Category Archives: Politics: National

Ohio: Unions and Elections

Posted on November 9, 2011 | Leave a comment

Liberals love to scream that corporations influence elections in an unfair manner.  They have tons of money and are able to exert influence that ordinary people can’t.

Strangely they are silent when that exact same influence is wielded by unions:

The nation’s biggest labor unions spent nearly $30 million to repeal the law. That was more than twice the amount spent by Republican-affiliated groups backing the law.

30 million dollars.  30.  Million.  Dollars.

Listen.  The Left complains that abuses take place all the time by “actors” of the right.  Rules are broken and advantages are exploited.  But make no mistake.  The REAL complain isn’t that those rules are really important or that advantages shouldn’t exist.  The REAL complain from the Left is that they aren’t the ones benefiting from ’em.

Once again we have Unions using illegally obtained money to elect officials and pass laws that benefit the Union.

Occupy Ohio people, Occupy Ohio.

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Posted in Economics, Idiots on Parade, Liberty, Lobby/PAC, Politics: National, States Behaving Badly

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Herman Cain

Posted on November 8, 2011 | 6 comments

I’ve stayed silent on the Herman Cain sex scandal issues.  Part because I’ve learned the hard way the price of reacting to bad news reporting.  And part because I’ve needed to set my thoughts.

With that said, here are the pertinent issues:

  1. Did he do it?
  2. Does it matter?
  3. Is there a double standard?

I think the biggest of the three is #1.  Did Mr. Cain in fact abuse his position and make unwanted advances towards women?  I resonate with the fact that the 90’s were a period of escalated reports of abuse.  However, I also resonate with the characteristics of powerful people.  Personally I think that there is a large enough pattern to suggest that something iffy is in play.  Do I think there is a case of abuse?  No, I don’t.  Do I think that he may have suggested a “sex to play” kinda scenario?  Yes, I accept that possibility.

Then, #2, does it matter?  I would suggest that America doesn’t think it does.  We elect all kinds of crazy and we do it every year.  Personally I think it DOES matter.  It suggests a certain character.  And further, I think it suggests a somewhat lack of discipline wielding power.

Last, is there a double standard?  Absolutely.  Neither party has grounds to stand on when it comes to moral failings.  And they should stop in this bickering.

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Posted in Elections 2012, Politics: National

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Jon Stewart

Posted on November 8, 2011 | 15 comments

I think the man is gifted.  He is mad funny.

But I seriously think that a significant proportion of young people get their news from him.

And that’s scary!

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Posted in Idiots on Parade, Life, Politics: National

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Mortgage Refinance Program: Part II

Posted on November 2, 2011 | 3 comments

The current economic condition was brought about by housing.   Housing costs and a housing bubble.  The result is that we find an enormous problem with hundreds of thousands of people facing foreclosure. And until that problem is cured, we may never truly begin to see a real path to recovery.

These people are suffering.  They’re going to bed at night with that pit i their stomach wondering how they’re gonna make the next payment.  How they’re gonna avoid having the phone shut off.  How they’re gonna make winter.  There is fear and apprehension and stress.  I get it.  And I don’t wanna diminish it.   But those feelings are never, ever, really gonna go away until they’re addressed.  Not just contained, but addressed.

I went to school in Marshall, MN, home of Schwanna’s Ice Cream and Red Barron pizza.

I met Mr. Schwann by the way.  He dropped out of school in the eighth grade before founding his company.  I tended bar at the hotel he liked to have his Christmas Parties at.  His favorite thing was to tell me to watch how his executives would “run on the bar” in an effort to drink what he was drinking.  The worst was when he landed on CC and water with a rind of lemon.  I never cut so many lemon rinds in my life!

My major was Mathematics.  Not math, but Mathematics.  In calc I found myself in class with a bunch of non-math majors.  And they were struggling.  Some just wanted to pass and get the req out of the way.  Others were earnestly interested in learning calculus.  I gravitated towards those kids.

We would study forever.  I’ve found that math is learned in a series of ramps and plateaus.  That is, forward progress is made steadily until such a time as a specific concept is hit that prevents further and deeper understanding.  And until that plateau is addressed, not contained, further learning can not occur.  The gifted teachers have a grasp of plateau identification and remediation.  Anyway, the same process holds true in other aspects of life.

And home finances are one of them.  Which is my very long way of saying that just giving someone the answers to the calc exam isn’t going to help them understand calculus.  And neither is forgiving mortgages going to help people address their home finance situation:

WASHINGTON — The federal government’s expansion of a mortgage refinancing program could reduce the monthly payments of up to one million homeowners, but analysts said the modest scope of the plan meant it would probably do little to heal the housing market or help the broader economy.

