Pakistan Matters to the U.S.

“The assassination of former Pakistani Prime Minister Benazir Bhutto has dealt a severe blow to U.S. efforts to restore stability and democracy in a turbulent, nuclear-armed Islamic nation that has been a critical ally in the war on terror”. This from an analysis written by Matthew Lee of the Associated Press. http://apnews.excite.com/article/20071227/D8TQ1RKO0.html

This was a truly sad event for Ms. Bhutto’s family, Pakistan, and the United States. George W. Bush’s nation building was all about spreading democracy. That opportunity now seems remote in Pakistan. The assassination also signals us that we live in a desparate world that will do anything to stop the changes that the western world wants to advance everywhere.

The fragility of many U.S. allies in the Islamic world reminds us that our national issues can be overshadowed by events on the other side of the world. If we let this fear distract us, the United States will no longer be a leader.

Too many political commentators are saying that this assassination will change our voting behavior in the elections of 2008. ”. That would not be good for America.

The Charge It Nation

This nation thrives by buying everything using credit. It’s the plastic! Credit cards have become part of our economic system.

When we shop at Sears or Costco or Walmart we are barraged with the “buy” mentality. I am just as guilty as the average American. I bought a flat screen TV last January for no money down and no interest charge for one year. After that one year I will be charged at the rate of 24% for the balance due dating back to the original purchase date. Why did I do that purchase? Every time I went into Costco to buy staples (e.g. bottled water, chicken, cleaning supplies) I walked by the flat screen TV display. I could not resist temptation.

All my friends say they pay their credit card bill every month in full. I don’t believe them! They are just ordinary people. Perhaps slightly more well off than most but the evidence convinces me that at least some of them are not entirely truthful. In September 2006 the amount owed by consumers on revolving debt exceeded $850 Billion. A year later, this past September, the amount owed had risen to almost $925 Billion. The source of this data is the Federal Reserve.

Why is this happening? The United States is a consumer nation. As individuals we have decided to buy everything we want regardless of our ability to pay for those items. The most recent glaring example is the purchase of homes with little or no down payment.

There is a positive side to this behavior. Americans have very comfortable life styles. We have a history of being the biggest consumers in the world. The Canadian Broadcasting Company did a report in February of 2005 informing us that China has surpassed America < http://www.cbc.ca/story/world/national/2005/02/16/china-consumption-050216.html> in the first years of this century in most buying categories.

I am a prefect example of the spoiled American. We have two cars, cell phones, multiple television sets, two computers with two printers, stereos, washing machines for clothes and dishes, etc. etc. etc. Unfortunately many of these items were bought on credit.

Consumption taxes or value added taxes will never become part of our nation. They would defeat our consumerism. They would reduce the consumption that makes our nation thrive. That would result in less jobs and a lower standard of living.

Oh, by the way I did disappoint Chase Credit Card Services. You see I did pay the last part of my purchase of the flat screen TV in December. It took me 11 months to pay for the TV without an interest payment. Chase immediately called to ask if I would like a new credit card with a special cash back feature. No thanks, I already have three other cards and I will soon have zero balance on each.

John Edwards is Correct

Former senator John Edwards is correct when he said, ”There’s a wall around Washington and we need to take it down. The American people are on the outside. And on the other side, on the inside, are the powerful, the well-connected and the very wealthy.” Mr. Edwards spoke about the corporate control of our nation in the last Iowa debate. He was talking about the well connected in Washington D.C. as well as the wealthy.

Look at just the issue of auto and truck fuel economy. It has taken 32 years to increase those standards. The new standards are not effective until 2020. That is 48 years since oil embargo in the 1973-74. The automakers and oil companies are the two groups that have blocked this legislation. Of course the congressmen and senators from Michigan supported the status quo. The consequence of this situation is that the U. S. is still importing 80% of its oil from the Middle East at high prices and the environment is being affected too.

Another issue is the current scandal on Wall Street over home loans in the secondary market. That is a large group of home loans given to people who could not afford a conventional loan. Wall Street brokers packaged those loans and sold collateralized debt obligations (CDOs) to money market funds. These CDOs were offered with money back guarantees. This issue was discussed in detail in the December 10, 2007 issue of BusinessWeek <http://www.businessweek.com/magazine/content/07_50/b4062026774092.htm> . This is another great example of protection of the wealthy over protection of the average American but packaged as protection for the sloppy home buyers.

