Category: Social Behavior

Even the Rich Can Be Fooled

“Our clients learn to consistently generate 3 – 6% per month (Want Proof?) cash income from a stock portfolio, regardless of market direction. Our technique is so conservative it is approved for use in retirement accounts (IRA, 401k etc).”

The above was copied from a web site entitled Compound Stock Earnings. The company with this web site advertises their sales pitch on one hour weekly radio infomercials that are on 10 local stations in major cities across the United States and Canada.

Bernard L. Madoff the head of a securities firm that bears his name offered “…solid 12-13 percent year in, year out.”  “Mr. Madoff seemed to have created a stainless persona of integrity and trust. From the start, in fact, a motto of his business captured this image of simplicity and directness: “The owner’s name is on the door.” This past Thursday this man was charged of cheating investors out of $50 billion.  Among those impacted have been some high flying hedge funds such as Citadel Investment Group, some city and county retirement funds, HSBC, and many private investors that reportedly include Mort Zukerman, owner of US News and World Report.

Have these people and businesses not heard the expression ‘If something seems too good to be true, it isn’t true’?  I know 5% is difficult to earn in these difficult times but there are investments that do honestly pay that return.  I guess the rich really can be fooled.    

What Are the Responsibilities of the Wealthy?

A United Nations University study revealed the following information. “The richest 2% of adults in the world own more than half of global household wealth according to a path-breaking study released today by the Helsinki-based World Institute for Development Economics Research of the United Nations University (UNU-WIDER).”

 

“The most comprehensive study of personal wealth ever undertaken also reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total. In contrast, the bottom half of the world adult population owned barely 1% of global wealth.”

 

These facts do not vary significantly in the United States. Professor G. William Domhoff, of University of California at Santa Cruz has posted his study on the internet.  His conclusions are remarkably similar to Pareto’s 80-20 Principle.  In 2001 20% of the population owned 84.4% of the nation’s wealth.  The top 1% owned 33.4%.  Similar to Pareto’s theory 80% of the population owned a mere 15.5%.

 

Living in Los Angeles most of my life has enabled me to see both the very rich in Beverly Hills and the homeless on Skid Row.  My wife was is in shock as I walk with her from the Central Library to the famous Grand Central Market.  She saw all those drunks and homeless lying next to building walls and was astonished by my cavalier attitude.  Why wasn’t she shocked by the palace my sister built in Calabasas?

 

The inspiration for the column is Business Week’s December 8, 2008 publication of THE 50 TOP AMERICAN PHILANTHROPISTS.  It was nice to learn about the money that these people had contributed to society.  However, the listing in the published version of this article also provided the current net worth of each person and the “Lifetime giving as % of net worth.”  What shock that data was!  Warren Buffet was ranked number 1 with a current net worth of $50 billion.  He has given 82% of net worth.

     

Unfortunately too many of these very wealthy people believe that leaving their multi billion dollar estates to the family is the right thing to do.  How many billions do they need to live comfortably?  Three good examples are David Koch who has a net worth estimated at $19 billion.  He has donated $623 million or 3% of his wealth.  Michael Bloomberg, mayor of New York City, with a $20 billion estate has contributed 8% of his wealth.  What will he do with the remaining $18 ½ billion?  Kirk Kerkorian with $11.2 billion has contributed 9% to humanitarian causes.

 

The list does indicate four people who have donated amounts significantly greater than their current total wealth.  The leading individual is Veronica Atkins, widow of Dr. Robert Atkins, has donated $882 million and still has an estate of $60 million.  That is enough money to support her and many of her children and great grand children in a very comfortable style.

 

Perhaps there ought to be a limit on wealth.  At least there could be requirements on the use of the wealth of billionaires.  The problem is who could draw those requirements?

CYNICAL

“This cynical stance they took last night — they’re willing to jeopardize 3 million jobs so they could gain some advantage in their war against unions — is appalling,” said Bill Samuel, the chief lobbyist for the AFL–CIO about the Republicans who opposed a Detroit bail out.

 

What does Bill Samuel mean when he uses the word cynical?  This word has at least twelve synonyms.  Did he mean suspicious, skeptical, scornful, or one of the other nine?  I believe it’s all three that I identified.  They are certainly contemptuous (another synonym for cynical) of the unions and the companies in Detroit.

 

When Russia invaded the Republic of Georgia it might have been viewed as cynical. After all didn’t they sneer (another synonym for cynical) at the president of Georgia when his government challenged those breakaway provinces?

