John McCain Has Some Worthwhile Positions

Remember, I am an Independent. The reason is that I am listening to the man not the party. My choice of Barack Obama over John McCain is because I am more in agreement with him than McCain. However John McCain has some views that I think are correct. The list is short.

SCHOOL VOUCHERS

Teacher’s unions have long opposed vouchers but the reasons are vague. Apparently the unions feel threatened by the idea of choice. Competition is the part of capitalism that provides consumers with the best products at the lowest prices. Perhaps that is the issue for unions. After all if there are less students in a school someone will have to be laid off even if that someone is incompetent as a teacher. So McCain’s statement that the least effective teachers may have to find another form of work is correct in a competitive world.

I believe that parents should have the choice to enroll their children in the school of their choice and that includes parochial schools. Parochial schools are providing a service to the community by rescuing over crowding in the public schools. That being the case, they too should receive public support.

NUCLEAR GENERATED ELECTRIC POWER

The New York Times reported an astounding 77% of France’s electricity comes from its 58 nuclear power plants. T. Boone Pickens has pointed out in his TV ads that Iran is converting to nuclear power so that they can sell more oil. What’s stopping the United States from building nuclear powered plants? Stupid fear.

DRILL, DRILL, DRILL

T. Boone Pickens says it won’t solve the issue of energy but every little bit helps our energy independence. The fear of oil spills in ocean areas may limit our off shore drilling but where ever the oil is on land we ought to drill it out. The United States has enormous natural gas reserves that can help bridge the gap until new sources of energy can be developed. Pickens’ ideas should be taken seriously by both Obama and McCain.

Who Is To Blame For The Mortgage Mess?

Well actually many home buyers foolishly believed they could buy a home with little or nothing down and some how afford the payments even after the interest rates adjusted upwards. The banks accepted the applications and the real estate broker told them “don’t worry.” So those buyers went forward with those home purchases on blind faith.

The banks and mortgage brokers didn’t care because they sold the loans to Fannie Mae and Freddie Mac. Those two government sponsored companies apparently did not review many of the loans that were made by the banks and mortgage brokers. The consequence is that “a record 9 percent, were either behind on their payments or in foreclosure at the end of June.” To believe that the people managing these enterprises did not realize the folly of their ways is equivalent to adults believing there really is a Santa Claus. To make matters worse the Federal Reserve did nothing to interfere with Fannie Mae and Freddie Mac.

Where were our congressmen? The Financial Services Committee of Congress headed by Barney Frank of Massachusetts has a web site that advises its responsibilities.

The Committee oversees all components of the nation’s housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.

Actually this mess goes back to a Republican lead Congress as this situation came to light about two years ago. So what have the Democrats done to prevent the meltdown of Fannie Mae and Freddie Mac? Apparently the answer is nothing. The cost to taxpayers will be in the billons. Who made money on this situation? The real estate brokers, banks, and mortgage brokers. I foresee new laws and regulations but they are coming after the animals have left the barn.

Competition is Dying in America!

M&A is the acronym for Merger and Acquisitions. It’s going on all the time. The list compiled by CNN for just the last three days is astonishing. It’s worth hundreds of millions of dollars. This process is killing competition and raising prices for everything.

I will pick just two industries to demonstrate my point. They are super markets and drug stores in the San Fernando Valley (metropolitan Los Angeles). There are now 1.6 million people living in this area stretching from Burbank and Sylmar on the east to Calabasas and Chatsworth on the west.

THE SUPERMARKETS

Today there are only four major chains left in this area. The number of independent stores is so small that most people do not know of their existence unless they are in the immediate neighborhood. Most small markets do not have the resources to do the advertising of the chains. Specialty markets like Whole Foods and Trader Joe’s do not offer a complete array of products.

The chains currently are Albertson’s, Ralphs (owned by Kroger), Von’s (owned by Safeway), Vallarta (catering to Hispanics and doing quite well), and Jon’s. However 20 years ago the list included Albertson’s, Alpha Beta, Hughes, Lucky, Market Basket, Ralphs, Safeway, Thriftimart, and Von’s. In addition there were many stand alone super markets that were big enough to advertise in the major newspapers. They included the All American Market, Panorama, McDaniels, Alexander’s, and Gelson’s (now a chain in only the wealthiest neighborhoods).

There were others stores too but they were absorbed into the remaining chains thanks to Yucaipa Cos.

THE DRUG STORES

The list is not as long but the trend is obvious. In the past it was Rexall, Thrifty, Longs, and Sav-on chains and many independent stores. Today the list is Rite-Aid, CVS, and Walgreen’s. Both Sav-On and now Longs are part of CVS. Although Walmart, Costco, and Target have pharmacies they are usually not convenient and have limited variety.

There are other industries that have seen consolidations including banks, department stores, and airlines. Los Angeles used to be the home of many savings and loan associations (California Fed, Glendale Fed, Great Western, American) as well as many bank chains that have been absorbed by Bank of America or Wells Fargo (First Interstate, United California, Security First National).