The Federal Reserve under the guidance of Alan Greenspan, a Wall Street maven and a conservative economist moved the markets to protect and enhance the wealth of his brethren. Easy money lead to growing wealth for the wealthy, not the average American. Mr. Greenspan also devised the idea of “core inflation”. That is inflation that ignores the cost of volatile items like food and energy. The idea was to convince us less wise Americans that inflation really is at a very low level. Recent article articles in both BusinessWeek and Newsweek point out the foolishness of this idea.

When I graduated from CSUN (California State University, Northridge) in 1962 there were over 30 million Americans in labor unions. Today there are approximately 16 million Americans in labor unions. Manufacturing was a significant part of our employment. Today almost every product we buy was made in another country. The leading exporter to the U. S. is China. Actually the number of people in manufacturing has remained almost the same as it was in 1947. From Economists View http://economistsview.typepad.com/economistsview/2007/02/manufacturing_e.html consider that “Because the population and, hence, the labor force has grown, the share of manufacturing employment (to total employment) has been steadily falling since the Korean War. Approximately one in every three workers was employed in manufacturing after the Second World War; today, that number is about one in ten.” Are corporations impacted by this situation? Of course, their profits are higher than ever because the labor costs are significantly lower.

It is unlikely that John Edwards will be the next president. He really would be an agent for change.

Is This The Wild West or What?

Las Vegas police say six young people in junior high or high school were shot after they got off a school bus on Tuesday afternoon.

Reported on local Los Angeles television on Sunday, December 9 and confirmed by the Associated Press, there were two threats to kill. Police arrested a 21-year-old Loyola Marymount University student in connection with an online threat to shoot and kill as many people as possible on campus before being killed himself according to police. This past Friday an Australian man was arrested after he allegedly posted a message saying a shooting attack would take place at The Grove shoppping mall near Beverly Hills.

On the same December 9 in Colorado there were three people killed at two church facilities. At the second incident the shooter was killed by a guard. No one knows at this time if the killer at the second incident was the shooter at the first incident.

In an Omaha shopping mall eight people were killed and another five injured on December 6. That killer committed suicide at the scene of that massacre.

Of course we all remember The Virginia Tech massacre comprising two separate attacks about two hours apart on April 16, 2007. The perpetrator killed 32 people and wounded many more before committing suicide; making it the deadliest school shooting in U.S. history.

Another masacre was the October 3, 2006 killing of five children in a one-room Amish schoolhouse.

No one will forget the Columbine High School massacre occurred on Tuesday, April 20, 1999, at Columbine High School in unincorporated Jefferson County, Colorado near Denver and Littleton. Two students, Eric Harris and Dylan Klebold, embarked on a shooting rampage, killing 12 students and a teacher as well as wounding 23 others before committing suicide.

There have been many other killing incidents over the past years.

The second Amendment to the Constitution says, “A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed”. Based upon that amendment this country has allowed everyone to own as many guns as they can afford.

I am opposed to the manufacture and ownership of handguns. The second amendment would not allow my ideas to become law. However, does a “well regulated militia” mean that everyone has the right “to keep and bear arms”? My interpretation of this amendment is that members of a militia have the right “to keep and bear arms”, not the general public.

The distribution of handguns is so prevalent that we cannot prevent ownership by every responsible citizen. We can limit ownership to those who have been licensed by the government. That licensing requirement ought to be limited to those people that have passed a written and operation test in addition to a psychological evaluation. The testing should be similar to the testing that we give people operating a car.

I know the NRA will take exception to this idea. My view is that our society needs to protect itself from those people who are incompetent to operate a fire arm or are not psychologically normal. In every instance the killers have been evaluated to have troubled backgrounds. The right “to keep and bear arms” should not take priority over the constitution’s preamble that calls for “justice, insure domestic tranquility, provide for the common defense, promote the general welfare…”

Oh, This Hurts!

How many people are following the debates (really forums) put on by each political party? Many commentators have said the numbers are small. I have not found any data on the internet to support or contradict those statements.

Although most of the candidates tend to mimic each others opinion in each political party there are some differences. Watching the news and listening to the candidates has slowly helped to define my positions. I am disappointed that none of the candidates have a vision of the future.

Here are my views on some of the leading candidates

-Mitt Romney has changed most of his positions from the time he was governor of Massachusetts to when he became a candidate for president. His views as governor were relatively liberal and mostly aligned with the Democrats in that state. Now as a past governor and a man trying to win support in his conservative party he has espoused views that support very conservative positions. Romney is a flip flopper. He bows to opinion and has not taken any stand on any issue even if it is unpopular. His speech on his Mormon religion was excellent but does not change his flip flopping on issues that really matter. He has not said anything that makes him a standout in the crowd.

