On Money and Else

Do Governments create jobs

2012-01-10T10:52:00.005-05:00

In a single word, the answer is: yes.

In fact, good governments create good jobs.

The US with a superior educational system until the 80's hired very smart and able people to run tasks in its government that are complex and necessary for any society to function, in addition to operate at a global leadership level.

Still, today, the US government creates jobs, good jobs, but at a much smaller rate and in smaller fields of reach, like National Institute of Health or the National Science laboratories, and many other worthy entities, not yet destroyed.

When people get ticked-off about government overruns and other mismanagement blunders, what is left of the story is that those projects are outsourced to private companies, and politicians who scream the loudest about the blunder are the ones who allow those corporations to run amok and cover-up for them when the corporations rob the public treasure. Funny how hollow we are in reporting.

The National Institute of Heath, is a great example of government excellence. The VA Hospital system, maybe the best government run health system in the world, until politicians started to eliminate benefits for bounded veterans and its families, by under funding the VA system. So much for pandering to soldiers, chant them as heroes in all campaign speeches and forget about them when they wounded or in need help.

As politicians legislated and destroyed -by outsourcing government functions- jobs, the quality and decline of the educational system followed step by step.

You can thank for the destruction of social quality, now claimed to be some kind of worthy philosophy, Reaganomics. What this philosophy is, it is a bunch of propagated social fallacies, accepted in the politicians -democrats and republicans- corporatocracy rules of politics, that they claim to create healthy economics by each president since Ronald Reagan; nothing is more of lie. None of the two parties escape the big lies, democrats and republicans are as false as their ideas. Today, more radicalized advocates for smaller role of government are louder and more efficient. The problem with the idea is that it misses some components, that is, smaller is OK but it should also include smarter and competitive and well remunerated.

The advocates of the Reaganomics philosophy think that by eliminating government, the interstate highway system will be pay by Nebraskans or Okies, who received from the central government -they want to eliminate more than 20% of their unfair share of taxes- so they can have highways worth of riding, maybe they prefer to go back to dirt roads and schools with no heat, and educate kids only until 11 grade. One has to wonder what kind of screamers are those!

Political demagogues have grown their radicalism to extremes that are unhealthy, to have a healthy country. If a new debate and some strong positions are not taken, been ranked 29 in education worldwide will be an achievement and the ride towards lower quality so far is guaranteed.

The US started to destroy its educational system with President Reagan, today we have politicians with ridiculous demagoguery, the include statements such as the elimination of the US Department of Education. I assume its substitute will the department of idiots. Those screaming the elimination of central agencies, what they are saying is something much different. What they cry is about is simple, get rid of the people who do not look like me, if what it takes is falling behind as a country, who cares we are still "number one", the question is at what "we are number one"?

Bomb throwing and war mongering for sure.

One More Year, Lower Illusions

2011-12-26T12:59:00.002-05:00

Since my last post, politicians keep doing their damage and keep fighting to the podium that awards the price of who is more conservative and destructive to America.

Bankers keep their robbers inside their combination safe and those who do not fit inside where sent to be employed in government posts.

Working people have lost another 3.5% of income, but the top 1% has gained 4.7%.

The level of employment has been nil, mostly the statistical reporting continues to "cook and bake" the data to make it look "decent", albeit its indecency.

Elected officials continue to borrow like drunk sailors, and the tea party goers seem to have stop drinking tea but keep enjoying their fallacies and delusions.

Obama has proven to himself a failure, he now admits he could become a one-termer president. He understands his lauded promises turned out so far to be nothing, empty rhetoric like his predecessor, proven to be "same old, same old", in fact it seems many now think president Obama has managed to improve his predecessor incompetence.

Two books appeared this year with the same title "Aftershock" one from former secretary of labor Mr. Reich and the other by economists Wiedemer's brothers, both worth reading.

Overall nothing has change.

If there is one book for your 2012 list consider Prof. Jeffrey Sachs latest "The Price of Civilization" he does not take a political stance, the book is a wake-up call via in-depth analysis of the state of the country, offering solutions to complex problems.

The Creation of Lawless People

2011-01-18T16:49:00.002-05:00

Every time a law takes effect a behavior or action becomes forbidden and penalized.

We have forgotten that laws are not the solution to bad behaviors or bad actors.

Good education and direct responsibility are components of a respectful and evolving society, that intents to be better tomorrow that it is today.

Among the many human deficiencies is the deviation of greed one of the most dangerous character flaw.

It does seem greed it is one deficiency in character that it has become impossible to teach, or we have become callous about the need to be corrected.

It is interesting that most religions have some form of fix for character flaws.

One fix for this fault in most religions is a form of the following core statement:

"don't do unto others what you don't want do to you"

The amazing part about religions forming such thought, as a core thought, is the important part that takes place as an allegiance to the group.

If the religious groups will concentrate in following that simple idea and act upon it, greed will be eliminated.

Thus, due to the society present situation it will be fair to say that religions have fail most people. The consequences of covering-up and clouding arguments around the core, justifying what is convenient to justify, does not comply with such core believe. It is understood in all religions that it is the spirit of the letter what matters not the letter itself.

Today, it has become the most common approach to justify why is difficult to accomplish religious core believes.

The fact is that it is not easy to be a good faithful believer; the disturbing part is that no effort is been put in getting near the thought or the education that takes to be a believer of core believes.

More effort is put in justifying why "Thou should not kill" is better to be debated with its present caveats than its initial intent of respect for all life.

When money enters the process it seems that believers lose sight and money surpass all core believes, bulk majority set aside the core ideas of their believe in favor of greed for money. Money and its justifications has corrupted their religious believe system.

At present time, we are incapable of handling money without corrupting their own believe thought process.

Thus let's the conversation be not about convenient caveats but about the spirit of the letter.

Here We Go!

2011-01-17T11:32:00.003-05:00

Up, down and here we go again.

The financial system is proven to be corrupted at its core, anywhere you look there is deception and government intervention to support with tax payers money institutions that are unwilling to confront their own inefficacies and misplaced purpose.

It is not that we do not know how to fix it. It is the greed of policy makers that is not allowing laws and decisions to correct the deficiencies of the financial system to be put in place.

Here the danger is the continues build up of wealth inequality. While tax payers get stripped of the assets to be directed to those int eh financial industry, the industry leaders continue to collect obscene amount of money for false and poor performance. Here is were the board of directors have proven to be allies of the problem, all regulatory entities have failed to take steps to put investors as owners with direct or indirect power to control corporate leaders abuses and deceptive practices driven (now clear) to self enrichment and failing their corporate duties.

As of late we have learn that Mr. Bernanke is an expert at tracking equities, and he values equities values as meter of his performance. See ABC interview last week.

Thanks to free cash provided to financial institutions, institutions that should be allowed to fail, the carry trade allowed by the fed and the treasury department is creating a monster of leverage.

If the Lehman and Bear Hedge funds collapse were the trigger of the past round of financial ineptitude, the present carry trade and governments push to create inflation has the potential to create the mother of all financial disasters. As they continue to deceit the rest of us, their assymetric knowledge is not as superior as they think.

What it came is not gone!!!!

2009-07-31T17:43:00.003-04:00

Seven months since last post, no reason for such long leap.
After the economic debacle I continue to wonder why there is not will to tackle the obvious systemic problems build in the system and reduce risk of next economic failure.
The economic policies are broken and there is more will to pilfering than to fixing it by politicos, who dip in the cookie jar as soon as they can, and still they will get reelected at a ratio of 95%.
I might take another seven months to wonder....

Money sinners in 2008, same old, same old and two good advices

2008-12-31T18:19:00.006-05:00

If hell exists and if some are fearful of going to be dammed in eternity, it seems that it misses the point with some of the “experts” that distribute ideas via the talking tube.
Let’s start by the outright liars of 2008, who happen to be the same of 2007 and I am confident they will be the same of 2009.
First the officials, those who are running the show:
The grand prize of misrepresentation and outright lies goes to Fed Chief Greenspan. It took a Congressional hearing for him to accept error. His following act Chief Bernanke is not doing better.
Chief Bernanke blunders with the economic status of the country and continued assertions of "everything is fine" until he got tomatoes thrown at him and had Cramer –also a sinner- screaming like a maniac, it was too late for the economic meltdown and actions to be put in place.
The Secretaries of the Treasury in unison were also big time sinners. The prize has to go back to the pernicious views of Robert Rubin who castrated any regulation with the help of the Senators from New York Schumer and Clinton. This triumvirate set the political doing for the present fiasco.
Secretary Paulson needs to get the prize for "idiocy in economics and purposeful erroneous public statements". The Secretary got caught in so many blunders that had to beg the Chinese and the Saudi clan every other week for a bail-out of the treasury debt, while telling everybody and Congress that he did not see any sign of distress in the economy. While the Secretary had his counter part saying the opposite! Bloomberg news found Mr. Paulson irrational talks funny; to the extent of creating headlines that were incomprehensible.

To the guy with the sign “the buck stops here”, well, no comment, I leave that one to your own assessment.

Big air heads with fancy titles in the talking tube:

Again the “you better ignore him or else” prize, for the past decade and for the next decade goes to the king of misinformation and intention to misrepresent the reality goes to: Lawrence Kudlow of MSNBC.
I am really sad for Kudlow and for having to live a life so full of air and deception to accumulate personal wealth at the expense of the less powerful.
Kudlow is the ultimate insider, whom benefits from others misinformation, he shows it every night. The power of deception in Kudlow’s TV show has no parallel.
Be careful about following Kudlow’s or his buddies forecasts, the probability of been is wrong is almost assured, not because they are not trained or uneducated, but because they are demagogues above anything else.

Cramer is the next in winning the “be careful how you interpret me” prize.
I like Cramer rants, he is sometimes too darn right that one has to wonder if it is his sanity or insanity talking.
The danger with listening to Cramer is that he needs to run a TV show and telling the truth will not gain him access to the people ne needs to get his business going. Cramer has the problem of "the happy herd" mentality, if Kudlow is goldilocks economy, Cramer is "there is bull market somewhere" . Cramer is is afraid the herd will disband if he cries wolf. If things are bad Cramer has the tendency to say is ok to keep saying something even if he is wrong. Think of the show as entertainment with the same purpose of any other TV show, that is to get you watching not matter the content.

To start the New Year after all the bail-outs etc., if you think this is not going to affect you, just wait and see.
So worry a lot about your own comfort level, and start to question how much you have been put to task with your future, and ask of your elected official’s questions, you might find the answers beneficial to have a better plan in 2010.

Now my personal and two best wealth building ideas of the next years:

First listen to a few honest people like Profesor Nouriel Roubini, economist Peter Shiff’s, and the foudner of Vanguard funds John C. Bogel forecasts and opinions. Over the years this trio are shown to be honest and truthful.

Second, be aware of all you buy, put your money to work with america. STrategy is to buy only if it is all “Made in the US” and your all staples should come from less than 100 miles radius from where you live.

If by the end of 2009 you have not save money versus 2008 and help your fellow citizens, throw me a note and tell me why you think it did not work.

Prosperous 2009 !!!!

Ponzi Schemes and Other Dreams of Fortune

2008-12-22T12:13:00.001-05:00

Mr. Madoff has brought to the forefront, again, the sad reality on which the present regulatory and investment ethics are grounded, and teh sad acceptance by all.
If you think nothing can be done, I suggest you write a note with your feelings to the Senate Banking Committee.

Express to your elected officials a yawn, yeah or nay, for tough regulatory environment. Either way, let regulators know what you think of the present situation, at this point your opinion counts, amid the flagrant set of scandals they want to hear do people care or it is just another short memory whiohc people will forget.

Let’s give credit to Mr. Madoff.

It was himself who tipped his family and senior employee of the charade. No a single regulatory agency got even a whim of what was cooking, they were to busy covering up the “real” banks schemes.
Do not forget to send a kick in the butt to the SEC for failing to recognize most of the investment and bank practices are no dissimilar to Mr. Madoff scheme. Intentionally, I used the word scheme with pure intent as way to deceive others.
If Mr. Madoff is going to go to jail, thus, the same should occur to the rest of schemers in the banking industry. Those banks receiving billions of dollars in tax payers money are much not different, they too would have collapsed as Mr. Madoff scheme.
Government has failed to investors, citizens and the country. Elected officials continue to fail to stop tax payer’s money use in the cover-ups, from the bank industry too many obscure financial industry pyramid schemes.

The big difference here is that one is operating under the umbrella of regulation and this is only 20% as recognized by the SEC, and 80% is unregulated in many forms of schemes.

Mr. Madoff major case against him is that he ran and unregulated operations, the same were SWAP and many CDOS and off the books operations in most banks and investment houses around the country.

We only have a solution that is to replace in mass all head regulators for failing at their jobs. That must include the Federal Reserve chairman whom was a proponent of such unregulated instruments.
When you fail to discipline you end up with self-destruction and that is not a good path to follow.

We all have dreams of fortune.
It has become so prevalent to scam around investments that it is an ethical stand that is perceived as acceptable and to some extend considered as part of the “process” to the leaders of the country.
The latest research conducted at major universities from where the next generation of leaders will come such as Harvard, Yale and other Ivy League schools shows that we are in ethical trouble.
The latest study shows that most MBA graduates are willing to comprise their ethics for money. When money is so easy to take from others in a questionable and illegal way and the penalty is so lame, the risk-reward ratio is tilted towards the unethical. Who is going to take the task of reeducating and creating tough white collar penalties for people who affect social well been.

How Much Golden Garbage Do We Have?

2008-11-02T21:10:00.000-05:00

So far bank and governments have bail out executive bonuses, golden parachutes, end of the year bonuses, but hey have left holding the bag to around 6,000,000 families.

The problem with the present situation and all the talk about recession and probably depression is that a massive amount of money has been redistributed from most people to a few using a system of wealth transfer that is based in ideological falsehoods.

How much financial garbage needs to be dumped to the always trusting and always unsuspecting citizen.
The math is quiet simple the governments around the planet allowed financial institutions to move out of their books trillions of dollar financial garbage in the form of products that were called investment s to a rate of 32 times the actual asset value of the investment.
So far we have siphoned around $6 trillion to $10 Trillion into banks and other institutions and the stock markets around the planet have eliminated around $32 Trillion of wealth. So how much more is left?
The answer common answer these days is: unknown the amount of leverage left in the system.
I think I have an answer based in the amount of financial garbage “exports” generated as part of the profits reported by Wall Street firms.
The magic number lay between $210 trillion to $250 trillion, so far of that amount 35% is consider to be “toxic” in other words worthless no even to profit as garbage dump, the rest has three components, and have been performing so far. First, is considered prime government debt obligations –here is where you are expected to pay your taxes to pay the bondholders-. Second, corporate operating debt –here is where workers are expected to work for less to pay bondholders. Third, is your mortgage and other consumer debt – here is where you are expected to pay your mortgage and credit cards as you have been doing all you life.
The scary Halloween components of such debt are the toxic part, so far we have only clean up around 20% of the considered toxic. We have around $22 to $25 trillion of garbage to clean up, basically the wealth accumulation of the country for the next 50 years or so as long as we do not get more in debt, in that case the USA will have to default on its debt obligations and more serious global disaster will occur. No a likely event in the next 20 years but a very probable event after that, unless a massive program of government intervention takes place around the planet.
Who in heavens would have ever thought that the right wing of the conservative party under Bush Jr. will make the global economic situation evolve into a massive interventionism that will create the largest socialization of the economy?

It started by the federal government under the auspices of the financial lending lobby, and continue with banking lobby to permit leverage of those assets more than the 12 times that the law had on the books and allowed to increased to 32 times leverage. Today there is not a single government in the planet who is not in the brink of disaster thanks to the control by lobby and the elected official’s lack of independence.

Selling Golden Garbage

2008-11-02T12:41:00.000-05:00

How so many smart Ph.D.s MBAs and government institutions failed to control the amount of financial garbage sold to the public., destroying people's futures and pensions.
The answer is no simple, but the intentions are, the main intention was to create something that will generate commission thus bottom line profits from which those paid for running those outfits will get billions of dollars in pay.
Thus the answer is greed. Because greed is good for those who can have access to the money of people’s pensions assets, offered by the managers of those pensions, who usually are golf buddies of the sellers of financial garbage.
Here where is lies the problem to the potpourri of obsolete controls. When humans are left to run amok the results are obvious, they can range from plain thievery to noble laureates creating untested theories that can be catastrophic for the rest of society.

When Milton Freedman the economist Nobel Laureate in the 1950’s from the school of Chicago economics, started to launch his theories it took its laureate status for schools to start to teach the premises of government regulation was bad, and the market will be self-regulation mechanism will correct themselves. The problem is that both premises cannot work without allowing destruction and there is not will to allow destruction of capital when affect those who are the wealthiest and control 80% of the national assets of a country. Much less when there is no economic security for very large part of the population. Specially, for those who are over their productive life, most people after age above 65 to 70 is a very difficult endeavor to earn a decent living. When the Freidman theories are apply to society at large they fail to account for very large part of the population as variables. Politically they are theories that are easy to manipulate and create thriving fallacies that seem to be of pleasant tone fueling the need for greed.

Today, we are confronted with a massive privatization of risk driven under the Friedman economic theories, has made the speculative market a large part of the economic global structure, this risk pervasiveness is proving toe be pernicious to human lives and pursue of a society well-being at large and individual’s social development.

The solution is quiet simple, as Freidman pointed out let the consequences of greed be dire and stop the government intervention. Politics of convenience have allow Freidman be use when usurpation of wealth participation is convenient but stop the full application of the theory when is not.

It begs the question, why in heavens you want to elect politicians who are constantly working against your economic interests?

Where are we going

2008-06-21T23:20:00.000-04:00

Without speculating much and looking at the sequence of present events, surrounding America’s foreign policy and its stand in the global market of power, one has to worry, seriously, worry about the present and future.

Most western countries have develop a culture that has eliminated ingredients to foster debate and dissent, to support a social format that support a class system that is probing to have more cracks than the present obvious crisis.

America has lost its capacity to foster varied views and debates and has entrenched itself in a very narrow set of views, this views are becoming every passing day more evident out of synch with the needs of most Americans.

There is not debate about the present standing of a America. It is an important piece of conversation to have a national level, for all Americans. Out the radical view it is America’s way or the highway, that was true ten years ago. Now it is no more a feasible and true view of acting, the marines cannot bring more contract to Boeing as they used to, of to Chiquita Banana a new banana republic with a corrupt dictator in charge to exploit the local assets to be brought back to America‘s shareholders and corporate bosses. The Chinese, The Russian, most of the European Union and in some cases the African union, are acting that indicates America power is not absolute anymore and needs to be share in all aspects. So far they have chosen to use the power of capitalism to put the brake on the United States, as the Chinese did with the bond market of the European Union with they currency policy, or Latin America asserting equal trade conditions and renegotiating past (most Latin American leaders agree to qualify those contracts as abusive) corporate contracts to exploit their natural resources.

In the eyes of citizens of the rest of the planet, there is a consistent view of disapproval of America.
It used to be that the populist line was “everybody complaints about America, but all want to come to America” that was true until ten years ago, now what we are seen is a major shift, mostly due to economic equality. As an example, the minimum wage in Portugal is 30% higher than in the US, and in Portugal with the minimum wage a family of two can be above poverty level, and afford a decent way of live, in the US with minimum wage you will need both members of the family to work and still be under pauper conditions. Those are hard facts and the adjustment is spreading to most Americans, and it is not been accepted as a new way of life.
Among leaders of the same people who disapprove of America present standards, there is consensus of approval, but it is for a very different reason.
Each country has a reason to go against the will of their own citizens, the most interesting is the present position of England. The English government continues to be label by Britons as a lap dog of the Americans, but there is more behind scenes that the eye can see.
British ruling class by aligning themselves, what it seems to many blindly, with America, they are actually doing something much more important. British rules are asserting their economic power in the form of a new renaissance of English colonialism, by accumulating political favors. Those favors are getting cash-out in the form of corporate favoritism and American military support to expand corporate penetration in countries in which England can exert very little influence by themselves, but they can assert and obtain trade preferences by using America’s military and in many cases dictator rules under the control of America’s protection. The list of those countries is large but the most important are those that separated from the former Soviet Union.
Other countries like China are using their fast gained economic power to assert preferential market access.

There must be a national debate about how to confront the next years in a world that is changing their economic structures from energy to currency formations and technological development. America’s ruling class is failing to bring American citizens to a higher level of competitive advantage and the price to pay is going to be dear and painful.

Liars, their lies and those who help them propagate

2008-06-02T10:55:00.000-04:00

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20080602&id=8712024

I open my news service I was confronted by headline that strikes “again” as the mulling of reality.
The head line read: “Paulson committed to dollar as reserve currency.”
It is true that the American Secretary of the Treasury is committed to have the dollar as reserve currency. I do not think that if the American Secretary was not committed to our dollar he might be suggesting switching to a stronger currency. This headline is the natural and poor reporting that the Reuters has to offer, but it has a deeper meaning, that is Reuters has choose to be a propaganda outlet to distribute so called news. No one with a straight face will put his or her name in such headline.
Any person will immediately recognize Paulson as the Secretary of the US Treasury and Ex-CEO of Goldman Sachs, also known for missing the mark and outright lying in a consistent basis and misinforming the people that granted his job.
The intent here of the editor clearly was to minimize the meaning of Paulson as Secretary of the Treasury and make the name to be some kind of abstract entity that chooses to make statements of profound meaning and solid.
By now, we know that Paulson is a crony elitist CEO for whom American citizens and well been is a peripheral thought part of the benign neo-fascist movement, that has arose in the past 30 years in the USA. Strong statements but the facts and situations we are living totally fit the definition.
Paulson and the media which provides the propaganda is very similar to any other benign fascist process in history. This is a natural evolution in America, by a large majority more American are more comfortable with pseudo-fascism that they are with a working Democracy. You can call any political ruling system anything you please and loudly defined, but the real measure is the inner workings of the system and how it affects the citizens under the system. Paulson like others whom are promoters of benign fascism are comfortable lying and manipulating the facts.

If you have not heard

2008-04-25T01:09:00.003-04:00

*-If you have not heard we are in a recession.
*-If you have not heard 84% of Americans believe fairy tales are facts.
*-If you have not heard the cost of the cheapest 4 year college degree with room at board and related expenses is at $80K and climbing.
*-If you have not heard we do not have poor in America we have “Low Food Intake Families” in other words families in famine.
*-If you have not heard we have more than 10 million families in low food intake category.
*-If you have not heard the president’s approval ratings is at the lowest ever record.
*-If you have not heard 1 in every 32 Americans will file for bankruptcy in the period 2007-2010.
*-If you have not heard America is the only developed country that does not provide alternatives for Universal medical coverage.
*-If you have not heard the average savings rate is a negative 5%.
*-If you have not heard the Defense Department failed again to pass the most basic auditing of its accounts.
*-If you have not heard the war in Iraq costs $750 Billion and by some accounts can reach up to $2 Trillion by 2010, that is $61,500 per citizen.
*-If you have not heard Communist China owns more US debt than any other country in the planet.
*-If you have not heard Communist China has a total of $1.2 Trillion in US Treasury Debt and they receive $3.000 in interest per American citizen per year.
*-If you have not heard The US is the second to last of developed countries in Health Care development.
*-If you have not heard college graduates will have to pay debt for their schooling for more than 15 years.
*-If you have not heard minimum wage in America now is earned by more workers than ever in history, said, the working poor are the largest growing group.
*-If you have not heard 62% of all tax received by the IRS is spent by the federal government in military or pseudo military expenditures.
*-If you have not heard the federal government has cut spending in research and consumer protection by 92% in the last 15 years.
*-If you have not heard has failed to comply with 67% of its international agreements signed in the past 20 years.
*-If you have not heard, you better start pay to pay real attention.

Professor Elizabeth Warren

2008-04-08T14:49:00.000-04:00

The Author of "The Income Trap" was the Jefferson Lecture in 2007.
The research presents what many knew already, we are in going in the wrong direction, it is something that has occurred in the past 30 years and we hare choosing to ignore at our own peril.
This lecture is a must share item with friends family and no politico should scape from the facts presented.

Here We Are! Now, What?

2008-03-31T22:37:00.002-04:00

If you had read my posts in the past, I had postulated a view stating the present disaster was coming.
The labor department and the USDA, stated that more than 23 Million Americans are in need of Food stamps to be able to have a poor meal.
If you think that famine is not possible in America, you are not seen what is happening around you. It is not OK to be blind for political or philosophical reasons.
When people in Argentina started to die of famine was a disgrace for the country that was in 2003.Here we are 6 years later in America we are setting the seeds of famine. You might negated but you will read, that is not an arrogant forecast it is a reality that is happening around you.

The present government has brought down America supremacy in many areas. The most important one is the economic supremacy, today the financial system is been saved by foreign debt, that is floated in open markets, those markets want their coupons, so this time is different. The lenders will do two things: one ask for the interest the other is to demand the few assets left and a currency that at the present cannot compete globally.

It is sad but it is true.

Liars and the Liars Den

2008-01-18T23:10:00.000-05:00

As I watched Secretary Paulson today describe the present economic crisis, I said to myself, he is not only full of it, but he was lying beyond the acceptable level for the last six months.
What is the difference today versus six months ago.
Simple, six months ago it was a sotto vocce agreement among big bankers that all involved will find ways to pump and dump their mess into the global markets.
What they -by they I meand The Fed, banks and politicos- have encounter is a disproportionate abuse of trust and greed that goes beyong any one acceptable actitude. This is the result of a corrupt set of values that assume that you can foul the people all the time. They might be right but th truth is catching up with them, but most people are not swilling to hold them accountable for thir lack of values.
This recession now is starting to evolve, some think we might find a worse situation going forward.
The facts all indicate that the US has lost its economic supremacy, and its social supremacy, and the only supremacy left is the military supremacy, and to conitunue this supremacy, it must generate enough business, as of today is not generating enough business to sustain the large expenditures to mantain such large amount of dollars need it to keep going in debt to levels that taxes cannot mantain.

Unless policy makers decide tocome up with a major shift in the economic paradigm. For example a shift in energy generation, we are so far behind in the solar and wind generation technology, that by implementing a national R&D ten year plan, to regaign leadeship in technology and energy it will be extremely difficult to compete in standard industry development with China, India and in the twenty years with Africa.

Report: Americans getting poorer

2007-11-16T10:32:00.000-05:00

Report: Americans getting poorer
In a new analysis of after-tax income, the United States ranks 15th among the world's richest countries. But wage comparisons for 'average workers' are tricky.

By Christian Science Monitor
"Comparisons are odious," that is, hateful, according to a popular phrase about seven centuries old. Comparison, however, is one of the tasks assigned to the Organization for Economic Cooperation and Development, an international body of 30 of the richest countries. It tries to compare its members' economic and social data, a difficult, perhaps even odious, job.

Sometime back it broadened statistically (for comparison purposes) the definition of the average workers in its member nations while trying to examine relative tax burdens. The result was "monumental," reckons Jacob Kirkegaard, an economist at the Peterson Institute for International Economics.

The OECD ranked the after-tax income of the average worker in the United States as 15th among its member nations. The richest middle class, if measured in terms of the purchasing power of its income, was in Britain.

Video: Do Americans work hard enough?

That ranking would surprise most Americans, who likely consider their nation the most prosperous in the world.

In one fell swoop, OECD statisticians lowered the estimated income of the average American worker by more than 10% and raised average incomes of other rich nations by as much as 30%, notes Kirkegaard.

It may well be that the comparative U.S. standard of living is slipping. The price of oil has risen more dramatically in the United States than in other nations because of the dollar's large devaluation. The reason for the drop is also statistical. In the past, the OECD had been using a proxy for the middle class based on the "average production worker." This concept focused on full-time workers in the relatively declining manufacturing sector, which tends to be unionized in the United States and better paid on average. The OECD's new measure is based on the "average worker," which captures all sorts of private-sector jobs in mining, utilities, construction, retail, hotels, restaurants, financial services, real estate and other areas.

So this new system ought to provide a fairer comparison.

But 15th place?

Not likely, figures David Grubb, an OECD economist in Paris. He points out that the United States and Canada included in their statistics sent to Paris the wages of nonsupervisory workers -- and not those of higher paid supervisory workers and salaried professionals. When that statistical difference is corrected, the rank of the American middle class would move up from 15th. How far is uncertain.

Continued: Wages vs. income

In the newest OECD Economic Outlook, the average annual wage in the total economy of the United States was $45,563 for 2005. That's exceeded only by Luxembourg, a wealthy banking duchy, with $50,634. Britain, Ireland and Australia are not far behind the United States with incomes above $40,000.

The problem is that this is a measure of total wages, not just the middle class, and it includes the richest Americans whose incomes have risen enormously in recent years. Outside of Hungary, the United States has the most extreme income inequality in the OECD.

Video: Does money buy happiness?
Kirkegaard figures middle- and lower-income Americans are being squeezed by the flood of money going to the superwealthy. Democrats in Congress have the same view, and their tax proposals would shift the tax burden up the income ladder.

Wages vs. income
After the early 1990s, the incomes of "very well-off Americans increased much faster than those of both the middle class and the poor," figures Gary Burtless, an expert at the Brookings Institution in Washington.

For example, top corporate officers got pay increases of 9.5% a year in the 1990s, on top of high levels to start with.

This doesn't mean that Middle America incomes have been entirely flat. An analysis by Terry Fitzgerald, an economist at the Federal Reserve Bank of Minneapolis, concludes that a "broad swath of Middle America experienced notable hourly wage gains" since 1975. In other words, children can still assume they have a better living standard, on average, than their parents did. To reach that conclusion, Fitzgerald had to disentangle a "confusing web of data." Two data series on individual hourly wage rates showed little, or even negative, growth over the past 30 years. But labor income for the entire national economy was shown to have grown 39% in that time span.

To square this apparent contradiction, Fitzgerald applied to the two wage series a broader price index (personal-consumption expenditures), which covers the basket of final goods and services that people consume each year.

The new result: Average hourly earnings rose 10%, rather than declining 4%, from 1975 to 2005. Median hourly wages also rose 20% rather than 12%. Then he factored fringe benefits into the wage calculation, since they have become increasingly expensive and "contribute to workers' well-being."

That combination accounted for 28% of the 39% growth of total labor income.

"This does not contradict the claim that wage inequality increased over this period -- it did," writes Fitzgerald in a bank publication. In other words, the rich are still getting proportionately richer.

This article was reported and written by David R. Francis for The Christian Science Monitor.

The Surprising Ignorant Class

2007-10-15T13:40:00.000-04:00

As of January of 2007, it was obvious for most people who pay a little attention, the stock markets and debt market had something amiss. When bonds fund specializing in collateral debt packages with 6% to 8% yields are paying 30% to its investors, something does not add up, the math does not add up, the risk taken does not add up, and the ratings companies overrated the products in purpose, as we know today.
There is no need of a Ph.D. in economics to realize something is not straight.
To obtain those results superfluous risks were taking and all CEO’s and top management at major leading financial institutions were accomplices and enablers of the big con on the people. To add INRI at this problem the so call self-regulators justified the creation of so called “hybrid investments” for decades every single time we create the golden goose is all the old con of the pyramid and when the pyramid it falls, poor Ponzy schemers look like saints.
After their con gets discovered we realized who was on it, lets start by the Chairman of the federal reserve whom “we have no signs of the housing market affecting the financial markets’ or “our banking institutions are strong” that what they say in June thru August, Now in September after it was clear they could not hide behind their false statements and Congress decided to have hearings int eh subject – can you imagine for congress to arrive to have hearings and the fed is deaf- the federal reserve and the Secretary of the Treasury –ex-Ceo of Goldman Sachs, and part of the big con- continued to deny any contagion from the housing debacle to the financial markets, in the mean time, behind the scenes the Treasury was having frantic meetings with major banks trying to figure out how to resolve this debacle.
If you had picked Trades magazine in April/ May 2007 edition, the front page was about the bonanza that these hedge funds and other hybrid investments did for 25 year olds, show them making hundreds of millions of dollars using “unregulated techniques”. Well, those hundreds of millions have to come from somewhere they do not get made out of thin air.
The sad part of the history is that as any other abusive operation it came from the most vulnerable, mostly from pension funds of municipal workers, teachers, basically anyone with a pension public or private. That is the sad part. In this story there is not much good to tell.

As long as most people pay taxes the government decides so create a supra welfare package to bail out all those heroes of the financial markets. Remember while these shenanigans are going on, kids are going to schools with not heat and bridges are failing in major cities and more than 90 millions Americans are under covered for medical ailments.
One has to wonder if the loss of people’s will to protest has created a new submissive slave society that refuses to evolve.

Who Are The Stock Market Manipulators

2007-04-04T12:41:00.000-04:00

As I wrote in the past, the bias is to keep the wheel of fortune spinning, it does not matter where it falls, the manipulator does not care, the idea is to keep it "all pink all the time."
Pink benefits them and makes those holding stocks feel pink. Their happiness it exposes them to a meager return of annualized 7% including dividends - as reported by Standard and Poor.
All is done using substantial amount of risk. Those risks shifts depending when you have to buy and sell stocks, and how much leverage those pools of pension money need to re float with extra leverage -thus increased risk.
The market operators have become extraordinary good at controlling public opinion and governments around the globe. Manipulators are confident -some say arrogant- to keep demanding the elimination of government guaranteed pensions, thus the risk is shifted to the individuals via “privatized pensions funds”, in other words they get people’s money to buy baseless assets. Thus a de facto transfer wealth towards those who control the access to debt and again sell back their liabilities to the pension pools.

The list of manipulators is short enough that can be compiled in one page.
To have an example how a market can be moved here is a press release on April 4 2007, that might offer some light.

“The indices are trading slightly higher midday as investors weigh more relief in the Middle East, a subsequent decline in oil prices, and upbeat analyst commentary against weak economic data.
The biggest headline today has been Iranian President Ahmadinejad announcing the release of the 15 British naval personnel captured nearly two weeks ago. The news has improved overall sentiment and pushed oil prices lower. However, given yesterday's sizable gains amid a lack of overwhelming news to support such a rally, it hasn't been overly surprising to see some hesitation on the part of buyers.
In fact, if it weren't for a 2.0% surge on the Nasdaq's most influential constituent and the third most heavily-weighted stock on the S&P 500 -- Microsoft (MSFT 28.43 +0.56), the indices would be exhibiting more noticeable consolidation. The Dow component is getting a boost after a Citigroup analyst raised his Q3 earnings estimates.”
In this case a major bank as Citigroup also one of the largest pools of pensions, issues a comments, that can be or not, but because it has under management and receives every day enough pension money to move the stock with a comments, not a fact.
As simplistic as it might sound there are some important mechanics behind issuing opinions with baseless facts.
If Citigroup knows that Microsoft is going to increase earnings, why do they need to tell the planet? Self interest? It can be broken down in two: one is sending a message to all other pension funds saying, we are not selling, for now; second to its fund mangers: reduce your selling of the stock. You might wonder why they do not send an email to all their fund managers, and keep it quiet having asymmetric advantage.
Well, that will have cross some many countries and at least thousands of fund managers that it will be a de facto stock manipulation. Because Microsoft float of share is so large it is easier to send the message in the open saying we are not selling, what about you?
Still this is an opinion that affects millions of people and around five trillion dollars worth of market capitalization.
That how big a comment like this is.

Stocks The Biggest Casino in Human History

2007-04-04T11:42:00.001-04:00

As you hear the news and you might get the feeling that you are getting some part of the truth about the underlining rational why stocks go up or down.

The answer is not simple. It can be summarize in two parts one is the transfer of wealth from the poor towards those with the access to large sums of borrowing, this is a new and extremely sophisticated class warfare, that can be see as the super-wealth taking advantage of the rest of the population. Second, linked to the first is the shift of risk from government responsibilities to the unprepared workers. Pension allocations is the primary driver of stocks prices second is the speculators from hedge funds that work for all major banks.
If you pay attention fear is the number one driver of news. Second is the building on the sense of wealth by using the power of central banks to create interest rates that will re-allocate the value of assets, as the wealth effect create by home value increases, with no underlining reason other than cheap borrowing costs. The dichotomy of fear and wealth creates uncertainty and the need for personal assessment of savings and pension risks.
Imagine if two and half billion people will give you for the next thirty years the present average of $290 a year and you can keep at least .5% of that money as custodian. No a bad deal, and it gets better. It does not matter what happen to the actual returns and performance of that money your cut stays the same.