The consequence of the reduced number of businesses in any industry ought to be obvious. Imagine if your company was the only one offering a particular commodity or service. You could charge what ever you wanted. If there were only a few competitors rather than many, your pricing would be less flexible. There are lots of house painters here in my neighborhood so pricing stays low. Gasoline is available from only five companies within three miles from my home. Remember when every major intersection had a gasoline station on all four corners?

So the loss of Longs Drugs, May Department Stores, and Linen and Things means that their competitors can earn more but all of us will pay more.

Financial Literacy Is Not a Government Responsibility

It’s hard to be a social liberal and still be in favor of a government that does not intrude in the private lives of individuals. How does a government help its population without intruding like a parent that keeps telling its children, “No, no, no. You’re doing this all wrong. Let me show you how. If you do fail I will be there to help pick up the pieces.”

I have been briefed by a few people who have teaser rate, adjustable rate home loans. Every one of them knew that they had acquired loans that could be financially devastating. I know that many people have claimed that they were misled about the low interest rate loans that enabled them to buy a home. How could they not know they were in for trouble when the payments were so low and the down payments were either nothing or near nothing?

Now a California assemblyman wants to add another bureaucratic layer to help people with their financial literacy. This proposed law is AB 2123, California Financial Literacy Initiative, is for the training of the public in financial literacy. This proposed law is supported by the AARP. The AARP brought the law to my attention.

The money to provide the education would come from donations from nonprofit entities into an educational fund. However, there would be a cost to the state in the form of a Financial Literacy Advisory Committee. There is no explanation how the committee would be funded. I foresee another government mandated activity that could cost all Californians more tax dollars.

I am sympathetic to everyone’s plight as I had a near bankruptcy experience about 25 years ago. It was not the result of an adjustable rate loan. It was the result of a job loss.

California government is in financial difficulty. This is not the time to enact any new laws. Has anyone heard of the library? Those are marvelous places where the books on all subjects are free to read.

A Hoax to Control Oil

Oil reached $147.27 per barrel on July 11 . Today it has dropped to $117.11 per barrel (as low as $114.90 on August 8). In January of this year the price was $99.62 per barrel. What caused the price jolts? No one in a position to know is talking publicly.

Television news, Business Week, Newsweek and most other media outlets have been telling Americans that the cause of the higher prices is the growing demand in China, India, and elsewhere. After all, they told us, those countries now have growing middle class societies that drive cars and they have industries that require the use of oil. Ted Koppel’s: People’s Republic on the Discovery Channel showed American style freeways filled with cars that helped to reinforce this image. Many of us thought, “Wow! The rest of the world is catching up with America. That’s why we are paying more at the pump.” So, what happened? Perhaps Big Oil, Big Lies is the best we will ever know.

Remember when the cost of electricity in California spiked dramatically? It seemed that we had to blame the state legislature for the mess. Actually it was a manipulation of power generating equipment led by Enron. A recording was made of an oil trader laughing about how they had manipulated the cost of electricity. That manipulated shortage went away as quickly as it arrived.

The problem is the gullibility of the American public. What is worse about this current manipulation is that the media, for the most part, has gone along with the explanations offered by oil companies and the Federal government. I am not in a position to do the investigation of this hoax. This item from CBS on May 29, 2008 has not received any follow-up. Manipulation is not the same as speculation. Will anyone do the investigation?

Is NAFTA Good for the U.S.?

This question was posed in a letter to “The Welchway” in the April 22, 2008 column that appears weekly in Business Week. It is written by Jack & Suzy Welch. Jack is the former CEO of General Electric and is most likely the primary writer of this column. http://www.businessweek.com/magazine/

content/08_17/b4081138462308.htm

The article contends that “countless American product lines have withstood the onslaught of Asian imports thanks to Nafta and partnering with Mexico.” Well the product lines may have withstood the onslaught but American jobs have not. NAFTA is part of the export of American jobs. Some have gone to Mexico and many more have gone to Asia. American workers are hurting badly and so is the entire American economy as the result of the exporting of our jobs. The result of this situation is that it is now almost impossible to buy any item that is made in the U.S.A. The third effect is that the dollar is now worth less to other nations and that is helping to drive up the cost of oil.

Of course the Jack Welchs and the Jeff Immelts (current CEO of GE) of the world are not impacted by this situation. American corporate executives now earn 200 times the average American salary. Corporations are all doing just fine thank you.

This will be an issue in the next election for president of the United States.

A Non Economist Wonders Why?

Below is a record of the changing federal funds rate. That’s the rate most publicized on news broadcasts when there is a report about the Federal Reserve Board. It is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions. Changes in this rate frequenlty cause the stock markets to react in an extreme manner.