The effort, built on sweeping voluntary agreements with the mortgage industry to let people refinance even if their homes have declined in value, reflects a new White House emphasis on economic measures that do not require Congress to overcome its bitter partisan divisions.

It also maintains a choice President Obama made in the early days of his administration to focus on reducing monthly payments rather than on the amounts that borrowers owe, the latter being what a growing number of liberal and conservative economists consider necessary to resolve the problem.

I resonate with the plight.  I get the desire to help.  But this isn’t helping.  This is enabling.  And until true and serious lessons are learned, nothing will change:

Treasury has publicly estimated that the redefault rate on HAMP permanent mods will be 40% over five year. Now, just one year into permanent mods, we have already reached a 21% redefault rate. There is no indication that the redefault rate is plateauing, and no reason to think that it will.

In other words, the default rate on refinanced mortgages is very high.  If you are failing to meet the payments of your current mortgage, there is little reason to believe that you will suddenly be able to make the payments on a restructured mortgage.

Not only does this program fail to help the problem it sets out to fix, the secondary impact is that it artificially keeps the home market from clearing.  The price of a home remains artificially high.  And this prevents true recovery.

Let the market work.  Accept the pain and allow these homes that are over leveraged to go into foreclosure and the market will heal.  It always does.

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Posted in Economics, Economy, Government, Politics: National

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GINI: Further Clarification on Wage Earners

Posted on October 31, 2011 | 4 comments

This morning I posted on the flaw of using the popular measure of income disparity across nations.  Many organizations use the GINI coefficient to measure this disparity.  However, what these organizations fail to mention is that they are measuring household disparity, not individual disparity.  And when they compare nation to nation, they don’t normalize those numbers so that we’re comparing apples to apples.

For example, in the United States, a massive amount of “households” is comprised of single parents.  That is, the home will find a single eligible wage earner.  And many of those parents opt not to work.  Now, some will say that’s because there is no work to be had.  Others, me included, will say that the incentives are all wrong.  The entitlement programs offer enough aid that the prospect of going to work doesn’t make sense.

So, no income.

Is this sad?  Most certainly.

Does this promote poverty generation to generation?  With out a doubt.

Is this a serious problem that requires serious thought?  Yes.

Does this implicate the job market, compensation structure or some inherent bias towards “the wealthy”?  Under no circumstance.

This morning I showed the “horizontal” version of the data.  Let’s look at the vertical:

Descriptor Lowest Fifth Second Fifth Third Fifth Fourth Fifth Highest Fifth
No Earners 62.4% 29.6% 14.0% 6.3% 3.0%
One Earner 33.0% 52.6% 48.4% 33.1% 22.2%
Two Earners 4.3% 16.0% 32.4% 49.3% 55.9%
Three Earners 0.2% 1.6% 4.4% 8.9% 13.1%
Four Earners 0.0% 0.2% 0.8% 2.4% 5.8%

The data continues to reveal reality.  The quintile that represents the poorest among us, the “Lowest Fifth” has 62.4% of it’s members with ZERO wage earners.  That is, more than half, WAY more than half of the poorest quintile has no one in it making any amount of money.  NONE.  There is no way that this can be counted towards any measure of income disparity.  For that to happen, there must be an income!

I have lived in North Carolina for 12 years [damn!  12 years] and I have never won the North Carolina lottery.  Never mind that we have had a lottery for only 7 years and that I’ve never bought a ticket.  Is it realistic that I be counted among lottery players that haven’t won?

No.

Back to the data.  The “Lowest Fifth” has 62.4% of its members with no income.  62.4%.  Compare this to the “Highest Fifth”.  That quintile has 3% with no wage earners.  Three.  Further, the “Lowest Fifth” has only 4.5% of its membership with 2 or more earners.  Compare that with the “Highest Fifth” who have 5.8% with FOUR wage earners.

It turns out that a predictor of income is, shockingly, the number of wage earners.

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Posted in Economics, GINI, Liberty, Life, Politics: National

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GINI: Income Disparity

Posted on October 31, 2011 | 5 comments

Thursday I posted my thoughts on the GINI rating and how it pertains to income here in America.  In that post, my main thrust was the fact that GINI, as reported when comparing national income disparity rankings, was comparing household incomes.  Not the incomes of individuals, but of households.