Clearly, this “all is good” creates a bias and that is to keep the money flowing and people believing the downside needs to keep growing like a pyramid scheme you need money flowing in to absorb the all those fees accumulated over the movement of the money from fund a to b and the rotation keeps the grease and those manager multimillion dollar salaries alive. If you wonder why all the financial news are biased in the optimistic the reason is simple they want your money.
If you think about why stocks should be sold above any other asset, well that is the dirty secret, they do not need, but the are enough suckers to keep the game alive, and the use of the free capital rhetoric is not other than taking the pension of other people and place it into stocks does not matter if those stocks any intrinsic worth.

I think that it will be interesting to address some of the fallacies and talking points that the talking heads use when they talk about stocks and other risk investments.

Part of the same process is the boom and boost process that occurs every four or five years in the prices of stocks and other assets as real estate. I leave that for a future commentary.

The big question is what one should do to have a more stable system. It is not hat easy anymore, but there are action that you can take and one is to find people in your community that care about their future and are concern about the risk that the present system represents.

Can the same Occur in Other Countries!

2007-03-19T11:58:00.000-04:00

Calpers Pressed to Drop Iran `Terrorism' Investments
By Alison Fitzgerald
March 19 (Bloomberg) -- California lawmakers are considering legislation that would force state pension funds to sell billions of dollars of shares in companies doing business with Iran.
The California Public Employees' Retirement System, the largest U.S. pension fund, and the state teachers' fund would have to unload shares in companies including BNP Paribas of France, Siemens AG of Germany and Eni SpA of Italy.
``Who's funding terrorism? It sure as hell shouldn't be our public employees,'' said Joel Anderson, a Republican assemblyman from El Cajon who introduced the measure. ``When you're looking at the war on terrorists, this is one of the best weapons we have -- just defunding them.'' Anderson estimated his legislation would affect $24 billion worth of investments.
California, which last year directed state pension funds to drop investments in Sudan, is among a growing number of U.S. states, from Texas to Maryland to New Jersey, moving to embrace so-called ``terror-free'' investing.
The movement, which includes federal legislation, against nations the State Department says sponsor terrorism, may put public pension managers in a front-line role in a debate over international policy. Some critics say the effort is misguided and would hurt small investors.
Calpers and the California State Teachers' Retirement System control $388 billion in investments. The legislation would affect overseas-based companies, since U.S. businesses are already mostly barred from trading with the countries on the State Department list: Iran, Sudan, Cuba, North Korea and Syria.
Federal Action
U.S. Congresswoman Ileana Ros-Lehtinen of Florida, the senior Republican on the House Foreign Affairs Committee, introduced a measure last week that would require U.S. government pension funds to divest stocks of companies that invested more than $20 million in Iran's energy industry.
``This measure will serve as one more critical instrument to deny the Iranian regime the economic resources required to pursue its dangerous activities,'' she said in a statement.
William Reinsch, president of a trade group representing 300 multinational corporations, said the legislation would work against U.S. interests.
``We're going to destroy our relations with the very countries we need in a united front against Iran,'' said Reinsch of the Washington-based National Foreign Trade Council.
The council won a court challenge last month, overturning an Illinois law aimed at companies doing business in Sudan.
Heightening Tension
If public funds are forced to divest, he said, ``the real losers would be a bunch of retired policemen and firefighters.'' That's because pensions would have to sell international mutual funds, which have had high returns, he said.
The Bush administration has ratcheted up its criticism of Iran's government, accusing it of supplying insurgents in Iraq with weapons to kill U.S. troops.
Supporters of Israel, which has been the target of threats by Iranian President Mahmoud Ahmadinejad, are backing the move to pressure Iran.
The American Israel Public Affairs Committee, the main U.S. pro-Israel lobbying group, will support divestment efforts against Iran in 10 states this year, Howard Kohr, executive director of the Washington-based group, said in a March 12 speech. Divestment ``would have a crippling effect on Iran's economy,'' Kohr said.
Shareholder Activism
A campaign to force companies to divest may affect ``a significant number of the world's largest companies,'' said Roger Robinson, who heads a company that tracks investing in terrorist nations. Robinson, a National Security Council aide in the Reagan administration, said he has no position on the California bill.
Edwina Frawley, a spokeswoman for Paris-based BNP Paribas, declined to answer questions about Iran. She said the company complies with ``all current ethical standards and regulations.'' Munich-based Siemens didn't respond to an e-mail request for comment, and a spokeswoman for Rome-based Eni declined to comment.
The California legislation puts Calpers, a leading proponent of good corporate-governance practices, in the position of being criticized itself.
``They have historically prided themselves on being ahead of the curve on issues like this,'' said Reinsch of the foreign trade council. ``One would think they would be ahead on this one.''
No Direct Investment
Calpers spokesman Clark McKinley said the fund doesn't invest directly in Iran, and he couldn't verify how much of its holdings might be affected by Anderson's measure. The Calpers board hasn't yet reviewed the legislation, he said.
The teachers' fund, known as Calstrs, hasn't taken a position either, said spokeswoman Brenna Neuharth. Calstrs already screens investments for geopolitical risk, including human rights abuses and money laundering, Neuharth said.
When the California assembly approved divesting from Sudan last year, Calpers said it wouldn't invest in nine companies. Calstrs sold stock in a Russian and a Chinese oil company.
The U.S. Securities and Exchange Commission last year asked Ford Motor Co., Marathon Oil Corp. and six other companies to explain their activities in countries on the terrorism list.
The SEC asked Ford in a July 5 letter whether the company's ``reputation and share value'' were being compromised by its activities in Syria, Iran and Sudan. Ford said its business was limited and lawful.
Missouri, Georgia
Missouri has adopted a policy to require two state funds to divest from companies that do business with Iran, Sudan, North Korea and Syria. Georgia is also considering such legislation, and a bill will be introduced in Ohio next week.
Missouri State Treasurer Sarah Steelman said she made the decision after learning the state was using BNP Paribas, France's biggest bank, to place its overnight money. It had been named as one of several European banks that lent $1 billion to Iran.
``We kicked them off our broker-dealer list and put in place policies that said we won't do business with companies that do business in Iran,'' she said.
In January, Steelman sent a letter to every state treasurer urging them to consider similar policies. ``This investment strategy provides an opportunity for many of us far from the front lines of the war on terrorism to do our part,'' she wrote.
To contact the reporter on this story: Alison Fitzgerald in Washington at Afitzgerald2@bloomberg.net

Risk and Standard Deviations of Risk

2007-03-16T15:46:00.000-04:00

The latest home mortgage worries have a very dangerous component to the stability of debt markets, that is the underlining risk regrading also commonly known as CDO's.
The algorithms that take 70% of a bundle of junk bonds mixed with 20% of AAA bonds or debt and 10% of AA and wiht a few stirrings of magic the whole package turns into AAA.
That is how big is the mortgage problem. I has touched from good to bad and worse stopping over all over the derivatives of merges and adquisitions to car financing, but lucky for us, the Chiense and Japanese pension system are the ones holding the bag. So you will be able to laugh out loud while you life under a 110% financed home, a 100% finanaced luxury car and maybe if you are lucky enough like The Donald 400% finanaced live style while claiming billions in assets.
(I personally know it. I worked for the Donald).

The dollar just hit and all time low against all major currencies, so here you haveit, a strong dollar policy, it means a real weak dollar, so every time you hear "we are commited to a strong dollar policy" it does not mean that "they" are doing anything to keep the dollar strong, is like been committed to rain in Las Vegas, it never rains. so spend five minutes and see what your dollar can buy around the planet, that might give you some food for thought why most people need to buy at Wal-Mart and not at Whole Foods or Carrefour.

Shameless Defiants

2007-02-21T13:03:00.001-05:00

You might think the increase in news about ethics-related corporate wrongdoing will make some faces red -corporate leaders and politicos- hot. No luck.

Corporatists have found a new who-cares attitude, their shameless shenanigans can continue without much damage to their personal reputation or the corporate image. Sadly, they are right.
Most shareowners have decided irresponsibility is OK. Thus this new found arrogance is thriving in the corporate boards, and corporate directors find themselves better than ever in saint status.

But who actually support these un-ethical low-lifers.
The Answer can be found here:
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&Date=20070221&ID=6514348
These guys in teh article are only a couple of many hundreds that are supporting the whole mechanics of corrupting the savings of most citizens.
They follow a sacrosanct litany of “super-hero of the moneyed” to favor the pilfering of the average Joe savings thru abusive commissions on pensions and funds -money- management.
If you think that in a democracy you elect leaders to protect you from white glove robbers, tough luck, politicos have become part of the takers, you might call corrupted, and all this, is proven that system so much laud is becoming irreversely corrupted.
Lesson: Do not trust your shadows.

Your real tax rate: 40% or 46%

2007-02-21T08:37:00.000-05:00

http://articles.moneycentral.msn.com/Taxes/Advice/YourRealTaxRate40.aspx
Income taxes, sales taxes, property taxes, Social Security and Medicare taxes, 'sin' taxes and the rest add up to a virtual flat tax nationwide.
By Scott Burns
We have a national flat tax, albeit one with bumps and potholes.
The fact that the political parties won't acknowledge this is one reason they are doing a disservice to the voting public.
Instead, both parties have a vested interest in the theatrical possibilities created by the idea of graduated tax rates. Notice that I said "the idea of" graduated tax rates. That should not be confused with reality.
Democrats argue that taxes on the rich should be raised because others need the money. This wins votes from the legions of voters who aren't rich.
Republicans argue, with great piety, that high taxes crush incentives and should be reduced, and that only then will the American way see a new dawn.
Politicians talk this way because they generally talk about only one tax: the federal income tax, which offers graduated rates from 10% to 35%.
Politicians rarely talk about what real people experience: the true maze of taxes and government benefits. If someone put them all together, we could see what our actual tax burden was. We could see who pays at the highest or lowest rates. Discussions of tax policy wouldn't be a waste of time.
Well, two researchers did it.
In a study for the National Bureau of Economic Research, Boston University economists Laurence J. Kotlikoff and David Rapson have found that our all-in marginal tax rate is 40%, give or take a bit. Yes, you read that right: 40%.
Most workers will pay about that much on each dollar of income when all taxes -- federal and state income taxes, sales taxes, taxes for benefit programs, etc. -- are considered.
As a consequence, a 30-year-old couple earning only $20,000 a year has a marginal tax rate of 42.5%, while a 45-year-old couple earning $500,000 pays at 43.2%. There are some exceptions: A 30-year-old couple earning $50,000 a year, for instance, pays 24.4%, and a 60-year-old couple making $150,000 a year faces a tax rate of 47.7%.
The average marginal tax rate on incomes between $20,000 and $500,000 is 40.3%, the median tax rate is 41.8%, and the standard deviation of all of those rates is 5.3 percentage points. Basically, most of us pay about 40%, plus or minus 5.3 percentage points.
Video: Don't worry about an audit
That's not a big range, particularly when you notice that it covers an income rise of 2,500%.
So I have a modest proposal: Ask your senators or representative if they have a clue about this. If they don’t, regardless of party, they shouldn't be in office. Vote accordingly.

Best'O Greed Part 2

2006-12-23T03:02:00.000-05:00

And a big "Boo-Yah" to you, too
Q: I'm trying to follow Jim Cramer and Mad Money to make big money in stocks. Will it work?
A: Fans of Jim Cramer and his Mad Money stock-picking television show on CNBC call in excited about stocks, usually starting their questions with Cramer's signature "boo-yah!" yell.

For an hour, Cramer plays up his hyperactive personality, barking out buy and sell recommendations on dozens of stocks. He is the evangelist of stock pickers and market timers. Fans see him as a fountainhead of information on gems other investors, traders, fund managers and analysts have somehow overlooked.

Is Cramer really a stock-picking genius?

When I asked Cramer for his picks, CNBC, after considerable prodding, provided a spreadsheet with Cramer's picks from two of the five segments of each show, excluding the lightning round, in which he answers questions from viewers.

Based on this incomplete list, Cramer's picks have gained 16.2%, on average, from the show's launch March 14, 2005, through March 27, 2006. That makes the Standard & Poor's 500 gain of 7.3% look pretty sad. Cramer says he's made his viewers lots of money. "I'm very proud of my record," he says.

I provided CNBC's list to third-party research firm Investars.com, which said, based on the incomplete list provided by CNBC, that the S&P 500 stocks picked by Cramer have performed much better than the S&P 500 at large and his picks of stocks in the small-cap Russell 2000 index have outperformed that index. Investars also found that small-cap stocks recommended by Cramer soar after being mentioned on Mad Money.

But before you get "Boo-Yah" tattooed on your forearm, let's take a closer look:

• Tracking the right benchmark. The median market value of the 606 stocks in the Cramer list was $6.8 billion, according to S&P's Capital IQ. Morningstar considers a portfolio with a median market value between $1.6 billion and $9.3 billion to be midcap. So it doesn't really make sense to compare Cramer's performance to the S&P 500, which is heavily weighted toward large-cap stocks.

What if we compare Cramer's results to a midcap index fund such as the iShares S&P MidCap 400 index exchange-traded fund (IJH)? Had you ignored Cramer and simply bought IJH on March 14, 2005 and held it until March 27, 2006, you would have been up 16.4%. That's dead even with Cramer's performance.

But it's not quite fair to compare Cramer to the IJH either. His picks include large- cap stocks and some foreign plays. So I asked IFA.com to calculate the return of the basket of index mutual funds it recommends for risk-tolerant, results hungry "mad money" type investors. The return of this portfolio, after fees, was 21.8%, trouncing Cramer's return. You can view the IFA portfolio here.

Cramer himself has described how hard it is to beat index funds. "After a lifetime of picking stocks, I have to admit that (Vanguard Group founder John) Bogle's arguments in favor of the index fund have me thinking of joining him rather than trying to beat him," Cramer said on the dust jacket of Common Sense on Mutual Funds, Bogle's 1999 book.

• Time. Don't forget the cost of the time it take to follow Cramer. IFA.com's President Mark Hebner breaks it down this way: Imagine having $100,000 to invest in a ten-stock portfolio of Cramer's stock picks. Cramer recommends spending at least an hour a week researching each stock. That translates to more than 500 hours of homework a year. Even if all that work pays off and you beat the market by two percentage points, that's a return of $2,000 or $4 an hour. "Was it really worth it?" Hebner asks.

Time also tends to be cruel to stock pickers. The chances of a money manager outperforming the market in the long term, especially after fees and other costs, is small, says Bogle, whose Vanguard Group popularized index mutual funds and who is acquainted with Cramer. "I wish him well, but I'm not investing with him," Bogle says.

• Fees. Had you followed Cramer's advice, you would have had to buy more than 606 stocks, according to the CNBC data. Even if you use an online broker that charges just $5 a trade, you would have spent $3,030 in commissions.

In an e-mail, Cramer wrote: "Transaction costs are always a factor whether they are done within a mutual fund, a hedge fund or by an individual himself. I believe strongly that my figures clearly beat almost every relevant benchmark by a mile and that even if you put in transaction costs you would be well ahead of the game."

To be fair to Cramer, one year of performance is not adequate to judge a stock picker. And CNBC spokesman Kevin Goldman wrote in an e-mail to USA TODAY: "It is overly simplistic to measure year-to-year comparisons. Cramer can change his mind on a stock depending on a number of factors. He says each investor should do his or her own homework about a stock."

What's the lesson here? Be skeptical anytime someone claims to have the ability to predict short-term movements in stocks or the stock market and make them prove their returns to you. Almost always, the best thing to do is plug your ears and run away, fast.

Best Of Breed Part 1

2006-12-23T02:58:00.000-05:00

Great new indexing tool just needs a better wrapper
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- Titles and headlines sell stuff. In fact, my old marketing
professor told us that they are 88% of the reason why people read an advertisement or a column or pick
up a book. You gotta "GRAB!" your reader or customer. Make them stop in their tracks.
No grabber? No stop? No readers. No sale! Well, I just got a review copy of a new book by financial
adviser Mark T. Hebner, a colorful high-graphics beauty, loaded with fabulous charts, tables, data and
research. But the title is "Index Funds." I set it aside.
"Freakonomics!" Now that title's a show-stopper! The new "Bogleheads Guide to Investing!" Gotcha! A
must-read! But plain-vanilla "Index Funds?" Dull. Boring. A snoozer. So stick with me and read: For this
review I'm retitling Hebner's book "The Freakoindex Guide to Winning Portfolios!"
Folks, there's actually a big connection between the two: Freakonomic research says "experts" have an
"informational advantage" and use it against their clients. Which sure hints why index funds will never be
more popular than a mere 8% of the $8 trillion fund world, even though indexing consistently beats
actively managed funds. Index funds will always be the minority because the "experts" will invent jazzier
titles and headlines to sell nonindex funds that make more money for the "experts!"
So the media has a responsibility to get the indexing message out. And I believe Hebner's giving
American investors a great resource. Yet many will miss it because it lacks a jazzy "88%" title. And it's
pricey. But we've got a big surprise for you. After we review it we're going to show you how to get it for
free! So here's our summary of what we call "The Freakoindex Guide to Winning Portfolios:"
Step 1: Passive investors win
The game's fixed. Active investors try to pick the winners from among thousands of stocks and funds.
But prices are news-driven. And news is random and unpredictable. Worse yet, "experts" like Wall Street
brokers, portfolio managers and traders have an "informational advantage" that makes it impossible for
Main Street to beat them. They take advantage of naïve investors blindly throwing money at news tips.
Step 2: Nobel economists win
Hebner has the best survey I've seen of research by Nobel Prize-winning economists and other
academics. Unlike Wall Street plugging an IPO client or some brokers hustling commissions, they're
objective and unbiased. All this research proves conclusively that indexing and simple asset allocation
are the best way to win.
Step 3: Stock pickers lose
Wall Street brags about the stock-picking talents of active managers. Yet research says only 3% of them
beat their benchmark, and it's mostly luck. Stock-picking success is random. And today's winners are
rarely on top tomorrow.
Step 4: Market timers lose
Market timing is a fool's game. Over a 10-year period, 88% of your returns will come from a brief 40 up
days. Nobody can predict which 40 days. An academic study of 15,000 predictions by 237 timers
concluded: There's "no evidence that [market-timing] newsletters can time the market."
Step 5: Picking managers loses
Forget about picking next year's hot managers. You can't. The S&P 500 beat 97% of mutual fund
managers for a 10-year period ending October 2004. In two 30-year studies, the S&P 500 outperformed
97% and 94% of the managers. And only 12% of the top-100 managers repeated.
Step 6: Style drifters lose
Active managers love playing with your money, churning portfolios. They're gambling, it's fun. Their
average salary is more than $400,000 annually, even when they lose your money. One study proves that
40% of all funds drift from their stated objective. Reported holdings are months old, so you never really
know what's in any fund, or in your portfolio!
Step 7: Silent partners win
Before you make a dime invisible partners skim money off the top! They're silent because the SEC
doesn't require funds to disclose details about who's skimming: expenses, commissions, fees and taxes.
In one 15-year study of taxable accounts, actively managed funds returned 50% of the gross, while index
funds returned 85% to investors.
Step 8: Risk blindness
The sad truth is, most American investors don't know that what they're doing amounts to gambling. They
chase short-term returns, follow hot tips, never really understanding the impact that timing and risk-taking
have on their after-tax returns.
Step 9: History exposes
Managers come and go. Performance drifts unpredictably over the short term. Indexes are your only
reliable source going back 80 years. Raw indexes, not actively managed funds, are the best measure of
long-term portfolio risks.
Step 10: Risk capacity
What's your risk profile? Your risk "capacity" is a combination of five factors: Personal tolerance for risk
(anxiety level!), your investment IQ, net worth, income and savings rate, plus time to retirement or any
special withdrawal needs. This book has a ton of information on how to determine your risk profile!
Step 11: Risk exposure
Over 90% of a portfolio's returns are a function of asset allocation and not the specific funds, stocks and
bonds. Active management has a negative effect on returns, draining off a third or more. Over a 50-year
period, studies show that a diversified index portfolio will outperform the S&P 500.
Step 12: Invest and relax
Hebner says index and relax: The best way to maximize your returns is to avoid active trading, market
timing and actively managed funds. Create and build a portfolio of index funds that works for your unique
risk profile. Set it and forget it. Buy quality, rebalance periodically. And relax.
Now the best news of all: Hebner's hard copy is a museum piece, a work of art that ought to be on your
coffee table or framed on a wall. But if you think it's a bit pricey at $29.99, get it online free, right now!
See the virtual book.
You can return to this fabulous resource any time you need research, data (yes, Hebner's team does
update statistics regularily) and inspiration about investing, asset allocation and portfolio management.
So get it: "The Freakoindex Guide to Successful Portfolios" is perfect for America's 94 million Main Street
investors! Even if you only call it "Index Funds."

The Phelps Factor

2006-12-15T13:24:00.000-05:00

Joseph E. Stiglitz

(NOBLE PRICE OF ECONOMICS)

On December 10, Edmund Phelps, my colleague at Columbia University, will receive the Nobel Prize in economics for 2006. The award was long overdue. While the Nobel Prize committee cited his contributions to macroeconomics, Phelps has made contributions in many areas, including the theory of growth and technological change, optimal taxation, and social justice.

Phelps’ key observation in macroeconomics was that the relationship between inflation and unemployment is affected by expectations, and since expectations themselves are endogenous – they change over time – so, too, will the relationship between unemployment and inflation. If a government attempts to push the unemployment rate too low, inflation will increase, and so, too, will inflationary expectations.

This insight holds two possible policy implications. Some policymakers have concluded from Phelps’ analysis that the unemployment rate cannot be lowered permanently without ever-increasing levels of inflation. Thus, monetary authorities should simply focus on price stability by targeting the rate of unemployment at which inflation does not increase, referred to as the “non-accelerating inflation rate of unemployment” (NAIRU).

But the NAIRU is not immutable. The correct implication, which Phelps repeatedly emphasized, is that governments can implement a variety of policies, particularly structural policies, to allow the economy to operate at a lower level of unemployment.

Policies that focus exclusively on inflation are misguided for several other reasons. As a practical matter, even controlling for expectations (as Phelps’ work insists that we do), the relationship between unemployment and inflation is highly unstable. It is virtually impossible to discern the relationship from the data except in a few isolated periods.

Changes in education levels, unionization, and productivity are part of the explanation for this instability. But, whatever the reason, policymakers face considerable uncertainty about the level of NAIRU. Thus, they still face a trade-off between pushing unemployment too low, and setting off an episode of inflation, and not pushing hard enough, resulting in an unnecessary waste of economic resources.

How one views these risks depends on the costs of undoing mistakes, which in turn depends on other properties of the inflation-unemployment relationship that Phelps’ analysis did not address. The weight of evidence indicates that the cost of undoing the mistake of pushing unemployment down too far is itself very low, at least for countries like the US, where the relationship has been carefully studied. In this view, the Federal Reserve should aggressively pursue low unemployment, until it is shown that inflation is rising.

By contrast, inflation “hawks” argue that inflation must be attacked preemptively. While most central banks are inflation hawks, this stance is a matter of religion, not economic science. There is simply little or no empirical evidence that inflation, at the low to moderate rates that have prevailed in recent decades, has any significant harmful real effects on output, employment, growth, or the distribution of income. Nor is there evidence that inflation, should it increase slightly, cannot be reversed at a relatively minor cost – comparable to the benefits of additional employment and growth enjoyed in the excessive expansion of the economy that led to the increase in inflation.

In the early 1990’s, the Fed, and many others, thought that the NAIRU was around 6%-6.2%. Based on changes in the economy, I and the staff that worked with me on President Bill Clinton’s Council of Economic Advisers argued that the NAIRU was considerably lower. We were right. Unemployment fell to 3.8% without any surge in inflation.

This matters because, as the great economist Arthur Okun argued, reducing unemployment by two percentage points would increase output by 2%-6%, or $0.5-1.5 trillion dollars in the case of America. Even for a rich country, that is a lot of money. It could be used to put America’s social security system on a stable footing for the next 75-100 years. It could even pay for a substantial share of the cost for a war like that in Iraq!

Phelps’ work helped us to understand the complexity of the relationship between inflation and unemployment, and the important role that expectations can play in that relationship. But it is a misuse of that analysis to conclude that nothing can be done about unemployment, or that monetary authorities should focus exclusively on inflation.

That view belongs to a school of modern macroeconomics that assumes rational expectations and perfectly functioning markets. In other words, individuals – usually assumed to be identical – fully use all available information to forecast the future in an environment of perfect competition, no capital market shortcomings, and full insurance of all risks. Not only are these assumptions absurd, but so are the conclusions: there is no involuntary unemployment, markets are fully efficient, and redistribution has no real consequence. But, while government policies, according to this school, are ineffective, that matters little. Because markets are always efficient, there is no need for government intervention. More perniciously, many supporters of this view, when confronted with the reality of unemployment, argue that it arises only because of government-imposed rigidities and trade unions. In their “ideal” world without either, there would, they claim, be no unemployment.

For more than three decades, Phelps has shown that there is an alternative approach. He has tried to understand what we can do to lower unemployment and increase the well-being of those at the bottom. But he has also striven to understand what makes capitalist economies dynamic, what lies behind the entrepreneurial spirit, and what we can do to promote it further. Phelps’ economics remains one of action, not resignation.

Joseph Stiglitz is a Nobel laureate in economics. His latest book is Making Globalization Work.

4 ways you can fight greedy CEOs

2006-12-13T16:00:00.000-05:00

( Michael Brush is doing for the individual shareholder what the SEC should be doing.)

Don't just fume about grossly overpaid execs and other corporate scams. You can make a concrete difference. Here are the people to contact and steps to take to get reforms under way.

By Michael Brush
The boss has always made a bundle. In 1940, U.S. corporations paid their chief executives 48 times as much as the average worker, on average. No small gap.

But that doesn't come close to today's great pay divide. CEOs earned $11.3 million on average last year, a 27% increase from the prior year and a huge 262 times more than the average worker. Barry Diller, the chairman and chief executive of the IAC/InterActiveCorp (IACI, news, msgs), took home $295 million last year, including pay, bonus and options cashed in, according to the Corporate Library.

What's worse? The CEOs don't seem to see anything wrong with that type of compensation. Diller recently said critics of his pay and similar packages are "birdbrains."

The momentum of CEO pay, obviously, isn't headed in the right direction. But you don't have to be a Democrat to appreciate that the party about to take power may give the little guy a bit more say in how much the big guy gets paid.

In a minute, I'll give you a set of four steps you can take to help get executive compensation back under control. First, another quick look at why such action is needed.

According to the Corporate Library, a corporate governance research firm, here's what the five highest-paid CEOs made last year:

1. IAC/InterActiveCorp's Diller got $295 million.

2. Capital One Financial (COF, news, msgs) CEO Richard Fairbank got $249 million by cashing in options.

3. Nabors Industries (NBR, news, msgs) CEO Eugene Isenberg got $203 million in pay, bonus, cashed-in options and restricted stock.

4. Yahoo (YHOO, news, msgs) CEO Terry Semel pocketed $183 million in pay, cashed-in options and restricted stock.

5. KB Home (KBH, news, msgs) chief Bruce Karaz got $156 million in pay, bonus, cashed-in options, restricted stock and incentive grants.

If these kinds of giveaways to CEOs tick you off, you don't have to just sit and fume about it.

Congress, regulators and companies themselves are considering a slate of reforms that would go a long way to correct the problem -- and you can take several concrete steps to support these changes.

Here's a list of whom to contact (click a name to send an e-mail):

SEC Chairman Christopher Cox's office. (Click the name to send an e-mail to Cox.)

Your representatives in the U.S. House and Senate.

Rep. Barney Frank, D-Mass., who will chair the House Committee on Financial Services, and Sen. Chris Dodd, D-Conn., who will head up the Senate Committee on Banking, Housing and Urban Affairs next year. (Please, e-mail MSN Money a copy of whatever you send to any member of Congress.)

And here's my quick list of reforms that you can try and do something about:

Boot the directors
The real culprits behind enormous salary increases for CEOs are boards that approve these egregious pay packages in the first place. So it's important to vote against board members on pay committees that let these bloated pay packages through. "Unless you boot off directors who agree to these outrageous pay plans, there is no way to stop it," says Nell Minow of the Corporate Library.

"Don't just discipline board members, change them," says Patrick McGurn, special counsel for Institutional Shareholder Services. Shareholders may soon get more power to do so -- but you'll need to support reform efforts aimed at getting greater "proxy access" for shareholders, as the reform effort is called.

The Securities and Exchange Commission recently sided with a company that rejected a shareholder proposal which would have given shareholders holding more than 3% of its shares the right to nominate board candidates. But a federal court has told the SEC to reconsider its ruling, which may give shareholders more say in policing boards that play too loose with corporate checkbooks.

Get a clearer view
What you can do -- Step #1: Contact the SEC and tell them you support the rights of shareholders to use the corporate proxy machine to propose changes in the rules on how board members are elected. "This should be on top of the list," says McGurn. Tell your representatives in Congress, too, since they have the power to influence SEC policy. The case involves American International Group (AIG, news, msgs) and the American Federation of State, County and Municipal Employees (AFSCME), which wants the bylaws change.

The good news is that it will be much easier to see how much executives make come springtime, when companies file proxy materials -- the documents containing details of executive pay.

The SEC recently adopted rules calling for better clarity, and pay experts are expecting some big surprises. "That in and of itself will have a chilling effect," says Minow, "although these people seem incapable of embarrassment."

But there's still room for improvement in disclosure. One shortcoming is that the SEC doesn't require companies to reveal the targets (such as company profits, revenues, etc.) executives have to hit to receive performance-based pay. This is a problem, since options often account for the lion's share of bloated pay packages.

Outgoing UnitedHealth Group (UNH, news, msgs) CEO William McGuire racked up an awesome $1.6 billion worth of exercisable options and $174.9 million out-of-the-money options during his tenure at the helm. That's on top of a salary, bonus and "other pay" package worth $10.6 million in 2005 alone, according to the Corporate Library.

Unmask the consultants
What you can do -- Step #2: Tell the regulators and your representatives that you want more detail about what targets CEOs have to hit to increase the size of their paychecks.

Companies hire compensation consultants to help determine how much to pay their executives. The question is whether that advice is objective. For instance, those same consultants try to get business from the companies to advise on their employees' retirement plans. If they give the CEO a healthy pay raise, does that help them land or keep other consulting jobs?

What you can do -- Step #3: Ask the SEC and your representatives to require disclosure of all relationships between compensation consultants and the companies whose executive pay packages they design.

Fantasy shareholding
If you hold just $2,000 worth of a company's stock for over a year, you have the right to submit votes to fellow shareholders. "For $2,000 you get a seat at the table with the board of directors and the CEO," says McGurn. "It's like fantasy baseball."

You can't force companies to ask shareholders to vote on anything (see Step #1). One area that's strictly off limits: votes that would constrain management on day-to-day business decisions. (That's fair enough. You wouldn't want shareholders micromanaging companies.)

But you can get proposals that ask shareholders to vote on several changes that can improve the quality of boards and help reign in executive pay, says Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

For several years, for example, Bristol-Myers Squibb (BMY, news, msgs) shareholder Dundas Flaherty filed proposals that asked shareholders if they wanted the office of chairman and chief executive to be split. Having the same person in both roles, some critics say, compromises board independence. About 40% of shareholders approved the proposal each time, says Cornish Hitchcock, a Washington D.C.-based attorney who helped Flaherty. In 2005, Bristol-Myers Squibb agreed to split the jobs.

What you can do -- Step # 4: As a shareholder, ask companies to put pay-related reforms to a vote -- or at least be sure to look for pay-related proposals from other activist shareholders and vote "yes."

For example, watch for proposals asking you to vote against excessive golden parachutes, excessive pay packages and the compensation committee reports that justify them, says Hitchcock, who also advises Amalgamated Bank's LongView index funds on how to use shareholder proposals.

Elson says proposals that require majority voting for directors are crucial. This change means that directors have to get a majority of all votes cast to win -- not just the largest number among several candidates. This makes it harder for boards and managers to get a rubber stamp on their favored candidates when the broader shareholder base is apathetic.

There are, of course, other steps to take. And anytime you go head to head with a corporation, it can be an uphill fight. But with the political winds swinging toward shareholders' favor, now's the time to give it a try.

Fear Mongering and Population Numbers

2006-12-08T13:07:00.000-05:00

The graph below is from the Department of Labor & represents the number of Americans working from December 1948 until November 2006.
You will see the graph indicates a much larger segment of the population in the working force.
The consistent media in 55% of the working population until the Reagan revolution, in which salaries starting to feel the lack of purchasing power declining a 32% by 1986. At that point, is a clear that an increment coming from the women segment to integrate in the labor force at a much lower pay ratio.
The last ten years employment is running at 64% of the population that is a 17% increase in the labor force since 1948.
The next issue that affect employment ratios is Social Security, with a larger working population and increasingly lower pay outs from Social security it is clear that for the next 60 years, at least that is the real data at hand, Social Security has more contributors per person today that it had in 1985 with lower pay outs.
I think the present debate about teh solvency of social security has to do more with hos the contributions should be impose, managed and collected than the solvency of the Social Security system.
The proponent of Social Insecurity have a lot to gain from it but fear mongering is not a decent tool to change a system that supports our elders peace.

Staying Safe from Financial Predators

2006-11-16T11:53:00.000-05:00

by Robert Kiyosaki
Tuesday, November 14, 2006
Ken Lay, the disgraced former chairman of Enron, found a way to escape his legal problems: He died after being convicted of fraud and conspiracy charges. His onetime CEO and partner in crime, Jeffrey Skilling, wasn't so "lucky": He was sentenced to 24 years in prison last month.

I'm not gleeful about Lay's death or Skilling's sentencing, partly because I'm afraid true justice hasn't been carried out. Similarly, when Martha Stewart was convicted and went to prison in 2004, I was shocked. Not because I condone insider trading or attempting to cover up illicit activities, but because she was hardly the criminal the justice system should have been after.

Between 1995 and 2005, literally trillions of investor dollars were stolen from ordinary people with hopes for a secure retirement or a college education for their kids.

Wealth Instead of Jail Time
Many of the crooks responsible for such acts have never been caught and some remain in business. In the same vein, while the savings of average people across the country were being wiped out, the New York Stock Exchange "inadvertently" awarded CEO Dick Grasso a $187 million dollars in compensation.

While Martha was baking cookies in jail, Grasso was richly rewarded for presiding over one of the most corrupt eras of the stock exchange. Was the $187 million Grasso's sales commission for the $7 to $9 trillion the "little" investors lost?

Thank goodness Elliot Spitzer, the New York State attorney general, had the guts to take him to court and win. It looks like Grasso may have to pay back $100 million, but he won't do any time behind bars.

This raises all sorts of questions. Who are the guys who awarded Dick Grasso so much money in the first place? Is someone going after them? Do you still want to trust your money to these people? Does Martha doing time make you feel more confident? Is Jeff Skilling the last crook?

Out of Sight, Out of Mind
It is true that people, especially investors, tend to have short memories. As soon as a market heats up, greed takes over and caution is forgotten.

For instance, the real estate market hit bottom in 1992. Property prices were horrible, the savings and loan industry went bust, and dishonest bankers and real estate developers like Charles Keating were going to jail. Scandals were everywhere, and the federal government had to step in for a bailout.

But in less than 10 years, memories of that horrible disaster were erased, crooks and corruption were forgotten, and people were pouring their money back into real estate.

Today, such corporate giants such as Enron, Tyco, WorldCom, Arthur Andersen, and others are gone -- taking trillions of investor dollars with them. But with the Dow over 12,000 memories of these offenders (and of Martha in jail) have vanished just as surely, and investors are once again flocking to the stock market.

Where Are They Now?
At the height of the Enron mania, the company's market value was $65 billion. Once the dust cleared, the final value was $0. As you know, Ken Lay, Jeffrey Skilling, and CFO Andrew Fastow were all convicted of crimes -- but what happened to the rest of the predators?

What about Enron's board of directors who were supposed to supervise Lay, Skilling, and Fastow? What about the accountants and the analysts? What about all the pension and mutual fund managers who were buying the worthless Enron stock with their investors' money? Were they asleep as Enron executives were robbing and lying? Aren't they still out there investing other people's money?

And what about all the stockbrokers and financial planners who recommended the mutual funds that were buying the Enron, Tyco, and WorldCom stock for their investors? Are they still in business? Were they investigated? If medical doctors can be sued for malpractice, shouldn't financial professionals practice under the same safeguard?

And what about all the financial journalists on television and in print who failed to alert investors to Enron's shady practices? Only a few years ago they were cheering on the dotcom stocks, and today are cheering on the Dow reaching 12,000.

