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Friday, January 29, 2010

Just Some Questions

Below are questions I have asked myself throughout the past week. Instead of writing what my answers to them would be I am interested in any answers you may have, or additional questions you have asked yourself.

For the week starting Saturday January 23, 2010 here are some questions I have had:

Can we get rid of the fist bump?

What happened to the swine flu?

Did you watch, listen or read the State of the Union address?

How about the GOP response?

When leadership changes parties doesn’t seem like everyone’s memory was wiped clean as well when it comes to criticizing the opposition for faults, real or perceived?

Is this consistent with your behavior during the Bush State of the Unions and Democrats responses?

How much more money are you willing to have taken out of your income to support all levels of government?

Colts or Saints?

Did Obama’s State of the Union address help, hurt or have no impact on Democrats campaigns for 2010?


Steamed or fried rice?

Will Obama have a challenger in the Democratic Primaries in 2012?

What is wrong with a mother and son telling America they are glad she did not listen to the advise of others who were encouraging her to abort him?

Is it me or does it seem if you are going to spill something that stains it will happen on the first day you wear a new shirt?

How glad are the Republicans who were ticked off at the Gang of 14 who compromised on Bush judicial nominees that they did not “go nuclear” and rewrite the cloture rules?

Has the global warming movement jumped the shark not that Osama bin Laden has entered the fray?

Is Attorney General Holder the biggest threat to national security and terrorist attack(s) on American citizens?

How ridiculous is it to criticize one party or the other because they stood up or did not stand up during a State of the Union?

Do you agree with Argentina President Cristina Fernandez de Kirchner’s position on pork?

Cookies or Pie?

So those are the questions, what are your answers? Click on the comments button below and let us know what you think.

Wednesday, January 27, 2010

Is Obama On Tilt?

Poker is a game that is rich in language and strategy. Good poker players know they are not playing their cards but rather playing their opponents. They read their opponents looking for "tells," signs from their opponents that signify what kind of hand they have. Are they playing with their chips different, slouching and looking upset, anxious to shove chips, giving any sign, or tell as to what their hand may be?

Read tells of their opponent determines if they call a bet, bluff a set of rags (bad cards), limp along trying to show a weak hand, or storm all in shoving every chip in the pile daring their opponent to call the bet. Being able to read the other players at the table is a lot more important than the strength of the cards in your hand.

In poker if a player has lost a hand on a very bad beat, such as his opponent pulling the one card out of 52 in the deck that could give him the winning hand, if a player loses a good stack of chips on a bad beat he can go into a funk. The funk is known as being "on tilt" and is often characterized by a bad decision or two in the ensuing hands. Often a player on tilt plays himself out of a tournament, or all his cash.

The very best players recognize when they are on tilt and become very tight players, folding hands they would normally play and only playing if they get top cards. They take a few hands off to regroup, refocus and reset their internal emotions and instincts.

In poker there can come a time when one player has significantly more chips than his opponents to be able to control the game. Wise poker players with large stacks control the table in a manner where everyone knows they are in control, but at the same time look for hands and situations to eliminate other players from the game. The wise player picking and choosing hands to collect more chips from opponents until game over, using his large stack to put opponents in difficult decisions to call bets and possibly lose it all, or fold their hand having lost just a few more chips.

Amateur players play their own cards and do not have the ability to read and analyze opponents as well as the professional and experienced players. Amateur players with large stacks often begin storming into hands and trying to bully opponents, and often find themselves taking a bad beat or two, finding themselves on tilt and suddenly not in control of the table any more.

At some point there is some luck involved, but a lot more so for the amateur than for the seasoned professional, who more often than not make their own luck. More than luck success is dependent on knowing your opponents, being able to calculate odds for hitting certain hands for yourself and your opponent, ability to out maneuver opponents into betting hands you want them to bet, and managing your resources, i.e. chips, so you can last to the end.

Last January President Obama and the Democrats were starting the new year with the largest stacks of chips in the poker game of American politics. They had plenty of investors having securely won the Presidential election and insurmountable majorities in both houses of Congress. Over the course of the next twelve months they have managed to squander their stacks on bad cards, and bad reads of the others in the game. Most notably they misread the player in politics that counts the most: the American voter.

The first hand was an "all-in" situation by Obama and the Democratic majority in Congress, passing the $787 billion American Recovery and Reinvestment Act. Ostensibly to provide jobs for Americans immediately the ARRA still has over 60% of the funds left unspent. A huge spending bill filled with pork it passed in a matter of days and told the American people "we control the table and will use our chips and position to pass what we want."

