The Certified Skeptic

written Tuesday, November 4, 2008

Election Day.

Here’s an opinion piece by Bob Herbert of the New York Times that struck a chord with me. On this election day, it points out some very troublesome issues with our Nation, our Leadership, and ourselves.

Link To Bob Herbert Article in the NYT

Thom

Here’s an interesting piece on John McCain from someone who knew him well, spent time in the POW camp with him, and has some insight on his character.

Link to article in Military.com

T

Here’s a pertinent article I found while surfing around looking for more information on the credit and economic crisis.

For what it’s worth…

How to Ruin the U.S. Economy
by Ben Stein

Posted on Monday, October 6, 2008, 12:00AM

1) Have a fiscal policy that creates immense deficits in good times and bad, burdening America’s posterity with staggering burdens of repaying the debt.

2) Eliminate regulation of Wall Street and/or fail to enforce the regulations that already exist, instead trusting Wall Street and other money managers and speculators to manage other people’s money with few or no regulations and little oversight.

3) Have an energy policy that disallows producing our own energy and instead requires that we buy energy from abroad, thus making our oil prices highly volatile and creating large balance of payments deficits, lowering the value of the dollar and thus making the problem get progressively worse.

4) Have Congress mandate that banks and other financial entities lend money to persons they know in advance to have poor credit ratings or none at all.

5) Allow investment banks, insurers, and banks to bet their entire net worth and then some on the premise that borrowers known to be improvident will in fact repay those loans.

6) Allow the creation of large betting pools called “hedge funds” that can move markets and control the outcome of trading, thus taking a forum for savings and retirement for families and making it into a rigged casino game that exists primarily to fleece suckers like ordinary working men and women.

7) Have laws that protect corporate officers from being sued for misconduct but at the same time punish lawyers in the private sector who ferret out such misconduct and try to make accountable the people responsible for shareholder and investor losses. If one of those lawyers gets particularly aggressive in protecting stockholders, put him in prison.

8) Appoint as head of the United States Treasury Department a man whose whole life was spent on Wall Street, who became fantastically rich through his peddling of junk bonds at his firm while the firm later sold short those same sorts of bonds.

9) Scare Americans into putting up $750 billion of their hard earned money to bail out the billionaires and their friends who created the market for loans to poor credit risks (The “subprime” market) and the unbelievably large side bets on those loans, promising that such a bailout would save the retirement savings of Americans, then allow the immense hedge funds to make the market crater immediately afterwards.

10) Propose to save the situation by surtaxing the oil industry, which is owned by our fellow Americans, mostly in their retirement plans, thus penalizing Americans for investing in companies that efficiently and legally produce an indispensable product.

11) Insist that the free market requires that banks and insurers with friends of the Secretary of the Treasury be saved but allow other entities not so fortunate to fail, thus creating total uncertainty and terror among financial institutions, and demolishing all of the confidence built up in financial circles since the days of FDR.

12) Then have the Republican candidate say he would keep on the job the Treasury Secretary who facilitated the crisis, failed to protect the nation from the crisis, got the taxpayers to pony up to save his Wall Street buddies, and have the Democratic candidate, as noted, say he would save the day by taxing the stockholders of energy companies.

There, that should do it.

I found this while mining the internet for information on the current credit crisis:

Analogies are never perfect, but here’s one using horse racing. Don’t expect a perfect correspondence to the banking situation, but I think it is close enough for government work.

Joe goes to the track and bets $2 on a horse.

Two guys standing nearby get into a discussion and Fred says to Sam, “I’ll bet you $5 that Joe wins his bet.”

Next to them are Bill and Bob. Bill says: “I’ll bet you $10 that Fred welshes on his bet if he loses.”

Next to them is Sally. Sally says: “For $3 I’ll guarantee to Bill that if Bob fails to pay off, I’ll make good on the bet.”

Sally then goes to Mary and borrows the $7 needed in case she has to ever pay off and promises to pay back $8. She doesn’t expect to ever have to pay since she believes Bob will always make good. So she expects to net $2 no matter what happens to Joe.

A quick calculation indicates that there is now 2+5+10+3+7 = $27 riding on the outcome of the horse race.

Question how much has been “invested” in the horse race?

Answer:

$50,000 by the owner of the horse who is expecting to recoup his investment from the winnings of the horse and other future deals. Everyone else is gambling, not investing.