A Rogue's Gallery
Some of the people who made off with millions of investor money are still being celebrated rather than questioned. For example, former General Electric CEO Jack Welch is still considered a leadership guru.

Yet if you look at the facts, Welch took a lot of investor money and left GE in worst shape than ever. When he was exposed for an extra-martial affair, his retirement compensation also came to light. His work at GE netted him nearly $1 billion. His retirement benefits include use of company jets and a lavish New York apartment, and his stipend is $734,000 a month.

Now, if he'd left GE a stronger company, I wouldn't have much to criticize. But the hard facts are that the 2000 value of GE was $600 billion and by early 2005 it was down to $379 billion.

There's also Steve Case of AOL fame. When AOL acquired Time Warner, Time Warner's stock went to $90 a share before falling to a low of less than $10. Market value of the merger was $240 billion, but by 2005 it was less than $82 billion. Thanks to Case, I have a number of friends at Time Warner who are wondering what happened to their retirement.

The Takeaway
Most of the people who were responsible for one of the biggest market crashes in history are still in the system today, doing many of the same things today that they were doing then.

So, as the Dow continues its upward march past 12,000, remember that Martha Stewart is now out of jail -- but so are many of the other characters who actually did run off with the money and never served a day or jail time.

Your mind is still your most important asset, so be careful who you take your advice from and what you believe is true. Remember that all financial markets are filled with good but not necessarily innocent people looking after their own self-interests before they look after yours.

Alarm over radioactive legacy left by attack on Lebanon

2006-10-28T03:49:00.000-04:00

Robert Fisk: Mystery of Israel's secret uranium bomb
Alarm over radioactive legacy left by attack on Lebanon
Published: 28 October 2006
Did Israel use a secret new uranium-based weapon in southern Lebanon this summer in the 34-day assault that cost more than 1,300 Lebanese lives, most of them civilians?

We know that the Israelis used American "bunker-buster" bombs on Hizbollah's Beirut headquarters. We know that they drenched southern Lebanon with cluster bombs in the last 72 hours of the war, leaving tens of thousands of bomblets which are still killing Lebanese civilians every week. And we now know - after it first categorically denied using such munitions - that the Israeli army also used phosphorous bombs, weapons which are supposed to be restricted under the third protocol of the Geneva Conventions, which neither Israel nor the United States have signed.

But scientific evidence gathered from at least two bomb craters in Khiam and At-Tiri, the scene of fierce fighting between Hizbollah guerrillas and Israeli troops last July and August, suggests that uranium-based munitions may now also be included in Israel's weapons inventory - and were used against targets in Lebanon. According to Dr Chris Busby, the British Scientific Secretary of the European Committee on Radiation Risk, two soil samples thrown up by Israeli heavy or guided bombs showed "elevated radiation signatures". Both have been forwarded for further examination to the Harwell laboratory in Oxfordshire for mass spectrometry - used by the Ministry of Defence - which has confirmed the concentration of uranium isotopes in the samples.

Dr Busby's initial report states that there are two possible reasons for the contamination. "The first is that the weapon was some novel small experimental nuclear fission device or other experimental weapon (eg, a thermobaric weapon) based on the high temperature of a uranium oxidation flash ... The second is that the weapon was a bunker-busting conventional uranium penetrator weapon employing enriched uranium rather than depleted uranium." A photograph of the explosion of the first bomb shows large clouds of black smoke that might result from burning uranium.

Enriched uranium is produced from natural uranium ore and is used as fuel for nuclear reactors. A waste productof the enrichment process is depleted uranium, it is an extremely hard metal used in anti-tank missiles for penetrating armour. Depleted uranium is less radioactive than natural uranium, which is less radioactive than enriched uranium.

Israel has a poor reputation for telling the truth about its use of weapons in Lebanon. In 1982, it denied using phosphorous munitions on civilian areas - until journalists discovered dying and dead civilians whose wounds caught fire when exposed to air.

I saw two dead babies who, when taken from a mortuary drawer in West Beirut during the Israeli siege of the city, suddenly burst back into flames. Israel officially denied using phosphorous again in Lebanon during the summer - except for "marking" targets - even after civilians were photographed in Lebanese hospitals with burn wounds consistent with phosphorous munitions.

Then on Sunday, Israel suddenly admitted that it had not been telling the truth. Jacob Edery, the Israeli minister in charge of government-parliament relations, confirmed that phosphorous shells were used in direct attacks against Hizbollah, adding that "according to international law, the use of phosphorous munitions is authorised and the (Israeli) army keeps to the rules of international norms".

Asked by The Independent if the Israeli army had been using uranium-based munitions in Lebanon this summer, Mark Regev, the Israeli Foreign Ministry spokesman, said: "Israel does not use any weaponry which is not authorised by international law or international conventions." This, however, begs more questions than it answers. Much international law does not cover modern uranium weapons because they were not invented when humanitarian rules such as the Geneva Conventions were drawn up and because Western governments still refuse to believe that their use can cause long-term damage to the health of thousands of civilians living in the area of the explosions.

American and British forces used hundreds of tons of depleted uranium (DU) shells in Iraq in 1991 - their hardened penetrator warheads manufactured from the waste products of the nuclear industry - and five years later, a plague of cancers emerged across the south of Iraq.

Initial US military assessments warned of grave consequences for public health if such weapons were used against armoured vehicles. But the US administration and the British government later went out of their way to belittle these claims. Yet the cancers continued to spread amid reports that civilians in Bosnia - where DU was also used by Nato aircraft - were suffering new forms of cancer. DU shells were again used in the 2003 Anglo-American invasion of Iraq but it is too early to register any health effects.

"When a uranium penetrator hits a hard target, the particles of the explosion are very long-lived in the environment," Dr Busby said yesterday. "They spread over long distances. They can be inhaled into the lungs. The military really seem to believe that this stuff is not as dangerous as it is." Yet why would Israel use such a weapon when its targets - in the case of Khiam, for example - were only two miles from the Israeli border? The dust ignited by DU munitions can be blown across international borders, just as the chlorine gas used in attacks by both sides in the First World War often blew back on its perpetrators.

Chris Bellamy, the professor of military science and doctrine at Cranfield University, who has reviewed the Busby report, said: "At worst it's some sort of experimental weapon with an enriched uranium component the purpose of which we don't yet know. At best - if you can say that - it shows a remarkably cavalier attitude to the use of nuclear waste products."

The soil sample from Khiam - site of a notorious torture prison when Israel occupied southern Lebanon between 1978 and 2000, and a frontline Hizbollah stronghold in the summer war - was a piece of impacted red earth from an explosion; the isotope ratio was 108, indicative of the presence of enriched uranium. "The health effects on local civilian populations following the use of large uranium penetrators and the large amounts of respirable uranium oxide particles in the atmosphere," the Busby report says, "are likely to be significant ... we recommend that the area is examined for further traces of these weapons with a view to clean up."

This summer's Lebanon war began after Hizbollah guerrillas crossed the Lebanese frontier into Israel, captured two Israeli soldiers and killed three others, prompting Israel to unleash a massive bombardment of Lebanon's villages, cities, bridges and civilian infrastructure. Human rights groups have said that Israel committed war crimes when it attacked civilians, but that Hizbollah was also guilty of such crimes because it fired missiles into Israel which were also filled with ball-bearings, turning their rockets into primitive one-time-only cluster bombs.

Many Lebanese, however, long ago concluded that the latest Lebanon war was a weapons testing ground for the Americans and Iranians, who respectively supply Israel and Hizbollah with munitions. Just as Israel used hitherto-unproven US missiles in its attacks, so the Iranians were able to test-fire a rocket which hit an Israeli corvette off the Lebanese coast, killing four Israeli sailors and almost sinking the vessel after it suffered a 15-hour on-board fire.

What the weapons manufacturers make of the latest scientific findings of potential uranium weapons use in southern Lebanon is not yet known. Nor is their effect on civilians.

Did Israel use a secret new uranium-based weapon in southern Lebanon this summer in the 34-day assault that cost more than 1,300 Lebanese lives, most of them civilians?

We know that the Israelis used American "bunker-buster" bombs on Hizbollah's Beirut headquarters. We know that they drenched southern Lebanon with cluster bombs in the last 72 hours of the war, leaving tens of thousands of bomblets which are still killing Lebanese civilians every week. And we now know - after it first categorically denied using such munitions - that the Israeli army also used phosphorous bombs, weapons which are supposed to be restricted under the third protocol of the Geneva Conventions, which neither Israel nor the United States have signed.

But scientific evidence gathered from at least two bomb craters in Khiam and At-Tiri, the scene of fierce fighting between Hizbollah guerrillas and Israeli troops last July and August, suggests that uranium-based munitions may now also be included in Israel's weapons inventory - and were used against targets in Lebanon. According to Dr Chris Busby, the British Scientific Secretary of the European Committee on Radiation Risk, two soil samples thrown up by Israeli heavy or guided bombs showed "elevated radiation signatures". Both have been forwarded for further examination to the Harwell laboratory in Oxfordshire for mass spectrometry - used by the Ministry of Defence - which has confirmed the concentration of uranium isotopes in the samples.

Dr Busby's initial report states that there are two possible reasons for the contamination. "The first is that the weapon was some novel small experimental nuclear fission device or other experimental weapon (eg, a thermobaric weapon) based on the high temperature of a uranium oxidation flash ... The second is that the weapon was a bunker-busting conventional uranium penetrator weapon employing enriched uranium rather than depleted uranium." A photograph of the explosion of the first bomb shows large clouds of black smoke that might result from burning uranium.

Enriched uranium is produced from natural uranium ore and is used as fuel for nuclear reactors. A waste productof the enrichment process is depleted uranium, it is an extremely hard metal used in anti-tank missiles for penetrating armour. Depleted uranium is less radioactive than natural uranium, which is less radioactive than enriched uranium.

Israel has a poor reputation for telling the truth about its use of weapons in Lebanon. In 1982, it denied using phosphorous munitions on civilian areas - until journalists discovered dying and dead civilians whose wounds caught fire when exposed to air.

I saw two dead babies who, when taken from a mortuary drawer in West Beirut during the Israeli siege of the city, suddenly burst back into flames. Israel officially denied using phosphorous again in Lebanon during the summer - except for "marking" targets - even after civilians were photographed in Lebanese hospitals with burn wounds consistent with phosphorous munitions.

Then on Sunday, Israel suddenly admitted that it had not been telling the truth. Jacob Edery, the Israeli minister in charge of government-parliament relations, confirmed that phosphorous shells were used in direct attacks against Hizbollah, adding that "according to international law, the use of phosphorous munitions is authorised and the (Israeli) army keeps to the rules of international norms".

Asked by The Independent if the Israeli army had been using uranium-based munitions in Lebanon this summer, Mark Regev, the Israeli Foreign Ministry spokesman, said: "Israel does not use any weaponry which is not authorised by international law or international conventions." This, however, begs more questions than it answers. Much international law does not cover modern uranium weapons because they were not invented when humanitarian rules such as the Geneva Conventions were drawn up and because Western governments still refuse to believe that their use can cause long-term damage to the health of thousands of civilians living in the area of the explosions.
American and British forces used hundreds of tons of depleted uranium (DU) shells in Iraq in 1991 - their hardened penetrator warheads manufactured from the waste products of the nuclear industry - and five years later, a plague of cancers emerged across the south of Iraq.

Initial US military assessments warned of grave consequences for public health if such weapons were used against armoured vehicles. But the US administration and the British government later went out of their way to belittle these claims. Yet the cancers continued to spread amid reports that civilians in Bosnia - where DU was also used by Nato aircraft - were suffering new forms of cancer. DU shells were again used in the 2003 Anglo-American invasion of Iraq but it is too early to register any health effects.

"When a uranium penetrator hits a hard target, the particles of the explosion are very long-lived in the environment," Dr Busby said yesterday. "They spread over long distances. They can be inhaled into the lungs. The military really seem to believe that this stuff is not as dangerous as it is." Yet why would Israel use such a weapon when its targets - in the case of Khiam, for example - were only two miles from the Israeli border? The dust ignited by DU munitions can be blown across international borders, just as the chlorine gas used in attacks by both sides in the First World War often blew back on its perpetrators.

Chris Bellamy, the professor of military science and doctrine at Cranfield University, who has reviewed the Busby report, said: "At worst it's some sort of experimental weapon with an enriched uranium component the purpose of which we don't yet know. At best - if you can say that - it shows a remarkably cavalier attitude to the use of nuclear waste products."

The soil sample from Khiam - site of a notorious torture prison when Israel occupied southern Lebanon between 1978 and 2000, and a frontline Hizbollah stronghold in the summer war - was a piece of impacted red earth from an explosion; the isotope ratio was 108, indicative of the presence of enriched uranium. "The health effects on local civilian populations following the use of large uranium penetrators and the large amounts of respirable uranium oxide particles in the atmosphere," the Busby report says, "are likely to be significant ... we recommend that the area is examined for further traces of these weapons with a view to clean up."

This summer's Lebanon war began after Hizbollah guerrillas crossed the Lebanese frontier into Israel, captured two Israeli soldiers and killed three others, prompting Israel to unleash a massive bombardment of Lebanon's villages, cities, bridges and civilian infrastructure. Human rights groups have said that Israel committed war crimes when it attacked civilians, but that Hizbollah was also guilty of such crimes because it fired missiles into Israel which were also filled with ball-bearings, turning their rockets into primitive one-time-only cluster bombs.

Many Lebanese, however, long ago concluded that the latest Lebanon war was a weapons testing ground for the Americans and Iranians, who respectively supply Israel and Hizbollah with munitions. Just as Israel used hitherto-unproven US missiles in its attacks, so the Iranians were able to test-fire a rocket which hit an Israeli corvette off the Lebanese coast, killing four Israeli sailors and almost sinking the vessel after it suffered a 15-hour on-board fire.

What the weapons manufacturers make of the latest scientific findings of potential uranium weapons use in southern Lebanon is not yet known. Nor is their effect on civilians.

Losers, A Mental State

2006-10-27T23:26:00.000-04:00

The majority of people supports the war in Iraq, bold statement, as the war grows more controversial and some say extremely expensive. I assert this is just temporary and based in the American mentality of winning and repudiating the foreign mentality of losing.

Who wants to join a losing team.
Today, the Iraq invasion and its consequences has put a majority of people in a state of mind: the loser’s mind.
No one wants to be with the losing team.
That is pessimistic and we live in an optimistic all the time social state, if not forget about it and go shopping.
The perception of losing as occurring with “Operation Iraqi Freedom” is making most people uncomfortably to be near the losers, most folks are bailing out, no losing team for them.
The many all weather optimists, interested and ideologues alike, there is some light of hope, so far, is all make believe, but in the soul of all there is a sorrow for losing.
If the endeavor of Iraq would have the most minimal signal of been in a winning track, many will rapidly jump in the bandwagon and become sudden winners.
Although with the past three years of disastrous actions and diatribes full of lies, it seems that the optimists are starting in the four inning with a handicap of seventeen homeruns.
Do not despair, yet, it is possible with a few billions thrown in propaganda, which it will not the first time, the idea of winning in Iraq can be accomplished.

Psychoanalysts will tell you that those perpetual optimists will gain back the company of those who feel the Bush-Cheney junta has put them with a forever no end in sight losing team.

I am confident the invasion of Iraq has many more supporters than those out of the closet losers copying with denial.
For most people can be argued that sticking with the present state of political power, is also a sad losing proposition, but this is only temporary unmanaged perception.

Some say money is the culprit, the argument is, we are mortgaging the future of the next generation. Well, that was never a consideration when people cheered in the bars when we bomb the hell out of Iraq, or for that matter, no one protests the 50% of all taxes spent in the government war machine, so money is not the culprit.

Some say that too many American soldiers have already died, one is too many, but I hear only attacks and treason claims when the invasion was televised, so there is not much concern over lives and the consequences of invasions.

The number one reason why four years latter people are mad and discouraged is because the junta failed to make the Iraqis and American proud of the invasion.
It would have been a lesson to other dictators if the invasion of Iraq would have the ingredients of pride, altruism, and seriousness. Sadly, the invasion of Iraq is proven to be was about oil and class warfare from the corporatists to the rest of American citizens.
Thus, from the beginning was a losing proposition, many told us this war was about oil and personal revenge, they say it loudly, and they were label traitors losers etc. Today, those same one are saying : I told you so.” The next reality is that most people are recognizing that this is a class warfare, and it was the purpose from the get go.
Lou Dobbs has taking these arguments flag and making a serious and honest reporting in the subject of destroying American working class.

Most people get caught in the demagoguery of the new dukes- Senators, counts-Congressman and king, President. The fact of the matter is that Washington is the Versailles of Louis XIV and all the ideological filth that emanates from there is just that: filth of the powerful and their loud-mouths in the media.

As Lou Dobbs, Bill Moyers and other truth tellers will tell you, there is a very well-off group who understands the process and controls it very well. This group have created the laws to favor them, allowing them to pilfer the rest 95% of people’s money. This monarchy loves this war and its faith based arguments, for this cadre all looks really nice. I will say, all looks extremely rosy if you are near Halliburton or any other war profiteer, the monarchy is doing a great job.

A Shot in the Arm for 401(k) Investors

2006-09-13T00:57:00.000-04:00

by Suze Orman
September 11, 2006
Last month, Congress passed and President Bush signed new legislation that affects your 401(k) and IRA savings.

The Pension Protection Act of 2006 also includes some changes on how traditional pensions -- known as defined benefit plans -- are run, but given that fewer and fewer firms offer those types of accounts, I'll focus on what most of you are relying on for retirement: your 401(k)s and IRAs.

There's a lot to commend in the new legislation, but that doesn't mean you should just sit back and settle for the new federal guidelines. Many of the changes simply create minimum "floors" for your retirement savings. To save enough to retire on comfortably, you need to aim for the ceiling, not the floors.

Automatic Isn't Automatically Perfect

Let me explain. A major provision of the legislation encourages employers to automatically enroll their employees in the company 401(k) plan rather than requiring employees to "opt in."

Furthermore, the law suggests setting the base contribution level at no less than 3 percent of an employee's salary, and to increase that contribution rate by 1 percentage point a year until it reaches 6 percent and no more than 10 percent.

I'm all for auto enrollment (amazingly, up to 30 percent of employees eligible for a plan don't participate), but I don't want employees to assume that a 3 percent contribution rate -- or 6 percent for that matter -- is enough.

The first rule of 401(k) investing is to always invest enough so that you'll get the maximum company matching contribution. If that requires you to invest more than 3 percent of your salary, do it. It's simply the best move you can make: Every penny your employer pours into your 401(k) account is akin to a bonus. You don't want to turn down bonus money, do you?

Contribute to the Max

It's no secret that my favorite type of retirement account is a Roth IRA. And I've said repeatedly that if you're eligible for a Roth but don't have enough money to invest in both a Roth and a 401(k), the best strategy is to sock away whatever amount you need to qualify for the maximum 401(k) employer match -- but not a dollar more -- and then concentrate on building up your Roth.

The maximum annual IRA contribution is $4,000 this year, or $5,000 for individuals at least 50 years old. (Quick review: individuals with incomes below $110,000 and married couples filing a joint tax return with income under $160,000 are eligible to fund a Roth.)

The maximum annual employee 401(k) contribution this year and in 2007 is $15,000 ($20,000 if you're at least 50 years old). The good news is that the new legislation makes those high contribution levels permanent; up until now they were scheduled to phase out after 2010 and revert to the lower limits put into place back in 2001.

So let me be clear: If you have the ability to max out your contributions to both your Roth IRA and 401(k), go for it. Don't assume that the 3 percent or so contribution rate your employer automatically signed you up for is all you need. You can and should invest more if you're able.

A New Kind of 401(k)

The new law also gives "permanent" status to the Roth 401(k), which could be a huge win for you. Employers have been somewhat slow to offer these new types of 401(k)s, in large part because they were only temporary; without an act of Congress, Roth 401(k)s were scheduled to disappear in 2010.

The fact that Congress acted and made these 401(k)s permanent should encourage more employers to offer them to employees. If yours doesn't, start making a fuss.

The Roth 401(k) is a fantastic saving opportunity if you're young, and if you happen to think that your tax rate in retirement will be higher than it is today. That's likely for many of us given that rates today are near historical lows, even though our federal budget is under tremendous strain.

With the Roth 401(k) you don't get any tax break on your initial contributions, but just like a Roth IRA you'll never pay a penny of tax on the money you withdraw in retirement, assuming you meet some basic requirements. That can be a huge advantage over a traditional 401(k), where all your withdrawals are taxed at your income tax rate and you don't even get to take advantage of the typically lower capital gains rate.

Taking Stock

A recent survey of 401(k) plans by Vanguard found that among plans that offered company stock, about 70 percent of participants had more than 20 percent of their assets invested in their employer's stock.

That's way too much. No single stock should be more than 5 percent to 10 percent of your invested assets. This doesn't just protect you from Enron-like debacles, it's also basic diversification common sense: Your retirement shouldn't ride on a single investment.

The new legislation addresses the fact that many employers use company stock to make matching contributions to their employees. In a sense, these employers force their employees to own the stock. The new law provides some relief here, pushing employers to make it easier for employees to unload company stock they get as a match or profit sharing.

The change is good, but doesn't really help address the real problem -- the fact that participants aren't quick to take action. Study after study shows that inertia, not action, tends to run our 401(k) behavior. We tend to stick with what we have, rather than make changes that will help us.

So the pressure is still on you to protect yourself. If you have more than 10 percent of your money in one stock -- regardless of how much you love your company and are optimistic about its future -- you're putting your retirement in danger. You owe it to yourself to diversify.

A Boon for Beneficiaries

Congress just gave your heirs a very nice tax break. Under the old rules, any 401(k) beneficiary other than a spouse had limited options in how to take the payout; the reality was that most took it as a lump sum that triggered a big tax hit. (Remember, 100 percent of 401(k) withdrawals are taxed as ordinary income.)

With the new law, beginning in 2007 beneficiaries can instead move the 401(k) into a special IRA specifically designated for beneficiaries, and make annual withdrawals over many years based on their own life expectancy.

That means heirs will be able to leave more of the money invested in the tax-deferred account for longer. And that's a great way for your heirs to build their own sizeable retirement nest egg.

No Charity Tax

Finally, the new law also has a great break for IRA investors older then 70-1/2 who face making required minimum distributions (RMD) even though they don't need the income.

In 2006 and 2007, you'll now be allowed to donate up to $100,000 each year from your IRA to a public charity and not owe any tax on that money. That is, you won't first have to claim the money as a taxable RMD before you make the donation.

This can be a useful way to support a charity and meet your RMD requirements without boosting your adjusted gross income. The donation can't also be claimed as a deduction, so it makes the most sense for those of you who don't itemize.

The Soul of Money and Consciousness

2006-08-30T10:49:00.000-04:00

There is not doubt, as we look into our own abilities, money becomes a unique measure of our capabilities. Our talents and material goods is the method of choice for exchanging the currency of abilities. But what about our internal measures of success? Pleasure of knowledge, fear from a bad trade or any other “gut feeling” we experience when we approach measurable points.

As in the prior consciousness post, the more we look into success, the more we look inward the person behind that success.
The same applies to money.
Now, the opposite seems to occur to crave for money, the more money is craved the less individuals look inward -into their conciousness- for money.
We say “money does not get you happiness” or “money is not everything” many more popular sayings about the limited capability of money. Still, we have not learn how to teach inward rewarding with outward results in a proficient manner.

In Maslow hierarchy of needs:
1. Physiological (biological needs)
2. Safety
3. Love/belonging
4. Status (esteem)
5. Actualization

**If you need to browse about Maslow, I'll suggest a quick browsing at:
http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs

If we look were we stand in our present society.
Some of us are stuck in a range from 3-4 and very few get into 5 in a real way. But it seems we have regress to #2 as a society. This is not a personal choice but the result of leaders choice, many are coy about challenging this regression.

The big step begins understanding how we pass from a linear left side of the brain thinking to a right side the brain thinking in a coordinated manner and obtain superior results.
This is what the book “A New Whole Mind” explores.
As we read present religious books and other motivational books.
We encounter the content travelling from the left side linear thinking to take-over actions in a non-linear way but forgetting to touch in how this is measured. These books usually fault at respecting and open some light into measuring equally both capacities of the brain, with its right and left side thinking.
Usually, the mantra is expressed in the common line “do what you love and you will be reward it.”
The intended meaning of reward is monetary, a total left brain approach, and the acting of love is no measurable nor can be taught in a clear way, what we need is a right brain treat of consciousness to be able to actually apply the content of those "self-help, God-help" books.

We are not taught to think in tangled non-connected manner, when in fact this is what we need in most of our human and non-human interactions. At the same time, we expect tangible measurements, if we are in love, usually it means we are somehow a little bit irrational. We do most things in search of these “irrational feelings” and demand tangible measurements.
We often for some unknown reason get a strong physical reaction to something or someone. It can come from influence of thinking or by the influence of our actions, but how do we is coming from a good place, where is this coming from?

If I feel great when I have a great stock trade or I feel awful when I have a bad one, does that means that stock trades –my actions- as a subject of many –trades- doing the same thing have a soul?

Thus, today’s tangled question: do stock trades have a soul?

Consciousness The Last Great Frontier

2006-08-28T23:58:00.000-04:00

If you are interested in the present, and want to know what is shaping the future, you must be interested in the research about CONSCIOUSNESS.
This incredible piece is by R. J. AUMANN a Nobel Price Winner of Economics.

Discussion Paper # 391 May 2005
תוילנויצרה רקחל זכרמ
CENTER FOR THE STUDY OF RATIONALITY
THE HEBREW UNIVERSITY OF JERUSALEM
URL: http://www.ratio.huji.ac.il/
Abstract

(Note: due to software translation of symbols you might find some duddles in the text. I will correct those as I work with the original text.)