And I think that’s important.  As I demonstrated in that post, taking these two families:

  • Family A making $60,000 a year
  • Family B making $70,000 a year

Looks to be fairly equitable.  But now let’s consider that family A and family B get divorced, created 4 households out of two.  Then the breakdown looks like this:

  • Family A making $0 a year
  • Family B making $28,000 a year
  • Family C making $32,000 a year
  • Family D making $70,000 a year

THIS looks to be dramatically different.  However, the same four families in the second picture are the individual household represented in the first picture.  Remarkable, yes?

So, how do things look in real life?  Let’s take a look at the US Census Bureau’s Current Population Survey for 2010:

Descriptor Lowest Fifth Second Fifth Third Fifth Fourth Fifth Highest Fifth
Family Households 9,411 13,969 16,162 18,543 20,528
% 12 17.8 20.6 23.6 26.1
Married Couples 4,037 8,521 11,587 15,270 18,621
% 7 14.7 20 26.3 32.1
No Earners 14,805 7,037 3,327 1,496 722
% 54.1 25.7 12.1 5.5 2.6
One Earner 7,845 12,474 11,488 7,853 5,263
% 17.5 27.8 25.6 17.5 11.7
Two Earners 1,020 3,790 7,702 11,700 13,258
% 2.7 10.1 20.6 31.2 35.4
Three Earners 55 379 1,040 2,112 3,119
% 0.8 5.6 15.5 31.5 46.5
Four Earners 5 58 180 577 1,377
% 0.2 2.6 8.2 26.2 62.7
Aggregate Earners 10,240 21,940 31,595 41,125 48,338

The data is remarkable.  Let’s go through it bit by bit.

First, the “Fifths” listed at the top is earnings by quintile.  That is, the poorest 20% is the “Lowest Fifth” while the richest 20% is the “Highest Fifth”.

Now then, the data:

Households that are “families” is a massive indicator of income.As the percentage of families in each fifth increases, so does the wealth.  The same goes for married couples.  The top fifth has nearly 5x the number of married couples as the bottom fifth.  Seems that family is important in wealth creation.

Family aside, the powerful statistic that I took away was the number of earners in a household.  And what I found matches exactly with the phenomenon I described in my earlier post.

Of the households in the bottom fifth, more than HALF don’t have a single wage earner in the household.  More than half.  While the top 20% has only 2.6% of households that don’t qualify as a wage earner.

Further, if you look at the “Lowest Fifth” as a column and march down, you’ll see that fewer and fewer of those households have the described number of earners.  Starting at the top, this segment of the population has 54% of households with 0 wage earners.  While at the bottom, it has but .2% of the households with 4 wage earners.  The exact opposite is true of the “Highest Fifth”.

In short, it would seem that as a household has more wage earners, that household moves from one of the fifths to another.  And to the extent that this is true, look at the last line; aggregate earners.

The “Lowest Fifth” has 10,240 members.  The fifth that earns twice as much money as the lowest fifth has twice as many wage earners.  The fifth that makes three times as much as the lowest fifth has three times as many wage earners.  The fourth has four times as many wage earners.  And the highest has five times the number of wage earners.

This is true almost to the exact number.

The data presented above tells me that we don’t have an income disparity issue.  We have a family structure issue.  If you take a single wage earner in a household and compare that household to one with 4 wage earners, it should be no surprise which of the two households makes more money.

And lest there be any doubt.  The “Highest Fifth”?  They are some working sums -o- beetches.  Fully 62.7% of those households have FOUR wage earners.  This is not the lazy rich that the OWS and the ((% make them out to be.

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Posted in Economics, Economy, GINI, Liberty, Life, Politics: National, Rocket Surgery

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OWS Continues To Grow Up: Welcome to the 53%

Posted on October 27, 2011 | 7 comments

A few days ago I posted a story about OWS protestors in LA who realized that their protest camp was being infiltrated by imposters and homeless:

Anyway, this nicely frames this nugget:

Homeless transplants from the city’s Skid Row have set up their tents within the larger tent city. No violence has been reported, but protest organizers are attempting to discourage people who are only at the encampment for the amenities.

I smiled and said, “Welcome to the 53%!”

Now, to be very clear, I do NOT think the OWS crowd is obligated to serve food and provide shelter for people who are not members in their group.  The people who are organizing any individual movement and group is working hard, I am sure.  However, what they are protesting subjects them to a degree of tolerance that would not otherwise be applied to other organizations.

See, the 99% feel that other people in the world should labor for their direct benefit.  These people honestly feel that they deserve a “living wage”, free college and healthcare.  Gone is the concept that any and all of these things require that an individual, somewhere-anywhere, labor for the benefit of the 99% and not themselves.