 

When Congress was asked to provide aid to the finance industry I was and still remain skeptical of the efforts by Hank Paulson.  I am very pessimistic (another synonym for cynical) about the Treasury department’s efforts to unfreeze the credit markets.   

 

Finally I do love the way David Letterman and  Jay Leno use sarcastic (another synonym for cynical) humor to mock (another synonym for cynical) everything.

 

Is this column too cynical?

Paradise Lost

NOW, on PBS every Friday evening, offered the best example I have seen that confirms the impact of global warning.  Paradise Lost documents the plight of the nation of Kiribati.  This island nation is most likely to become the first victim of global warming as the rising seas drown the islands.  There is probably nothing that can be done to save the land.


This is not the first indication of global warning.  Ships are now able to traverse the north rim of North America.  There was a documentary about Glacier National Park in Montana.  The governor of that state flew over the park with a reporter.  The governor pointed out the areas that had been covered with glacial ice in past years but are now all barren rock.  He stated that each year the ice retreats and predicted that eventually all of it will be gone.

 

Man’s paradise is this planet.  It is changing in significant ways.  I am convinced that man has contributed to the changes that are occurring now.  Can we make an impact?  Of course I do not know.  Isn’t it worth trying?

Why We Live Here

It’s Southern California.  The only place there is snow is in the mountains.  The cities have unbelievably mild winters where 70°F temperatures are common in the winter.  The coldest winter nights seldom go below freezing  (32°F).  Today the temperature was 50°F at 8 a.m. and reached 71°F.  Most of us know how fortunate we are.  I was born in Canada.  Thanks Dad!

 

This article from the local newspaper says it better than me.

Need a reminder why we live here? Just step outside

By Susan Abram, Staff Writer

Updated: 12/01/2008 11:03:03 PM PST

If you’re feeling a little down from all the bad news lately, just look up and let the amber glow of the sun melt your worries away.

Not bad for December, huh?

It could definitely be worse. This is how The Weather Channel describes what’s about to descend on parts of the nation:

“A polar cold front howling southward out of Canada tomorrow will hurl snow and wind into Montana and northern Wyoming – a true meteorological shock …”

That’s right, howling and hurling. It’s dipping into freezing temperatures in the Midwest. That means if you leave a can of pop on a Chicago or Milwaukee sidewalk for too long, it’ll explode under pressure. Apparently, soda hates the chill, too.

And New York?

Fuggedaboutit. Step outside without layers of wool and that slice of pizza you scarfed down for lunch will give you a bad case of “agita,” Italian-American slang for heartburn.

Meanwhile, temperatures in Los Angeles are expected to take their time falling to somewhere even partially resembling winter.

The mercury will drop from a high of 80 on Monday to about 74 today.

Weather forecasters say we can expect much of the same the rest of the week across most of the San Fernando Valley.

Take that, Cleveland!

susan.abram@dailynews.com 818-713-3664

INTROSPECTION

It’s about looking into yourself and examining your mental state and your processing of ideas and thoughts.  ABC’s Charlie Gibson interviewed President George W. Bush and we all found that he is either a liar or lacks the capacity to evaluate his decisions.


Two questions that Mr. Gibson asked were answered with the words, “That’s an interesting question.”  Question 1 was “Would you have gone into Iraq if there was no evidence of WMD?”  Question 2 was “Your only 62.  Is there one more thing you want to achieve?”


That GWB has not thought about these two events is utterly astonishing.  But as you listen to the interviews you realize that this man lacks emotion and seems to lack empathy for the millions of people who have been impacted by the Iraq War and the recession.  As to the recession, an unemotional “I’m sorry it happened” suggests that he has no clue of the impact that the current financial crises has had on most Americans.

      

If ever there was a man who represents the devil it is George W. Bush.  If there is a hell, I believe he will go there.

Keeping Jobs In America

As I walk through the stores this holiday season there is one consistent fact.  Most of the merchandise was made in another country (not the United States).  Even clothing sold in high end stores was manufactured in another country.  My Dell desktop computer was made in China and my Dell laptop was made in Malaysia.  Tech service on those computers is provided in Bangalore, India.

Does patriotism trump our pocket books?   There is an article on the Los Angeles Times November 29 front page about the new Kia plant being built in West Point, Georgia.   The paper quotes one lady there that buying American, “is still a big deal.  But you can only be patriotic until you can’t afford it anymore.”  