Consciousness is the last great frontier of science. Here we discuss what
it is, how it difers fundamentally from other scientific phenomena, what
adaptive function it serves, and the difculties in trying to explain how it
works. The emphasis is on the adaptive function.
1. Introduction
Consciousness is the last great frontier of science. Sixty years ago, life was not
understood; it was a mystery. With the discovery of DNA, that mystery was
solved; today, we more or less understand, at least in principle, how life works.
But we do not at all understand how consciousness works.
We start by deÞning our terms; already there, there are dificulties. By con-
sciousness, we mean, in the Þrst instance, the ability to experience. To see, hear,
smell, feel, taste, desire, enjoy, sufer, like, dislike, love, hate, fear, become excited by an idea, be saddened by a loss. We do not mean to sense. A machine can
"sensor" also senses. Machines read; record sounds; detect odors, touches, and
favors; win at chess. They can even be programmed to exhibit a frownie, or
emit downbeat sounds when something isn't right. But presumably they do
not experience.
What, exactly, does "experience" mean? Ah, that is where the dificulty lies.
The word cannot be deÞned in technical terms that do not refer to the concept
itself. Experience cannot be defined in terms that a machine can understand.
If you yourself are not conscious have never experienced something then you
will not understand what the term means; just as little as congenitally deaf people
∗Center for the Study of Rationality, and Departments of Mathematics and Economics, The
Hebrew University of Jerusalem, 91904 Jerusalem, Israel
understand what music means. To be sure, they can understand about the vibra-
tions of taut strings, about air waves, about the workings of musical instruments,
and even about musical notation and rhythm; but they can never understand what
music is. For that, one must hear it. Similarly, someone who is not conscious
cannot understand experience.
Ernst Mayr, in The Growth of Biological Thought,1 distinguishes between two
fundamental questions in biology: how and why. How refers to mechanism,
why to function. The question how do we digest food? is answered by
describing the process, involving saliva, chewing, swallowing, processing in the
stomach and intestines, absorption into the bloodstream, and so on; and, disposing
of wastes. The question why do we digest food? is answered by saying that
food must be digested in order to provide vital ingredients for the functioning of
the body, particularly energy.
To these questions, we add a third, which logically comes before the other
two: what. This refers to the descriptive aspect of biology, and of science
in general. The answer to the question what is digestion? is that it is the
process whereby food is transformed to a state that the body can use. What
questions also include observational, descriptive, and classifying matters, and also
methodological or conceptual matters, like what is a species?
The remainder of this essay is divided into three sections: What, Why,
and How. In the Þrst, we discuss what consciousness is, and how it diﬀers
radically from other scientiÞc phenomena. In the second, we discuss a possible
function of consciousness, from the evolutionary viewpoint; and the third discusses
the mechanism. Unfortunately, the How section is particularly short: We really
have nothing to say about this, other than to describe the diﬃculties.
2. What
We have deÞned consciousness as the ability to experience. This puts the phe-
nomenon into a completely diﬀerent category from other scientiÞc phenomena, in
several ways.
(i) Unlike almost everyindeed everyother scientiÞc phenomenon, conscious-
ness is completely subjective. No veriÞable outside characteristics of consciousness
are known. No matter how complex an organisms behavior is, a computer could
conceivably be programmed to mimic that behavior. An individual can observe
1Cambridge, Massachusetts: Belknap Press, 1982.
2
consciousness only in himself.
SpeciÞcally, I can observe consciousness in myself only; I cannot be certain
that anybody else really is conscious. To be sure, since other people appear
roughly similar to me, and act similarly, I may surmise that they, too, are con-
scious; but Im not certain. Each individual can be certain of consciousness only
in himself, where he directly observes it.
(ii) Whereas the phenomenon of consciousness is highly subjective, it is, para-
doxically, the only phenomenon of which the observer is absolutely certain. All
other phenomena and observations could conceivably be attributed to hallucina-
tions, dreams, and/or mental illness. But also hallucinations, dreams, and the
ravings of a madman are experiences; in each case, the observer is sure that he
is experiencingis consciousand he is right (we include dreams under the
heading of consciousness).
(iii) Sometimes, people express perplexity as to the nature of the problem.
They do not see anything mysterious about consciousness, and do not understand
in what way it is diﬀerent from other neurological functions like, say, the regulation
of breathing. Asked whether a computer could in principle be conscious, they
answer, why not?
We are dumbfounded by this reaction, and can only conjecture that these
people are themselves not conscious. To me, it is evident that no combination
of silicon chips and wires could conceivably experience in the sense that I do.
Consciousness involves something beyond the merely physical and mechanical.
(iv) It seems only slightly less evident that no combination of oﬀ-the-shelf
chemicals could experience in the sense that I do. But here, we are entering a
gray area. By all indications, the day is not far oﬀ when it will be possible to
synthesize a human being.2 Will such a golem be conscious?
Each of the possible answersyes and nois problematic. Yes is prob-
lematic because a combination of chemicals is in principle no diﬀerent from a
combination of silicon chips and wires, which we intuitively feel cannot experi-
ence. But no is also problematic, because there is no reason to believe that a
golem that is identical, molecule for molecule, with a live human being would not
in all respectsincluding consciousnessbe like that human being.
2In an email message dated March 22, 2005, the U.S. National Academy of Sciences an-
nounced that The U.S. National Academy of Sciences and other members of the InterAcademy
Panel, a worldwide organization of science academies, have stated that a worldwide ban on hu-
man reproductive cloninga technique that attempts to produce a childis justiÞed. If it is
being banned, it is presumably within reach; and then, no bans can prevent it from happening.
3
(v) Are animals conscious? On the face of it, there is no reason to suppose
that they cannot be. But as stated above (in (i)), it is not even clear that all
humansother than meare conscious. By analogy with me, I can surmise that
other human beings are conscious; but the analogy is less compelling in the case
of animals. The further one gets from human beings on the evolutionary scale, the
less compelling the analogy. So the short answer is, possibly; we dont know.
(vi) Consciousness may have levels. For example, dreaming is certainly an
expression of consciousness, but perhaps at a lower level than waking conscious-
ness. Newborn children, and the mentally impaired, may be conscious at a lower
level. In the opposite direction, people taking certain drugs sometimes report a
heightened state of consciousness.
Here again, we are at a loss, because we cannot really imagine what it is like to
be, say, a newborn child. We personally have never taken drugs, so cannot make
a judgment in the opposite direction either. We are stuck in our own conceptual
prison: Consciousness is about subjective experience, so it is diﬃcult to imagine
levels of consciousness other than our own.
Though it may have various levels, its existence at any level already poses the
conceptual problems discussed here.
(vii) Conscious experience appears to be associated with certain physiological-
neurological processes in the brain, like the simultaneous Þring of many neurons
in a well-deÞned group of neurons.3 This, however, does not explain how con-
sciousness worksjust as little as noticing that human reproduction is associated
with sexual intercourse explains how reproduction works.
(viii) Up to now we have discussed only the input component of conscious-
ness: experience. There are also two other vital components. One is the process-
ing component: thought, including intention. The other is the output compo-
nent: volitionconsciously choosing to do something, and doing it. True, a person
could be conscious, but have no power to take any actionas when asleep, or as
a result of a totally debilitating stroke. But under most normal circumstances,
thought and volition are intimately associated with consciousness. Indeed, as
we shall presently see, it is the combination of all three elementsexperience,
thought, and volitionthat enables consciousness to perform its function.
3Communicated by Prof. Rafael Malach of the Weizmann Institute of Science, Rehovot.
Based on this observation, Professor Malach makes the fascinating suggestion that a group of
individuals acting in concert may also be conscious.
4
3. Why
We next address the issue of why: What is the function of consciousness, from,
say, the evolutionary viewpoint?
The answer we propose is based on the two related notions of decentralizing
and decouplingroughly speaking, splitting a diﬃcult or complex task into several
easier or less complex tasks, often with the aid of an auxiliary “driving force.”
Here are some examples:
(i) Tearing a Manhattan telephone book in twoperhaps the grand-
daddy of all decoupling processes. Taken as is, it is very diﬃcult. But if one Þrst
separates the book into a number of thinner parts, then one can easily tear each of
these parts in two, thus accomplishing the task. Here the diﬃcult task is tearing
the whole book; the easier tasks are tearing each of the thinner parts; and the
decoupler is separating the entire book into the thinner parts.
(ii) Operating an economy. An economy can be centrally planned, as in a
Kibbutz (Israel cooperative village). A central planner decides how much of each
good will be allocated to each individual, how muchand whereeach individual
will work, and so on. In theory, the entire economy of a whole country could be
planned in this way. That is the conception behind socialist economies, like that
of the former Soviet Union.
Centrally planning an entire economy is enormously complex and diﬃcult. To
start with, the informational requirementsÞnding out what each person wants
to consume and what he is capable of producingseem utterly beyond reach.
But even if that could somehow be achieved, the problemof getting the people to
do what you want them to do, and the sheer complexity of the task, makes the
eﬃcient central planning of an entire economy practically unachievable. Indeed,
socialist economies like that of the Soviet Union achieve levels of eﬃciency that
are far below those of advanced free economies.
What enables free economies to work more eﬃciently is that they are, by and
large, decentralized. Within limits, each person seeks to acquire the goods and
services that he wants, and to work at the tasks that he wants and that he is
able to perform. There is no problem in getting the people to do what you want
them to do, as each individual makes his own choices. And, the complexity of the
task is greatly reduced, as the task of operating the economy is transferred from
a central planner to individuals, each planning only the segment of the economy
that interests himusually, his own consumption and production. Instead of one
planner (or planning agencies) planning many billions of transactions, we have
5
several million planners planning thousands of transactions each. The total size
of the task is perhaps roughly the same, but the task is decoupled into millions of
individual tasksand so is much more easily accomplished.
The driving force that makes the whole process work is individual motivation.
Each individual is motivated to seek for himself the best deal that he can get
the goods and the work that he likes mostand it is this that operates the entire
economy. That is Adam Smiths invisible hand.
(iii) Money and prices. Primitive decentralized markets work by barter:
Two or more people get together and exchange goods or services, to the mutual
beneÞt of all parties to the transaction; the process may be repeated as often
as desired. One may hope that the Þnal outcome is optimal, in the sense that
no traders could have done better by trading with each other.4 In practice, in
reasonably large marketsor even in fairly small onesidentifying the bartering
groups, and deciding on the barters to be implemented, is so complex, involved,
and fraught with uncertainty that barter is unlikely to achieve an outcome that
is anywhere close to optimal.
Enter the institutions of money and prices. Rather than bartering, each trader
sells his goods at market prices; with the proceeds he buys the goods he desires,
again at market prices. Then if the prices are right, the market clears: the
demand for each good exactly matches the supply. Moreover, the resulting reallo-
cation of goods is optimal (in the above sense); and in large markets, all optimal
outcomes are achievable in this way.
Thus, the unsophisticated but highly complex, involved, and uncertain bar-
tering process is replaced by the price mechanism, which, though a lot more so-
phisticated than barter, is far easier to execute: it requires only that each trader
buys what he likes,5 given his budget.6 Here the complex task is achieving opti-
mality; the simpler tasks are for each trader to decide what he wants, given his
budget; and the decoupler is the price mechanism. And again, the driving force is
individual motivation. Each individual is motivated to maximize over his budget
setsell and buy, at the given market prices, so as to be left with those goods
and services that he most prefers.
4More precisely, no group of traders could have improved the welfare of all its members by
trading within the group only. In economic theory, such outcomes are called core outcomes.
5Unlike barter, where each trader needs some knowledge about the preferences of the traders
with whom he trades, and also about at least some of the others, so that he will know with
whom to trade.
6The proceeds from the sale, at market prices, of the goods that he brought to the market.
6
An interesting aspect of this decoupling is that historically, it has emerged by
itself in every reasonably advanced society, without being imposed by any plan-
ning entity. Not only has the price mechanism emerged by itself, but the market
prices themselves also usually emerge by themselvesdetermined by supply and
demandwithout being imposed by planning entities. And when planning enti-
ties do enter the process of price determination, as in the former Soviet Union or
with rent control in various cities, they often wreak havoc, causing shortages and
other distortions.
Whereas this example is related to the previous one (Example ii), they are
not the same. In the previous example, the point was decentralizing the economy,
letting each individual see to himself. In the current example, the point is the
formation of a price system. Logically, the examples are independent; a centrally
planned economy can have a price system, and a decentralized economy can work
on barter.
(iv) Chess. The ideal way to play chess is to plan the entire course of play
from the beginning, taking into account anything the other player might do. In
practice, this is beyond the power of any man or machine. Instead, the players
evaluate the situation at each move, using numerical indices for the various
pieces; e.g., 8 for the queen, 5 for a rook, 3 for a bishop or knight, 1 for a pawn.
They also take account of the general characteristics of the position: develop-
ment of the pieces, castling, passed pawns, and so on. Using such criteria, each
player looks ahead for a few moves, trying to maximize his valuation of the
position at the end of that period, and taking into account that the other player
is doing likewise. Weaker players often do not look ahead more than a move or
two, and even that only partially. Stronger players may look as much as Þve or
six moves ahead, and sometimes even more; but they, too, do not examine all
possibilitiesall branches of the treein the process. Human players do not
use a precise numerical valuation, but take a generalized view. Chess-playing com-
puter programs7 basically do use a precise numerical valuation function; though
even there, the depth of the look-ahead varies, with some branches of the tree
being examined more thoroughly than others.
Here the complex task is planning the whole game beforehand; and the simpler,
decoupled tasks are playing move by move, with a more or less modest look-
ahead. The overall, macroscopic driving force is, of course, the desire to win; but
7Like IBMs Deep Blue, which several years ago defeated World Chess Champion Gary
Kasparov in a tournament (though there have been allegations that Deep Blue cheated by
enlisting human aid during the course of play).
7
microscopicallyat each separate movethe driving force is to maximize the
valuation several moves ahead.
In Examples (ii) and (iii) above, the decoupling is achieved by spreading the
task over many individuals, each with his own motivation. In contrast, in this
case the decoupling is achieved by spreading the task over time. There is a single
overall motivationwinningwhich is expressed at each move by looking ahead
a few moves and maximizing valuation.
(v) Solomon’s judgment. Rather than rendering his judgment (1 Kings 3,
16-28), King Solomon could have entered into a complex factual investigation of
the womens claims. He decoupled the process by motivating them unwittingly
to reveal the truth themselves. Here the complex task is determining which woman
is the live babys mother; the simpler tasks are for the women to express their
preferences given the judgment; and the driving force is the womens motherly
love.
(vi) Fair division. This may be achieved by cumbersome methods of direct
measurement. Alternatively, the process may be decoupled by the method of one
cuts, the other chooses, which motivates the parties themselves to divide fairly.
(vii) Evolution. Suppose a Creator had wanted to create the living world
as we know it. He could have designed each individual organism separately, to-
gether with the appropriate interactive adaptations. This would have been enor-
mously complex. Alternatively, He could have decoupled the process by means
of evolutionsurvival of the Þttestwhich runs by itself, automatically, with no
need for hands on direction. Here the complex task is creating the world; the
decoupled alternative tasks are for each organismor even each geneto adapt
to its surroundings; and the driving force is survival of the Þttest.
These examples should give the reader some idea of what we mean by decou-
pling. What we now suggest is that consciousness serves as a decoupler that allows
human beings to perform tasks that otherwise would be unachievable because of
their complexity. Let us illustrate.
(a) Food. The body needs food for energy and other vital purposes. The
process of supplying food may be divided into two parts: (1) before it enters the
mouth, and (2) afterwards. Part 1 consists of triggering the individual to seek
food, and acquiring, preparing, and eating it. Part 2 consists of digesting it, i.e.,
transforming it into a state that the body can use (see Section 1, above).
Both parts are extremely complex, but Part 1 is by far the more so. We must
choose the food to buy, shop for it, store it, clean it, cook it, and serve it. We must
8
also choose and buy closets and a refrigerator to store it; sinks to wash it; stoves,
ovens, gas tops, microwaves, pots, pans, cake forms, pie dishes, utensils, mixers,
vegetable peelers and so on to prepare it; plates, bowls, platters, and utensils, to
serve it. We must earn money to buy the food and all the auxiliary items we have
mentioned, and those we have not mentioned. Earning money usually involves
various skillsnot the least of them socialwhich must be acquired.
There is another fundamental diﬀerence between the two parts. Part 2 is
hard-wired: It works automatically, by mechanical, chemical, and electrical
means, with no conscious, voluntary component. Part 1 is precisely the opposite:
all conscious, all volitional. To start with, when the body runs short of the
required nutrients, it must be prompted to eat. Once this is done, the food must
be acquired, prepared, and eaten. Conceivably, parts of the process could be hard-
wired: A gauge could tell the brain when the stomach is empty; the eye and brain
could identify food, then send signals to the hand automatically to take it and
put it in the mouth. But it seems unlikely that acquiring the food and preparing
it, and earning the necessary money, could all be hard-wired.
How, then, does the process work? What drives it?
The answer is simple, even obvious: hunger. And, the other side of the same
coin: enjoyment of food.
Hunger does not mean an empty stomach. An empty stomach by itself will
not prompt us to eat. We need the pain or discomfort of hunger, and/or the
pleasure of food, to make us eat. Pain and pleasure depend on consciousness. If
you are not conscious, you cannot experience pain or pleasure. So consciousness
is an important component of the mechanism that supplies us with nutrients.
Moreover, it decouples the nutritive process into the two parts we have described:
until the food reaches the mouth, and afterwards.
Indeed, it does much, much more: The entire process of acquiring, preparing,
and serving food is decoupled into many small steps. Each step is conscious,
with a well-deÞned goal; it is motivated. Going to market, picking the items to
buy, standing in line at the check-out counter, bringing the items to your car,
unloading, putting in the refrigerator, all the myriad tasks involved in cooking,
all the myriad tasks involved in earning the money with which to buy the food,
all the myriad tasks involved in all stages of the processall together, and each
one separatelyare driven by hunger, through the medium of consciousness; they
are motivated.
More precisely, the experiences of hunger and food enjoyment are the overall,
macroscopic driving forces, like the desire to win in chess (Example iv above). The
9
thought process, which is the second component of consciousness (see Section
2, Item viii), translates this into many small tasksmaking money, baking a
cake, and so oneach with its own driving force, like valuation-maximizing in
chess. And then volitionthe third component of consciousnesscomes into play,
enabling the individual actually to carry out these individual tasks.
It is important to note that while hard-wired processes like digestion may be
highly complex, they are fairly repetitive. Digestion works on the same materials,
in the same way, every day; there are few, if any, surprises. The processes of food
acquisition and preparation are much less repetitive; they require a good deal
of instantaneous adaptation to various diﬀerent environments, environments that
may be unfamiliar. Consciousness is particularly important for motivating and
carrying out these non-repetitive tasks.
Finally, we remark that themechanisms provided by nature to facilitate eating
hunger and the enjoyment of foodmay sometimes misÞre. It is well known
that severely undernourished people whose hunger leads them to overeat may
well die as a consequence; there are documented cases of people who survived
the concentration camps during the Holocaust, only tragically to die in this way.
Even better known is that the enjoyment of food may cause people to overeat or
to eat foods that are not nutritious. While not immediately fatal like with the
concentration camps, this may nevertheless be detrimental to health; or at least,
serve no useful adaptive purpose.
(b) Sex. Biologists identify two basic drives in living organisms: nourishment
and reproduction.8 What we have said about food applies, mutatis mutandis, also
to sex. It is hunger and the enjoyment of foodnot the need for nourishment!
that makes people eat. Similarly, it is not the desire for oﬀspring that makes
them have sex; it is the sex drivethe enjoyment of sex. Enjoyment is a function
of consciousness. You cannot enjoy if you are not conscious. Many people do
consciously want oﬀspring, but that is not why they have sex.9
As with nourishment, the process of reproduction has several distinct parts:
(1) before the semen enters the womans body; (2) conception and pregnancy;
8It is interesting that in several places, the Talmudic literature identiÞes these two basic
drives. In the biblical verse relating how Josephs master, Potiphar, left everything in Josephs
hands, except for the bread that he (Potiphar) eats (Genesis 39, 6), the Midrash takes the
bread to mean Potiphars wife. And when Jethros daughters tell him that an Egyptian man
saved us, and Jethro says, where is he? Call him and let him eat bread (Exodus 2, 19-20),
the Midrash takes the bread to mean the daughters themselves.
9Thus, homosexuals will usually not have relations with persons of the opposite sex. When
they want oﬀspring, they prefer adopting, or artiÞcial insemination.
10
and (3) childhood, when the oﬀspring cannot fend for itself. The Þrst two parts
are decoupled by the sex drive. The second part, though highly complex, is hard-
wired; once sex has taken place, there is no conscious intervention until birth.
After birth, parental love takes over; like hunger and the sex drive, this depends
on consciousness. As with food, the Þrst and third parts of the processwhich
are not hard-wiredsplit up into a myriad of distinct small steps, starting with
dating and earning the required money; each is conscious, each has a well-deÞned
goal, each is motivated.
Like with food, the hard-wired part of the process is fairly repetitive, the other
parts not.
Unlike food, sex is programmed to be proßigate. In a single season, a single
ßowering tree produces many hundreds of thousands of blossoms, and billions
of grains of pollen. It is doubtful if even one of these comes to fruition. In
each ejaculation there are hundreds of millions of sperms, at most one of which
is used. Many sexual episodes lead nowhere, many relationships lead nowhere,
many dates lead nowhere. The sex drive leads to many activities that have no
chance of producing oﬀspring: sex with birth control, sex after the reproductive
age, homosexuality, masturbation, oral sex, bestiality, pornography, and so on.
Love and sex play dominant roles in advertising, literature, Þlm, music, painting,
photography, dance, almost all cultural activity. In the case of food, we used the
term misÞre to describe situations in which food does not provide nourishment.
In the case of sex, the corresponding situations are so ubiquitous that they must
be considered a part of the process.
(c) Pain. It has long been recognized that pain calls attention to something in
the body having gone wrong, so that it can be attended to. Again, pain depends
on consciousness; if you are not conscious, you cannot experience pain. Machines
cannot suﬀer.
As before, we have here a decoupling process. Pain motivates the individual to
seek medical or surgical treatment. Unlike with food and sex, though, the eﬀect of
treatment is not entirely automatic; repeated intervention may be required. Pain
decouples the treatment process into many distinct small steps, motivating the
individual at each step to do what is required in order to alleviate his condition.
It, too, may misÞre, as when a medical or surgical treatment causes more pain
than what the patient can suﬀer.
To summarize: Consciousness enables the decoupling of highly complex,
non-repetitive tasks into many simpler tasks, mainly through the element of mo-
tivation.
11
4. How
This is the shortest of our sections: We have little to contribute on this score,
other than to say that the neurological phenomena that have been observed to be
associated with consciousness do not explain how it works; the how remains a
deep mystery.
One last remark is worth making. How questions are usually answered
by analogy with something else, with which we are familiar. For example, the
workings of the circulatory system are explained by analogy with plumbing. But
consciousness is unique; there is nothing else in the world that is even remotely
like it. Since there is nothing like it, what analogy can we use to explain it? And
if not by analogy, how else can it be explained?
12

Suspicious Trading

2006-08-27T19:25:00.000-04:00

Whispers of Mergers Set Off Suspicious Trading
By GRETCHEN MORGENSON
The boom in corporate mergers is creating concern that illicit trading ahead of deal announcements is becoming a systemic problem.

It is against the law to trade on inside information about an imminent merger, of course.

But an analysis of the nation’s biggest mergers over the last 12 months indicates that the securities of 41 percent of the companies receiving buyout bids exhibited abnormal and suspicious trading in the days and weeks before those deals became public. For those who bought shares during these periods of unusual trading, quick gains of as much as 40 percent were possible.

The study, conducted for The New York Times by Measuredmarkets Inc., an analytical research firm in Toronto, scrutinized mergers with a value of $1 billion or more that were announced in the 12-month period that ended in early July. The firm analyzed the price, the total number of shares traded and the number of individual trades in each stock during the weeks leading up to the announcement and looked for large deviations from trading patterns going back as far as four years.

Although any number of factors can lead to spikes in trading, deviations of the kind observed by Measuredmarkets are among the data used by regulators to spot insider trading. Of the 90 big mergers in the period, shares of 37 target companies exhibited abnormal trading in the days and weeks before the deals were disclosed.

Christopher K. Thomas, a former analyst and stockbroker who founded Measuredmarkets in 1997, said that his company’s analysis led to the conclusion that the aberrant activities most likely involved insider trading. Measuredmarkets provides examples of unusual trading to institutions, individuals and a regulatory organization in Canada.

It is always possible that a company’s stock moves because of developments in a particular industry or business sector, or because a prominent newsletter, columnist or blogger has written something that could prompt investors to take action. But in the companies that were analyzed, no such influences seemed to be at work. The companies were not the subject of widely dispersed merger commentary during the periods of abnormal trading, nor did they make any announcements that would seem to explain the moves.

The analysis by The New York Times found that, in a handful of the mergers, significant progress toward a deal was being made on the days unusual trading occurred. For example, the day that four bidders were putting together buyout offers for Amegy Bancorp, a Houston bank company, trading in its stock quadrupled.

Attempts to quantify the amount of potential insider activity in deals have come up short in the past, in part because the regulators with access to detailed information do not release it. The Securities and Exchange Commission does not disclose, for example, the percentage of referrals it receives from exchanges that wind up as cases.

The S.E.C. would not comment on the study but said that it had looked at Measuredmarkets’ system and concluded that surveillance techniques of self-regulatory organizations like the New York Stock Exchange were more sophisticated.

Securities regulators, traders and academics agree that merger waves lead to more illicit trading on nonpublic information. In Britain, regulators have made insider trading a primary focus and have shifted their scrutiny to brokerage firms and institutional investors, rather than individuals, involved in mergers.

Like Measuredmarkets, the Financial Services Authority in British has found a pattern of stock trading ahead of mergers. In 2004, 29 percent of companies involved in mergers experienced abnormal trading before public announcements, according to a March 2006 study of large British companies subject to takeovers. In 2001, the comparable figure was 21 percent.

The British study compared the stocks’ price movements with previous returns, adjusted for overall market moves. The comparison period was 240 trading days, ending 10 days before the merger announcement.

In this country, the S.E.C. has focused more on individuals than on institutions in its investigations. And even though merger activity has rocketed in recent years, the number of its cases involving insider trading has held in a range of 40 to 59 annually since 2000, the S.E.C. said.

Some economists and academics assert that insider trading is essentially a victimless crime and therefore not worth deploying regulatory armies to battle. But there are losers, including small investors who miss out on gains, when such trading moves markets.

Moreover, many investors are troubled by what they now see as rampant insider trading, saying it fosters the perception that insiders can profit in the markets at the expense of outsiders.

“Martha Stewart got hurt very badly for something that happens every single day on Wall Street,” said Herbert A. Denton, president of Providence Capital, a money manager and an adviser to minority shareholders. “It’s a falseness and a hollowness to the capitalist system when you are pretending that things are pristine and they are not. Either the S.E.C. should get very, very serious and prosecute a lot of people or forget about it.”

Although Ms. Stewart was investigated for insider trading, she was found guilty of other related charges.

The S.E.C.’s handling of one insider-trading investigation is the subject of scrutiny by Congress after the firing last September of Gary J. Aguirre, a former staff attorney at the agency. Mr. Aguirre contends that his investigation into possible insider trading by Pequot Capital Management, a prominent hedge fund, was thwarted for political reasons by his superiors. He was fired after complaining, even though he had just received a merit pay increase.

Mergers and acquisitions present particularly rich opportunities for profiting on insider information, a violation of the securities laws written to keep all investors on a level playing field. That is why all those involved in corporate unions, from law firms to investment banks to those in between like printers, are supposed to keep quiet during the process.

Officials from the nation’s top securities regulators met on Aug. 18 to discuss emerging trends in insider trading, said Joseph J. Cella, chief of the office of market surveillance at the S.E.C. “We are certainly cognizant of the uptick in merger-and-acquisition activity,” he said.

The companies identified by Measuredmarkets represented many industries and received bids not only from corporate rivals, but also from private investor groups and management-led buyout teams. They included Amegy Bancorp, the subject of a $1.7 billion takeover announced last September by Zions Bancorp, the large Utah bank; CarrAmerica Realty, a real estate investment trust acquired for $5.6 billion by the private investment company Blackstone Group after a March announcement; Dex Media, a directory publisher whose $9.5 billion purchase by the R. H. Donnelley Corporation was disclosed in October; the IDX Systems Corporation, a health care systems company whose $1.2 billion acquisition by General Electric was announced in September; and Texas Regional Bancshares, which the Argentinian bank BBVA said it would acquire in June for nearly $2.2 billion.

In each of the five cases, the abnormal trading occurred during periods of significant behind-the-scenes progress in the mergers, as outlined by the companies themselves in regulatory filings long after the deals were struck.

In the Amegy bank deal, the volume of shares traded more than quadrupled on a day when four of the bank’s bidders were analyzing its financial records and preparing offers. Volume jumped in CarrAmerica’s shares on Feb. 17, the day the real estate investment trust struck a confidentiality agreement with a potential bidder and Goldman Sachs began providing the bidder with an analysis of CarrAmerica’s books.

Trading in Dex Media increased sharply last Sept. 14, the day that management, legal teams and financial advisers representing the company and Donnelley met. And the price and the number of shares traded in IDX jumped on Sept. 7, when its chief executive and a G.E. executive talked and G.E. agreed to increase its bid by 5 percent.

Officials at the companies said that they were unaware of unusual trading in advance of the deals and declined to speculate on reasons for the action.

Measuredmarkets has no way to identify who might have been behind the anomalous trading. But a few of the deals that it flagged are already under scrutiny by regulators.

In June, for example, the S.E.C. froze $1 million in trading gains of South American investors who profited on the June 12 buyout announcement of the Maverick Tube Corporation, an oil equipment maker, by Tenaris SA, a steel company with headquarters in Luxembourg. Anadarko Petroleum’s June bid for the Kerr-McGee Corporation, a smaller rival, is also being investigated, according to a July 13 report in The Houston Chronicle; the transaction closed in August. The S.E.C., following its usual practice, declined to comment on the report.

The takeover crowd includes corporations, management-led buyout teams as well as private equity firms, which represent wealthy private investors. Companies’ directors are reaching out to many potential bidders these days to ensure shareholders get the best price. In the process, they are expanding the number of people with knowledge of the deals.

Still, it is undeniable that brokerage firms, with their varied businesses all under one roof, remain particularly well-positioned to capitalize on inside information. Not only do these firms advise buyers and sellers in mergers, giving them immense access, they also have proprietary trading desks that invest the firm’s money in stocks and other securities, money management units that invest for clients and trading desks that profit mightily by executing trades for hedge funds.

Brokerage firms contend that barriers within their operations keep deal information from seeping out. But regulators at the Financial Services Authority in Britain are challenging these assertions.

In a July 7 speech, Hector Sants, managing director of wholesale and institutional markets at the F.S.A., described why his focus was shifting to institutions. “Our spotlight will shine in particular on relationships between investment banks and their clients,” he said, “because we believe the risk of market abuse is highest where a client can be made an insider on a forthcoming deal.”

The fast and furious pace of deals this year is increasing the opportunities for mischief. In each of the last three months, according to Thomson Financial, the value of announced mergers has exceeded $100 billion — the longest stretch of such volume since 2000.

Although the number of deals in the first seven months of this year slipped to 685 from 763 in the same period in 2005, the dollar amount of transactions rose 31 percent in that time, Thomson Financial said.

Regulators on the front lines also seem to be spotting more irregularities. Officials in the market surveillance unit of New York Stock Exchange Regulation Inc. have made more referrals to the S.E.C. this year than they did in the comparable period last year. As of last month, those regulators had referred 76 cases for possible investigation, up from 60 a year earlier. In 2005, the surveillance unit referred 111 cases, 63 percent more than the previous year.

The number of insider-trading cases filed by the S.E.C., though, has been relatively static. Walter G. Ricciardi, deputy director of enforcement at the S.E.C., said that 9 percent of the cases filed by the commission since Feb. 1 have been based on insider trading, which can encompass merger or any other news that would affect a company’s market price. On a percentage basis, the cases have ranged from 7 percent to 12 percent of the agency’s total since 2000.

“The yield is less probably than in comparable areas,” Mr. Ricciardi explained of insider-trading inquiries. “A lot of times the trading may look like something crazy, but you’ve got to have evidence.”

Recent cases have centered on some relatively small players. In late December, for example, the S.E.C. sued Gary D. Herwitz, an accountant, and Tracey A. Stanyer, an executive vice president at Sirius Satellite Radio, for trading ahead of news in late 2004 that Sirius was going to award a $500 million contract to Howard Stern, a radio show host.

Each settled with the S.E.C., without admitting or denying wrongdoing. Mr. Herwitz paid $52,000. Mr. Stanyer paid $35,000 and was barred from serving as officer or director of a public company. Mr. Herwitz pleaded guilty to insider trading in federal court in Brooklyn and was sentenced to two years’ probation and a $20,000 fine earlier this year.

In May, the S.E.C. sued Jason Smith, a letter carrier in New Jersey, contending he leaked grand jury information to a 14-person ring that included low-level employees of Merrill Lynch and Goldman Sachs, a worker for a printing company and a retired seamstress in Croatia. Regulators say that scheme generated $6.7 million in profits.

What about cases involving larger or more sophisticated investors? “We certainly see institutional-type accounts that have come into the market with extraordinarily good timing on a repeat basis; we have investigated those,” said Mr. Cella of the S.E.C. “But to get the evidence to prove a violation of the statute under which we allege insider trading is difficult.”

And that is true whether the case involves individuals or institutions.

The British securities regulator, for its part, has cited the possibility of hedge funds profiting on insider information as a foremost concern. David Cliffe, a press officer at the F.S.A., said that hedge funds must be keenly watched because they have extensive and close relationships with investment banks that are in a position to provide nonpublic information in exchange for lucrative trading commissions.

Spotting abnormal trading is far simpler than bringing a successful insider-trading prosecution, as Mr. Cella of the S.E.C. noted. Still, the trading anomalies identified by Measuredmarkets are intriguing.

Consider Koch Industries’ bid for Georgia-Pacific on Nov. 13. Senior officials of the companies first met to discuss a merger on Oct. 5. Koch Industries proposed to limit its purchase to certain Georgia-Pacific assets after the company, which makes forest products, had spun off other businesses to the public. Subsequent company filings noted that Danny W. Huff, Georgia-Pacific’s chief financial officer, told Koch officials on Oct. 7 that such a deal would “probably not” be acceptable to his company’s board.

Merger talks continued through October and into November. Both sides conducted corporate analyses — known as due diligence — from Nov. 8-11. Koch Industries’ board voted to approve a bid on Nov. 10.

That day, volume in Georgia-Pacific shares jumped 37 percent above its 2005 average and the number of trades in the stock rose significantly as well, Measuredmarkets found. On Friday, Nov. 11, volume increased yet 66 percent more from the previous day’s high level. Georgia-Pacific shares rose 5.5 percent over the period. The company made no announcements either day, and the overall market rose 1.3 percent over the two days.

On Sunday, Nov. 13, Koch Industries announced that it would pay $21 billion for Georgia-Pacific, or $48 a share, a 39 percent premium to the closing price the previous Friday. Anyone who bought Georgia-Pacific shares on either Nov. 10 or Nov. 11 stood to gain 40 percent in just a few days.

A spokeswoman for Koch Industries did not return phone calls seeking comment.

Another case in point is the surprise merger, announced May 7, between the Wachovia Corporation, a bank holding company based in North Carolina, and Golden West Financial, a West Coast savings and loan. This time the unusual trading showed up both in the stock of Golden West Financial and in its call options.

Traders buy call options, giving them the right to purchase shares of the underlying company at a set price within a specified period, when they expect the stock to rise. Options provide the potential for a sharp profit because each option represents 100 shares.

On May 3, the number of Golden West’s call options that changed hands was triple the daily average. Subsequent filings show that was the day Wachovia’s board met to review a possible acquisition of Golden West and the day after Golden West’s board met to weigh the bid.

Officials at Wachovia and Golden West said they did not know why the volume rose.

The probability of detection appears small, based on the number of cases brought in the United States, and the penalty for insider trading is often a negotiated settlement that may not involve much more than giving up the gains.

An example is the S.E.C.’s conclusion of a case in 2004 with an employee of Fleet Boston. The employee, the S.E.C. said, made $473,000 by trading on knowledge of the bank’s buyout by Bank of America. The commission exacted $525,000 in a settlement, which included his profits, prejudgment interest of $1,576.67 and a civil penalty of $51,842.36.

The penalty portion of such settlements, Mr. Ricciardi said, typically equals the illegal profits. The Insider Trading Sanctions Act of 1984 allows for a penalty of up to three times those profits.

The S.E.C. dispenses a reward, up to 10 percent of the penalties, Mr. Ricciardi said, to tipsters whose information leads to a successful case.

When stocks gyrate because nonpublic information about deals has leaked out, many people are harmed. The most affected are those who sell shares in the company before it is taken over at a significant premium. An investor who sold Georgia-Pacific shares on Nov. 9, just before the unusual trading, missed a 46 percent gain. Those who sold the Andrx Corporation, just before unusual trading began last February missed, a 36 percent gain.

Others also lose. The company that makes the acquisition, for example, may wind up paying more. Investment advisers typically include a company’s target share price and total market capitalization in the analysis of what an acquirer should be willing to pay. If a stock rises in the days or weeks during negotiations, the purchase price could be driven higher. A rising price could even scuttle a merger if the deal becomes too costly to the prospective buyer.

Jenny Anderson contributed reporting for this article, and Donna Anderson contributed research.

Why the Rich Get Richer

2006-08-21T21:51:00.000-04:00

by Robert Kiyosaki

How to Profit From a Cooling Real Estate Market

All over the U.S. there are stories of a rise in real estate foreclosures. Many people who took those exotic mortgages -- borrowing 125% of home value or choosing adjustable-rate mortgages -- are struggling to make their payments, and some aren't making it.

Also, a glut of new property supply, especially condominiums, is coming on line. A friend of mine, a very seasoned real estate investor, says in San Diego County, once one of the hottest real estate markets in the country, thousands of new condominiums are getting ready to come to market -- just as the market softens. He estimates that over 12,000 new units are coming on line, and the market, at the best of times, can only absorb about 1,000 condominiums a year. If he's correct, that means 12 years of supply will be ready for market in the next year.

As interest rates rise and the number of eager new buyers begins to diminish, adding supply to an already bad real estate market for sellers may mean a very good market for buyers and for property investors.

Hungry Alligators

The people who are in the most trouble are flippers -- people who aim to buy low and sell high within a short space of time. Many were buying condominiums off the plans, which means the projects were yet to be built, in the hopes that when the homes were completed, they would sell for a tidy profit. The trouble is many of these flippers, lured into the market by stories of people making a huge killing earlier with a similar strategy, are now the ones to be slaughtered. Now, they either lose their deposit or have to cough up the money for the purchase in the hopes there's a greater fool than they were somewhere out there real estate.

If you recall, the same thing happened around the year 2000 as amateurs jumped into the stock market, buying up tech stocks or any IPO with a dot-com after the company name.

In the coming months, I predict we'll see an increase in people dumping real estate they can't afford. They'll be forced to sell because they'll be eaten alive by a phenomenon known as negative cash flow. Investment properties that you have to feed money to every month are fondly known as alligators -- if you can't afford to feed the property every month, it eats you.

I know of one so-called real estate investor (and I prefer to call people like him speculators rather than investors) who has three homes he thought he could flip for a profit -- but he priced them too high. Now, $7,500 comes out of his pocket every month to feed the negative-cash-flow alligators. The problem is, he and his wife don't earn that much a month. Their three alligators are literally eating them out of house and home, consuming the profits they made from other flips -- and their savings.

To add more pain to the misery, they still have to pay the capital-gain taxes they made from their previous successful flips. They're toast. The alligators are eating them alive. They can't afford to feed them, and they can't afford to sell them because the prices they paid for these alligators are more than they're worth today. And this is only one story -- out of who knows how many. Over the next couple of years, keep your eyes open for some great bargains.

It's Time for the Pros

Some people say we're now entering a bad real estate market. I disagree. I think we're entering a great market. A bad one is when amateur investors become real estate experts and they bid up prices. They make housing expensive for homeowners, often adding little to no value to the property. They simply muddy the waters and make a valuable investment, a home, expensive.

Now, I must admit, I sometimes do buy to flip, so I can't be too critical. Yet it's the amateurs who come late to the party -- and who eventually donate their money back to the professionals. What I'm saying is: Now is the time to turn pro. Now is not the time to be an amateur. It's the amateurs who jump in when the market is hot. It's the professional who comes in when it's cooling down. Get the message?

When the red-hot bull market of real estate was beginning to overheat, you didn't have time to make considered decisions. Sellers were receiving multiple, over-asking-price offers. In a bull market, you had to be quick, have money, and be a little foolish. Now that the market is cooling down, sellers are a little bit more humble. You have more time and can do your due diligence carefully. You can negotiate better terms and make a better deal, especially if the seller has his leg inside an alligator's jaws.

Bad News That's Good

But don't be in too much of a hurry. I think we still have some bad news yet to come -- and I believe it may come from the bond market. I suspect that many of our foreign investors who have been buying our debt may be becoming more cautious about investing in American assets, especially U.S. bonds. Many foreign bankers may be having doubts about the U.S. government paying the interest on our debt. In other words, many investors will be moving increasingly out of their cash into tangible assets such as gold, silver, and other metals. Again, this is only a suspicion. We should know more by September of this year.

If investors stop buying U.S. government debt, who knows what might happen? The U.S. may need to raise interest rates even higher, which will drive home values down even further. So be patient, keep looking at real estate, but keep your hand on your wallet (unless of course you find a seller with a really mean alligator eating him alive).

A year ago, I sent out a warning to investors, especially flippers, to cash out quickly. I received a lot of irate e-mails from people who thought I was turning on them. They thought I was spreading bad news. Little did they know that by forecasting a real estate downturn, I was spreading good news -- good news for real investors and bad news for amateur alligator wrestlers.

Recent ColumnsGo
Forth and Multiply -- Your MoneyTuesday, August 22, 2006Lazy People Don't Get RichTuesday, August 8, 2006Bet on Gold, Not on Funny MoneyTuesday, July 25, 2006Why the Rich Get Richer ArchivesDiscuss this column on our message boards

More From Robert Kiyosaki
Thinking of Quitting Your Job?
Want to start a business but afraid of failing? Robert Kiyosaki shares his successes and failures to illustrate 10 key lessons for entrepreneurs.

Robert Kiyosaki, author of the best-seller Rich Dad Poor Dad, quit his job at age 31 -- and he's never looked back.

Before you do something stupid, read this book. www.richdad.com

Latin America Sustaining The US Debt

2006-08-12T17:58:00.000-04:00

BY R G PAGES—staff writer—

INSTEAD of serving to protect the population the current economic model of the Latin America and the Caribbean is forcing them to emigrate.

For experts meeting at the 7th International Conference on Globalization and the Problems of Development in Havana, the region’s principal export line is that of persons and large-scale emigration to the developed nations.

With the neoliberal reforms of the 1990s exports grew in Latin America, but not on the basis of the development of national industries.

The current model has seen a reduction in employment, increased emigration and a lack of growth overall in its Gross Domestic Product (GDP).

This is a notable paradox because a growth in exports should signify a higher GDP and, with a few exceptions, this is not occurring. Mexican expert Arturo Huerta reasoned that the internal Latin America markets are still being restricted. Governments are adopting policies of cutting back on inflation and public spending and not extending the infrastructure of works to the benefit of the population

Demand and wages are being contracted in defense of external interests, noted Huerta, a professor at the Autonomous University of Mexico.

He analyzed what happens with nations dependent on the export of their mining products. Gold has been rising in price since 2001, associated with insecurity on the US stock market, of the dollar and the behavior of the economy.

Thus gold is presently extremely profitable, because foreign investors in gold mines do not pay taxes on profits or aggregate value and thus the governments of countries with reserves of this important natural resource receive no contribution to their GDP.

As gold extraction requires high technology. Investment in the sector does not increase employment. By not paying taxes, foreign investments give nothing to the country owning that natural resource. Thus gold exports increase but the GDP does not.

Remittances entering the countries of the region have grown and now represent the second largest entry of capital in global form. However, one cannot say that these remittances have a positive impact, because it should be the function of national economies to improve the populations’ living standards.

PERVERSE TRANSFER

Jaime Stay, a professor at Mexico’s Puebla University, believes that there is a very close relationship between the flight of capital, external debt and the functioning of the US economy.

The US economy acts like a black hole by attracting large volumes of capital from the rest of the world. Capital enters the Latin American region in the form of loans or bank credits and simultaneously produces the flight of that capital toward the developed nations, essentially the United States.

The exit of capital can assume many forms. One of them is related to the corruption involved in a large part Latin American governmental dealings. There are daily examples of how corruption has come down to setting up bank accounts elsewhere, such as in tax havens.

Capital flight is accompanied by another phenomenon, which is not strictly the flight of capital abroad, but appears in the so-called net transfer of resources. It is a serious problem, because the net income from capital is less than the net payment that has to be made for that income at a previous point.

Jaime Stay exposed the fact that the exit of profits without interest payments reaches a higher total than that of capital income.

This phenomenon, which was apparent in Latin America during the external debt crisis of the 1980s, has reappeared with absolute totals larger than those of that decade. The exit of profits has grown steadily year after year up until 2004.

“We have a net transfer of capital from the underdeveloped countries, which cannot confront the gravest problems impeding their development, to nations of advanced capital – starting with the US economy,” Stay affirmed.

It is a perverse transfer. The less developed countries are constantly contributing to the developed ones, in an unjust relationship that might well date back to colonial times. It is ethically unjustifiable when we are supposedly living in a world in which opportunities for everyone should be extended.

SNOWBALLING

Claudio Katz, a professor at Buenos Aires University, noted that the monetary, credit and social policy of every country in the region is subordinated to what the International Monetary Fund imposes on them in order to meet their external debts.

He described how in the Argentine case, the way in which the external debt is being discussed at the moment is going to bring problems, although the government is conducting itself with more dignity and a taking up a more confrontational position with the IMF.

Katz believes that the Argentine government initiated negotiations on its debt erroneously, by acknowledging that it exists, when it is known that it is a fraudulent debt and very much in question.

The Buenos Aires professor warned against reassuming the system of repaying the external debt in the form of bonds, given that, in the long term, this generates a fiscal surplus for decades in order to be able to price new bonds emitted. Having a fiscal surplus, he added, means reducing social spending on education and housing.

“Apparently we are easing a problem without foreseeing that huge snowball that is indebtedness,” Katz explained.

Brazilian professor Theolonio dos Santos, from the Fluminense University of Rio de Janeiro, similarly analyzed the problem of the flight of capital from Latin America to the developed countries, again essentially to the United States.

He gave this example: a Latin American country is given a $100-million loan at an interest rate of 45%. That means that for every $100 given, $45 has to be returned in interest. The government of that country needs to increase its bank reserves to make itself attractive to the World Bank and the International Monetary Fund.