-Mike Huckabee has declared himself the Christian candidate. He does not believe in evolution. He has implied that there is something wrong with Mitt Romney’s Mormon religion. There is no religious qualification for this job. As to Huckabee’s position on issues he seems to have mimicked Mitt Romney when he was governor of Arkansas. To Huckabee’s credit he does defend his action when he was governor. Defining himself as the Christian candidate eliminates him as someone I would support.

-Hilary Clinton has defined herself as the candidate with the experience that will enable her to walk into the White House and capably go to work because she was there before. She voted for the war in Iraq and does not regret it. Recently Mrs. Clinton voted to declare a military group sponsored by the state of Iran a terrorist organization. In light of the NIE report that Iran stopped developing nuclear weapons in 2003 it appears her decision was wrong. Her contention that experience trumps new ideas is hard to swallow. Donald Rumsfeld and Dick Cheney came to the current administration with significant experience and their assessment of Iraq was entirely wrong. Still she is smart, wise, and seems most likely to be the candidate most likely to succeed as president.

-Barack Obama calls himself the man with hope (his book “The Audacity of Hope”) and the man with new ideas. He points out that he would not have voted for the war in Iraq. He would directly personally negotiate with the leaders of other countries to avoid war. He does have some issues that he has not resolved or cannot resolve. He is young and in his first term as a Senator. His experience in government is small. Mr. Obama was not present to cast his ballot on the resolution to declare a military group sponsored by the state of Iran a terrorist organization (the one that Hilary Clinton voted yes). He then proceeded to criticize Mrs. Clinton’s decision to vote yes. In the Philadelphia debate in October Mr. Obama criticized Mrs. Clinton’s equivocation on driver’s licenses for illegal aliens but he too gave a long answer to the yes or no question (Should illegal aliens be issued driver’s licenses?).

-John Edwards has a clear vision of where he stands on most issues. Like Barack Obama he has limited experience in government. He did vote for the Iraq war but has regretted that decision. His positions have been strongly in support of unions and working class people. He is wealthy and that has been held against him because he earned the money as a lawyer. I have not found any significant contradictions in his positions although he has become more strident with the passing of time.

Significance of Older People in our Economy

Adults age 55 and older constituted 31 percent of the voting-age population and 35 percent of those who voted in the 2004 presidential election, according to the U.S. Census Bureau. Currently 43 million Americans receive social Security benefits. There are 76-million baby boomers and the first of them are just turning 62 this year. None of us are happy about this. AARP starts sending out solicitations to everyone at age 50. I ignored the solicitations until I was 60.

A chart published by the U.S. Census Bureau < http://www.census.gov/population/pop-profile/dynamic/AgeSex.pdf> graphically shows the increased population by age of the baby boomers and that the numbers of people born after that generation have not declined substantially. This is a situation that will benefit all older people.

As the 50 and older age group grows into a large percentage of the population we have the power to influence our society and our government. This can be accomplished in both locally and nationally. When my wife and I vacationed in Vancouver British Columbia in 1999 we found that city to provide a variety of services for the elderly including a chirping bird sound at every corner with a traffic light (for those that cannot see clearly). Another example of helping the elderly and disabled is Los Angeles modification of many corner curbs with ramps that help crossing streets. Social Security and Medicare are two examples of national services.

We have the power of the vote and pen to pressure government and society to do the right thing. Active participation in the AARP < http://www.aarp.org/> and the Alliance for Retired Americans <http://www.retiredamericans.org/> is a good way to obtain the services and support that is needed. Both of these organizations have similar goals and both are worthy of support. The Alliance for Retired Americans is allied with the AFL-CIO and other unions. Active participation in either or both of these organizations will impact the voting of our representatives and the outcome of the coming presidential election.

