American Banks

If you put your money into a bank, what do you have to look forward too?

• A very low interest rate
• The potential that the bank may go out of business

When
you put your money into a bank, are you expecting to have this money
put at risk? People put their money into banks because they do not want
to take big risks; they want their money to be secure. That really does
not work if the bank takes the risk (with your money) anyway. Not only
is the bank taking big risks with your money, they are paying managers
huge salaries and bonuses. For what? Making bad loans? Taking huge
risks with your money?

The real issue is credit cards and other
"retail" debt. Retailers want to be able to make sales to customers
that do not have the money to make the purchase. And, they also do not
want to take the risk of loaning that money to the customer directly.
Hmm - let's think about this again. What, are we stupid?! I am sure it
makes perfect sense to a banker that wants to keep getting his/her
million dollar bonus. But, is it really fair to the American people,
who are going to get stuck with the bill for those who have spent money
they do not have? The biggest irony is that the retailers shift the
risk to the banks, and the banks shift the risk to the government and
ultimately to the American taxpayer. Clearly, if certain American
taxpayers did not spend money they did not have in the first place, we
would not be where we are today. Then, there's the accountability; if a
retailer wants to sell something to someone who cannot afford it, they should be the ones taking the risk - not the American taxpayer!
So, what is the answer? Well, let's keep it simple ...

Americans needs some place to put their money where:

• The money is 100% safe (insured)
• They will be paid a fair interest rate
• Their money will not be put at risk - forcing the government to bail out the bank if the bank's management makes bad decisions
• The bank is not paying huge salaries to its management while only paying depositors a ridiculously low return on their money

Here's
a thought: why not have banks that are only allowed to make certain
stable investments with depositor's money? These banks could be 100%
insured by the FDIC - this would be less risky than the banking model
today, because the banks would not be taking on risky loan portfolios
(e.g. credit cards and other unsecured debt). If banks take deposits
from American taxpayers, they should have a responsibility to use the
money in a way that will ultimately benefit the depositors directly,
and the American public in general.

So, why not have Deposit Banks and Credit Banks?

Horse & Buggy

Why don't we still ride around in a Horse & Buggy?

I would like to think it is because the Horse & Buggy was replaced by something else, as society evolved. Imagine what would have happened if the Government had kept the Horse & Buggy going just because a bunch of Unions organized a large voting block for a particular political party. I realize this sounds like Republican rhetoric. And, I apologize to all my independent and moderate friends out there. But, I am trying to make a subtle point here. So, what if the Government had kept the Horse & Buggy alive?

Well ... I think we would have kept the people of the times employed. But, we would also still be riding around in a Horse & buggy.

Sometimes natural selection determines when a technology or company should go the way of the Horse & Buggy. If the government continues to intervene just to protect a certain block of the voters, then we are going to be in serious trouble. Society is going to give up on trying to realize the American Dream. And, they are going to just sit back and wait for whatever the Government will provide to them. That, in my opinion, is not what made America great!

We need to maintain our meritocracy. We need for all Americans to continue to strive to be better each day. This is what made America great - not an entitlement based socialist society.

Let me ask you a different question: Do you own auto maker stocks? Would you have bought auto maker stocks on your own? If not, why not? Guess what?! You, as an American taxpayer, are now a part owner in the auto makers. That is, the government took the risks with your money, that you would not have done with your "own" money. Essentially, since no one would put up the money to save the auto makers, the Government reached into your pockets, and gave the money to the auto makers.

Doesn't this bother anyone else?

I suspect this post will get flamed. But, I had to get this off my chest. :-)

Maximum Wage

In this time where class warfare is on the rise, I think there are a few things we need to keep in mind. 

First and foremost, I want to remind everyone that Congress routinely gives themselves automatic raises.  We (in this country) already have a minimum wage.  So, why not a maximum wage?  Why not tie all the congressional raises to the minimum wage?  That is, Congress does not get a raise unless the minimum wage is raised.  We can set this to be a fixed multiplier on the minimum wage.

I find it ironic that Members of Congress (on both sides of the isle) are chastising corporate executives for their bonuses and perks, and, yet, these very same Members of Congress are getting automatic pay raises.  Isn't this a double standard?  In economic times like these, everyone is focusing on Wall Street.  What about the Members of Congress?  Do we really know how much money is being spent by these folks?  It seems to me that we need to start reigning in Government Spending.  It seems to me that the Government should be setting a good example - they should not be spending money they do not have.  Isn't this really what has put the country in the trouble we are in today?

Now, lets think about the "rich are getting richer and the poor are getting poorer" mind set.  America is the land of opportunity.  That means that some of these folks are going to be lucky enough to be running a Fortune 100 company.  Not very many - but a few.  The key concept has always been (as communicated to me by my parents and grand parents), you get what you earn.  If you want to work your way into a better paying "job", then, you need to work hard enough to achieve that goal.  The thought that the Government is supposed to provide everyone the same opportunity seems to fly in the face of this concept. 

On the other hand ... when a corporation is not providing its employees with cost of living raises, at the same time the company is giving CEOs and Executives huge salaries and bonuses - something is just not fair.  This is the real problem.  How can we have a meritocracy that rewards hard work, that will also protect these hard working folks against corporate greed?  How can we eliminate the double standard by Government - shouldn't they take pay caps and cuts like the rest of the "average" Americans?

Just my two cents ...

Green Taxes

I am very much in favor of a gasoline tax to fund tax breaks for companies that make electric cars.