Then what happens? The $100 million it was given in credit – with the 45% interest – is placed in a US bank where it is only taxed at an annual interest rate of 5%. In the course of time, the Latin America nation is ruined because all the capital that enters has to be directed to paying debts and commissions.

Although it seems irrational, that is what has occurred with the Latin American economies. In Brazil, Theolonio noted, $46 billion entered the country in the form of high-interest loans. Afterwards, that money was deposited as a reserve in the United States at only 4-5% interest.

If a Brazilian housewife asks to borrow money and has to pay 48% interest on it, and then deposits that money in another account (equal to the reserve in US banks) at only 5% interest, she will be ruined. If you own a property be prepared to lose it because all the money will go on paying interest and commissions.

GOVERNMENTS’ HANDS TIED

The inability of governments to manage their own resources is one of the consequences of the model imposed on Latin America.

The independence of state central banks and the thinking that there must be huge resources in those central banks so as to maintain that reserve is placing nations in very difficult positions.

Professor Dos Santos stated that the Central Bank of Brazil has raised the interest rate that the state has to pay it and with that policy is spectacularly increasing the public debt. In order to pay those high rates of interest, governments have to spend less. It is an absurd situation that translates into an absence of public works.

It is argued that bank interest rates have to be high to prevent growing demand and avoid inflation, which are viewed as the main enemy.

In the name of preventing inflation, they are compromising public resources. Brazil is the most serious case in the region, the professor noted. “My country is paying $750 billion just on servicing its internal debt, not to mention its external debt, another payment whose interest rate is taken from the world market.

The distribution of profits in Brazil remains within the financial system to the detriment of the business sector and traders who have to pay extortionate interest.

For Arturo Huerta: “We do not have a monetary policy or a fiscal policy. We have recourse to privatizations and the politicians are incapable of saying that we have to break with these models.”

Katz stressed that the most incredible aspect of privatization is that 10 years of the process have gone by and there is no study of what has already happened.

“With privatizations they wanted to send us this message: the state is ridding itself of deficient public enterprises and has money that can be invested in education and health. However, what has in fact happened is that we have a colossal public debt and are unable to invest in social programs. Argentina, a country that has traditionally had a 6% unemployment rate, now has one of 16-20%. Privatizations have led to 44% of its population falling into poverty and 35% of its children suffering from malnutrition.

Katz confirmed that the flight of capital from Argentina almost equals that of its external debt.

With privatizations the peoples have begun to realize that they have no benefits, as is the case in Bolivia with water and gas.

Huerta observed that Mexican sold off its banking system and went into crisis. In order to rescue it, the country had to spend out more than $100 billion, the cost of which is being paid by the people. A government that loses its central bank and its strategic economic sectors has no future whatsoever. Sovereign control of the national economy has to be respected.

A country that is unable to generate its own currency cannot have economic sovereignty. Latin American money is controlled by international finance capital, which wants the currency of the country in which it invests to be stable, thus forcing the imposition of high bank interest rates on the state in question.

The region has to recover control of its monetary policy in order to subsequently adopt a fiscal policy that is an incentive to economic growth, Huerta noted.

Unfortunately, no political party in the region is proposing the rescue of monetary control in its program.

Oscar Ugarteche, professor at the Catholic Pontificate University of Peru, stated that while the Latin American countries have high international reserves in US banks, his nation is registering an immense budgetary deficit in the order of 5% of its GDP.

However, now the Bolivarian Alternative for the Americas, a redefined economic model that promotes integration on the basis of a genuine policy of regional development.

There is not War in Iraq

2006-08-10T16:36:00.000-04:00

Congress failed to pass a war resolution.
Thus, qualifying the present occupation of Iraq as an illegitimate act war, which is intrinsically anti-American and breaches the Constitution.
The Constitution states and grants to the people's House of Representatives the only right to enact and act in legal war actions.
What we have in Iraq is an ongoing occupation, clearly an unconstitutional act by the President.
The members of the House of Representatives for decades have stopped exercising and claiming the rights of citizens grant in the Constitution. This includes a vote for a series of laws under the titles of The Patriot Acts, without even reading the content.
The indecent stance of the House Members is summa pauper in this case.
No only they failed to read the law or even spend one minute debating such usurpation of people's freedoms. Coump the egregious behavior by the use of talking points to justify anything that has come from the present leadership. Radicals as Rove never found better allies than the majority elected democrats. Isn;t that scary!!!
When we hear "freedom is not free," clearly is not, we have lost a large amount of freedom and we are paying dearly for those loses.
These Orwellian titled laws seem to be a present habit and it is the most damming piece of biased absolutist legislation since the McCarthy era. It contains the most destructive provisions damming freedom and civil rights in America.

House members by consenting in some cases or by coalescent behavior in other cases, continue to fail to represent the people, that is something people must start to demand and act with stronger stance against such egregious behavior.

The House Members allow Presidents for decades to use war acts and usurp freedom without due process or abiding to basic American values. The puzzling is how most people continues seated watching TV.
In a few instances seems the tide is shifting, as the primary election of Ned Lemont, this primary election has rocked the world of the entrenched politicos.

This entrenchment supine position of politicos is not a single party situation, but both parties practice it and thy are as guilty as sin.
Can you call for term limits?

Such continuous actions by House members are the driver for their poor respect by the people. Congress has less than 25% of approval rating.
Still, this will not eliminate the fact these same cadre will be re-elected in 98% of cases, with incumbents controlling the election as de facto right.

Maybe we start to see some changes with people actions been more participative and vocal in the primaries.

If people do not participate in primaries, the stuffing of the election is done.
The key is to participate in the primaries.
The teaching of others about this important event, until we have party line free open line elections -then might the best win- and not the anointed by the parties elitist Politburo, we need to grow the debate.

We must demand truth, openness and debate, no lies and convenient usurpation of rights.

No Man Is an Island

2006-08-09T01:43:00.000-04:00

Anthony Kennedy's surprising charge to the American Bar Association.
By Dahlia Lithwick

HONOLULU—There is something about Waikiki that can render the 5,000 lawyers swarming this town for the American Bar Association convention disinclined to think. The convention center, the streets, and what seems like every hotel in town are overrun with them, lugging around their bright yellow beach bags and their ubiquitous LexisNexis name tags. (Pity the Honolulu drivers whose chances of running down an attorney have skyrocketed to about 1-in-3 this week.)

Seemingly simple decisions, decisions attorneys make in 30 seconds if they're on the clock, may consume 15 minutes in Hawaii. I listen to them debating—the snapper or the ahi, change before mai tais on the beach or after, attend the 11:30 panel on innovations in forensic accounting or flip over and tan the backs of their thighs—and I listen to the long pauses in between. In Waikiki, the billable hour stretches long and languid. Beach books replace case files. Deep thoughts are few and far between.

Unless you are Supreme Court Justice Anthony Kennedy. I find myself devoting 15 whole minutes, as I prepare to attend his keynote address Saturday evening, to deciding whether to shower first or to tan the backs of my thighs. As I dart for the ladies' room outside the Hawaii Ballroom at the Sheraton Waikiki—perhaps I can at least wash the salt water off my face—I almost trip over the tall gangliness of the justice himself, flawless in a dark suit and navy tie. The stern commander has arrived to oversee his vast battalion of 60-year-old men in hibiscus-print shirts.

The conference organizers seem to have contracted this same aloha spirit of timelessness. Instead of the obligatory six minutes of musical prelude, we are treated to a gorgeous 45 minutes of song and dance from students at Kamehameha High School. Each song lasts seven minutes. The dancers' hands convey opuses, yet no one checks their watch.

Kennedy takes an enormous amount of abuse from his critics—who have sometimes included me—for his unremitting, agonizing, thinking-ness. His speech here in Hawaii is vintage Kennedy, ranging across history (pit stops at Henry II, Newton, and Blackstone); intellectual theory (Marx, Holmes, and Solzhenitsyn); and—of course—geography. He tells of his own travels in China and Bangladesh and across Africa. He peppers his speech with language to shame a Peretz—prolix, essentiality, and dualisms. The punch line to his opening joke is: "a faint reflection of my former existential self." (This slays the lawyers.)

But Kennedy—for all that he cannot seem to stop being Kennedy, even in Honolulu—arrives with a serious project. He is charging the assembled attorneys to do the job of selling to a doubting world "the essentiality of the rule of law." "Make no mistake," he warns, "there's a jury that's out. In half the world, the verdict is not yet in. The commitment to accept the Western idea of democracy has not yet been made, and they are waiting for you to make the case." Referring to terrorism and violence and totalitarianism, he says, "The tide has gone out, and we are on the beach."

It's a tall order to swallow with your aquamarine bikini-tini. But it's a quintessentially Kennedy point: "Our best security, our only security, is in the world of ideas, and I sense a slight foreboding." The world of ideas may be far from Honolulu. But the world of ideas is the only place Kennedy calls home. To that end, he assigns himself a seemingly impossible task: He wants to define "rule of law" so we can start to peddle the concept worldwide. It is not enough to sell the world on the U.S. Constitution, he says. That is merely a set of "negative commands." He is looking for a positive formulation for the rule of law.

And suddenly he begins to sound like a 4 a.m. UNICEF commercial, describing the number of hours of human labor required to get clean drinking water in Africa and the number of babies who die there each year from diarrhea. "This can be fixed," he says. "This is not rocket science." He tells of the numbers of men who must languish in prison in Bangladesh for a year because they can't pay the $3 fine that would keep them out of jail. (He says he offered $1,000 to keep the next year's worth of men out of jail, and one can't help but wonder if he'd likewise offer to personally pay for decent defense counsel for next year's crop of indigent capital defendants in America.) "Can the world embrace the rule of law under such conditions?"

He describes the American conception of law as a "liberating force, a covenant, a promise." And in spite of the lofty intellectualism and the big words, this speech captures my imagination and that of the assembled crowd for its two quintessential Kennedy traits. The first is the vast sprawl of his imaginative world. He travels the planet and reads widely and he attends lectures on water purification. Then he applies all that knowledge to his conception of the law. And whether you like that expansive scope, listening to him is still a tonic to the smallness and smug certainty that has characterized our political leadership in this country for the past six years. It offers a welcome break from the hermetically sealed constitutional worldview of some of his detractors. Kennedy is a legendary agonizer. But his comments here reveal the extent to which that agony is not an end in itself. His sense of justice and equality is a work in progress, informed by what he learns from people all over the planet who know more than he does. There's something reassuring in his sense that the world is a fluid place.

Which brings us to Kennedy's second great characteristic, the one that has launched a thousand heart attacks over at the National Review Online: Kennedy believes that justice has a purpose. It is not a neutral set of ideals. It is a promise that humans "can dare, can plan, can have joy in their existence." It's premised on the view that poverty and hopelessness and alienation should cause us worry. Maybe that premise is too ambitious. Maybe it is truly not the province of the law to pave over the differences between those who are suffering and those who are not. But Kennedy at least recognizes that all this suffering and alienation is the handmaiden of lawlessness; and that it is as much the task of lawyers to fight lawlessness as it is to serve some dispassionate, neutral machine called the law.

We cannot sell this cold, rational notion of justice and democracy and—as he warns these lawyers—"You can make this case. You must make this case."

Kennedy's inability to find certain, easy answers and his tendency to hold grandiose hopes for the law are fodder for his detractors. This is the Kennedy of Casey, and Lawrence, and Rapanos, and it's the Kennedy that plows up fields of constitutional law and sows seeds of confusion and inscrutable grandeur in their place. This is the Kennedy who drives conservatives nuts with his notion that the courts must fight injustice, regardless of the messiness that ensues. But as he concludes with the charge that our freedom rests on our ability to sell the world on democracy, the crowd is on its feet.

Maybe the fact that Kennedy is suddenly experiencing his moment in the sun isn't just a historical accident of a four-four court with a guy in the middle who can't seem to make up his mind. Perhaps this country is actually ready for what he's selling: the twin notions that the world is an enormous, embattled, struggling place and that the law has a responsibility to try to fix it. Not just in service of the Constitution, but in the service of freedom.

Dahlia Lithwick is a Slate senior editor.

Article URL: http://www.slate.com/id/2147247/
Copyright 2006 Washingtonpost.Newsweek Interactive Co. LLC

The Responsible Way To Continue Pax Americana

2006-08-07T12:24:00.000-04:00

By choosing to go to Iraq on the cheap, we are encountering a barrage of obstacles and criticism from locals in Iraq and in America.
Today, such poor planning and execution is putting the whole endeavor at question.
This should not be the case if a well crafted and properly implemented occupation was debated. But, most people defected of their responsibilites as citizens, and let the poor judgement of their elected representavies to act without responsible questioning.
It is still time to reverse the present erroneous approach in Iraq.
Americans citizens continue to build a negative image of the reason for the occupation and overthrow od the Iraqi Government and finding difficult support of the occupation and the expansion in the present form.
Unless, some “humanitarian reason” is stated as "immediate need" and "compassion" is attached to the message. The idea of “humanitarian reason” usually is one of those cover all up, good and bad, catch word, in 99% of the cases used for other than its connotation. Orwell serve us or-well.

When the Pax Americana was announced as a de facto strategy by President Reagan, following the steps of President Wilson, it was a welcome event by the elites around the globe. These elites could count on their Washington compadres to preclude resistance at home, in case of their people in “democratic votes” elected the “wrong candidates” or taking the "wrong direction" thus allowing swift action via American “operations” as now in Iraq in the past in Chile, Iran, France, Germany and other 160 interventions since the beginning of the twentieth century.

The idea of American “interests” supported such concept of military action both cover or uncover operations.
The “defense of our interest” was enough of a concept to rally around the intervention.
What is always missing and continues to be missing is: the debate on, can we do it better and where and what are the benefits for all citizens in a specific way.

We gladly continue to apply this foreign policy of empire control, via “protecting the American interests”. It always lacks the full understanding and engagement of the American citizen to bear the great responsibility of these actions.
A growing apathy forgets to ask for the benefits as citizens of such empire expansive and expensive actions.

Pax Americana is rooted around the planet to some extend as a welcome event.

Clearly, the jury is still out if the English empire when hit a wall in 1940’s for economic over extension, is a crude example of the present state of Pax Americana. The present economic state has the citizens as the largest debtors in the planet. The country as a whole is the largest debtor in history of the globe, a dangerous place to be.

As we continue this strategy of mild control but under control, from time to time needs some tinkering. The change of a turned disloyal government as in Baghdad was part of keeping the flock under control. Also, it helps to send a message to others that there is not two ways about dealing with the Empire.

The problem with this "only military approach will fix it" is the constant erroneous way of using power.
At its core, this is the "only way" of military action, historically has identified powers in state of decline and in inminent change for the worse.

As of today, the Empire uses 40% of all global GDP in military endeavors but only accounts for 28% of all global GDP.
Clearly, the economic growth needs to surpass military expenditures if we plan for a larger and responsible Pax Americana.
The use of economic might versus the use of military might is need it for any sustaining power to last. A balance for military cost of global GDP should not be more than 7% and the economic growth should be no less than 4%. Thus, growing the military expenditures at unison with economic growth, no in the reverse as in the past twenty five years.

The use of constat warfare -the endless war on terror- has created a tremendous drain in the American economy and the citizens, and the largest bad ill for anything that this Pax Americana is meant to be.

We need a more cohesive economic approach, as we know and applied it always yields better results. It could be regime change or reverse elections. the economic approach benefits the American citizens with large monetary rewards versus using expenditures in war, thus, continuing to destroys American’s assets and create little benefits for the citizens.

Most people deny the facts, or the concept of Pax Americana, by attaching themselves to fallacies, or by accepting the rhetoric and demagoguery of leaders, evading the responsibility that conveys to accept such imperial responsibility.

This is a dangerous stance as citizens and creates apathy.

We are also seeing a serious lack of participation in elections and debates, this has put in question if America is a Democratic Empire or is evolving into a dictatorial Empire –Patriot Act at home, pre-emptive wars abroad.
Civil liberties of Americans have deteriorated more than ever, as Justice Kennedy commented on August 6 of 2006 “we are losing our democracy, faster than we are fighting for it”. This loath at home of civil liberties is the result of a poor planning in foreign policy and evades the responsibilites that result of poor decissions, and continue to act irresponsiblity in the frame of Pax Americana.

The lost capacity to argument forward looking ideas from part of citizens how best use the Pax Americana, it erodes any benefit that might have created, and it should be a serious questioning of our leaders.
By accepting the responsibilities of having soldiers based in 169 countries fighting an average of five armed conflicts a year for the past fifty years and with more than seventeen million people directly in the feeral payroll engaged in controlling the globe, we need to take seriously our role.
As citizens of the Empire we need to demand a new approach, a real monetary and economic driven approach that benefits all and no only a few. We must take the empirial responsibilities seriously.

TO GO BEYOND THOUGHT

2006-08-04T11:17:00.000-04:00

From Parabola Magazine
An interview with Karen Armstrong

http://www.parabola.org/magazine/current_excerpt.php4

Parabola: Can you describe the Axial Age and the light it might shed on the difference between thinking and knowing?

Karen Armstrong: You were supposed to get underneath thinking. In India in particular, the concern was that thinking as well as feeling were not what constituted the deepest self of the human being, that it was something other. This didn't mean that they weren't interested in being intelligent and rigorous and analytical, but the goal was to go beyond thought. People in the Axial Age were reaching out for an ultimate realityÑand it could be called Brahman or God or nirvana or the Tao--that couldn't be encapsulated in human thought and language.

P: Why can't it be encapsulated?

KA: Because human beings experience transcendence. We have ideas and experiences that go beyond our conceptual grasp.

P: Does rational thought blind people to the elusive aspects of our experience?

KA: No. We need rational thought. Plato described the two different ways of approaching truth as mythos and logos. Mythos is a more silent, intuitive way of looking at reality and logos is more of a scientific, discursive, logical way, and we need both. We've always needed logistic thought, if only to sharpen an arrow correctly.

P: But we need mythos as well.

KA: Yes. When a child dies, we want a scientific explanation but that's not all we need. We need some kind of different kind of thinking that helps us deal with the turbulence of our inner world at such a time. Myth is an early form of psychology. There are all these stories about gods going down into the underworld to slaughter demons. We all have to learn how to negotiate our unconscious worlds. We have to go into the labyrinth of our own selves and fight our own monsters.

We've always been aware that there are two ways of approaching truth, one through reason and science and the other through an intuitive knowing. The word mythos comes from the Greek word which means to close the mouth or close the eyes. Mystery and mysticism come from the same root. So they are associated with a sense of darkness, with going into a realm where you don't see very clearly, where things are more obscure and will remain obscure.

It is also a realm of silence rather than wordy thought. We approach this kind of knowing in art. At the end of a great symphony or when you've listened to a great poem there's often nothing to say. You're being pushed beyond rational thoughts and distinctions into a silent intuitive space.

P: What is the proper role of thought in religious search?

KA: Well, thinking can only take you so far. Action, behavior, especially compassionate behavior, is more important than thinking. By constantly exercising compassion, the golden rule, you enter a different state of consciousness. This rather than thinking will get you to enlightenment.

P: It's amazing that all the religious movements came to that same conclusion. But can it be that simple?

KA: Yes. The Buddha said compassion can bring you the release of the mind. This is a synonym in the early Buddhist scriptures for the ultimate enlightenment of nirvana. The New Testament is full of the same wisdom. Charity and loving kindness bring you into the presence of God, not thinking things. In the Western Christian world we've come to place too much emphasis on thinking certain beliefs.

What the sages in the Axial Age were discovering was second-order thinking, where you watch the mind thinking. Socrates for example could make you realize that you don't know what you think you know. He demonstrated that thought can do a whole lot of things but that it always finishes with unknowing. Socrates could take a person through a series of questions until he realizes that he hasn't a clue what, say, courage is, even though he's been on the battlefield. Often the people who came to Socrates--as far as we can tell from Plato's accountsÑthought they knew their minds. After ten minutes with Socrates they realized they didn't know anything. In the Axial Age people were testing the limits of what thought can do. It can take us a long way but we keep bumping up against an unknowing. Socrates said that is where you really begin your quest, when you realize you know nothing.

P: You're talking about a very fertile kind of not knowing, not just obliviousness, not just stone ignorance.

KA: Yes, and it's a humbling thing. Instead of being full of ourselves, we begin to realize that the world is deeply mysterious and elusive. We realize that we haven't got the tight grasp on reality that we think.

P: In The Great Transformation and in all your writing you make a distinction between belief and this more fertile state.

KA: We've made a fetish of belief in the Western Christian world, so that we call religious people "believers," as though accepting certain doctrines is the main thing they do. But this is very eccentric.

P: And dangerous, as you've pointed out in your writings, about the way fundamentalism leads to violence.

KA: And dangerous. As the Taoists said way back in the Axial Age, to expect certainty from religion is immature and unrealistic. It was a sign of an undeveloped spirituality, a childish viewpoint. There is no certainty. The Taoists found a great freedom in not being certain about things. They didn't have to pompously declaim facts and doctrines and truths. Keats spoke of "negative capability," when the mind is capable of resting in doubts and uncertainty without any irritable straining after facts and reason. It's quite a trick of the mind to allow yourself to be in that fertile state of unknowing, to just let yourself stay in the darkness.

P: We're in a frightening place in world history. Your predictions about religious war have come true, and our whole environment is in a perilous shape. From your study of the origin of the great religious traditions, what really matters?

KA: The exercise of compassion is what matters in our world. The Dalai Lama says "my religion is kindness." Confucious said "religion is altruism"Ñdethroning yourself from the center of your world and putting another there. Now this requires intelligent thought. You really have to think and practice the golden rule about what the other person really wants rather than what you think he ought to want. When we speak to people we should behave as Buddha or Socrates did. Address them where they really are and not where we think they should be. We have to put ourselves in the place of another, and we have to be able to do this globally.

P: This state of compassion, of engagement, does take thinking.

KA: It does. It takes constant, flexible intelligence. Each case will be different so principles are really not the point. You have to be flexible to respond to each situation that arises, especially in a time where everything is changing so fast.

We have to investigate. We have to find out more about the world. I've had some extraordinary conversations with highly educated Americans who have asked me where the Palestinians have come from, as if they marauded in off the desert. I've had to explain Palestine. There is so much ignorance.

All the great sages have said that we must see things as they really are. Don't bury your head in the sand and say that environmental catastrophe isn't going to happen, for example. In the Axial Age, the prophets of Israel called those positive thinkers who thought that Jerusalem was not going to fall because God was with them "false prophets." You cannot achieve enlightenment that way. It takes information gathering and that does not mean being content with the little scraps of sound bytes that are handed out by politicians or Fox News.

P: Often, in our culture, people treat yoga and meditation like a kind of spa treatment. Our practice of the precepts doesn't keep pace with our practice of various techniques.

KA: Absolutely. I saw a place in Toronto called the yoga lounge, next to a nail parlor. You could do a little yoga or meditation and hop in to have your nails done. This is not what yoga is. In the Axial Age, it was based on a five-point moral program. At the top of the list was ahimsa or nonviolence. This did not only mean that you couldn't kill or maim somebody but that you weren't to say a cross word or make an impatient gesture or swat an insect. Until your guru was satisfied that this was second nature to you, you couldn't begin to sit in the yogic position. What religious knowledge was about was not just thinking but behaving. Living a self-effacing, nonviolent life style was just as important as your mastery of sacred texts.

P: In your book you describe an evolution from external blood sacrifice to internal sacrifice--and in the case of Buddhism, to sacrifice of the concept of self. Yet when I think of living this way, completely open, defenseless, radically honest, it's as if certain primal emotions come alive. The ego doesn't want to be sacrificed, to be killed.

KA: Yes, but when you've mastered this way of life you start to experience incredible joy because you're training yourself to go beyond the frightened ego, who often needs to destroy other people and bolster itself up. If you let that go, a lot of your fear goes down.
We are programmed to defend ourselves, but if we take ourselves out of that mind state, if we start divesting ourselves of ego, we enter a different state of consciousness.

P: What came through your book is the emergence of another way of thinking--with conscience. You cover huge swaths of history in detail. Yet, there's a beautiful base note of compassion. It comes through as the last word, the ultimate religious act.

KA: The point is that there was no collusion. This is the conclusion reached by these spiritual geniuses who worked as hard at finding a cure for the spiritual ills of society as we are working to find a cure for cancer. This is the conclusion they came to. Not because it sounded nice but because they found it worked. The Buddha always said, "Test my teaching against your experience." They found that if you did live in this way you experience an enhancement of being. The Chinese Confucians spoke of human heartedness, of becoming more humane.

P: Axial sages thought the heart and mind should work as one.

KA: Yes.

P: So what happened? How did these wonderful insights of the Axial Age harden into rigid principles and hierarchy?

KA: Well of course not many people actually want to be transformed. They don't want to lose themselves. Most people expect from religion a little moral uplift once a week.

P: We live in the place and the age when religion has become another consumer item or service.

KA: Yes, it is a commodity. People say wouldn't it be great if there was another Buddha. But I'm not sure such a great sage could manage today. The media and the exposure could easily destroy them, encouraging narcissism, for example.

P: How do we find our way out of this trap of spiritual materialism? Can we think our way out?

KA: Basically, I don't think we need any great figure to come along. We know what to do. The golden rule, that's all it is. All the traditions teach the same. Instead of waiting for some lead, just go on, just start practicing. And perhaps start demanding it from our politicians and religious leaders, too.

P: That is a radical suggestion.

KA: But everybody knows about the golden rule or compassion. "I may have faith that moves mountains," says St. Paul. "But if I lack charity it's worth nothing at all." And then there's imagination, which is the ability to think yourself into the position of another.

P: We tend to minimize imagination, as if it has to do with fantasy, distraction.

KA: I think it is the religious faculty. The religious imagination is endlessly trying to envisage the eternally absent God, that which always eludes us. I think it's the moral faculty too, because you have to use it to think yourself into the position of the other.

P: What you're saying is extraordinary because there is such a strong tendency to go on facts, to stick to life as it is, and yet we really can't.

KA: We can't because this is part of the way our minds go. We keep bumping up against mystery. There's great enlightenment to be had by accepting that, and if everybody did it the world would be a much better place.

The economy's next time down has begun

2006-08-03T12:46:00.000-04:00

The bills for the housing bubble and all the debt that's been run up in the last few years are coming due. That means pain for stocks, for homeowners and for consumers with too much debt.

By Bill Fleckenstein
At a speech presented to the precious-metals conference in May 2004, I introduced the concept of "The Next Time Down" -- a bearish process that has begun to unfold, some two years later, in the financial markets and economy. (Obviously, I was early, as usual.) This week, I would like to give readers an update as to where I think we are in the process. First, though, a quick synopsis, which comes directly from my speech:

"The 'use-your-house-as-an-ATM-to-live-beyond-your-means' stimulus is finished, thanks to the recent de-leveraging/crackup in the bond market. The refi game and the bull market in housing it created postponed the consequences of the largest stock market bubble in history. Though the Fed and the rest of the government succeeded in postponing the fallout from the massive misallocation of capital that took place in the mania, they have also succeeded in compounding and exacerbating those consequences. Even more leverage was created in the system, as we attempted to speculate our way to prosperity.

"In short, the excesses from the bubble have not been cleared away, but they will be, along with the recent excesses from the refi bubble … These developments will tend to be self-reinforcing, and especially damaging, if and when housing prices join the decline."

Exhaustion: built into a bubble
The Federal Reserve precipitated, aided, abetted and cheered the largest (by dollar volume) stock mania in the history of the world. That mania exhausted itself in 2000. The exhaustion was not caused by the Fed tightening, contrary to what many folks believe, any more than the 1929 market break (and ensuing Great Depression) was caused by Fed tightening.

Manias end in exhaustion, though there are always coincident events surrounding the end of the move that get blamed for the decline. In both 2000 and 1929, higher interest rates were present, but they were not the cause. The preceding bubble was the cause of both the subsequent exhaustion and the ensuing bust.

Stock-splits out, split-levels
In an attempt to avoid the consequences of the late-1990s stock mania, the Fed managed (after 13 rate cuts and several tax cuts) to precipitate a bubble in housing. That bubble, in my opinion, is a far more dangerous problem than the stock mania was, because of all the leverage involved -- and the damage that will eventually inflict on the financial system, in addition to consumers whose overspending ways will be throttled back as the housing mania unwinds.

The next time down has been slow in developing, due to the fact that the housing bubble lasted longer than I would have expected (bubbles always last longer than anyone expects). And that is mostly due to the incredible abdication of responsibility on the part of all manner of lenders. That the public was gullible enough and willing to take on the debt is somewhat surprising (given that many people were burned by the preceding stock mania), but it wasn't shocking.

As I noted in two previous columns ("Straight talk on what the Fed has wrought" and "It's RIP for the housing boom"), the housing mania peaked a year ago. Mortgage applications have declined since then, transactions have stalled out and inventories of new and existing homes have grown. Last week's release of May existing-home sales showed that inventories climbed to 6.5 months. To put that into perspective:

In the spring of 2003, when the economy was near the lows, existing homes for sale stood at five months' worth of inventory.

In the middle of 2000 (not exactly a weak period), the number was about 4.2 months.

Thus, we are on the verge of a big down-leg in housing prices.

Overview of an aftermath
The next time down will be a time where people will be squeezed financially, because their main asset, i.e., their homes, will be declining in value. Meanwhile, their loan will be rising as a percentage of the value of that house and, in many cases, may ultimately pass 100%.

Jobs will be difficult to come by, as they have been for many, and that's a lingering residue of our prior stock mania and our general lack of competitiveness (productivity protestations to the contrary). It will indeed be a very ugly period, as the economy shrinks and people scramble to figure out how best to service their enormous debt loads. This will play havoc with the dollar, and I believe the "vaporization" of the dollar will be part-and-parcel of the next-time-down scenario.

When unmasked at last
Meanwhile, the Fed will become thoroughly discredited at some point. It will ultimately be seen as the culprit that created the conditions for the bubbles (the cause of the next time down). And, more importantly, the Fed will be seen as impotent to do anything about it. The Fed will cut rates, which really won't be effective, though it will put tremendous pressure on the dollar. Of course, the Fed won't care about dollar weakness until it's a problem, in the form of funding the Treasury market.

So, in the environment that I envision:

Stocks will decline dramatically in value.

The dollar will see serious weakness.

Foreign currencies (as lame as they are) will do well.

Precious metals will do the best, because they are currencies beholden to no central bank and without liabilities.

We are now only starting the process with metals, and metals (as well as foreign currencies) have done well before the point in time where I've felt they would provide debasement insurance. And, when we are in the period that I see us eventually entering, metals will go up, even as stocks go down. Likewise, metal stocks will rise, even as stocks generically decline.

En route to the zero-correlation zone
None of that has been the case thus far, because just the opposite of what I expect to happen has happened. By that I mean: The Fed has managed to maintain its credibility.

Currently, everyone is afraid of the Fed, which causes all asset classes to trade off together. Thus, there is no discrimination among them (creating casual correlations that will turn out to have been ephemeral). As you can see from what I've said, I expect quite a good deal of discrimination prospectively.

The theocrats thrive

2006-07-25T18:44:00.000-04:00

Cynthia Tucker - Universal Press Syndicate

07.24.06 - Religious extremists have powerful political allies Last week, Ralph Reed, once the golden boy of hard-core religious conservatives, was defeated in Georgia's Republican primary for lieutenant governor, his first attempt at elective office. Because he rose to prominence as the cherubic face of the Christian Coalition, his political remains have been autopsied by pundits nationwide, some of whom are speculating that the cause of death was the more general demise of America's theocrats.

But they're wrong. Reed lost because his hypocrisy on the issue of gambling became too glaring for his ultraconservative constituents to ignore. While he was recruited by disgraced lobbyist Jack Abramoff to work against gambling initiatives in Alabama, the project was largely funded by the Mississippi Band of Choctaws, which wanted to protect its casinos from competition.

His defeat, however, by no means suggests a loss of power for a small group of vocal activists who wish to force all Americans to live according to their benighted religious views. They still have an extraordinary ally in the Oval Office. A day after Reed's loss, President Bush vetoed a bill supporting federal funding for a broadened program of embryonic stem cell research. The president used his first veto in six years in office to strike down a proposal supported by nearly 70 percent of the country, including many conservatives who oppose abortion.

The president's veto means that federal funding will not be available to support research on embryos left over from fertilization procedures, even if parents are willing to donate them for that purpose. Hundreds of thousands of such embryos are stored in fertility clinics around the country; the vast majority of them will eventually be discarded as medical waste. (Apparently, the discarding of those embryos doesn't bother the president nearly as much as using them to find cures for Parkinson's and Alzheimer's would.)

The theocrats thrive. Though they represent only a fraction of the country's voters -- indeed, a minority of GOP voters -- they are a powerful force in GOP politics, especially in the Deep South. Desperate for their support in his anticipated bid for the presidency, Sen. John McCain, R-Ariz., has kissed the ring -- metaphorically -- of an icon among the theocrats, Jerry Falwell; in May, McCain gave a speech at Falwell's Liberty University. Six years ago, McCain had rightly pegged Falwell and Pat Robertson as "agents of intolerance."

Though they have not yet succeeded in remaking the federal courts in their own image (that could still happen), this small group of extremists has enjoyed significant victories over the last six years. Even as U.S. diplomats and public officials battle the notion that this country is at war with Islam, right-wing fundamentalists in uniform intend to turn the armed forces into a haven for proselytizing. Last year, congressional hearings were held after students at the Air Force Academy complained about overt religious discrimination; the Air Force issued regulations emphasizing "tolerance" and religious freedom.

But Focus on the Family, headed by Christianist James Dobson, quietly lobbied the Air Force to weaken its regulations. Officers are once again free to pressure cadets about their religious beliefs.

The theocrats have also intimidated scientists, stalled over-the-counter sales of an emergency contraceptive called Plan B, and used their political connections to get federal funds for their so-called pregnancy resource centers, where they wrongly inform pregnant women that abortions are linked to breast cancer and infertility. Several family planning experts say that same group of rigid ultraconservatives is now working to limit access to contraceptives.

They "are increasingly trying to portray contraceptives as ineffective and trying to redefine some of the most popular and effective methods as abortion -- such as birth control pills and emergency contraception," said Cynthia Dailard, senior public policy analyst for the Alan Guttmacher Institute, which advocates family planning.

If these Christianists were genuinely interested in curbing abortions, they'd support the use of contraceptives. But their goal is to turn back the clock, to bring back the days when women had no control over reproduction. Like right-wing Muslims, they rage against modernity itself.

Don't be fooled by Reed's defeat. The extremists are still winning.

(c) 2006, The Atlanta Journal-Constitution

URL: http://www.workingforchange.com/article.cfm?itemid=21132

Enough of the D.C. Dems

2006-07-25T10:44:00.000-04:00

Enough of the D.C. Dems
By Molly Ivins
March 2006 Issue

Mah fellow progressives, now is the time for all good men and women to come to the aid of the party. I don’t know about you, but I have had it with the D.C. Democrats, had it with the DLC Democrats, had it with every calculating, equivocating, triangulating, straddling, hair-splitting son of a bitch up there, and that includes Hillary Rodham Clinton.

I will not be supporting Senator Clinton because: a) she has no clear stand on the war and b) Terri Schiavo and flag-burning are not issues where you reach out to the other side and try to split the difference. You want to talk about lowering abortion rates through cooperation on sex education and contraception, fine, but don’t jack with stuff that is pure rightwing firewater.

I can’t see a damn soul in D.C. except Russ Feingold who is even worth considering for President. The rest of them seem to me so poisonously in hock to this system of legalized bribery they can’t even see straight.

Look at their reaction to this Abramoff scandal. They’re talking about “a lobby reform package.” We don’t need a lobby reform package, you dimwits, we need full public financing of campaigns, and every single one of you who spends half your time whoring after special interest contributions knows it. The Abramoff scandal is a once in a lifetime gift—a perfect lesson on what’s wrong with the system being laid out for people to see. Run with it, don’t mess around with little patches, and fix the system.

As usual, the Democrats have forty good issues on their side and want to run on thirty-nine of them. Here are three they should stick to:

1) Iraq is making terrorism worse; it’s a breeding ground. We need to extricate ourselves as soon as possible. We are not helping the Iraqis by staying.

2) Full public financing of campaigns so as to drive the moneylenders from the halls of Washington.

3) Single-payer health insurance.

Every Democrat I talk to is appalled at the sheer gutlessness and spinelessness of the Democratic performance. The party is still cringing at the thought of being called, ooh-ooh, “unpatriotic” by a bunch of rightwingers.