Going back to October 2001 the chart indicates how the Federal Reserve Board has changed rates too often and too steeply. The 5.25% rate was maintained for 10 months. It was reported that the reason was the Fed wanted to fight inflation. Overall inflation from 2005 to 2006 was 3.2% and from 2006 to 2007 was 2.8% (data from the Bureau of Labor Statistics).Now we face the consequences of the Feds focus on inflation. Obviously the radical movement was started during Alan Greenspan’s leadership at the Fed and has continued under the control of Ben Bernanke.Inflation (and deflation) ought to be the major concern of the Federal Reserve. Alan Greenspan voiced concern about this issue almost all the time that he was chairman of the Federal Reserve. Current Federal Reserve Chairman Ben Bernanke also voices the same concerns. The reality seems to be that Wall Street bankers are more of a concern than any other issue. Increasing inflation is obviously is occuring but at the same time Wall Street banks are taking a terrible hit due to their bad judegement in the sub-prime mortgage business. http://apnews.excite.com/article/20080227/D8V2QCCG0.htmlSo who is being bailed out? It certainly is not the average American.

Federal Funds Rate

Date	Change (Basis Points) Increase Decrease		Level (Percent)
2008 January 30 January 22	… …	50 75	3.00 3.50
2007 December 11 October 31 September 18 August 7 June 28 May 9 March 21 January 31	… … … … … … … …	25 25 50 … … … … …	4.25 4.50 4.75 5.25 5.25 5.25 5.25 5.25
2006 December 12 October 25 September 20 August 8 June 29 May 10 March 28 January 31	… … … … 25 25 25 25	… … … … … … … …	5.25 5.25 5.25 5.25 5.25 5.00 4.75 4.50
2005 December 13 November 1 September 20 August 9 June 30 May 3 March 22 February 2	25 25 25 25 25 25 25 25	… … … … … … … …	4.25 4.00 3.75 3.50 3.25 3.00 2.75 2.50
2004 December 14 November 11 September 21 August 11 June 30	25 25 25 25 25	… … … … …	2.25 2.00 1.75 1.50 1.25
2003 June 25	…	25	1.00
2002 November 6	…	50	1.25
2001 December 11 November 6 October 2	…	25 50 50	1.75 2.00 2.50

Why are most Mexicans in Mexico so poor?

The fonts on this posting were revised on November 23, 2008 to enable easier reading. The words and text were not revised.

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“Why is Mexico so poor?” is the common search question.

The Los Angeles Daily News reporting on President Felipe Calderon of Mexico on Sunday, September 3, 2007, “Criticizing the United States for its treatment of illegal Mexican immigrants has become routine for most Mexican politicians, including Calderon. Because the immigrants send home about $20 billion a year and because the yearly emigration of more than 400,000 people from Mexico relieves that country of masses of the poor, the government in Mexico City has little incentive either to stem the emigration northward or to support stricter measures making it harder for Mexicans to cross the border.”

So I wondered why are most Mexicans in Mexico so poor? I looked at Wikipedia ,ask.com and Google. The answers I found were very limited. Those that I found echoed my suspicions. The web sites are http://www.funqa.com/economics/4400-1-Economics.html

http://www.city-data.com/forum/illegal-immigration/134888-why-mexican-economy-so-poor-their.html

http://answers.yahoo.com/question/index?qid=20081107091500AAt44RQ

http://www.mindfully.org/WTO/2003/Mexico-Poor-NAFTA22mar03.htm

Additional web sites located June 13, 2012

http://answers.yahoo.com/question/index?qid=20110611210236AAtOGz1

http://www.knowswhy.com/why-is-mexico-so-poor/

The message from all of these web sites is clear. The wealthy of Mexico have the power to keep most of the country’s population very poor and they like it that way. It’s all about cheap labor. Their attitude is if the poor don’t like it they can sneak into the U.S.A. They have gotten away with this because too many American companies like the cheap labor force and the American government is complicit in this situation. It’s not a Democrat or Republican thing. It is a U.S. government thing.

The American public uproar is the best thing Mexicans have going for them to change the Mexican government. So President Calderon’s statements are just part of that government’s public stance to convince Mexicans that their government really is concerned about the well being of its population. As to the marches in the U.S. about illegal alien rights, those are the words and actions of do-gooders who have played into the hands of the wealthy Mexicans.

A very inadequate educational system and major government corruption are the two issues most commonly identified as destroying the Mexican economy. Many Mexicans can not read or write. Bribery is a way of life in almost every part of the government including the police. These two problems discourage foreign investment.

Notice that Carlos Slim, the wealthiest man in Mexico, is now listed as the third wealthiest man in the world according to Forbes magazine. He along with other wealthy Mexicans couldn’t be happier with this situation. Carlos Slim alone is reported to control 20% of the Mexican economy. Can you imagine what would happen to Mexico if the wealthiest in that nation were forced to surrender and share what they have with the average Mexican? I am not a communist but I believe that the wealthy families of Mexico are one significant cause of that country’s problems. The U.S. could force this situation to change. The U.S. won’t do that because the situation benefits American corporations.