This is, of course, crazy and no one really supports it.

See, what’s happening is that protesters have organized into roles.  One of those roles is to cook and prepare meals for the other protesters, in theory, so that they can focus on other tasks that are required.  Perhaps this is park cleaning, garbage removal, sign making and library tending.  This makes sense.  Just like in life, specialization of tasks is more efficient and better serves the community.

However, because of the nature of the camps, homeless and other non-protesters are coming for the meals.  And the folks who are contributing are getting fed up; they are tired of supporting those who don’t contribute in other ways.

Again, no one supports requiring people to labor for those who don’t contribute.

And the proof that no one supports it is the fact that those protesting for just such that condition are opposed to that condition when they are the ones being asked to contribute money and labor.

Hat tip Boortz.

To show they mean business, the kitchen staff refused to serve any food for two hours yesterday in order to meet with organizers to air their grievances, sources said.

…

The Assembly announced the three-day menu crackdown announced earlier in the day — insisting everybody would be fed something during that period.

Some protesters threatened that the high-end meals could be cut off completely if the vagrants and criminals don’t disperse.

Unhappiness with their unwelcome guests was apparent throughout the day.

“We need to limit the amount of food we’re putting out” to curb the influx of derelicts, said Rafael Moreno, a kitchen volunteer.

See, they understand.  They GET it.  And when faced with the prospect of laboring for those who don’t contribute in a meaningful way, they react by reducing the “welfare” they provide to “vagrants”.  Further, these people understand the power of incentives.  They know that if they put out more and more “stuff” they will get more and more “derelicts”.  The reverse seems to be obvious.  Reduce the quality of the “stuff” and the “derelicts” go away.

I so do love the free market.

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Posted in Economics, Idiots on Parade, Liberty, Politics: National

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Payday Loans

Posted on October 24, 2011 | Leave a comment

I like to listen to Clark Howard.  If you can get past the obnoxious campy “always-in-a-good” aspect of his delivery, the advice he gives is normally really strong.  Good conservative kinda stuff.

However, every time he talks about payday loans I get all hot-n-bothered.

See, Clark thinks that the industry should be shut down or regulated.  He feels that charging someone 10-20% on money for 1-3 weeks is out of the world crazy.  And, I admit, that kinda rate, even if you call the loan a “1 month loan” is way high.

But look at the numbers.  See what happens when you assume a 10% default rate:

Number of Borrowers Amount Borrowed Default Rate
100 $100.00 10.00%
Total Amount Lent $10,000.00
Loans Unpayed 10
Money Lost $1,000.00
Fee to Cover Money Lost $11.11
Loan + Fee $111.11
Repayment % 11.11%
Effective Annual % Rate 133.33%
Profit $0.00

If the lender accepts ZERO profit, the effective annual rate is 133.33%.

Now look what happens if the lender actually wants to realize a profit on his money:

Number of Borrowers Amount Borrowed Default Rate
100 $100.00 10.00%
Total Amount Lent $10,000.00
Loans Unpayed 10
Money Lost $1,000.00
Fee to Cover Money Lost $11.11
Loan + Fee $111.11
Repayment % 11.11%
Effective Annual % Rate 133.33%
Profit $0.00
Desired Profit Margin 1.00%
Profit $100.00
Fee + Profit per good loan $12.22
Loan + Fee + Profit $112.22
Repayment % 12.22%
Effective Annual % Rate 146.67%

The rate jumps to 146.67 for a 1% profit margin. Consider that; do you know anyone willing to risk 10k large in the hope of getting back $100.00?  Me either.

So, let’s look at 5%:

Desired Profit Margin 5.00%
Profit $500.00
Fee + Profit per good loan $16.67
Loan + Fee + Profit $116.67
Repayment % 16.67%
Effective Annual % Rate 200.00%

Wow!  If our lender would like to realize a 5% profit rate, he would have to charge an effective interest rate of 200%!  But wait, what if the default rate isn’t 10%, what if it’s 15%?

Desired Profit Margin 5.00%
Profit $500.00
Fee + Profit per good loan $23.53
Loan + Fee + Profit $123.53
Repayment % 23.53%
Effective Annual % Rate 282.35%

The annual rate soars to 282%!

The problem isn’t the payday lender.  Not at all.  The problem is the borrower population.  The rest is just numbers.

So, if Clark just asked the right questions he would walk away with a better understanding of the situation.  And just think, this profit margin and annual rate assumes a PERFECT efficiency in administration costs.  No labor, insurance, rent or processing.  ALL of which add to the cost before profit that the borrower has to pay.