Take “unpatriotic” and shove it. How dare they do this to our country? “Unpatriotic”? These people have ruined the American military! Not to mention the economy, the middle class, and our reputation in the world. Everything they touch turns to dirt, including Medicare prescription drugs and hurricane relief.

This is not a time for a candidate who will offend no one; it is time for a candidate who takes clear stands and kicks ass.

Who are these idiots talking about Warner of Virginia? Being anodyne is not sufficient qualification for being President. And if there’s nobody in Washington and we can’t find a Democratic governor, let’s run Bill Moyers, or Oprah, or some university president with ethics and charisma.

What happens now is not up to the has-beens in Washington who run this party. It is up to us. So let’s get off our butts and start building a progressive movement that can block the nomination of Hillary Clinton or any other candidate who supposedly has “all the money sewed up.”

I am tired of having the party nomination decided before the first primary vote is cast, tired of having the party beholden to the same old Establishment money.

We can raise our own money on the Internet, and we know it. Howard Dean raised $42 million, largely on the web, with a late start when he was running for President, and that ain’t chicken feed. If we double it, it gives us the lock on the nomination. So let’s go find a good candidate early and organize the shit out of our side.

Molly Ivins writes in this space every month. Her latest book is “Who Let the Dogs In?”

Religion and Philosophies That Kill

2006-07-19T10:53:00.000-04:00

Humans continue to prove be the most damaging creation to our world.
We have the capacity to create ideas that justify anything, from cannibalizing each other, to invent with our talent systems of mass destruction that can kill hundreds of thousands in one blip as the atomic bombs of Hiroshima and Nagasaki.
The destruction experience continues with innovative procedures. The quality of the killing and the quantity of the killing now has taken philosophical and religious trends. Who kill for what and how is done, do we mass murder or use sophisticated guns or laser guided missiles or fission bomb or we dump depleted uranium in hundreds of thousand shells as done in Iraq.
We continue to walk away from one of our most untapped talents: human to human dialogue, mutual education and respect for our social agreements.
The latest killings are taking the name of religion to a point of questioning those lauded gods.
If your god justifies your killing shouldn’t you change gods, otherwise there is no much you can add to our race, our planet, our development, even your religion. If your religion puts a higher laud in you as dead than puts laud in you alive, well, please do it alone and do not leave a mess behind.
Religious leaders, town leaders all the way up to national leaders are becoming co-conspirators to killings by doing no much or by doing too much in promoting or avoiding their own tenets or respect for human live and using all means to save all lives.
When religion and political leaders promote killing of each other for some well rhetorical argument, we need a serious new way to grow in our learning as species and clearly top to bottom new leaders.

BUILDING FOUNDATIONS FOR REAL DEMOCRACY AND FREEDOM

2006-07-16T09:39:00.000-04:00

BUILDING FOUNDATIONS FOR REAL DEMOCRACY AND FREEDOM
Riane Eisler
www.partnershipway.org

Millions of us are working for a more equitable, caring, peaceful, truly democratic and free society. Today, these goals are seriously threatened, both in the United States and worldwide. We are at a historic juncture when we are challenged to go deeper. Now is the time to reassess and expand the progressive agenda, starting with core principles and methods. It is a time to assess what has been missing and formulate long-range strategies.

A central lesson from history is that regressive leaders who rely on fear and force recognize the foundational importance of family and other intimate relations in the establishment of social values and political and economic structures. The reason for their intensive focus on these relations is that the construction of family and other intimate relations directly influences what people consider normal and moral in all relations – public as well as private. Family relations affect how people think and act. They affect how people vote and govern, and whether the policies they support are just and genuinely democratic, or violent and oppressive.

Yet if we look at progressive politics and media, progressives have basically ceded values for family and other intimate relations to the regressive fundamentalist bloc. If you pick up The American Prospect, The Nation, and other progressive journals, other than an occasional mention of hot-button issues such as abortion and homosexual marriage, you don’t read about developing and mainstreaming progressive family policies and practices. Relinquishing the definition of “family values” to the regresssives has been, and will continue to be, disastrous.

Regressives have successfully pushed our culture back by insisting on a male dominated, hierarchical structure of family. U.S. fundamentalists stress the “headship” of the father in the family, with women and children subordinate to the will of the father. Whether Khomeini in Iran, Hitler in Germany, the Taliban in Afghanistan, or some fundamentalists in the United States, dictatorial leaders always give top priority to “getting women back into their traditional place” in a “traditional family” – a code phrase for a punitive, authoritarian family where women are subordinate and economically dependent, and children learn their parents’ (usually father’s) will is law. These early lessons then translate into dominator political and social structures, because people often vote in ways that unconsciously replicate their early family experiences.

Slogans like "traditional values" have often marketed a family where fathers make the rules and harshly punish disobedience – the kind of family that prepares people to defer to "strong" leaders who brook no dissent and use force to impose their will. These slogans have masked a family "morality" suited to undemocratic, rigidly male-dominated, chronically violent cultures.

We can, and must, offer a progressive partnership family agenda to counter the regressive “family values” agenda. We are forming a coalition of progressives from all sectors, religious and secular, to articulate the family values and policies appropriate for truly democratic families and societies. Our purpose is to develop clear goals, a think tank to articulate family as a progressive value, guidelines for public policies, and social marketing strategies that can reach people’s hearts and minds.

Principles

Historically, the political and economic top of the domination pyramid has continued to rebuild itself because we haven’t changed its foundations. A pro-family, pro-child, partnership political agenda is essential for long-term structural change. People first learn respect for human rights or to accept human rights violations as normal in the foundational human relations: the relations between the female and male halves of humanity and between them and their daughters and sons.

A progressive family pro-family agenda is not about left vs. right or liberal vs. conservative. It’s about constructing and strengthening the psychological and cultural foundations for a less violent, more equitable world. It’s about how we organize our society for the benefit of all.

A progressive family agenda is informed by the principles at the core of both religion and humanism: principles that support caring and equity. It is not about discarding religion. It’s about building on the partnership elements of religion that support compassion, justice, and nonviolence, while rejecting those that justify domination, violence, and injustice – starting with our primary relations. This is no simple undertaking because the “traditional” family values that are being promoted by regressives have been so effectively marketed, beguiling people with “Christian” agendas that actually violate Christian teachings.

The task at hand for progressives is to invite responsible policy makers, leaders, the media, and the general public to look with fresh eyes at the meaning of the term “family,” “ values, ” and “morality,” to redefine these terms in ways based on partnership, mutual respect, and caring rather than domination, top-down control, and coercion.

Analysis

Family relations are microcosms of social relations. In a top-down, authoritarian family that relies on fear and force, children often learn to be denial about their parents’ behavior since they depend on them for survival: for food, shelter, and protection from strangers. This makes it easy to later be in denial about "strong" leaders who abuse power, and to identify with them instead – particularly in times of actual or perceived external danger such as ours.

Family relations based on domination and submission also teach important lessons about violence. When children experience violence, or observe violence against their mothers, they learn it’s acceptable to use force to impose one’s will on others.

Not everyone from families based on domination and submission fits these patterns – but many people do if they don’t gain access to more egalitarian relationship models. Studies show, for example, that men from authoritarian, abusive families tend to vote for “strong-man” leaders. Also, they tend to support punitive rather than caring social policies.

To build cultures of justice, safety, and democracy, we need families where women and men are equal partners, where children learn to act responsibly because adverse consequences follow from irresponsible behavior, where they learn to help and persuade rather than hurt and coerce, where they’re encouraged to think for themselves.

Toward a Progressive Family Values Agenda

We are here offering some initial guidelines for a progressive agenda on family relations based on a common principle: the transformation from domination to partnership as the model for personal, social, economic, and political relations.

This agenda has three goals:

To help develop and disseminate progressive values that promote intimate relations based on partnership – mutual respect, accountability, and caring.
To show how the current definition of “traditional family values” is based on a selective reading of scriptures that supports a system of top-down rankings of domination ultimately backed up by fear and force.
To show why a more just, democratic, and peaceful world requires a reframing of ethics for family relations.
A progressive pro-family, pro-child, pro-democracy political agenda will:

Focus on the rights of children to have a fair opportunity to grow-up healthy and thrive, including the right to shelter, nutrition and health care, freedom from violence, and a clean environment.
Promote equality between women and men.
Support all families, whether children are parented by a man and woman, a single parent, or two parents of the same sex.
Promote an economic vision where the drive for productivity does not overshadow the value of having parents spend time with their children.
Support parents with policies such as a living wage, paid parental leave, high quality childcare, and preschool education for all children.
Protect reproductive freedom and show that the only way to prevent abortions is to provide family planning and sex education, as do other nations with much lower abortion rates.
Provide education for healthy, nonviolent family relations and parenting for both boys and girls, as offered by Nordic nations, which have much lower crime rates, prosperous economies, longer life spans, and regularly rate at the top of the U.N. Human Development Reports.
Promote real educational reform through small classrooms and small schools where every child has individual support and attention.
Take a stand against corporate practices that harm children – from toxic dumps and other forms of environmental pollution to marketing unhealthy food and drinks – and recognize that we must address global warming and other environmental problems that threaten our children’s future.
Make ratification of United Nations conventions to protect women and children a top priority.
Take a strong stand against intimate violence – the violence against women and children in families and other intimate relations that is a mainspring for learning to use violence to impose one’s will on others.
Family Violence as a Key Moral Issue

Rather than focusing on current notions of what form constitutes a moral family, a progressive political platform should focus on what kinds of family behavior is moral and try to effect change in those traditions that are unjust and violent.

We must focus attention on the global pandemic of violence against women and children that a U.N. report called the most ubiquitous violation of human rights worldwide (UNICEF study, 1997).
We must educate policy makers about the link between intimate violence and national and international violence.
As a long-term strategy for changing reliance on force to “solve” problems worldwide foreign aid should focus on changing traditions of family violence.

Consider these statistics: Each year 40 million children under the age of 15 are victims of family abuse or neglect serious enough to require medical attention (U.N. We the Children: Meeting the Promises of the World Summit for Children 2001). A woman is battered, usually by her intimate partner, every 15 seconds in the United States. (U. N. Study on the Status of Women, 2000). In China and India, millions of baby girls are killed or abandoned by their parents. “Honor” killings by other family members result in the death of thousands of women in Middle Eastern and South Asian countries (Ending Violence Against Women: Human Rights in Action, 2003). 20 percent of women and 5-10 percent of men have suffered sexual abuse as children (World Report on Violence and Health, 2002, WHO). Each year, an estimated 2 million girls undergo some form of female genital mutilation (U.N. The World’s Women 2000: Trends and Statistics). Child abuse alone costs the United States economy $94 billion a year (Violence Creates Huge Economic Cost for Countries, WHO Report, 2004).

Intimate violence and national and international violence are as tightly bound together as the fingers of a clenched fist. If we’re serious about a more peaceful world, vigorously addressing intimate violence must be a top priority for both secular and religious leaders. This is the purpose of the Spiritual Alliance to Stop Intimate Violence (SAIV) co-founded by human rights activist and author Riane Eisler and Nobel Peace Laureate Betty Williams (For more information, please see www.saiv.net ).

A Call to Action

How can we expect people raised in authoritarian families where men are ranked over women, and children learn that any questioning of authority will be severely punished, to vote for leaders whose policies promote relations of mutual respect, responsibility, democracy, and nonviolence? How can we build societies respecting human rights when millions of people grow up in families that routinely violate human rights?

Let’s make ending family violence and other forms of intimate violence a top religious and secular issue that speaks to the heart of all people who care about children and families.
Let’s bring together both secular and religious groups already working for policies that support families where mutual respect and accountability, rather than inequality and rote conformity to orders for fear of harsh punishment, are modeled.
Let’s work with religious groups towards supporting real spirituality: compassion, empathy, and non-violence.
Let’s reach out to the people who are finding community and spirituality in religious institutions that preach fundamentalist ideas by helping them focus on these basic moral issues – and let’s show that this is essential to build foundations for the less violent, more equitable, safer future everyone wants.

Forming a coalition of progressive politicians, organizations, foundations, and businesses to support a long-range family values agenda to counter regression and move our culture and political system forward is the essential next step for progressives. We invite leaders from all sectors – secular and religious – to flesh out this agenda. The next step will be to enlist the best social marketing, word-smithing, and PR talent to implement a strategy that reaches peoples’ hearts and minds.

This is what people can – and will – respond to if we are clear and passionate in our message with standards and stories that inspire and transform beliefs, behaviors, and policies. Then we can resume the movement toward realizing the American dream of democracy, freedom, and justice for all.

****

Riane Eisler is best known for her international bestseller The Chalice and The Blade, as well as the award-winning Sacred Pleasure, Tomorrow’s Children, and The Power of Partnership. She is co-founder of the Spiritual Alliance to Stop Intimate Violence (www.saiv.net ), and president of the Center for Partnership Studies www.partnershipway.org .

Top

Lessons from the Un-Gore of Mexico

2006-07-14T10:10:00.000-04:00

Gregg Palast does not dissapoint with its articles. This article is worth its content in pure gold.
A lesson on democracy from Mexico might be a little too much to swallow but it is real and true.

Lessons from the Un-Gore of MexicoJuly 14, 2006
By Greg Palast

[Watch "Florida con Salsa," Palast's 15-minute investigative report from Mexico City for Democracy Now!]

The Exit polls said he won, but the "official" tally took his victory away. His supporters found they were scrubbed off voter rolls. Violence and intimidation kept even more of his voters away from the polls. Hundreds of thousands of ballots supposedly showed no choice for president -- like ballots with hanging chads.

And the officials in charge of this suspect election refused to re-count those votes in public. Everyone knew full well a fair count would certainly change the outcome.

You've heard this story before: Gore 2000. Kerry 2004.

But Lopez Obrador 2006 is made out of very different stuff than the scarecrow candidates who, oddly, call themselves "Democrats."

For six years now, I've had this crazy fantasy in my head. In it, an election is stolen and the guy who's declared the loser stands up in front of the White House and says three magic words: "Count the votes."

This past Saturday, my dream came true. Unfortunately, it was in Spanish -- but I'll take what I can get. There was Andreas Manuel Lopez Obrador, presidential challenger, standing in the "Zocalo" -- the square in front of Mexico's White House, telling the ruling clique inside, "Count the votes!"

Most important, his simple demand was echoed by half a million pissed-off, activated voters chanting with him, "Vota por vota!" -- vote by vote.

And you know what? I think they are going to have to listen. I suspect that the rulers of Mexico, a vicious, puffed-up, arrogant elite, may well have to count those votes. But, for that to happen, someone had to ask them to do it -- in no uncertain terms.

Traveling the USA, I'm asked again and again 'Why don't Democrats stand up when their elections are stolen?'

The answer: for the same reason jellyfish don't stand up... they're invertebrates.

I'm beginning to find that answer a bit too glib (though darn funny). Because it's not about electoral cojones; it's about a devotion to democracy deep in the bone. Yet weirdly, candidates that call themselves "Democrats" seem kind of, well, indifferent to democracy.

Why? Elections are the radical tool of the working class -- the great leveler of the powerless against the too-powerful. But the candidates themselves, both Republican and Democrat, tend to come from the privileged and pampered class. Votes are just the surfboards on which their ambitions ride.

Right now in Mexico's capitol, nearly a million ballots sit in tied bundles uncounted. That's four times the "official" margin of victory of the ruling party over Lopez Obrador. Supposedly, they're "votos nulos" -- null votes, unreadable. But, not surprisingly, when a few packets were opened, the majority of these supposedly unreadable votes were Lopez Obrador's.

If you think that's a Mexican game, think again. Because that's exactly what happened in Florida and Ohio.

In Florida, 179,855 ballots supposedly showed no vote for President. A closer look by the US Civil Rights Commission statisticians showed that 54% of those Florida "votos nulos" were cast by African-Americans. Did Black folk forget to vote for President, couldn't make up their minds or, as one TV network implied, were too dumb to figure out the ballot? Not at all. Machines can't count some ballots. But people can. For example, several voters wrote in, "Al Gore," which the machines rejected as his name was already printed on the ballot. The write-in could fool a machine but a human has no problem figuring out that voter's intent.

The National Opinion Research Center at the University of Chicago reviewed all 179,855 "uncountable" votes and found the majority attempted to choose Gore. And they would have been counted -- but Florida's Secretary of State, Katherine Harris, ordered a halt.

So Bush was elected not by counting the votes but by preventing their count. And he was reelected the same way in 2004 when a quarter million votes were nullified in Ohio.

But why fixate on Florida and Ohio? Here's a nasty little fact about voting in the Land of the Free not reported in your newspapers: 3,600,380 ballots were cast in the November 2004 presidential election that were never counted. In 2000, the uncounted ballots totaled just under two million.

And where were the Democrats? In 2004, behind the huge jump in uncounted votes was a mass challenge campaign aimed at poor, Black and Hispanic voters by the Republican Party -- pushing these voters, mostly Democrats, to "provisional ballots." They could have been counted, if someone had fought for it. Hundreds of lawyers were on stand-by but the head of the biggest legal team told me in confidence -- and in frustration -- that the Kerry campaign told them to stand down.

Recently, Al Gore was asked if the election of 2000 was stolen. "There may come a time when I speak on that, but it's not now," said the beta dog. (I suspect that if Al Gore were found bleeding in an alley, he'd answer the question, Who shot you? with "There may come a time when I speak on that...").

Lopez Obrador is of a different breed. At the rally last Saturday in Mexico City, he played video and audio tapes of the evidence of fraud on a screen eighty feet tall. Imagine if Gore had projected the "scrub sheets" of purged Black voters on a ten-story-high screen in front of the White House.

Lopez Obrador put political force behind his legal demands by calling on voters from every state in Mexico to march to the capital. Two million are expected to arrive this Sunday. The result: the word among the political classes is that the election may be annulled. Even the conservative Financial Times has warned Mexico's elite not to "fool itself" by ignoring the demand for a full vote count.

North-of-the-Border Democrats just don't get it. The Republican Party is pushing "provisional" ballots, pushing voter ID requirements, compiling secret challenge lists, scrubbing voter registries and selling us vote-nullifying ballot boxes: they get it completely. The GOP knows the key to their electoral domination is not in winning over their opponents' votes, but in not counting them.

The un-Gore of Mexico City has a lesson for the Blue-party gringos. Either the Democrats demand that all votes count, or the Democrats will count for nothing.

**********
Greg Palast is the author of the New York Times bestseller, "ARMED MADHOUSE: Who's Afraid of Osama Wolf?, China Floats Bush Sinks, the Scheme to Steal '08, No Child's Behind Left and other Dispatches from the Front Lines of the Class War." Go to www.GregPalast.com.

Palast's report, "Florida con Salsa? Vote Fraud in Mexico" was filmed and produced by Rick Rowley and Jacquie Soohen (Big Noise Films). Matt Pascarella, in Mexico, contributed to this investigation.

Held Hostage While Been Fiscally Responsible

2006-06-15T20:02:00.000-04:00

One of the first things one learns after receiving pay check as employee or business owner is that it has a finite number on the amount to be enjoy it. Usually, this amount is smaller than one hopes, thus we smartly learn to plan around this number, consequently the birth of our fiscally conservative and responsible behavior.
Now, 49% of Americans are imprudently using credit above their capacity to repay it in a prudent manner, and institutions with the alliance of lawmakers –republicans and democrats alike- enact laws allowing the debtor to increase their debt and guarantee the lender their risk.
Is that a fiscally conservative idea or is a risky liberal idea.

The funny thing if that hose driven by political demagoguery fail in the camp of so called fiscal conservatives, while the latest research on personal debt holders claims that 82% of those in default of personal debts call themselves conservatives. My first reaction was wow hypocrites, followed by “wow” liberalization of capital is been taken by the horns by imprudent conservatives thus lefties must be very smart prudent in fiscal matters.
I think the last statement is been proven correct by the present Washington crowd, from the largest deficit in the history of the country to the largest expenditures and indirect taxation ever and increase of federal imbalances.
So it is time for fiscal responsible folks to start to teach Washington a couple of lessons on fiscal responsibility and start to demand lower direct and indirect taxes.
The first thing is comes to mind is communication taxes. All taxes that arrive in your phone bill should be abolished. The government should take responsibility for people’s safety from the federal budget by supporting a national 911 service.
Next month read your phone bill, sum the amounts you pay in taxes for those services, let’s act and repel all communication taxes.
The second immediate tax to abolish should be all related to travel as for airport and airline taxes or gasoline taxes. In today’s world traveling as communicating is not a luxury it is a necessity, thus taxes are to be repeal in those activities, all the allocations should be planned from the general budgets from the states of federal government.
If you add the costs of those two taxes you are getting tripled taxed in those items by around 140%.
Some might oppose cutting taxes for some reason or another, the facts sustain that transportation and communication taxes should be totally eliminated. If you think like I do, call your elected officials, write a letter to the editor, let your opinion be known to others and we might be able to start to repeal some of those taxes that affect most of working Americans.

Legal Rape While Banning Abortion

2006-06-15T18:19:00.000-04:00

The States of Alabama, Colorado, Iowa, Kansas, Montana, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, have successfully enacted laws to ban de facto abortion rights in their states, and they consider themselves supra-religious states, and holders of some superior moral credo.
At the same time, these same states have common law marriages that allow the marriage of under age kids, in which the only requirement is cohabitation--the parties lived together and legal polygamy.

While the pray to the Lord, they let their kids get legally raped.

Although the definition may vary from state to state, the common features of a common law marriage are:
• Cohabitation--the parties lived together without age requirement.
• Consent--the parties intended to hold themselves out as husband and wife.
• Holding out--the parties "held themselves out" to the world as husband and wife (i.e. The parties spoke of each other as "my husband" or "my wife").
• Neither party was married to someone else.
This is the utmost hypocritical stance from the political power in those states.

At the same time these states are the most radical is the abolition of human rights.

Here is one of those cases in which, ignorance and hypocrisy are allied to build fallacies based on hate.

These states as the Colorado case resolved by the court today are prime examples of humanity degradation and faling into regression: http://www.breitbart.com/news/2006/06/15/D8I8Q3CO0.html
The leaders in those states must be held accountable. Specially, those so called holders of family values, it will be not far fetched calling them promoters of under age rape.

A disgraceful state of affairs.

If that is what conservatism is all about, then we have a serious case for strictly repudiating those ideas and support the protection of minors. Protecting free speech with forward modern ideas and human rights are for sale in exchange for demagogery and radicalism.

The leaders of the country, Republicans and Democrats alike, have fail human rights, and they continue engage in policy enactments that curtail freedom and promote regressive acts towards all of us.

Why the Rich Get Richer

2006-06-14T11:02:00.000-04:00

How to Profit From a Cooling Real Estate Market
by Robert Kiyosaki
Utility Links

Printable ViewEmail this PageTuesday, June 13, 2006
All over the U.S. there are stories of a rise in real estate foreclosures. Many people who took those exotic mortgages -- borrowing 125% of home value or choosing adjustable-rate mortgages -- are struggling to make their payments, and some aren't making it.

Also, a glut of new property supply, especially condominiums, is coming on line. A friend of mine, a very seasoned real estate investor, says in San Diego County, once one of the hottest real estate markets in the country, thousands of new condominiums are getting ready to come to market -- just as the market softens. He estimates that over 12,000 new units are coming on line, and the market, at the best of times, can only absorb about 1,000 condominiums a year. If he's correct, that means 12 years of supply will be ready for market in the next year.

As interest rates rise and the number of eager new buyers begins to diminish, adding supply to an already bad real estate market for sellers may mean a very good market for buyers and for property investors.

Hungry Alligators
The people who are in the most trouble are flippers -- people who aim to buy low and sell high within a short space of time. Many were buying condominiums off the plans, which means the projects were yet to be built, in the hopes that when the homes were completed, they would sell for a tidy profit. The trouble is many of these flippers, lured into the market by stories of people making a huge killing earlier with a similar strategy, are now the ones to be slaughtered. Now, they either lose their deposit or have to cough up the money for the purchase in the hopes there's a greater fool than they were somewhere out there real estate.

If you recall, the same thing happened around the year 2000 as amateurs jumped into the stock market, buying up tech stocks or any IPO with a dot-com after the company name.

In the coming months, I predict we'll see an increase in people dumping real estate they can't afford. They'll be forced to sell because they'll be eaten alive by a phenomenon known as negative cash flow. Investment properties that you have to feed money to every month are fondly known as alligators -- if you can't afford to feed the property every month, it eats you.

I know of one so-called real estate investor (and I prefer to call people like him speculators rather than investors) who has three homes he thought he could flip for a profit -- but he priced them too high. Now, $7,500 comes out of his pocket every month to feed the negative-cash-flow alligators. The problem is, he and his wife don't earn that much a month. Their three alligators are literally eating them out of house and home, consuming the profits they made from other flips -- and their savings.

To add more pain to the misery, they still have to pay the capital-gain taxes they made from their previous successful flips. They're toast. The alligators are eating them alive. They can't afford to feed them, and they can't afford to sell them because the prices they paid for these alligators are more than they're worth today. And this is only one story -- out of who knows how many. Over the next couple of years, keep your eyes open for some great bargains.

It's Time for the Pros
Some people say we're now entering a bad real estate market. I disagree. I think we're entering a great market. A bad one is when amateur investors become real estate experts and they bid up prices. They make housing expensive for homeowners, often adding little to no value to the property. They simply muddy the waters and make a valuable investment, a home, expensive.

Now, I must admit, I sometimes do buy to flip, so I can't be too critical. Yet it's the amateurs who come late to the party -- and who eventually donate their money back to the professionals. What I'm saying is: Now is the time to turn pro. Now is not the time to be an amateur. It's the amateurs who jump in when the market is hot. It's the professional who comes in when it's cooling down. Get the message?

When the red-hot bull market of real estate was beginning to overheat, you didn't have time to make considered decisions. Sellers were receiving multiple, over-asking-price offers. In a bull market, you had to be quick, have money, and be a little foolish. Now that the market is cooling down, sellers are a little bit more humble. You have more time and can do your due diligence carefully. You can negotiate better terms and make a better deal, especially if the seller has his leg inside an alligator's jaws.

Bad News That's Good
But don't be in too much of a hurry. I think we still have some bad news yet to come -- and I believe it may come from the bond market. I suspect that many of our foreign investors who have been buying our debt may be becoming more cautious about investing in American assets, especially U.S. bonds. Many foreign bankers may be having doubts about the U.S. government paying the interest on our debt. In other words, many investors will be moving increasingly out of their cash into tangible assets such as gold, silver, and other metals. Again, this is only a suspicion. We should know more by September of this year.

If investors stop buying U.S. government debt, who knows what might happen? The U.S. may need to raise interest rates even higher, which will drive home values down even further. So be patient, keep looking at real estate, but keep your hand on your wallet (unless of course you find a seller with a really mean alligator eating him alive).

A year ago, I sent out a warning to investors, especially flippers, to cash out quickly. I received a lot of irate e-mails from people who thought I was turning on them. They thought I was spreading bad news. Little did they know that by forecasting a real estate downturn, I was spreading good news -- good news for real investors and bad news for amateur alligator wrestlers.

Distracter in Chief

2006-06-06T11:36:00.000-04:00

Spinning Phony Crises to Avoid Real Ones
By Eugene Robinson
Tuesday, June 6, 2006; A15
What uncharted realm lies beyond brazen cynicism? A wasteland of utter shamelessness, perhaps? A vast Sahara of desperation, where principle goes to die? Someday George W. Bush and the Republican right will be able to tell us all about this barren terra incognita, assuming they ever find their way home.

The Decider's decision to whip up a phony crisis over same-sex marriage -- Values under attack! Run for your lives! -- is such a transparent ploy that even conservatives are scratching their heads, wondering if this is the best Karl Rove could come up with. Bush might as well open his next presidential address by giving himself a new title: The Distracter.

Let's check in on what's happening in the real world:

Iraq has become a charnel house for the victims of escalating sectarian slaughter. On Saturday, a car bomb killed 28 people in Shiite-dominated Basra, and hours later gunmen killed nine Sunni worshipers in a mosque. On Sunday, on a road near Baghdad, assassins pulled travelers out of their minivans, sorted them by faith, killed nearly two dozen Shiites and let the Sunnis go. Yesterday, men wearing police uniforms grabbed at least 56 people from bus stations and travel agencies in Baghdad and took them away -- no one knows why, no one knows where.

Prime Minister Nouri al-Maliki's new government remains toothless and ineffectual, despite his pledge to end the sectarian violence. On Sunday, he failed yet again to reach agreement on who will run the only two ministries that matter -- the ones in charge of the army and the police. The butcher Abu Musab al-Zarqawi, the most prominent figure in the armed Sunni insurgency and the most hunted man in Iraq, remains at large and periodically manages to issue messages inspiring his followers to continue their jihad. (Just like his hero, Osama bin Laden.) Yet the president spent his weekend radio address pushing "a constitutional amendment that defines marriage in the United States as the union of a man and woman."

Immigration, the last artificial crisis, at least is a genuine issue. But the president and his allies did such a job of rabble-rousing that the best outcome, at this point, is probably for Congress to deadlock and end up doing nothing. The National Guard is headed for the frontier, apparently under orders not to do much of anything. Immigrants are still marching north, employers are still hiring them and self-appointed sentries are still patrolling the border, where something really bad is bound to happen sooner or later.

Yet the issue of "profound importance" the president urgently wants to highlight is "protecting the institution of marriage."

The diplomatic maneuvering over Iran's nuclear program, which looks like the next crisis, is at a critical point. Defiant words from Iranian leaders on Sunday rattled the world's financial markets yesterday and sent oil prices soaring -- threatening even the modest relief most analysts had predicted from $3-a-gallon prices at the gas pump. Just in time for summer vacation.

The president, however, would rather we all reflect on the fact that "marriage is the most enduring and important human institution." Not satisfied that he had gotten his message across in his Saturday radio address, Bush gave another speech in support of a marriage amendment yesterday.

It's almost surreal. For one thing, the president has no role in amending the Constitution. Proposed amendments must be passed in both the House and Senate by two-thirds majorities, and then they must win approval from the legislatures of three-fourths of the states. The president doesn't have to sign it. He doesn't even have to read it.

People who are close to the president are always telling us what an essentially decent man he is, without a bigoted bone in his body. But that doesn't square with all this demagoguery in support of a measure whose only effect would be to write discrimination against gay men and lesbians into the United States Constitution.

Bigotry, pure and simple.

But of course the president knows that there's essentially no chance an amendment to ban gay marriage will make it out of the Senate -- that in fact it might not even get out of the House. All he can possibly accomplish is to energize activists on the religious right, who otherwise might be tempted to sit out the November midterm elections.

It's risky to raise expectations you have no intention of fulfilling, but maybe enough of the Republican base can be fooled by this charade to make a difference in the fall.

Meanwhile it keeps us from talking about things that are real, and that really matter.

Walking With a Manual to Live a Life

2006-05-28T23:24:00.000-04:00

I had conversation with a good friend about his struggle with his two kids.
He made a comment containing something we encounter very often, that is, the lack of obvious guidance in front of life situations.

I find this most acute among those entering adulthood.
After turning 18 it does seem it is time for moaning things of the past and few have a clear path to life and there is not book of "errors and bull-eyes."

I find that after we enter adulthood, there is not much follow-up guidance that relates to people as a part of an evolving society.
We have develop a behavior to be accepted inside one box and individualistic, as if self-drawning is an acceptable behavior.

Most of the education we follow is to ensure is all in one box. Although, the possibilities are there to make this box larger and fuller.
Most information available to us does not portrays these activities as virtues of human interaction.
We are losing the capacity to be responsible to others in the context of group and we are directed to learn in one direction, the ego driven way.
The home alone way of learning. While we continue in this direction we are losing capacity to evolve as humans. We are losing the ability to participate in society in an active way, we have become passive elements in a non-contextual society.
More than 90 per cent of all interaction and decisions of our activities in society are controlled and framed by social rules dictated from policies of interested parties with the only motif been self-promoting.
As this activity continues to grow, it creates apathy. Thus, participation in the social decision process is at its lowest in history.
The base for social harmony is active participation in all institutions. We need to re-build networks of people re-learn to interact with each other and make it part of the natural way of daily life. We need to learn from each other harmonically. We need to invest in each other.
In the context of democracy that is the inclusion of our time putting forward ideas. We must be active in voicing and insistence to those individuals we elect to represent us.

By looking at our life we need to find the harmonic higher interactions with ourselves and society. We cannot provide society with value if we do not educate ourselves, education is a all life process we cannot afford stop educating ourselves, for some silly reason as been adults.

The understanding of human needs must be the first step to practice social interaction and integration. We have put too much emphasis in structures such as corporations and other fictitious organizational systems. We need to explore partnerships, cooperation and other forms of value added capital interactions with solidarity as principia modus operandi.

We need to start value-added activities that enhance human relations in society in ways that break the mold and make the box bigger and better and still satisfy the need for profits.
We are getting surrounded by a poisonous dialectic approach that is dangerous to humans as a species that needs to survive in a limited/finite environment. The influence of one line sound bites has drained the possibility of dialogue and curtailed some of the most fun and enhancing qualities of dialogue as dissent and cynicism.

To make society better we need to start with the basics.
As you open your eyes you see your body and feel your body waking up, we realize we need to understand our bodies, thus we need to learn and become practitioners of body healing. This activity will enhance the life of those who practice healing. Becoming a doctor and healer in our society is one of those activities that demand the qualification of “a higher calling” but it is also an important part to make society a better place for all its members. Part of this healing must include the soul we need to re-introduce soul healing activities in our daily lives and practices. We will not be able to fulfill our social duty if we disregard the soul well being.

As we continue our day, our relation with the accepted structures of behavior become part of “laws” that allow all of us with all our differences to interact in a manner that is respectful. Thus, we must practice the art of “law” this is in the form of training and practice and in the creation of laws, this is in the form of becoming a member of the elected cadre or becoming a versed trained attorney.

As we progress in our activities we encounter the need to exchange our talents, thus, the need to understand finances. Becoming an able financier is part of the qualities we need to enhance the social environment. We must train ourselves to be able to make decisions that are sounds and profitable to our society.

As a binding practice of the above we should practice public debate and presentation, if our ideas cannot be present to the public at large we might lose our efforts to the void. Learning to be a good public speaker is a bidding ability to help society understand new ideas.
Learning logic, mathematics and philosophy are also binding abilities that will need to be practice during the rest of our lives if we want to be able to evolve.

It is said that if you enjoy what you get do and it becomes effortless you have reached satisfaction. By first exploring the above activities one must engage any activity one enjoys without limits.

Practice to the physical limits is the only way to find out satisfaction and sense of accomplishment.

From here all other activities as much important as they are they are supporting roles of the above.

We have some manuals for life all in the form of books and great authors. Being in the twenty first century, I prefer to start with authors that are still alive.
My first choice will be Riane Eisler, specially her dissertation: The Chalice and the Blade. All her books are giving us a new path, therefore groundbreaking ideas.
You can get a glimpse to her thinking at : http://www.partnershipway.org

In the subject of books, some one said that books are the main course for the brain, essays are the
Appetizers, discussions dessert and magazines/newspapers are junk food for the brain.

My second choice will be a reading of distant evolved philosophies starting with someone like Deepak Chopra. www.intentblog.com All his works have ground breaking ideas and its debates are reformatted and evolved ideas that present a very interesting alternative future.

Third will be, read mathematical logic and practice decision making. Here the amount of authors is so large that I will start by reading David Berlinski who has the capacity to present complex ideas in a fun way with ground breaking science.

There is not a book that will teach you how to live but you can make your own if you find a path to practice, practice, practice what you love to the point exhaustion, then you will be exhaling.

Best Minds

2006-05-18T12:00:00.000-04:00

Losers: Why We Invest With Them
By Doug Wakefield with Ben Hill

One thing that didn’t change much after the 2000 to 2002 decline is the misperception that, when selecting investment managers, the most important thing to look for is how they did last quarter or last year. It’s an obsession that never seems to change much. But then again, in today’s culture, why should it change? The advantages of capitalism have, unfortunately, led us to consumerism and the belief that we can get anything, at any price, at any time. With the advent of the internet, easy credit, and the sense of entitlement our prosperity as a nation has fostered, many have come to believe that they can have it all and they can have it all, right now.

It is not my intention to debate whether this has served us well as a nation. What I do know is that this mentality does not serve the investor and, as such, must be discarded before we can attain to any lasting success. As evidence to this fact, I offer the stories of some of our investment icons in days when they may not have been so warmly embraced.