Let's face it - Oil is not going to last forever. And, electric cars seem to be a very good, green alternative. I know - I know - the electricity has to come from somewhere. But, as we Americans begin to endorse greener ways of generating electricity, I believe that problem will resolve itself. Consider this: if everyone had some way of generating green electricity - say - putting solar panels on their roof. Imagine all the electricity that could be generated if entire neighborhoods were using solar electricity generators! And, if a household just generates enough electricity to charge the battery in their electric car, then we have managed to take all of those carbon emissions out of the system. And, if we make sure that all the technology used to build solar panels and electric cars is American, we can help the economy to boot.

Now, before the right wingers start accusing me of being a tax and spender, let me say that I am not talking about putting these green taxes into the general fund. I do not trust the government not to divert that money to something else in future. Rather, any green taxes should be put into a trust fund such that the funds can only be used to fund green project start up costs (infrastructure, etc.).

So, how about it America? Can we invest a few cents per gallon to ensure our future energy independence?

Outsourced Social Security

There was a proposal by some to hand the management of Social Security over to private investment organizations.

If this proposal had been accepted, imagine where we would be now? Actually, I'm not sure it makes much difference, because the Federal Government is getting stuck with the tab for all the sub-prime mortgages anyway. But, that aside, there is clearly something wrong with the way the banks have managed risks for the last three or so decades. Does it make sense to try to outsource Social Security to a broken financial system?

By the way, if we were to outsource Social Security, we would have to borrow even more money to keep the Federal Government going. Its called cash flow ...

Democracy at Work

California had a state-wide referendum on Gay Marriage. This is Democracy at work. The public voted not to allow Gay Marriage. Now, I feel the need to say that I do not live in California. Nor do I have any opinion on this issue - not For and not Against. My key point here is that an election on this issue was held, and, the people have spoken.

So, what happens after the vote?

The lobby for Gay Marriage decided to take their arguments to the Federal Government. Their intention being to force the state of California (or it seems any state) to accept Gay Marriage. What does this say about our democracy? What does this say about America? Doesn't the constitution protect State's Rights to make their own laws?

Americans have a well deserved reputation for "not liking being told what to do". It seems to me that the right way to do this is to allow all states to make their own laws for things like Gay Marriage. That way, an American who feels strongly about a particular issue (like Gay Marriage) can move to a state with a similar ideology.

America is a collection of people with different cultures and beliefs. The strength of our country has always been our diversity. A key component of our diversity has been our ability for States to set their own social standards.

Now, on to the concern. If a State has a referendum on an issue, and the issue is defeated, it is simply not right to try to get the Federal Government to overrule the State's Right to pass laws regarding the issue. The people voted against the issue. What happens to Democracy when the Federal Government overrides the State's Rights? It seem to me that the advocates of the issue would throw Democracy out the window just to have their own way. Give me a break! There was a referendum. The people voted. Live with it, or move to a State whose citizens share your points of view. That is the best thing about America: Diversity.

So, there are two aspects of the issue:

• If we have a vote, is it right to overrule the vote when it does not go the way the minority wanted it to go?
• Should the Federal Government be entitled to overrule the State's Rights, when the State has practiced Democracy by having a referendum?

Catashtrophic Healthcare

What is the real health care issue?

Catastrophic illness that is not covered by insurance companies.

Why don't insurance companies want to cover catastrophic illnesses? Its simple; catastrophic illnesses are like hurricanes: they cost the insurance companies a lot of money. Like hurricanes, catastrophic illnesses can have large impacts on the insurance company's cash flow. If the company's cash flow is too significantly impacted, they could miss their profit goals. And, in this case, executives for that company could lose a significant amount of money (compensation is usually linked to company performance). So, rather than take the risks, insurance companies prefer the easy money. They just want to provide insurance, where they are assured to make money.

All companies need to increase their earnings (profits). This means they either have to increase revenue or reduce costs. Reduced costs mean reduced quality for products (in some cases), or, reduced services for the same cost. Likewise, revenue is increased either by raising prices, or, by increasing market share. So, if a company is arbitrarily trying the increase their profits, then there is a good chance that consumers are going to be the ones that ultimately pay the price. Growth in profits without growth in market share is always going to lead to inflated prices for consumers. Simply put, consumers are getting less for their money. This is my definition of inflation.

In most cases, stockholders are not the ones that benefit the most from increased profits - the company's executives are the ones that benefit the most. And, the customers who are paying for products and services are the ones that benefit the least. This is a classic example of how the rich are getting richer and the poor (or middle class) are barely getting by. Companies increase their profits, which increases the amount being paid to top executives; increasing the gap between the rich and everyone else. But, I digress. I simply wanted to point out that perhaps insurance company executives are not motivated to provide the best service for the best price. Rather, they could be motivated by their compensation, which is linked to the profitability of their company.

Is this really the way a health insurance company should be run? The role of an insurance company in society is to provide the public with some degree of financial protection against unforeseen events in their lives. If you think about how much more benefit an insurance company could provide to consumers, if they were not paying executives so much money, its almost depressing.

Perhaps there should be a nationalized insurance company for catastrophic healthcare. In general, I am not for government intervention in the free market. However, I think my example here makes it clear that the only ones that are really benefiting from the current situation are the executives of these companies. I would much rather have a federal civil service organization managing a catastrophic heathcare trust fund.

Tell me what you think ...