The issue with the home market is that the only “investor” was the person who bought the home. All those engaged in the meaningless derivatives spun off from this are gambling. You can see how quickly the face value of all these side bets can exceed the underlying investment. Who is holding these side bets?  Not the homeowner. It is the people at the failing investment banks, hedge funds and similar enterprises. Notice that the bailout is being directed at them not the homeowners.

The real world is, of course, even more complicated. Over the last 30 years people have been allowed to place bets on everything starting with the value of stock averages. They might as well bet on the temperature in Newark at 8:00 AM.

So when you hear everybody saying this is a crisis caused by the housing collapse, be skeptical. We are in the midst of a classic pyramid or Ponzi scheme and there is no way out except for people to lose a lot of money. All that is different this time is that it is the taxpayers who are being asked for the cash.

— and an added comment —

I think there is a bit more to this - the person who borrowed funds to buy the horse got a loan with 1% interest for 6mo (the race is in 5mo) that will reset to 8% after that time. He must sell it after the race or he won’t be able to make the payments. The horse has a weak leg and is only worth 25k at most. The bank that made the loan to the owner sold the debt to a third party who then counted the 50k + interest (@8%) as an asset and borrowed $1.5 million against it to invest in (or bet on) other horse races. The party that loaned the 1.5 mil then counted that as an asset and… etc. etc. Others sold insurance against any party in the chain defaulting.

———————

We used to be a nation that produced wealth by manufacturing, inventing, and creating things or ideas of real usable value — computers, airplanes, refrigerators, etc. The current crisis emphasizes how we’ve somehow morphed into a nation that was creating wealth from thin air… from nothing… and producing nothing of value except the gambling winnings themselves.

T

In an attempt to save the apparently fragile financial systems of the world, an agreement has been reached among the administration and congressional democrats, and republicans on the basic points of a deal designed to have the U.S. — specifically you, me, our children, grand-children, and many more future generations — buy distressed and worthless investment instruments from troubled banks. Where this money is going to come from, specifically, is yet to be determined. We’ll have to wait for more details.

Both the specifics of the deal and whether it’ll work or not is yet to be seen. But, as I write here today, I’m feeling blackmailed. I feel like I’ve been mugged — and mugged by the very people who are supposed to be our leaders. Leaving aside the issue of how these guys could have been so asleep at the controls to not see this crisis coming (and whether they’re criminally negligent — something I’ll muse on at a later date), why is this deal being pushed through congress with such urgency? I’m smelling great stinking piles of dead fish. I don’t believe we know the half of it… who’s really going to benefit… how much it’s really going to cost… and what long-term damage this is going to cause to the U.S. economy. I have yet to hear a convincing reason as to why this must be done so fast. Just because Bernanke or Paulson say so? I don’t buy it.

I found the following website while searching the web for information about the current credit crisis and our economic system in general. It takes about three hours to listen/watch all 20 chapters, but was well worth the time in my humble opinion.

http://www.chrismartenson.com/crashcourse

I’d really like to hear from anyone with comments and criticism of the ideas contained in the crashcourse.

T

Saturday, July 19, 2008

Link to article..

Check out this well-written article about the current economic issues confronting our nation. I found it helpful in understanding how we got here and what we may still be facing.

T

Fuel prices are at record levels and people are having to adapt. It can be a hardship and the additional money spent for fuel has to come from somewhere else… food? vacations? entertainment? health care? Often, there’s not much one can do but pay the price and get mad… and maybe look for someone to blame.

Recently, I’ve been criticized for driving around in a motorhome — “a pig of a vehicle that gets less than 10 m.p.g.” Specifically, the criticism was the result of a piece I wrote in my political blog that was hard on the President for not using the patriotic fervor after the 9/11 attacks as a catalyst to make the USA independent of foreign oil, or at least, independent of Middle Eastern oil. The writer thought I was a hypocrite.

Simply put, I think the implication was that I have no right to criticize the President if I choose to drive a vehicle that has poor fuel efficiency.

Let me try to respond.