A Trip Down Memory Lane

Think back, if you will, to 1974. If we put ourselves in that era, it’s been just 3 years since the dollar was removed from the gold-exchange standard, and our national debt has already topped $474 billion. 1 The Arab Oil Embargo is in full swing and Americans are waiting in long lines for gas as prices continue to rise. Plans for busing black children to white schools in Boston, has set off a series of race riots. Under intense public and Congressional pressures, Richard Nixon has become the first President of the United States to resign.

The Dow has lost 45 percent, falling from 1051, in January of 1973, to 577, in December of 1974. Fund managers, who had been eager to buy just a few years earlier, have now taken a “batten down the hatches” approach to the markets. Consider the words of Eric T. Miller, a manager at Oppenheimer at the time.

“I wish we could say that we have strong preferences for areas that are unique right now, but we don’t, partly because we don’t think it’s time to try to be a hero… to be terribly venturesome, unless you could put me on [an] island and we were taking a three-year view.” 2

In the same vein, Howard Stein, the Chairman of Dreyfus at the time notes,
“Price-earnings ratios, historic gains in earnings, projections of earnings per share, and many other analytical devices that you and I work with seem to have little relevance of late.” 3

In the midst of all this, imagine that you’re shopping money managers. You’re excited about one in particular, because you’ve heard he’s really good, but he’s lost 23 percent in 1973 and he’s down 50 percent by 1974. Incredibly, as the losses have mounted, he’s actually getting more confident!

If we’re like most people, we’re thinking to ourselves, “If I invested $1 million with this guy at the beginning of 1973, I’d have had $500,000 left by late 1974.” We extrapolate the current trajectory. “At this rate, I’ll be broke in 2 years! I don’t care how brilliant he thinks he is; I’m going pass on this one.”

“Oh, that was Warren Buffet? Well, of course I would’ve stayed with him.” But, we didn’t know today’s story at that time. Clearly, those who stayed with him and endured the losses over those two years were handsomely rewarded.

“By early 1986, Berkshire had broken $3,000 a share. In the twenty one years that Buffet had been turning the veritable dross of a textile mill into gold, the stock had multiplied 167 times; meanwhile, the Dow had merely doubled.” 4

Now, if the only thing we learn from this story is that we need to go invest in Berkshire Hathaway shares, we miss the point. This was yesterday’s story and yesterday’s returns.

Over the last 32 years, how much of every investor’s success has come from inflating the money supply? Clearly to increase the money supply [and debt] in circulation from $474 billion, in 1974, to $10.2 trillion, by March of 2006, has influenced asset prices around the globe. Over the last two decades the Fed Funds rate has been reduced from over 20 down to 1 percent. Clearly, this story is not going to be repeated any time soon. This is the reality that all of us must accept. The circumstances that helped make this possible, do not, and could not, exist in our current economic and market environment. We would do better to ask ourselves, “What things can we learn from this story that could help us become better investors?”

In the late 1990s, the “losers” were those managers who refused to index or to benchmark their portfolios to the overall markets. In seeking to steer clear of risky stocks and sectors that had become historically overvalued, their portfolios “underperformed” the markets. It is not coincidental that, in 2000, as the markets began their steep descent, these same portfolios “outperformed” their benchmarks.

One management company, which made the “mistake” of avoiding high-risk investments, was considered by some of its institutional investors as a “loser” at the time. During the 24 months leading up to 2000, this company’s assets under management declined from $30 billion to $20 billion. Still, their unwillingness to compromise and follow the herd, in the late 90s, proved a valuable asset. By the end of 2004, their assets under management had grown to $75 billion. This story, of the cash flows in to and out of GMO, shows us that even large institutional investors tend to chase yesterday’s returns. 5

Michael Covel’s book, Trend Following: How Great Traders Make Millions in Up or Down Markets, focuses on trend following hedge fund managers. If the book title sounds a bit out of your league, let me encourage you to read it anyway. The knowledge and insights contained within would be benefit to investors at all levels of the game.

One of the managers discussed in Covel’s book is Bill Dunn, of Dunn Capital, who manages over $1 billion for investors. Since first opening in 1974, his long-term track record is enviable by any measure. However, Dunn has had several drawdowns, (temporary losses). One such drawdown lost him his largest client at the time. When asked how he deals with pressure from clients to change how he trades, Dunn responded:

“A person must be an optimist to be in this business, but I also believe it’s a cyclical phenomenon for several other reasons. In our 18 years of experience we’ve had to endure a number of long and nasty periods during which we’ve asked ourselves this same question [whether he should change his model]. In late 1981 our accounts had lost about 42% over the previous 12 months, and we and our clients were starting to wonder if we would ever see good markets again. We continued to trade our thoroughly researched system, but our largest client got cold feet and withdrew about 70% of our total equity under management. You guessed it. Our next month was up 18% and in the 36 months following their withdrawal our accounts made 430%!”

When we read about successful investment managers like Buffet, Grantham, and Dunn, we see vast differences in approach and one commonality. They were all willing to accept short-term losses. Investors who looked at these losses, or periods of underperformance (some of which lasted up to a couple of years), and decided to sell, missed out on large gains in the years that followed.

And, it’s not just individual and institutional investors who get this wrong. Again and again, even the largest brokerage houses quite often make the same mistakes. Consider the words of Barton Biggs in his new book, Hedgehogging. Biggs, who recently retired from the position of Chief Global Strategist at Morgan Stanley, spoke of the atmosphere at Morgan Stanley in the year 2000.

“Secular cycles, both in markets and sectors of the market, make a big investment management firm a very conflicting enterprise to manage if you are a businessperson, because the rational things to do to maximize short-term profitability are exactly the wrong things from both an investment and a long-term profitability point of view. For example, during 2000, even as the bubble was bursting, Morgan Stanley Investment Management, which has a business-dominated management, acted like businessmen: they heavily promoted the underwriting of technology and aggressive growth stock funds because those were the funds the salespeople could sell and that the public would buy. Management was not evil; they were doing what they thought was right. Large amounts of public money were being raised and very quickly lost. Short-term sales profits were collected at the expense of, not only the public, but the firm’s long-term credibility and profitability.”

As Biggs points out of the short-term focus at the top of a market, he also points out the short-term view at market bottoms.

“The firm erred in the other direction in the spring of 2003 when it shut down its
Asian Equity Fund, which it had invested exclusively in the Asia ex Japan markets. The fund had shrunk from $350 million 10 years earlier when the Asian Miracle was on everyone’s lips, to less than $10 million. At that level of assets, it was a clear money-losing proposition, so it was the right, short-term business decision to close it down. At the time, there didn’t seem to be any interest in Asia. I argued vociferously to keep the fund open, and maintained that, as the markets rallied, new assets would come. To no avail. No one agreed with me, and the fact that they didn’t was a buy signal.”

In April of 2006, the Asian markets of Singapore, India, and Hong Kong, are up 116 percent, 328 percent, and 94 percent (respectively) from where they were in October of 2002.

It should be plain to see that at every level of investing, we are our greatest enemy. And while learning about ourselves as investors is one of the best things we can do to ensure our success, this never has been, and never will be, the primary message of industry marketing and media. As Biggs points out, there are business decisions and investment decisions, and short-term business decisions often seem to take precedence over long-term investment concerns. If we are to become successful investors, we must understand our inherent weaknesses as instinctual beings trying to ensure our (money) survival, and continuously build our resolve to avoid the comfort that can only be found in the herd.

This predicament cannot be overstated. If we invest correctly, we most often take actions opposite of the herd and usually experience temporary losses. We then have to deal with strong instincts and emotions that shout to us, “You’re wrong! Go back and do what everybody else is doing. They made money on their last statement. They must be right!” To some extent, we all experience these thoughts, and if we are to succeed, we must learn to overcome them.

So now, we turn our attention to three character traits that we must develop to increase our probability of long-term success in the game of money. I do not expect that these tenets will produce a “Eureka!” moment for us, but we should be warned: These views are easy to academically ascend to, yet nigh unto impossible to sustain when we are experiencing strong emotional or mental stress, such as the kind caused during periods of drawdowns.

To read the entire April Newsletter, you can sign up, at no cost, through our website. If you would like a copy of our research paper, Riders on the Storm: Short Selling in Contrary Winds, visit our website. This will also give you access to archives of the same monthly newsletter titled, The Investors Mind: Anticipating Trends through the Lens of History.

Sources:
http://b3308-adm.cl.uh.edu/egret/fall2004/historyviewpoint1974.html
Buffet: The Making of an American Capitalist (1995), Roger Lowenstein, page 157
Ibid, page 159
Ibid, page 275
Quarterly meeting with institutional investors, 4th quarter 2004, www.gmo.com
Trend Following: How Great Traders Make Millions in Up and Down Markets (2006), Michael W. Covel, page 39
Hedgehogging (2006), Barton Biggs, page 119 & 120
Ibid, page 120

Gaps After The Storm

2006-05-12T09:03:00.000-04:00

Yesterday was a very turbulent day and today looks alike.
CHC was a buy. After yesterday all looks grim but is normal.
Teh MSNBC commentars and other talking heads were in unison calling for six year highs for the dow, two days after all teh front pages, the dow takes a dip and makes everybody 2% poorer.
Today might be one of those profitable days for gaps, my screen dumped 120 stocks, so today, I need to re-screen a little and I will go for the 9 and 10 risk grade only.
Long >7
9 blk<135
9 bmo<53
9 ckh<81
9 cnc<22.8
9 cpsi<41.9
10 enr<47.5
9 lxp<19.9
9 mxim<30.6
9 o <21.4
9 ori<21
9 pkg<21.4
9 pl<44.9
9 uhco<12
9 ust<41.3
9 vsta<13.1
10 wgl<27.9
Long >4
8 brcm<36
8 mchp<34
8 osk<50
8 apcc<21

More on My gaps

2006-05-11T08:13:00.000-04:00

The amount of speculation and high risk distributed in the market by pension funds and insurance companies is creating a very dangerous situation, and it might not be far away teh day like in 2001 when England pension system was at peril becuase insurers and pension funds were invested in the stock market at levels that they should not, part of the opposition to Blair in england comes from pensioneers.
The Soros nightmare was coming back to the englishman in the form of lost retirements by gambling managers.
Due to the large size of this accounts, managing the positions is 100% done by computerize formulas with individuals calling the depth of the trades.
With this in mind you might see trickle 100 lots non-stop in the level II screens, stocks like CSCO and MSFT that are part of the favs of this crowds show the most clear pattern of what it means hedging.
The speculation is good for gaps, it creates larger entry points, and when prices are programed in computers to have reduced risk creating hedging with options/short positons that also accelerates the gap size. Sometimes as yesterday TEVA was sold at 12% dsicount to news today to buy TEVA one will have to put a buy price in the <5% range of yesterday closing for a >4% not a bad idea but the risk range is 70% reason why I shy away today.
I will suggest to read charts with technical and fundamental analysis to grasp this idea of selling in 4 to 7 % ranges.

As I said this fits me and it is not intended for anyone else.
If you want to follow it set up in any of teh financial sites around a portfolio
and paper play it.

May 11 Gaps

2006-05-11T08:12:00.000-04:00

Yesterday bought mxim for a 4% at <33.1

For today I have for >Seven%
risk-/symbol-/limit buy price
9 abt<39.3
8 bdx<59.4
8 chc<18.5
9 cnc<22.9
8 epl<22.4
8 erts<44.3
8 ford<4.7
8 fss<17.4
8 hni<50.1
8 msft<22
9 mxim<31.2
9 ofc<37.1
9 ori<21.1
8 osk<48.8
9 pkg<21.4
9 pl<45
8 rbnc<10.8
8 snps<20.4
9 uhco<12
9 ust<41.4
9 vsta<13.5
8 vz<31.2
For the four retracement same as yesterday except mxim that was bought.
My selling target for mxim will be >36.7 the price shows larger than average retracement for a gap-up in the =+10% range.

May 10 Gaps

2006-05-10T07:55:00.000-04:00

35 days >7%
Symbol Rank Limit Buy Price
blk 9 135.9
chc 8 18.46
cnc 9 22.85
dspg 8 24.7
epl 8 22.28
erts 8 44.2
ford 8 4.7
fss 8 17.6
hni 8 50
msft 8 22
mxim 9 32.41
osk 8 50.15
snps 8 20.79
uhco 9 12

Long 25 days >4%
Limit < than
osk 9 50.5
apcc 8 21.3
mxim 9 34
sbib 9 16.55
umpq 8 26

Yesterday one entry and exit with 7% = UHCO

Gapping the Gaps

2006-05-09T18:32:00.000-04:00

Part One

I am going to try to share one of my favorites trading strategies, the one that has allowed me to stop sweating the small things.
I subscribe to different data services for the simple reason that each one has something that interests me a little better to screen for what I am looking to trade.

After years producing a consistent returns it is time to share some of the basic ideas.

There is high risk in any strategy nor strategies are static, they need constant changes in their algorithms and active capital management.

My main strategy after the human design is done, the output has 90% mathematical base and 10% common-sense decision-making component.

As disclosure, this is only for my own use and consumption and it is not inteded to provide any financial advice nor should be use without consulting expert advice. If you choose to do anything with the content I post here it is at your own risk.

I do not trade all year, so I will no post all year, but I will try to post as much as possible before the market opens all my possible trades for the day.

I am not greedy, so I stop trading at the moment the strategy allows me to reach the six figures, that is what I need to have fun.
I will be trading every single stock that I post here, as long as I am not vacationing or I have reach my goal!

As informational bechmark my returns are clean >27% (after tax and trading costs) in good or bad markets. Actually, the worse the market conditions are better it performs this strategy.

It is here for anyone who wants to know how I do it.

The idea of the strategy is simple:
due to news or market conditions a series of stocks react sharply to those news selling-off dramtically and then after a consolidation period those same stocks will come back above their initial trading price.
This is call a gap in pricing, thus gapping the gaps.

Some gap techniques focus in the first 30 minutes of market trading.
Other focus in one full day retracements of 1.5% to 2%.

My strategy focuses in a wider retracement band and in a larger waiting period for the retracement.

I have two series of trades that I entry "the short band trade" of 4% with up to 25 trading days and "the long trading band" with retracements of 7% or more with up to 35 trading days.

You have to follow and consistently stay in the strategy. Everytime I try to deviate from the strategy and tinker with new ideas that are off the main purpose I get nailed. Staying focus is boring but it pays big time.

All stocks I trade have consistent patterns:

1) In all cases over a period of >20 trades they produce at least 16 retracements, in other words, they have at least 80% probability of making the target price. In all cases stop-loss is a must. Retracments are best followed with an Elliott Wave software.

2) All stocks trade at a ratio of at least -10% to +10% from the initial entry. Consequently my stop-loss is 11.5% from the entry point. If you calculate the stop loss to the gains you will find out that the actual risk is less than 2% in the down side, 10% neutral returns and 88% positive trades (all including trading costs of < than $30 per round trade).

3) All selected stocks fluctuate in the upside as much as they fluctuate in the downside. Some days you might wonder if you are better off going long with the selection. I keeps me wonder many days, but I know better and I continue to stay focus. A good japanese candle charting software will put an image on what I am describing.

4) All stocks show a pattern of probability in the downsize after the set holding period of less than 5% and my average is 90% winning trades on trading days, and 95% if I see the rational to extend the holding days for a new cycle.

5) The open positions can be large, a few times when the market was in a flat pattern I hold up to 25 stocks. My average is to hold up to 7 stocks at any given time.

6)I use a discount broker, I add the trading costs and I deduct taxes after each trade to calculate the algorithm profitability. I use a scale to qualify each stock performance for a number of trades -usually 20 trades or more. The scale is 8, 9 or 10. This means the stock was profitable in the algorithm 80%, 90% or 100% in the last 20 trades. Consequently, every 3 months the stocks I follow changes.

7) The trading days pattern I follow can be as short as hours up to 35 days. Look at UHCO today5/9/06. I bougth it and sold it in three hours with 7% profit.
But that is not the norm. The norm is holding any stock for a few weeks. I resort to have a holding average day for each stock, but this is only informational. The rational is that a stock that passes the average holding days, and is trading the upside has > 90% provability to be profitable and the contrary is also true.

How I work the trades:

1) Before the market opens I screen for the daily trades and do a print out. If I have a large amount of stocks I choose those with the highest return grade -9 or above.
2) I set the the buy price and the amount of shares.
3) The amount of speculation in the market is so large that sometimes my buying price is off and far higher than the initial volatility prices, it is not the norm, I do not worry if it occurs until the stock settles after a few days.
4) Imnmeditely after I buy. I write the stop loss on my trade list book (I do not auto entry the auto stop- loss, that's just my habit) and put the selling price with the broker. If it is a short entry the sellign point will be 4% above the purchase price if it is long entry I add 7% to the purchase price.
5)The amount of weekly trades averages 2.5, so it is boring but profitable.

Let me know your comments.

2006-05-06T01:18:00.000-04:00

The Early Bird Makes One Million

2006-05-02T12:30:00.000-04:00

This article by Scott Burns has the same jist of the one I wrote about the donut billionaires last year.
The main idea is compound interest over long period of times.
Consistency at anything nets great results. Genius is the compound interest of a life of hard choices.
Enjoy it.
_!_!_!_!_!_
Start on your first $1 million at age 16
It's easier than you think to become a millionaire.
The magic combo? Getting an early start saving and having the discipline not to raid the piggy bank.
May 1,2006
By Scott Burns
Here's a simple recipe to become a millionaire:
Work four summers, starting at age 16
Save the income in a Roth IRA account
Invest it in a simple, low-cost equity portfolio
Simmer slowly for 47 years
Serve ungarnished (and untaxed) at age 67This is the first recipe in my new Small Change Millionaire Cookbook, an occasional series of columns with a single purpose -- demonstrating different ways small amounts of money can be turned into a large amount of money. Just as a mere 10 calories a day of additional food can pack on a pound a year, small change can become large amounts of money. The good news is that money grows faster than fat. Calories don't have the benefit of compound annual growth.Many people fail to diet because the end goal seems so far away. So it is with saving and investing: Most people fail because it is nearly inconceivable that a few dollars a day or a well-timed gift can be turned into that magical sum.
It has such a nice sound.So let me show you how four summer jobs can become your first million.Let's suppose that you are 16 years old, in high school, and willing to work. Let's also suppose that you can clear about $2,000 over the course of a summer, if only because a doting grandparent puts money in the Roth while you take your earnings to school. If you invest in a Roth IRA, it will grow, tax-free, for as long as you have the account. All withdrawals from the account after age 59 1/2 will be tax-free.If your money is invested in common stocks and you achieve the average compound annual rate on large-capitalization U.S. stocks, 10.7%, your account will grow to $9,378 at the end of the fourth year. You will be 20 years old. Invested in the same way, with no additional savings, the account will grow to:
$25,917 by the time you are 30
$71,625 by the time you are 40
$197,943 by the time you are 50
$547,037 by the time you are 60
And $1,114,423 by the time you are 67And you will have started and finished all of your saving before turning age 21.Worth the risk Note that this plan does not require investment brilliance. It does depend on two things, an early start and tenacity. If you invested in small company stocks, whose long-term annual return clocks in at 12.5 percent annually, you could have much more money. (Try $2.4 million.) Similarly, you could diversify to reduce your risk and make your 47-year ride more comfortable. But you would do it at the expense of a somewhat lower return.The "Yes, but" crew will be happy to tell you that $1 million isn't what it used to be. I can remember people telling me this in the '60s. It is as true now as it was then. Millionaires are, well, just dreadfully common.Even so, the number of millionaires is relatively small. And being a millionaire is a better choice than being a pauper.The same crew will be happy to tell you that the future won't repeat the past, that SARS, terrorism or some other misfortune will cripple the future, or that we will be crushed by a rising China. Similarly, an actuary might tell you that you have a substantial chance of being dead by 67.Perhaps.But so what?All you've got to risk is four summers.See Scott Burns' Web site.

Love and Light

2006-04-27T21:55:00.000-04:00

Love and Light

Elder Workers

2006-04-27T21:40:00.000-04:00

Traveling is an eye opening when contrasts are obvious. I think I travel enough to see at least four times a year different regions, and contrast with changes are normal, but this past year one constant contrast is too darn obvious, and is the amount of elder people doing menial jobs, and with the many that I ask why they are doing the job, the majority say they need the money. That cannot be good for any one.
The largest segment of the population entering the labor force is the segment of 65-75 year olds. It is also the largest growing segment of the population in developed countries. Yes, we are growing older and beautiful and for most poor in assets or enough income to eat or have decent living standards, not everything is capital a large amount is due to the lack of soul. We have become extreme on religion and soulless in caring.
Proportionally, the elder are also the largest segment with lowest standard of living and most are at peril of pauper living. With children, elders are the largest age group in poverty.
What is wrong with a community or country which loses respect of its elders and young and allows them to be paupers?
It might seem acceptable for ideological reasons but is unacceptable as evolutionary purpose.

Where you can see this elder growth is in the areas where service industry thrives.
Geographically, states like Florida and Georgia where wealthy retirees are finding a pleasant retirement other retirees are finding jobs to supplement their pauper income.
The reason is the fact that most of these pauper retirees thought they were “middle class” at some point of their lives.
The fact of the matter is that to be in the middle of the pack that is in a society that has at least seven clear social classes: Super Rich more than $100 million in assets, The Bourgoises more than 25 Million in assets, the Millionaires from 2 million, the Middle Class more than 400K in assets, the educated worker class more than 150K in assets, the poor up to 50K in assets, the pauper no assets or negative assets.

In my recent post “Do You Know Your CPI” had the purpose of stating the fact that most people do not realize that if they do not know their assets they are setting themselves to be part of this large and growing working class group of pauper elders.

There is a new ingredient to the equation of jobs for the elder that is illegal workers and illegal employers. If there is a serious effort to apply the law, those new jobs that will be emptied by enforcing the laws on legal residency and employees might find a replacement pool of workers from a segment that was left unattended, and a segment that is marginalize in jails. Here is an opportunity to continue poverty!
I am encountering more and more elders working and I regret the experience and the situation should be rectified with decent pensions.

Swandive

2006-04-26T00:04:00.000-04:00

Swandive

Pawn Shops Gasoline Bonanza

2006-04-25T23:44:00.000-04:00

(CBS 11 News) DALLAS High gasoline prices are causing some people to take desperate measures.Pawn shops say their business is increasing, with some customers saying they're selling things to buy gas.Gas prices are climbing again, with most stations prices hovering at, or just below $3.00 a gallon. For some people the high fuel prices are overwhelming."We just have customers come in and have to tell us that they need money ‘till the end of the week, for gas to get back and forth to work," said pawn shop owner, Gerald Costner.Everything from high end jewelry, to name brand purses, and televisions… pawn shop owners say they are seeing it all come in. They say customers are frustrated and have no place to go to get extra cash for gas."Some of the construction people tell us they are having to pawn their tools to buy gas, but when they pawn their tools they can't go out and work in the construction business ‘cause their tools are in pawn. So it kind of a catch-22,” Costner said.Mary Rodriguez has worked at the Casa View Pawn Shop for five years. She says she's seen people of all ages coming in looking for help. “We've always had a clientele of the young kids, or middle age kids, and now we’re getting an older generation. Which, it just seems wrong that they have to pawn things just to get gas, or ya know, to make ends meet on things like that."As prices continue to rise at the pumps, many motorists say they don't see things getting better anytime soon, for the consumer. “It is frustrating, but the thing is they know they can get away with it, because people need gas,” Rodriguez said.At Casa View Pawn, the owner says they've seen the increase in numbers over the past couple months.
After I watched the report on this subject on CNN one of the individuals interviewed came out of the pawn shop with two hundred dollars to fill his Jaguar. Well, well, this individual beloved Jaguar could not wait for April 30’s check.

This is another note in the journal of poor understanding of self’s live.
My contention is that more people will go to the pawn shop because if they do not have currency they will not able to get to work, at the same time this individuals should seat down and figure out if they have better alternatives. The law of efficiency and leas effort demands sometimes a little effort to obtain excelling results.

LIFE

2006-04-24T15:15:00.000-04:00

LIFE

James Petras Giving a Controversial Shot at Some Facts

2006-04-24T11:24:00.000-04:00

James Petras article is controverisial, no question, I think it should be read by as many folks as possible.
The facts cannot be denied -and they are in teh right context- nor "demagogued around" as some might try.
One can agree or disagree with his exposure of events, but there is one constant, it is the truth all around his esay.
His comments are based in the present events.
His exposure is candid and his comand of a good penmanship demostrates us how little we do to assert reality. We have become sheeps at large, his challenge is to stop radicalism and start looking at a better view of humanity and its interactions and accept the facts, it is time for a reinassance of questioning power.

Enjony it !!!!

The Ascendancy of Finance Capital: Record Profits and Rising Authoritarianism
By James Petras
Mar 30, 2006, 08:19

Email this article Printer friendly page
No sector of the US economy, in recent years, can match the rate and size of profit which have accrued to the biggest financial institutions. For the first quarter of February 2006, Goldman Sachs (GS) broke Wall Street records by reporting new profits of $2.48 billion dollars (annualized at over $10 billion dollars). Earnings were up 64% over the same period last year (which was also a very lucrative year). Return on equity rose to 38.8%, topping the record for a top investment house. Total revenues rose $10.3 billion dollars. GS has had record earnings in five of the past nine quarters (Financial Times (FT) 3/15/2006, p 1). Morgan Stanley reported a 17% increase in net income to $1.64 billion dollars for its first quarter in February 2006. Revenues rose by 24% compared to 19.7% last year. Lehman Brothers reported a 24% increase in profits in the first quarter to Feb. 2006 to a record $1.1 billion dollars. Revenues increased 17% to $4.5 billion dollars. Bear Stearns (BS) joined the dance of the billions of Wall Street, reporting first quarter profits of $514 million dollars; earnings were up 34% from the year earlier. BS new revenues grew 19% to $2.3 billion, while return on stockholders equity rose 20.1% in the first quarter of 2006. The combined profits of these 4 banks total $5.73 billion dollars for the quarter November 2005 - February 2006, or $22.9 billion annually - and that does not include the profits for three of the top 5 banks (Citigroup, JP Morgan and Merrill Lynch) whose quarter runs January to March 2006, which are expected to have equally high returns, doubling the new profits to over $12 billion dollars for the first quarter and increasing profits to nearly $50 billion for 2006.

No other sector of the economy can boast such high rates of return, nor can any top seven enterprises even approach the record profits. The banks draw their biggest profits in facilitating the concentration and centralization of capital (dubbed "mergers and acquisitions"), charging lucrative fees for "advising" and underwriting bonds to fund the mergers and acquisitions. The second source of profits is speculating, including debt trading, betting on global equity markets - especially in energy where Goldman and Morgan "have been making a fortune in recent quarters".

While US consumers, demagogic politicians and anti-war activists have blamed the oil producing countries, they have entirely overlooked the big speculative banks in pushing up the price of oil.

The key political point is that the driving force of the most important economic sector - services - in the US is the financial sector, the one least engaged in productive activity, meaning production of goods and services for the population. Moreover its high profits, the astronomical bonuses and income of its leading elites, and its role in promoting the concentration of capital play a major role in increasing income inequalities. The costs they impose on enterprises for their "services" contribute to indebtedness which in turn leads to massive layoffs, reduction in health and pension benefits, as part of the "advisory" messages of the implicated banks.

In addition to their speculative activity, the banks have become significant equity holders in non-banking sectors. They play a major role in cutting labor costs as a route for maximizing short-term profits as the expense of long-term investments in research and technology. Finally the most lucrative and dynamic source of speculative profits is in overseas expansion, particularly in Europe and especially in Asia. For example, Lehman Brothers announced in mid-March 2006 an "aggressive expansion in Asia. While overall revenues were up 17%, overseas revenues rose 30%, while Asian revenues rose by 67%. David Goldfarb, Chief Administrative Officer stated that Asian expansion was Lehman's "number one priority". All the major banks have or are in the process of securing beachheads in the banking sectors of China and India Financial imperialism is becoming a major vehicle for market-driven empire building in the 21st Century.

Finance Capital: Political Power and Economic Policy

Financial capital wields enormous power over government economic policy through its direct representation in the controlling body of US monetary policy via the President and Executive Board of the Federal Reserve. The key explicit criteria for the appointment of the President of the Federal Reserve is the "confidence", close ties and solid relations which the candidate has with Wall Street. The same criteria are applied to all the key economic appointees, including Treasury, Commerce, World Bank and International Monetary Fund. Long time Federal Reserve President Greenspan was highly respected and lauded not for his abysmal economic performance but for his favorable policies to Wall Street Bankers. Under Greenspan's Presidency, the US economy de-industrialized, accumulated huge trade and budget deficits and went through two speculative bubbles (information technology and savings and loans). He presided over an economy which reached unprecedented levels of public debt - doubling in five years. Greenspan's backing of Bush's tax cuts for the rich (income, capital gains etc) contributed to the huge budget deficit and widening inequalities. His policy of low interest rates fueled the speculative bubbles at the expense of productive investments. His backing for unregulated capital (dubbed "globalization") led to the re-location of US multi-nationals abroad (many of whom export to the US and led to huge trade and balance of payment deficits. Yet all these policies which led to the disastrous state of the national economy, created extraordinarily favorable conditions for the domestic and international expansion of finance capital, as well as the concentration and centralization of banks into ten controlling units.

Wall Street's impact on the economy and social structure can be best illustrated by examining New York City - its center of operation. The distribution of assets in New York City is among the most unequal in the world. Slightly over 1% of the population control over 80% of the assets - comparable to land inequalities in Guatemala and Brazil . Secondly, Wall Street is closely tied to real estate capital in New York , and both were instrumental in raising property values and rents, leading to the destruction of over 500,000 manufacturing jobs over the past three decades. Most of the former industrial properties were "redeveloped" to provide office space for finance related activities and high end housing for wealthy financiers. New York Senator Schumer, a notorious backer of Wall Street, leads the US in scapegoating China for the loss of manufacturing jobs, ignoring the essential role of finance - real estate in deliberately destroying the manufacturing sector in New York City . Of course, the demise of manufacturers in New York city was not only due to finance capital; the local garment capitalists and the trade unions were also partly responsible. The former relied on low-wage labor to compete - a losing proposition against China - instead of upgrading its technology, computerizing design and production and specializing in high-end products. The trade unions (International Ladies Garment Workers Union - ILGWU, later re-named UNITE) reinforced the failed cheap labor strategy of garment bosses, by discretely allowing de facto wages to fall below the minimum wage and what was stipulated in collective bargaining contracts. No doubt the ethnic-class differences between the six-figure salaried Jewish labor bosses and the low-paid Asian and Latino workers and the common class-ethnic positions of the labor bosses and the manufacturers facilitated these failed policies: loss of manufacturing competitiveness and loss of jobs for workers.

Finance Capital and the War in the Middle East

Finance capital was until recently predominantly made up of white Protestants and Jews. In the most recent period, Wall Street's ethnic and religious base has broadened as corporate capital has taken over from family-owned banks. Nevertheless among the new generation of upwardly mobile speculators, there is a pronounced disproportion of individuals of Jewish origin, who are not necessarily religious or involved in Jewish or Israeli communal activities, fund raising or politics. Nevertheless a significant affluent minority of prominent Jewish banking and real estate millionaires are active in financing and promoting Israeli policy either directly or through the key pro-Israel lobbies like AIPAC and the President of the Major Jewish Organizations. These lobbies have been in the forefront of promoting the Iraq War, a boycott or military attack on Iran and the ethnic cleansing of Palestinians. The political muscle of this minority of Israel-First wealthy Jewish financiers is not countered by any countervailing organization by other Jewish financial bankers or for that matter by Gentile, Muslim or Hindu financial tycoons. Through the political use of their wealth, strategic location and high status, this minority of politically active financiers is in a position to establish the parameters and policies of Middle East policies vie their dominant role in funding political parties (especially the Democratic Party), candidates and congressional representative.

The Jewish and Gentile critics of the war deliberately exclude the role of the minority of wealthy Jews and their political lobbies in shaping US policy in the Middle East by focusing on the US and overseas oil companies ("No blood for oil!"). There is an abundance of evidence for the past 15 years that:

1.2.3.4. A thorough search through the publications and lobbying activities of the oil industry and the pro-Israel lobbies over the past decade reveals an overwhelming amount of documentation demonstrating that the Jewish lobbies were far more pro-war than the oil industry. Moreover the public records of the oil industry demonstrate a high level of economic co-operation with all the Arab states and increasing market integration. In contrast the public pronouncements, publications and activities of the most economically powerful and influential pro-Israel Jewish lobbies were directed toward increasing US government hostility to the Arab countries, including maximum pressure in favor of the war in Iraq, a boycott or military attack on Iran and US backing for Israeli assassination and ethnic cleansing of Palestinians.

The most striking illustration of Jewish power in shaping US policy in the Middle East against the interest of Big Oil is demonstrated in US-Iran policy. As the Financial Times notes: "International oil companies are putting multi-billion dollar projects in Iran on hold, concerned about the diplomatic standoff (sic - US economic-military threats) over the country's nuclear program" (FT March 18/19, 2006 p.1). Despite the fact that billions of dollars in oil, gas and petrochemical contracts are in play, the pro-Israel lobby has influenced Congress to bar all major US oil companies from investing in Iran . Through its all out campaign in the US Congress and Administration, the US-Jewish-Israeli lobby has created a war-like climate which now goes counter to the interests of all the world's major oil companies including BP, the UK-based gas company, SASOL (South Africa, Royal Dutch Shell, Total of France and others.

The myth of "war for oil" is circulated by almost all the major progressive Jewish intellectuals and parroted by their Gentile followers, who are in word and deed prohibited from mentioning the AIPAC word in any public meetings or manifestos. The power of the minority of politically active Jewish financiers in the pro-Israel lobby is spreading far beyond the area of US foreign policy into the cultural, academic and economic life of the US. Three major events immediately come to mind.

In New York City, a major theater production of the life of Rachael Corrie, an American humanitarian volunteer murdered in the Occupied Territories by an Israeli Defense Force soldier driving a bulldozer, was cancelled because of Jewish pressure and financial threats. The theater admitted that the cancellation had to do with the "sensitivities" (and pocket book) of the issue to Israel-Firsters. The pro-Israel lobby's defense and support of a minority opinion in favor of Middle East aggression is now extending its authoritarian reach into undermining the basic freedoms of American to free and open expression.

The second example of the growing tyranny of the pro-Israel minority over our civil liberties is the virulent campaign waged by all the major Jewish publications and pro-Israel organizations against a well-documented essay written by Professor Walt of Harvard and Professor Mearsheimer of University of Chicago critical of the lobby's influence on US Middle East policy. From the ultra-rightwing Orthodox Jewish Press (which claims to be the largest "independent" Jewish newspaper in the US), to the formerly Social Democratic Forward, to the Jewish Weekly , all have launched together with all the major Jewish organizations, a propaganda campaign of defamation ("the new Protocols of Zion", "anti-Semitic", "sources from Neo-Nazi websites.") and pressure for their purge from academia. The Jewish authoritarians have already partially succeeded. Their press releases have been published by the mass media without allowing for rebuttal by the academics under attack. Harvard University has demanded the identification of the Harvard Kennedy School be removed from the paper. The financier of the professorial chair (in his name) which Professor Walt, as academic dean, occupies at the Harvard Kennedy School, is no longer mentioned it in his publication. Ultra-Zionist Professor Dershowitz and his fellow Harvard zealots call into question their moral and academic qualification to teach. Both in the United States and France , legislation is being prepared to equate anti-Zionism with anti-Semitism and to criminalize as a 'hate crime' the free expression of outrage over Israeli atrocities and any criticism of the Lobby's control of US Middle East policy. In the US , the proposed legislation would take the form of withdrawing federal funding from any academic institution where the policies of Israel are criticized. As yet there is no organized opposition in the US by Jewish or Gentile academics or journalists to this erosion of free expression or a defense of the integrity of the two critics of the Lobby. There is no group of Jewish investors or financiers willing to fund a civil rights campaign in defense of free speech, academic and artistic freedom, to counter the minority Zionist financial elite. It is business as usual.

Some Myths and a Few Insights: Capitalism and War

In addition to the myth of the "war for oil" there are several facile misconceptions:

Myth 1) - the dominance of financial capital leads to war: There is no evidence that financial capital performs better under war time conditions than in peace. In fact recent history demonstrates that 'crisis' provokes market volatility and sudden disruption which prejudices important financial 'bets' even as other benefits. Most of financial profits accrue from mergers and acquisitions with tend to increase due to competitive market conditions - not wars. The financiers who support war do so for their own personal-ideological reasons, ethnic identification and usually do so via ethnic-affiliated organizations not through financial associations. Thus the big contributions by a minority of Jewish financiers to the pro-war Zionist lobbies have less to do with their class affiliation and more to do with their identification with Israel First organizations.