It looks bad, but a closer look reveals an industry that really isn’t as predatory as we like to think.

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Posted in Economics, Politics: National

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Warren Buffet Wants Tax Rates To Rise

Posted on October 23, 2011 | 5 comments

Warren Buffet is now famous for claiming that his secretary pays more in taxes than he does.  Forget for a second that she doesn’t literally pay more.  Also forget for a second that she most certainly doesn’t pay the rate that Buffet claims she does.

Instead, focus on Buffet.  And his salary:

Warren Buffett, the billionaire chief executive officer of Berkshire Hathaway Inc. (BRK/A), was paid a $100,000 salary for a 30th straight year after warning that excessive executive compensation can hurt shareholders.

Buffett, 80, received no bonus in 2010 and he doesn’t get stock options or grants, the Omaha, Nebraska-based firm said today in a filing. Buffett’s personal and home-security services paid for by Berkshire cost $349,946. The company’s compensation committee has determined salaries since 2004. Buffett, Berkshire’s chairman and largest shareholder, formerly recommended his own salary to the board.

It’s reasonable to conclude that Buffet will earn another $100,000 next year.  Plus, of course, the security compensation.  So, if he gets his way and Obama and the Democrats raise the marginal tax rate from the 35% it is now to what ever they wanna move it to, guess what happens to Buffet’s tax burden?

It remains almost exactly the same.

See, Buffet makes his money in other ways than a simple paycheck:

  • Buffett’s adjusted gross income last year was $62,855,038
  • Buffett’s taxable income last year was $39,814,784
  • Buffett paid $15,300 in payroll taxes last year
  • Buffett’s federal tax bill came to $6,923,494, or 17.4% of his taxable income last year
So, if we DOUBLE the current top marginal rate, Buffet is only impacted on the first $100,000 + whatever the security compensation costs him.  The rest, the $39,400,000 or so left over, won’t be impacted.
Don’t be fooled.  Buffet doesn’t wanna pay more taxes.  He wants OTHER people to pay more taxes.

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Posted in Liberty, Politics: National

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Private Campaign Donations

Posted on October 23, 2011 | Leave a comment

I know that the Left doesn’t like the ruling that allows corporations to donate to campaigns.  Or, perhaps more importantly, actively campaign for the candidate of choice.  The granting of free speech rights to corporations does seem, in some ways, a bit silly.

Further, I resonate with those who feel that massive corporations can impact a campaign in a way and manner that can seem, how to say, unfair.  And in many ways, this political donating is similar to how I feel about unions.  The individual members of the union, or the workers/shareholders of a corporation may not WANT their money going to candidate A or to party B.

But I don’t know how to fix it.

I know that individuals are limited in the amount of money they can contribute to a candidate.  But after that, if an individual wants to spend private money to purchase air time on the radio in support of a candidate, she can, right?

I think so.  Even if it means that this woman can donate massive amounts of money to Minnesota Democrats:

For more than 30 years, one of the most influential charitable and political donors in Minnesota has been a woman passionate about issues but guarded about her privacy.

Alida Messinger, an heir to the fabled Rockefeller fortune, has quietly given at least $10 million to candidates and causes over the past decade. Some recent gifts have been extraordinary: $500,000 to a group that last year backed her former husband, Mark Dayton, for governor. And before that, $1 million to help bankroll the ballot campaign for the Legacy amendment, which raised the state sales tax to create 25 years of new funding for conservation and cultural projects.

Now, Messinger is preparing for a new showdown that will be expensive, contentious and, for the first time, public.

She is vowing to do all she can to help the DFL regain control of the Legislature and get President Obama re-elected. Her millions could also become a force in the fight over the constitutional amendment on the ballot next year to define marriage as a union of man and woman — not gay couples. Messinger, 62, contends GOP politicians are harming Minnesota. “We are not a quality-of-life state anymore,” she said. “Citizens need to get involved and say we don’t like what you are doing to our state.”

A single citizen, full of money, is helping to shape the political climate of a state.  Going so far as to elect her ex-husband to the Governor’s mansion.  And that’s not all of it.  Part of her giving, $500,000, went to a GROUP that worked to elect the good governor.

I don’t like it when a single individual can influence politics that much.  I suspect that much of my chagrin this afternoon has to do with the fact that Ms. Messinger donates to Democrats.  But I get that for ever rich Messinger, there is a rich Koch, or two.  For every Steve Jobs, there is a rich….well, a rich Republican.  I get that.

And maybe just because I don’t like it doesn’t mean it’s not capital “R” Right.

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Posted in Elections 2012, Government, Politics: National

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