The motorhome is our home, our house — our ONLY house. It’s NOT our daily transportation. We only drive it when we’re moving to a new “home-base”. It will be driven less than 10,000 miles this year, and as fuel prices rise the miles we drive will go down. We don’t drive the motorhome when we run to the store, go sightseeing, run out to a restaurant or a movie, or when we go anywhere else while we’re parked at a “home-base”. We have a car for those trips… just like almost everyone else… except that we have only one car and most every other couple has two or more.

When it comes to the facts of our energy consumption, I’ve analyzed our usage both prior to embarking on this lifestyle, when we had a “real” house, and after, with the motorhome. I can assert, and I have the data to back it up, that the motorhome uses less energy than the average “real” house… including the diesel fuel we burn to move our house from one place to another.

Yes, we do consume about 1,000 gallons of diesel fuel each year that we wouldn’t be using if we didn’t have the motorhome. But we’re only heating and cooling about 300 sq. ft., and use only a small fraction of the energy the average homeowner uses for the same purpose.

We have a solar array on our roof that produces power from the sun. We can live “off the grid” indefinitely while the average homeowner is buying energy to power their much larger houses. Thus, our consumption of grid-electricity is very low.

We’re careful with our use of hot water; we don’t have snowmobiles, boats, quads, or other adult energy-consuming toys; we don’t use energy to mow our lawn or clear the snow; we’re buying much less “stuff” during this phase of our lives because we’re more into exploration than into accumulation — remember that there’s an energy component to each and every “thing” you buy. In general, our fulltiming lifestyle is a low energy lifestyle.

Apparently, in the minds of these critics, the issue isn’t the amount of energy we’re using… the issue is that I’m not using energy the way they’d like me to use it… the way they’re using it. I guess they’d be happy if we actually used more energy than we are fulltiming in our motorhome… as long as we used it in a “normal” way… the way they’re using it.

Or maybe they just need to understand what this lifestyle is all about.

Thomas Hoch
www.tdhoch.com

Friday, May 16, 2008

NYT Headline Today: Bush Rebuffed on Oil Plea in Saudi Arabia

I find it sad and embarrassing to have our president pleading with the Saudi’s to produce more oil because the price is too high here in America. Saudi Arabia is the country that produced 15 of the 16 hijackers that perpetrated the Twin Tower attacks on 9/11. It’s the country that indoctrinates all young people to hate the infidels of the west. And our leader, the purported leader of the free world, is “pleading” with these guys for more oil. This is the second time this year he’s prostrated himself for this purpose. And both times he’s been rebuffed.

How fitting is this for a president who has no energy policy? Recently, Tom Friedman pointed out in a recent column that this is the president who told people after 9/11 to go out shopping and buy something instead of asking Americans, who were passionately patriotic and wanting to help at that time, for some personal sacrifice in helping to reduce our dependence on imported oil. If we had spent the past 7 years on a national initiative for energy independence we may have been in a position by now where we don’t need that part of the world. Instead we’ve doubled the National Debt by waging a needless war, have nothing to show for it, and will be there — blowing more trillions of dollars — for many, many more years.

It’s beginning to look like the country with the greatest power is the country that has the most oil… and the country that uses the most oil is the beggar.

“Please Dad, Please… Can I have the keys to the family car?”

How sad. How tragic.

T

Wednesday, May 14, 2008

Lately I’ve been feeling like Phil Conners. Who’s Phil Conners you ask? He’s the character played by Bill Murray in the 1993 movie “Groundhogs Day”.

If you’ll recall, Phil is caught in some kind of time warp. Every morning the clock radio goes off at 6:00am with Sonny and Cher singing “I’ve got you Babe”. Every morning it’s Tuesday and it’s Groundhogs Day. He then proceeds through the day running into the same characters and repeating the same events. It’s a good film — it’s probably been a while since you’ve seen it, so rent it and enjoy it all over again.

Anyway, back to me. Lately, every morning I’ve been getting up to the same back-and-forth reporting on the Democrat Presidential Campaign for the nomination. Will it ever end? It’s “tuesday” every day, we listen to the same drivel from candidates that are only telling their audiences what they think the audience wants to hear, we listen to their same spin on what the results mean — and this goes on for months and months, years and years.

How did we become a nation where not only is “politician” a lifelong career, but where “campaigner” is becoming a career too? How did we let that happen?

Why wouldn’t it make sense to mandate a campaign period of 6 or 8 weeks? To limit the amount of money spent to some reasonable amount?

I, for one, am ready.

T