Myth 2) - While financiers are a major funding source for the bellicose pro-Israel lobbies and their congressional spokespeople, they are a minority among Jewish investment bankers, whose prime concern is maximizing the earnings of their banks and hence their incomes, and engaging in many non-Jewish social cultural and professional activities. Over half do not even marry within the Jewish community.

Myth 3) - Many writers cite polls which suggest that most Jews, like other Americans now oppose the Iraq war. The fact remains however that they are not willing to criticize the pro-war Jewish lobby or to mention Israel 's involvement in precipitating the war through its occupation of Palestine .

Myth 4)- The pro-Israel lobby is just like many other lobbies. The Jewish pro-Israel lobby is uniquely powerful because it commands a vast network of grass roots organizations,150 full-time functionaries in Washington operating under discipline and commitment to a foreign power, Israel . Moreover the lobby is financed by wealthy individuals in highly lucrative growth sectors (such as in the banking sector). Thirdly its long established reputation of threats and rewards to recalcitrant and to loyal Congress people, executives and opinion makers makes it an extraordinary and dangerous lobby.

Conclusion

The ascendancy of finance capital and its influence over US economic policy has had major, largely negative, consequences for the US economy, especially our living standards, external accounts and budget. The deregulated financial markets have led to record profits for Wall Street but it has also led to a series of speculative bubbles, which have bankrupted millions of retail investors.

The loss of US industrial competitiveness is largely the result of the transfer of capital from productive innovations which increase competitiveness to speculative activity several times removed from the actual production of goods and services. "Derivative" and "Hedge funds" now equal the size of the US economy at $12 trillion dollars a financial collapse waiting to happen. Financial capital in its most advanced stage of derivatives is based on bets on bets on bets which have vastly increased the likelihood of economic collapse even as it widens the chasm between bankers and wage earners.

The political power of finance capital has been exercised in the realm of economic policy and executive appointments; it has not been directly involved in formulating or benefiting from the war policies. However it has been compatible, supportive and benefited from its close ties and relations with the militarist policy elite in Congress and the Executive. The relation is mutually supportive. The Executive deregulates financial markets, lowers taxes, cuts social spending, appoints Wall Street friendly Federal Reserve Presidents, and in exchange Wall Street supports the imperial war ministers in the Cabinet and in Congress.

Investment banks have been deeply involved in recycling Arab petroleum funds and engaging in large-scale mergers and acquisitions in the Middle East, while a minority but deeply engaged Jewish financiers have funded the pro-Israel lobbies pushing for a more bellicose US policy toward the Arab and Islamic world.

Wall Street's position on the erosion of democratic freedoms has ranged from ambiguous to authoritarian. While backing the Administration's Patriot Act, they opposed the blocking of Dubai 's purchase of US port terminal management. While an active minority backed the banning of the Rachael Corrie theater production and funds pro-Israel organizations attempting to purge academics critical of Israel , the majority look on with indifference.

Rising authoritarianism and lucrative financial profiteering are compatible with the ascendancy of finance capital.

Unideal Observers

2006-04-23T10:29:00.000-04:00

Unideal Observers

CEO Hiperpay Debate and Outrage

2006-04-23T09:26:00.000-04:00

The big debate and outrage that is should not be. If laws are proper and decent.
CEO's pay and Board of Directors deaf ears from owners proposals, who are screaming for lower pay will be hear if fair laws are put in place, but politicos, specially those of the Great Oily Parties own their alligance to who they are on lease for the present time. The great corrupters group of industrialists. The Atlanta Journal Constitution has small caption on their editorial side with the title " The Robber Baron Of The Week." Something that it might help to chenge the tide of this pay abuse if more newspapers, TV, radio will start to follow suit of the AJC.

By now, most people are agreeing about CEO’s pay has taken a path of no return with an arrogant stance of super-individuals who happen to be salaried, but hey! that is not more or less than the rest of us believe how things should be. We are encourage to behave in a nationalistic environment in a Darwinian line of thought with the big eat small or else and greed is good, or once a week soul scrapping of six of sin, when it should be all the opposing sin one day and sanctified the other six.

Now, the solution to the absurdity of CEO’s pay is simple, tax all salaries equally and stop subsidizing with tax payers money the salaries of CEOs.
What I mean by that is simple. The CEO’s pay is tax deductible to the corporations and that includes the top three C’s of the company, so ultimately is a political problem, and is up to the legislators to act and the voters to demand change from their legislators.
The taxpayers actually are the ones subsidizing the salaries of the top dogs at corporations.
The solution is simple tell your elected officials to introduce legislation to eliminate this tax break and pilfering of people’s assets.
Not a complicated issue.
If options granting is the problem, make the options taxable at the present stock value to the corporation, and let the Board of Directors explain to shareholders why they are paying taxes when they can actually save the corporation money with decent competitive salaries.
Today those CEO’s salaries are indecent.
The solution to get them in line is easy, let’s get this indecent situation in line.
We all need to talk about it and if choose stand up, you can write or speak with your elected officials, tell them they should eliminate the tax break for CEO’s salaries as a corporate benefit. Get all salaries at present tax value like everybody else, and that should include options taxed at present stock value.
Not a difficult thing to do, one less tax law.

Gosh if we could eliminate around 500 laws a year instead of writing 500 laws a year.
We all should know that 95% of the laws written are to provide less than 5% of the population some economic incentive –aka wealth transfer from poor to rich- and the other 4% are patches to old laws and 1% are social laws as the Patriot Act which was not read by 99.5 of those who vote it for it.
Doing nothing and apathy brings you these situations.

Dr. Razavi's Good to Know Info

2006-04-22T17:05:00.000-04:00

Dr. Razavi's Good to Know Info

The Grand Oily Parties aka GOPs

2006-04-22T11:45:00.000-04:00

What GOP Stands For
The Grand Oily Party

What the other party stand for
No synonym, thus stands for nothing
But behaves the same than the above party

When the present President was elected all voters identify him as an oil man, with not a single profitable company under his tenure.
A baseball team owner- it is in question who actually owned anything, with questionable track record.
Now, he had a clear path of family relations to rulers with power. We must call those fellows “who is who” ruling the planet inner circle.
Among those in the family inner circle is the famous “Prince Abdullah Bush” -as is known in the Bush family the Ruling Prince of Saudi Arabia, James Baker of Carlyle group (a money group that milks your taxes) a superb family friend and the lists goes on and on of no so lovely good fellows.
Most of the Bush friends come from the industrialist ruling power, great propagators of dictatorships, as the present President put it “ it will much easier for me if I was a dictator” a Freudian slip or a wish, you judge. But his present government circle led by VP Cheney should be of no doubt of the tendencies and techniques to government and the purposeful Orwellian language use should be a clue for their clear intents.
You will not find many middle class Americans “a la” Dennis Kucinich-like people in that circle of this powerful crowd but they befriend dictators but not elected officials that have real democratic popular process. This must be another clue.
There is a natural reason for such inclinations of power. Power is the natural brother of greed as such, people, who are alike joint their greed in purpose.
But the point is not who is on the list, but how great of a job has done delivering to its friends and constituency.
A few leaders around the planet, have indebted their national wealth to redistribute it among their constituency and trump the future of the rest of the people as this administration has done. It is the largest wealth transfer ever in the history of humans, there is not other phase in the earth records that one can take the proportions of wealth transfer taking from the poor and give to the powerful and rich as this past 5 years. No in vain you see all over articles about how the been rich is the fastest growing group, and the wealth of the richest 50000 families has growth at a rate of 14% annually for the past ten years and the wealth of the individuals in the country as a whole as grown at less than 0.5%. See the Census Bureau for this data from The Federal Reserve.
And the most interest thing is how the wealth transfer has occurred. For most people lower taxes are though out to be a good thing and in fact they are if they are applied properly. The nature of taxes needs to evolve to be a continues debate, but what taxes should be not is a tool to exploit the less vocal groups in society that want to live in peace and those who live in political apathy. That is what this government has done. But the Grand Oil Party and the other political ruling party, are not much different, one party does it unapologetically (GOP) and the other (?) has to compromise from all angles using demagoguery a little more but the result usually is the same.
The bottom line is simple. The Grand Oil Party knows how to deliver to the rich and the other one knows who to deliver to the rich quietly and with much less propaganda.
If you really feel like do something, check out your local politico list, show up at your local political party meetings of all sides and give them your piece of mind. It is not difficult and it creates opinion. If you feel more like a couch potato, well, expect more of the same, but while you are in the couch, write to your opinion to your local paper.

How is your CPI "baby"

2006-04-20T20:56:00.000-04:00

www.fed.gov

Is your CPI 3.5%? If not go figure it out.

This condition does not require medicine, but it is very important for your wallet and your investments.

The Federal Reserve and the Government continue to release data showing that Inflation and the Consumer Price index are at a low in the range of 3.5%. Is that the truth and the numbers are a reflection of something? The fact of the reporting on those numbers is as fictional as a novel. The Federal and Government around the planet interpretation of inflation and Consumer Price Index have nothing to do with people’s economics, and that is what they suppose to reflect, the people behavior and capital cost with the median of spending habits in mind. Basically, reflect the increase in costs in people’s expenditures.
Is your inflation and CPI at 3.5%?
Most likely your real and most of Americans CPI is in the range of 7% and in some cases if you have kids your personal CPI could be as high as 25%.
You might wonder why the government will cook this numbers, as if they were Enron. Simply put if it is a devil agreement of economists to keep it quiet and those who control government. If they announce the real CPI, people will realize that their salaries will have to increase, pensions will have to be adjusted, labor contracts, you name it, the impact will be across the board and it will be a positive welcome to the most disadvantage people in society. Since when, any government will provide the most disadvantage people with anything unless it requires a fight. It will be a first.
Well, the only way to learn what is your real CPI is to have a control of your income and expenditures, but that will be too much to ask.
Simply look at the most direct needs of people data from the Federal Report:
Housing: up 18%
Gasoline and other oil derivatives: 32%
Food and staples: up 11%
Schools (colleges): up 12%
Decent Clothing: up 14%
Medical Costs: up 19%
Salaries up: 0.7 %
So if you are in the red by the end of the month. Maybe you need to start recording your expenses and income. As next step, bring those numbers to your elected people attention at the next town meeting. Who knows maybe the next your heard is that Congress is asking questions about how the CPI is calculated and salaries are up more than 0.7% or you keep losing ground every year it passes.

Trees as Asset

2006-04-13T12:27:00.000-04:00

One of my last investments is in a do good, feel good, make money investment that gets little publicity, it is called: high value trees.

After reading a few books about generational wealth preservation I found that they are a few consistent investments to have in your aim to preserve assets, and that included trees. I found the idea very compelling a basic to follow.
Basic things are not that difficult to apply but difficult to have broad market appeal. The example I used in the "billionaire donut."

Everybody knows that the number one creator of wealth is business ownership.
But most people decide for employement and leaves ownership aside, thus most becoming limted salary dependands. In that case the probality for wealth and education with substantial (100 million or more) assets is reduced to 1 in 1 million.
But the average person goal for money is more modest at one million to five million dollars by retirement age.

The magnificent thing is that not accounting for the value of their houses, 2 of every 100 of Americans have at least one million in assets.
The next stepping stone to wealth will be if you are part of the present elite the haves and the haves more as Presdent bush called his base. Those are CEO's, large private owners basically 40,000 or so familes who control 72% of the total wealth. That's makes it easy to drop a shoe.

For me, to get to the average goal is where trees come to play.

The number one investment on preservation of wealth is hard assets, and trees are as hard as it gets. Blommberg Wealth Manager Magazine called high value trees the perfect asset for wealth growth.

My next important consideration is tax savings.
The assumption gave me a series of class assets to consider that appreciates and do not pay taxes while they increase in value.
For most of us, the imminent asset is real estate. It is the asset that most people held as primary residence. In this class the next investment that holds value is commercial investments and third is land between driving distance of growing areas. The past years with declining dollar value and low interest rates, we have created a new high in returns for real estate. Those forces pushing prices might not hold true for the next twenty years. The caveat here is that if the dollar continues its decline and the Federal Reserve decides to change stance in interests and starts a new reduction period it might allow the bubble to continue but the probability of that is nil, and the most probable is real estate might not appreciate above inflation. Real estate needs stabilization in prices. After it stabilizes from present prices and a new pool of new prospective owners will get rebuild, unless the growth of new immigrants and nativity rates are not encouraged.
The second asset that appreciates and does not get taxes while grows is wood in the form of trees.
Corporations might gain concession from governments to harvest and this will fail in the above business creation category.
For individuals the next most profitable way to invest is to own a parcel of good land, preferably buy land that allows the growth of endangered species of high valued trees, and fully managed, the alternative will be to find larger company that will manage and buy the harvests as the trees grow. The average growth of a well managed tree farm can be as high a 15% and as low as 5%. The median growth is more common and that is around 9% for tropical woods.
The obvious constant here is time. Most individuals who invest in managed tree farms should expect slow, very slow, a really very slow process of getting returns. But you can count that a well managed farm with average tree growth in the range of 8% after 13 years can become a very compelling investment.
As of today is difficult for individuals in the US to invest in small amounts in this kind of asset class, it is mostly reserved for the people or organizations with at least $5000 start up and more. The ideal would be to have register shares on these investments at value of around $10 with no dividend distributions. I am not sure if the cost of trading the shares will make it valuable enough, but I am considering is learning from companies in Holland, Sweden and many other countries in which investors have access to shares of sustainable profitable tropical rain forest investments.

Follow up to CEO Health Care

2006-04-13T10:44:00.000-04:00

by Jon Kamp
Of DOW JONES NEWSWIRES
CHICAGO (Dow Jones)--The federal government proposed stiff Medicare reimbursement cutbacks for heart products like pacemakers, defibrillators and stents, but the cuts may be softened before a new rule is officially determined later this year, clouding the potential impact for affected companies.
The U.S. Department of Health & Human Services' Centers for Medicare & Medicaid Services late Wednesday proposed sweeping changes in a 1,200-page report on reimbursement rates for hospital impatient procedures. The changes are targeted at closing reimbursement loopholes used by specialty hospitals and trimming overall costs. The proposals are expected to be implemented in October.
The reimbursement cuts proposed for some of the hottest and most lucrative heart devices in the medical device sector were steeper than some on Wall Street were expecting. Proposed changes for orthopedic products like replacement hips and knees, on the other hand, were surprisingly moderate.
The proposed reimbursement cuts would hit coronary devices that are major revenue drivers for companies like Medtronic Inc. (MDT), Boston Scientific Corp. (BSX) and merger partner Guidant Corp. (GDT), St. Jude Medical Inc. (STJ), Johnson & Johnson (J&J) and others. The products include implanted devices that control heart beats and stents, the tiny mesh tubes used to prop open arteries.
The proposed reimbursement cuts for stents top 30%, Morgan Stanley analyst Glenn Reicin estimated, while the proposed cuts for implantable defibrillators top 20%, he said.
Despite the severity of the cuts, it's not yet clear exactly what impact the companies with heart products will feel going forward. According to Reicin, investors have already priced in expectations for heavy cuts, and even if "radical changes" do make it through a long period of haggling and commentary, they may effect hospitals more than device companies.
"We think it is unlikely that these changes will modify purchasing and demand characteristics of medical devices," Reicin said in a research note late Wednesday. "Hospitals have traditionally had little leverage in reducing device costs."
Some companies with a major stake in cororary devices were down in premarket trading Thursday. Boston Scientific recently traded down 3.7% at $21.35, St. Jude was recently down 4.3% at $35.25, J&J was recently off 18 cents at $57.69 and Medtronic was recently down 1.3% at $50.39.
If the proposed changes are really damaging for hospitals and utilization, "we think that changes will be scaled back and have little likelihood for implementation," Reicin said.
In a note early Thursday, Leerink Swann analyst Jason Wittes concurred. "There is room for negotiation, and the final codes will likely be less dramatic," he said.
Bank of America analyst Glenn Novarro noted some of the proposed changes "were far worse than expected," and suggested a potentially more damaging impact for affected companies. In a research note late Wednesday, Novarro said the cuts "would serve as a significant negative" for medical device stocks if enacted.
The impact was much less dramatic for major orthopedic companies, as the only sizable reduction was proposed for spinal procedures. Among major orthopedics firms, Zimmer Holdings Inc. (ZMH) recently rose 1.5% at $66.50 in premarket trade and Biomet Inc. (BMET) gained 1.6% at $38.75
Morgan Stanley has an ownership stake in Biomet, St. Jude and Boston Scientific. The bank has had an investment banking relationship with Guidant, Medtronic and Biomet.
Bank of America or an affiliate has an ownership stake in Guidant and Medtronic, and the bank has had a banking relationship with Boston Scientific, Guidant, Medtronic and St. Jude.
-By Jon Kamp; Dow Jones Newswires; 312-750-4129
jon.kamp@dowjones.com

PayWatch:

2006-04-13T10:42:00.000-04:00

Insurance CEO Drives Down Everyone’s Care but His Own
by James Parks

When William McGuire retires as CEO of UnitedHealth Group, he won’t have to worry about his health care. His contract requires the insurance company pay for lifetime health care for him and his wife. Not that he really even needs help paying for health care: As of Dec. 31, 2004, McGuire had $1.1 billion in unexercised stock options and cashed out more than $114 million in stock options during 2004.

So why is McGuire working overtime to lower the quality of care for working Americans?

McGuire is a big player in pushing for health savings accounts (HSAs)—employment-based programs in which consumers pay for their own health care through accounts established with a set amount of money available. President George W. Bush has made such accounts a cornerstone of his so-called health care reforms.

McGuire and others are peddling HSAs as a way to cut back on health care costs—but in fact, consumers would bear the cost burden. In an HSA, consumers would face a minimum of a $2,000 deductible for a family, but as high as $10,000 in some cases—before their coverage actually kicks in.

While working families likely won’t benefit, big employers like UnitedHealth Group will because they can shed current health care costs by shifting workers into high-deductible plans.

In sum, HSAs will lower health care quality and raise premiums by increasing out-of-pocket expenses for workers, cause employers to shift costs to workers and encourage families to give up preventive care, which would increase the likelihood of serious illnesses.

McGuire also has the fourth highest pension deal among corporate CEOs, according to the newly released AFL-CIO Executive PayWatch, with a retirement package worth $5.1 million. Meanwhile, his 55,000 employees—like other employees across the nation—have no legal right to retiree health care coverage or pension benefits.

Meanwhile, UnitedHealth Group is one of the insurance companies that received quick federal approval to be the first Medicare drug discount card providers when Bush’s Medicare reform took effect.

Coincidentally…McGuire raised more than $100,000 for the Bush campaign.

The New Robber Barons

2006-03-30T14:05:00.000-05:00

The New Robber Barons
By PETER ROST
The U.S. Department of Labor claims we have an unemployment rate of 4.9% According to "the Economist," however, the true unemployment rate in the U.S. is over 8%, or 12.6 million Americans. The difference is due to the fact that the U.S. Government doesn't count people as unemployed after six months without a job

I recently joined the ranks of our many unemployed citizens. The termination of my employment as a Vice President at Pfizer was subject to intense media interest, partly due to the fact that Pfizer notified the press before they informed me.

Contrary to press reports, however, I have received no severance payments and for the first time in my life I am eligible for unemployment benefits; $13,078. At this annual income level my family of four would actually fall below the federal poverty level,quite a difference from a year ago when my salary was over half a million.

I'm also uninsured for the first time in my life and I have to pay the full price for drugs, just like 67 million other uninsured Americans. Contrary to many others, however, I do have a choice. In accordance with federal COBRA law, I was offered the opportunity to continue my health care coverage for 18 months. There was only one hitch; I had to pay $15,269 per year to receive this benefit. I decided that with an income of $13,078 that didn't make sense.

Clearly the system we have today isn't just broke. The system is utterly and completely sick and our weakest citizens are paying the price, every day. And while I have belatedly been forced to share some of the experiences of our poor, uninsured, and unemployed, my situation doesn't even start to compare with people with no resources, no voice, nowhere to go and no one who listens to them. For those citizens we have something that's called the Government; a government that is supposed to look out for the people who can't look out for themselves, but instead focuses on "pay to play money."

Today's system is built on greed. Greed is defined as an excessive desire to acquire or possess more than someone needs or deserves. Greed is not a corporate executive who builds an organization such as Microsoft, creates a lot of jobs, and happens to get rich. Greed is to become CEO for a drug company such as Pfizer, be responsible for a stock price drop of 40% over his five year tenure, twice as much as the AMEX Pharmaceutical Index, secure a $80 million retirement package while firing 16,385 Pharmacia and Pfizer employees, and get a 72% pay increase to $16.6 million as his reward.

According to the New York Times average worker pay has remained flat since 1990 at around $27,000, after adjusting for inflation, while CEO compensation has quadrupled, from $2.82 million to $11.8 million. Our CEO's are in a position in which they can basically use public companies as personal piggy banks. And this is perfectly legal as long as they get someone else to sign their check. Meanwhile, the federal minimum wage has remained at $5.15 an hour since September 1, 1997. In fact, after adjusting for inflation, the value of the minimum wage is at its second lowest level since 1955.

At the same time, the pharmaceutical industry spends over $100 million on lobbying activities to stop lower drug prices, according to the Center for Public Integrity. There are 1,274 registered pharmaceutical lobbyists in Washington, D.C. and during the 2004 election cycle, the drug industry contributed $1 million to President Bush. For an industry that makes $500 billion on a global basis, spending one million on a president or $100 million on lobbying is pocket change.

This money was well spent. It stopped legalized import of cheaper drugs and instead we got a new Medicare drug program. This $720 billion law includes $139 billion in profits to drug manufactures and $46 billion in subsidies to HMOs and private insurance plans. The program has been such a disaster for our poor that at least twenty-four states have enacted emergency measures to ensure access to medications in the last couple of weeks . That's what a million dollars buys in Washington.

So how could this happen? The answer is simple. The American democracy has been stolen by our new class of Robber Barons--the CEO's of our big corporations. A political system dependent on charity from rich men in hand-tailored suits with $100 million retirement packages is no democracy. It is a kleptocracy. It is not what our founding fathers envisioned.

But we have the power to change this; to free our corporations from sticky-fingered CEO's, to free our elected representatives from "pay to play money" and to free our people from all these tyrants. We have the power to be free, at last.

Can we change this? Can we build a new future? I believe that we can. I believe this because we live in a country that could rid itself of slavery, a country that finally allowed women to vote; a country that has come a long way in the short time since the civil rights movement began. But early on, each of those incredible changes was fiercely opposed by those in power, and none took place without great sacrifice. To free our corporations from sticky-fingered CEOs, to free our elected representatives from "pay to play money," and to free our people from these tyrants is going to take sacrifice and time. Perhaps a long, long time. In short, it will require a second American revolution. And I believe that one day it will happen.

The Mobs

2006-03-27T17:50:00.000-05:00

The Mobs against the President

At the present time, President Bush has the lowest popularity rankings of its presidency, at the same time the last two events: the port deal and the immigration debate are taking another toll in the negative side.
I wonder if they will be only two events of this kind, public outrage with the UAE Port deal and the immigration reform (claims for action) are just examples of mob-brat behavior, in today’s globalized markets and WTO courts, there is a price for promoting special protectionism.
The UAE will not bring this to the WTO but the shareholders of BO that approved the deal might pull a recourse for compensation.
The president is getting criticized from all flanks. The fact of the matter is, in both cases the position of the President is correct, even if the brat-mobs decided the opposite.
In the port case: if it is not good for UAE to run ports in the same should reciprocal for US companies running foreign ports. For that matter, any other national foreign strategic interest businesses run by american corporations will be question in the near futere. Check Point software had to pull out of buying a software company this week, it seems that we are in a roll.
Many American corporations are engaged in running vital foreign government infrastructures, and it should not be surprising to see the same policy used by congress to those american corporations. The idea that it will not be used by other countries against American corporations running critical operations in those nations is just pollianish.
The port case will thread water because in the most likely scenario, the UAE will be offered to calm the waters with some other alternative to the direct investment in BO, including tax payers funded loans for infrastructure in Dubai City or other similar preferential action.
The mob posturing can be justified by sheer blindness in the face of free markets and global trade. This posturing falls in all merits of decent behavior.
Teh question is: are we for fair trade or we are protectionist at convenience.
USA claiming flag around the planet will have one more caveat: you can instill fear in others but eventually protectionism will be use in kind and fair trade dialogues.
The immigration situation falls within the same merit the fair trade doctrine. In this case, the solution is far simple and there is only one beneficiary that is the present tax payers.
Clearly there is racism involved in the debate, but if NAFTA has done something is to impoverish its members in all Latin American countries. The rpesent has a culprit and that is NAFTA and its proponents, that happen to be the same Congress we have today lynching inmigration.
The failure of leadership from the US and Mexico in lifting people's standards to deter mass iunmigration has failed. Poor standards of living has created a larger problem that was promised to be resolved with NAFTA. It turns out that the deal of NAFTA benefited again the same crowd of the super connected plutocrats.
By now, borders with Mexico and Canada need to be eliminated. Free flow of merchandise and people will deliver some of the promises of NAFTA and instead of racism and xenophobia and market protectionism.
Instead of introversion and bully attitudes, evolution is in the direction of integration and assimilation. Mob idiocy is not a recipe for success.

It's worse, way worse, than it sounds.

2006-03-17T16:30:00.000-05:00

The trade deficit's deep bite
A $225 billion U.S. trade deficit means we're deeper in the red than 20 years ago and sinking fast. Among the impacts: A lower standard of living for all of us in the years ahead.

By Jim Jubak

It's worse, way worse, than it sounds.

Which is pretty frightening, since it certainly sounds really bad.

On Mar.14, the U.S. Bureau of Economic Analysis announced that the broadest measure of the U.S. trade deficit grew to $225 billion in the fourth quarter of 2005. That marked an increase of 21% from the $185 billion deficit in the third quarter of 2005. And the quarter's results drove the deficit for all of 2005 to $805 billion, a new record.

The current account deficit -- defined by economists as the combined balance on trade in goods and services plus income transfers between the U.S. and the rest of the world -- increased in the fourth quarter to 7% of U.S. gross domestic product (the most common measure of the U.S. national income). For all of 2005, the deficit was 6.4% of GDP.

In 1985, when the G7, then the club of the world's seven largest free-market economies, pushed through a major devaluation of the U.S. dollar in the Plaza Accord, the current account deficit was a mere 3.5% of U.S. gross domestic product. The good news is that the world is a lot more tolerant of a massive U.S. deficit with the rest of the globe than it was 20 years ago. The bad news is that we're running a lot deeper in the red than we were in 1985.

So how can I say that the news is actually worse than it sounds?
First, because if you look at the long trends driving the deficit numbers, they're still picking up steam. The momentum is running very strongly against the United States, and when you're talking about reversing the course of something as big as the U.S. or the global economy, momentum counts.

Second, because the deficit has become so large that there isn't any silver bullet that will let us get out of this hole painlessly and quickly.

And, third, the demographics of an aging world say that our creditors are going to need the money they've lent us not too far down the road in order to support their own retirements.
Depressed yet? Wait, I'm just getting warmed up.

Overseas investors buying U.S. assets
Let's take a look at the most ominous trend in the 2005 numbers.

Unlike the trade deficit, which just measures the difference between what we export in goods and services and what we import, the current account deficit also includes international flows of investment income. That's worked to the benefit of the United States over the decades since World War II because we've built up quite a big portfolio of overseas investments from real estate to ownership stakes in foreign companies to holdings of foreign bonds that pay income to the U.S. owners of those foreign investments. For all of 2005, that income flowing into the U.S. came to a whopping $466 billion, up 24% from 2004.

But for years, overseas investors have been buying our assets faster than U.S. investors buy foreign assets. In 2005, for example, U.S.-owned assets overseas increased by $492 billion, while foreign-owned assets in the U.S. increased by $1,293 billion. (Or $1.29 trillion, if you prefer.)

And as you'd expect, the faster growth in foreign ownership of U.S. assets has gradually increased the amount of income that overseas investors receive from the United States. In the fourth quarter, the income flow actually turned against the U.S. We sent $2.4 billion more in income overseas than we received. That was a shift from the $4.9 billion income surplus in favor of the United States in the third quarter of 2005, and only the second time EVER (or at least since there have been decent records) that income from investments has been in deficit for the United States. In 2004, the surplus from income was more than $30 billion. From 1980 to 1985, the annual average was above $30 billion, and from 1980 to 2004, the smallest annual surplus was $4.3 billion in 1998.

So the shift from surplus to deficit in the fourth quarter is a big deal. It quite probably marks the end of a long period when flows of income into the United States from U.S.-owned assets helped offset deficits in years when U.S. imports exceeded U.S. exports.

Trend is accelerating
A turning point like this is just the beginning of an accelerating trend. It's extremely likely that the income deficit will continue to grow for years to come, because foreign investors are increasing their ownership of U.S. assets -- an increase of $278 billion in the fourth quarter -- faster than U.S. investors are buying overseas assets -- an increase of $43 billion for the quarter.

And ownership of an asset today creates a stream of income for a lot of tomorrows.
A shift from an income surplus of $30 billion to the income deficit of the $10 billion or so some economists project for 2006 isn't much help if you're trying to balance an annual current account deficit north of $800 billion. But it becomes positively devastating if you add this trend to other trends now working to push the current account deficit higher in the years ahead.

Look at oil, for example. In 2005, the United States imported $176 billion in crude oil at an average cost per imported barrel of $46.78, according to the Census Bureau. Our trade deficit with OPEC (the Organization of the Petroleum Exporting Countries) came to $92 billion. That's less than half our huge deficit with China in 2005 of $202 billion, but it's still a significant part of the $805 billion record deficit in 2005.

And there's certainly a good chance that the price of that oil -- and hence the size of the U.S. trade and current account deficits -- will climb in the years ahead. On the same day that the fourth-quarter current account numbers hit the news, the president of OPEC said the organization's new price target was between the upper $50s and the lower $60s per barrel. That's a huge jump from the last announced price target of $22 to $28 a barrel.

There's an unfortunately long list of similar trends that are working to continue to push the U.S. current account deficit higher. The size of the U.S. surplus in agricultural products has been falling as U.S. consumers eat more specialty and out-of-season products from around the world. Higher U.S. interest rates will increase the income flowing to the overseas owners of U.S. financial assets. And so on…

But you get the idea.

No magic fix
It would be comforting to believe that this huge problem can be fixed by a single, simple act. That's why our politicians are so fond of "solutions" such as forcing China to revalue its currency, the yuan, so that Chinese goods become more expensive. Or of rhetorical solutions such as "The U.S. can grow its way out of this problem by making U.S. exports more competitive."

Well, when you're running an $800 billion current account deficit, "it don't work like that." In many categories, Chinese goods are so much cheaper than the alternatives and so embedded in the global supply chain that making the yuan more expensive would, for some painfully long period, just increase the profits of Chinese manufacturers and the size of the U.S. trade deficit with China.

And our chances of growing our way out of this mess? Since U.S. exports make up such a small percentage of the U.S. economy, exports would have to grow by 70%, Paul Ashworth of Capital Economics has estimated, to eliminate the deficit.
A slew of solutions
In truth, it's going to take the combination of a lot of different "solutions" to get us out of this fix.
Yes, we should work to increase U.S. productivity, because that will drive U.S. exports higher -- and because high U.S. productivity growth, relative to the rest of the developed world, will continue to attract the overseas investments that we'll need to finance our deficit while we dig ourselves out of this hole

Yes, we should put pressure on China to take down barriers in its markets that prevent U.S. companies in fields such as financial services from doing more business in China. And we should demand that the Chinese adopt adequate rules protecting intellectual property. Add that to some appreciation in the yuan, and the trade deficit with China will shrink. Gradually.

Yes, we should do everything we can to encourage economic growth in the rest of the world. The U.S. can't continue to pull the global economy -- even with strong assists from China and India.

Yes, U.S. consumers have to spend less and save more. The odds are that it will take a painful slowdown in the U.S. economy to produce the "spend less" result. Higher U.S. interest rates would go a long way toward creating that spend-less environment and encourage U.S. consumers to save more as well. Part of the U.S. savings "problem" is a result of the negative real interest rates that Alan Greenspan engineered to keep the economy from deflating after the popping of the tech stock bubble in 2000. But certainly, no rational economist expects people to save when banks pay 1% and inflation is 2%.

Yes, those of us who live in the U.S. are looking at a reduction in our standard of living. We've used borrowed money to live beyond our means, and the bill is coming due.

And most of all, we need to follow the first law of holes: When you find yourself in one, stop digging. We need to adopt policies on energy, government budget deficits, health care and education that won't put us even further in hock while we're trying to work our way out of this deficit.
We don't have an endless amount of time to take these steps. Japan, a major funding source for the U.S. current account deficit, is one of the most rapidly aging societies in the world. Japanese savers will need to keep more and more of their money at home to pay the costs of that aging. The Chinese, another society of savers, have only a relatively small window of opportunity for putting aside the money they'll need to pay for their own retirements and health care in a society virtually without pensions or health insurance.

All this may sound very abstract to you. Global problems do seem far away from the everyday tasks of getting the kids to school or paying the doctor.

So in my next column, I'll talk about how the U.S. trade deficit and the budget deficit in Washington have already put the squeeze on your future.

The Kingdom of Idiocy

2006-03-12T23:21:00.000-05:00

The latest award winning idiotic behavior comes from an irresistible out loud clamor opposing the deal, by a foreign company holding trust from the UAE, controlling the ports operations in three major US cities.

This hypocritical posturing is the most idiotic behavior posed by politicos, media and other irrational morons in a long while.

Let’s start by looking at the radical and biased news reporting that emanates from FoxNews. Coincidentally, Fox News parent company News Corp happens to have as majority share-owner a corporation named Kingdom Holding Company. This holding company is led by Prince Alwaleed Bin Tabal, an articulate and brilliant individual who runs the Saudi Royal family trust. At the same time Fox has become the number one media outlet of disinformation, dispersing lies, baseless commentary, ran by a radical right wing apologist, and with a corporate parent manager named Rupert Murdoch, who is an expert at democracy manipulation and election media intoxication.

Kingdom Holdings also is the largest shareowner in Citibank. By now we all know that Andrew Weil, was “asked to retire” as CEO because his runs with regulators and the large sums of fines accumulated by its operation and other penalties. Among the things that brought such fiasco to Citi where: allowing Citibank to launder dirty money of drug trafficking from Mexico’s Carlos Salinas de Gortari ,former president of Mexico, who is personal friend of Robert Rubin –Present Chairman of Citibank and secretary of the Treasury under Bill Clinton- and great friend of the Bush family as their are friends and "brothers" with the Royal family of Saudi Arabia.
Today Carlos Salinas de Gortari is exiled in Ireland and has a vacation home in Dubai. The list of irregularities at Citibank is so long that it took two truck loads to move the files with evidence of misbehavior. The latest nightmares for Citi are around the on going investigation of Pinochet, Argentinian president LaRua laundering charges of public money under "advice" of Citi or the Osama Bin-laden family bank accounts. If you worry who moves containers in which port, better start to worry about who allows the money to move around to finance the deals.
Other mundane things Kingdom Holding are involved include, luxury Hotels as the Four Seasons, hey, leave no bed unmade in your way to Washington, the Plaza Hotel in NYC, Samba Financial Group the largest financial group in SA or the grandiose Hotel George V in Paris.

So why the present attack to the UAE and not Saudi Arabia?

It is a convenient attack falling in the lap of the President. Moreover, it is an attack based on racism and islamophia, this is not far away from other phobic behavior and biases used to twist politics and the herd’s brains. The illegal Mexican border crossing, of latest headliners, events that for 200 years were accepted as common, got a reprieve thanks to the infatuation of the "media" with the gaffe of the UAE.
In the kingdoms of idiocy the herds move in sync.
You can blame it on the President and his crony plutocrats with absolutist behavior but do not forget to put most of the blame in the Congressional crowd on election day, who were the ones who started all this sell-off, from the fascists driven republicans to the reactionary right wing democrats.
Attacking the sale-off to foreign companies of key strategic operations is old news and misplaced after so many years of foreign ownership of key assets.
"Dud" all these things go against the Party of Davos.
It is difficult to resist all this enjoyment thanks to the Kingdom of Idiocy.