Saving Social Security

Republican presidential hopeful Fred Thompson appeared on today’s “Fox News Sunday” to say that his plan for saving Social Security is to cut the benefits. Mr. Thompson has not actually said how much the benefits would be cut. The typical monthly benefit for 2008 is $1,044. The median savings of Americans age 51 to 62 is $63,116. There have been discussions on the radio about the fact that 80% of the population has savings of less than $50,000. Just how much cut in Social Security payments can the average retired family handle? My opinion is NONE. Clearly most retired people need the monthly retirement income they receive from Social Security. The Economic Policy Institute (EPI) published “Retirement Income The Crucial Role of Social Security in May 2005 <http://www.epinet.org/content.cfm/book_retirement_income>. Key conclusions were:
In examining Social Security benefits within the context of other retirement savings programs, the data show a number of striking results:

For the typical person approaching retirement, the value of expected future Social Security retirement benefits represents the largest single source of wealth. That finding is consistent with the well-known fact that Social Security provides more than half of all income for about two-thirds of people over age 65.
Social Security provided a larger addition to wealth than any other form of wealth between 1989 and 2001 for the average person near retirement. As labor markets tightened and annual earnings improved over that period, the expected value of Social Security benefits rose. Although stock market and home prices rose significantly over that timeframe, these increases had only a modest effect on the wealth of those in the middle of the income spectrum; their stock market holdings were too low to be affected, and increased borrowing kept home equity in check.
In terms of the adequacy of workers’ retirement savings, the data indicate that the retirement system outside of Social Security is a system with many holes. Despite large tax incentives from the federal government for workers to save for retirement, more than one-fifth of households nearing retirement (those between the ages of 56 and 64) had no retirement savings other than Social Security. In contrast, nearly everyone can expect to receive some benefits from Social Security.
Even among the households that have private pensions, savings are very unevenly distributed. Indeed, one of the most dramatic transformations over the last two decades has been the replacement of traditional Defined Benefit (DB) pension plans with Defined Contribution (DC) plans such as 401(k)s. This shift has actually been detrimental to a large share of the working population. Despite increased coverage by DC plans and the rise in the stock market, the total DB plus DC wealth of the typical person nearing retirement was no higher in 2001 than in 1983.
Retirement savings, including Social Security wealth, notably improved from 1989 to 2001, although large trouble spots remain. The share of households that could expect to have retirement income of less than twice the poverty line declined. Also, the share of households that could hope to replace at least half of their current income with benefits from their savings in retirement rose from 1989 to 2001.
There is significant inequality in the retirement preparedness of different demographic groups. Minorities and single-female-headed households saw larger than average improvements in retirement preparedness, although they remained less well prepared than other groups. Much of this inequality results from an uneven distribution of retirement savings outside of Social Security, while expected Social Security benefits are an equalizing force. The tight labor market was particularly helpful in raising the annual earnings and future Social Security benefits of these groups. In addition, these groups depend more heavily on Social Security for their retirement income than do other groups.

The many ways in which Social Security has proven superior to private retirement benefits should give pause to those who want to carve up Social Security through privatization. Social Security is universal, and its value has risen faster than other forms of retirement savings for the vulnerable households that need additional retirement benefits the most.

The Republican obsession with not raising the Social Security cap of $97,500 is remarkably out of touch with reality. Even conservative Alan Greenspan, former Federal Reserve Chairman, has said that the fix for Social Security is to raise the cap. In 2006, the median annual household income according to the US Census Bureau was determined to be $48,201.00.Clearly $97,500 is well above that average.

The Bush Mideast Peace Conference At Annapolis

In 14 months President George W. Bush will leave office. His accomplishments have been few. There are only three significant things he has done as president. First he lowered tax rates (this may have been a greater impact on the rich than the poor), second he created a prescription drug program for Medicare participants (some would say this was mainly a benefit to drug companies), and third he was instrumental in removing Saddam Hussein from power (and left this nation with a serious problem in Iraq).

Bush’s mistakes are to numerous to list here. I want to focus on peace in the Middle East. His objective is to obtain one really wonderful success that will enable him to be remembered in a positive light. It’s called “his legacy”.

A reading of history tells us that the likelihood of success is very remote. Bill Clinton, the master of communications, was unable to bring Yasser Arafat and Ehud Barak to agree on a peace settlement. George W. Bush is not known for is diplomatic talent. This AP analysis dated November 25 is worthwhile http://apnews.excite.com/article/20071125/D8T4Q05O0.html. How can he bring two groups that have been fighting for 60 years together in peace?

It is a nice gesture to bring all the Arab nations to this conference but the only two groups needed for peace are the Israelis and the Palestinians. As long as Hamas and Hezbollah terrorists continue to attack Israel there will not be a sustainable peace. The Palestinians do not have the will to stop the terrorists.

I expect that the Arab nations will demand land from Israel as a trade for peace. Israel has already withdrawn from southern Lebanon, the Sinai Peninsula, and Gaza but those withdrawals have not brought any peace. Will Israel’s withdrawal from the Golan Heights and all of the West bank territories bring peace? Sorry to say but I do not believe the Arabs will be satisfied until there is no state of Israel.