Manufacturing continues to decline in the United States.  This contention is supported by the fact that union membership has fallen by 50% in the past 40 years.  In September 2001 the Commissioner of Bureau of Labor Statistics, Katharine G. Abraham presented a paper with the dismal fact that “Manufacturing employment fell by 141,000 in August” of 2001.  Manufacturing has continued its decline to the present.    

America’s largest corporations have continued to thrive and grow larger during the past 20 years as manufacturing employment has declined.  This situation is the result of the export of American manufacturing and jobs to lower cost nations.  With a new Democratic Party administration in the White House and strong Democrat presence in Congress this circumstance could change.  The problem is the lobbyists employed by big business.  

Congress may not be able to resist the temptations of the lobbyists but can always pass laws that induce employment in the United States.  That can be accomplished through tax incentives.  Lobbyists and corporations love incentives.  Now the public must demand that Congress do its job.

Random Data

According to Allure Magazine, November 2008, 150 Gallons of spray-tan solution is used in just one season of Dancing with the Stars.  I still think Julianne Hough is both talented and gorgeous too.  In that same miscellaneous beauty data it was revealed that Richard Nixon refused makeup before his televised debate with John F. Kennedy.  I believe President Kennedy would have won anyway but we will never know.

There are arguments that H1-B visas are just another way to bring in low cost labor.  My one experience was a Marketing manager from Germany who was brought into this country because my employer claimed no one with his experience was available here.  His pay was well over $100K.  I was furious but he was unsuccessful in his job.  That really was too bad because the company needed an outstanding individual in that position.  The company went out of business due to poor sales.

Finally there is Billy Mays.  He is on most cable television networks hawking a variety of products.  He makes lots of money despite being very irritating.  Marketers don’t care just as long as he can keep selling everything at $19.99 plus shipping and handling.  I am a far better speaker in Toastmasters and I do use hand gestures.  Mr. Mays is a far better pitchman.

Make The U.S. Auto Industry Competitive

Darwin’s survival law applies to business too!

Without a plan to make the U.S. auto industry competitive, no amount of money will make the Big Three profitable.  Reuters reported that General Motors Chief Executive Rick Wagoner said “bankruptcies would have a devastating impact on the domestic economy, many times larger than the aid automakers seek.”  Perhaps he is correct in the short term but the management of all three Detroit auto makers have no vision for the future.  Everything they have introduced in their vehicles has been reactive to foreign competition.

They have built low quality gas guzzling cars and trucks that are everywhere.  Approximately 50% of the cars sold are still built by the American owned manufacturers.  A review of Consumers Reports indicates that the quality of their vehicles lags far behind the imports.  This is especially true when Detroit’s vehicles are compared to Honda, Nissan, and Toyota.  Those three Japanese manufacturers have made major inroads in U.S. sales despite their higher prices because their vehicles are economical to operate, have higher quality and provide longer life. 

I know this from personal experience.  I drive every car I have owned until the cost to repair it is very high.  No Big Three car I have ever owned lasted more than 100,000 miles.  I sold a Ford Fairmont (to a Ford lover) at 54,000 miles when it was literally falling apart.  All six of the Japanese imports have lasted at least 135,000 miles.  Currently our family still owns a 1990 Honda Accord with about 200,000 on the odometer and it still travels 60 miles a day.

The Big Three need to consider bankruptcy re-organization that includes new management.  The U.S. government is not in the business of investment in private enterprise.  

A Unified Federal Government!

Surprise! Change is not what you thought it meant.  Barack Obama used the words “change you can believe in” in his race for the White House.  He never defined the meaning of those words. 

It turns out most of us misunderstood his intentions.   He did not mean throw everyone out who has ever worked in Washington, D.C.  He meant change from the methods and philosophy of both the Republican Party and the Democratic Party. 

We can already see that this is happening with the selection of Rahm Emanuel as Chief of Staff and the possible appointment of Hillary Clinton as Secretary of State.  What we will see at the end of the day, I believe, is an Obama administration made up of some of America’s most talented people.  I anticipate that some of them will be Republicans.

This could mean a unified federal government!  What will Rush Limbaugh, Sean Hannity, and the other right wing talk radio hosts say if this situation should come to pass?  “They are all RHINOS” (Republicans in name only). 

Exactly what is wrong with a Unity Government?  Well, for the first time in a long time we might see laws passed that will make our nation function for the benefit of everyone.  That is change I can believe in.