After the bill was passed and the cost and where the funds were going became more publicized grumbling began with the voters. Next up was "Cap and Trade" legislation that would add hundreds of billions of costs to American industries, shove more manufacturing jobs out of our country into others and cost jobs. While this was being debated unemployment numbers in American began to grow. The members of the House and the Senate who have more seasoning in the political poker game began reading the public and pulled back on the Cap and Trade bill and let it languish in political purgatory.

On top of this the American automakers were failing and about to go under. Rather than let that happen, Obama and Congress pushed more chips into the game and sent billions to GM and Chrysler, and then billions more. It was seen by the public as not a bailout for the automakers but for the United Autoworkers. Decades of increasingly bad contracts for the companies and increasingly beneficial for UAW members pushed the automakers to the brink. More discontent among the American public caught the eye of a few more players in Congress.

Pushing more chips into the pot, Obama flew off to Europe to try to secure the Olympics for his home town of Chicago. More chips sent him to Virginia and New Jersey to campaign for Democrats running for governor in those states. More chips from Obama and Democrats in Congress when they headed to Copenhagen to craft a global warming agreement that would put America at a severe economic and manufacturing disadvantage and cost hundreds of billions more. Bringing terrorists bent on killing Americans from military lock ups to trial in New York City with the same rights as American citizens. Closing the terrorist prison at Guantanamo Bay. Loss. Loss. Loss. Loss. Loss. Loss.

Chips began to move from the stacks of Obama and Congressional leadership and to the stacks of other players. Power began shifting at the table.

The biggest hand of the game so far was health care. Making secret deals away from the table to gain more chips from other players, Obama and his allies in Congress made deals with three individual states at the expense of others, deals with the pharmaceutical industry, with the American Medical Association and with organized labor. Each of these deals cost the American public more money and gave these groups those funds. Cobbling the deals together it appeared that Obama, House Speaker Pelosi, Senate Majority Leader Harry Reid and the far-left of the Democratic Party had bought the cards needed to win the hand.

The cost was dear as the American public was amassing its own stack of chips and they were collecting more and more from the center and center left of American politics for the right and center right to play. And play them they did last Tuesday in Massachusetts when a fellow name Scott Brown pulled an Ace on the hole card. Obama and his allies have lost most of their stack on this hand after bleeding much of their stack the previous twelve months.

This past week President Obama had the appearance of a player on tilt, joining him were his allies in the media who have been pushing his agenda and government take over of health care, encouraging Obama to ignore the obvious tells of the other players, especially the American voter, and push ahead betting more chips. Finally taking a read of the American voter Pelosi and Reid seemed to sense that the cards and chips have shifted and have sat back and not made any bets since Tuesday. Obama and his Administration have taken to the airwaves and speech circuit and continue to bet chips.

Of the hundreds and hundreds of speeches and television appearances Obama has made in the past fifty-three weeks as President none has been more important than the State of the Union speech this evening. It will provide a tell for the American public and how to play their chips in the coming year and midterm elections.

Will Obama continue his misreading of an American public that has as many people disapproving of his performance as approving? Will he continue to misread the members of Congress who last February rushed through his stimulus bill? Will he lash out at opponents, lecture the nation and look somewhat petulant? Will he adhere to his belief that he knows better than the public what is good for them? Will President Obama push more chips into the game playing the same cards he had when he lost most of his stack?

Is Obama on tilt?

Monday, January 25, 2010

Back to Jobs

With the defeat in Massachusetts last Tuesday President Obama and the Democrats shifted their focus from trying to force bad legislation through Congress to "putting Americans back to work." Good idea, but then so is reformation of aspects of our healthcare industries.

As a quick recap, in February 2009 with Obama in office less than a month Congress passed the American Recovery and Reinvestment Act of 2009. Quickly signed by the President, ARRA, known at "the Stimulus" had a price tag of $787 billion. The purpose of the Act was to create and preserve jobs and, according to the White House, prevent U.S. unemployment from reaching 8%. Money was going to go to communities across the country for "shovel ready" projects to promote infrastructure development and create local jobs.

As I wrote last January, the Congressional Budget Office in analyzing the bill stated it would have little impact on the recession or creating jobs before the current recession ends. Almost all of the spending in the bill would occur in the months leading up to the 2012 election cycle. Almost all of the funds went not to private sector companies and projects, but rather to state and local bureaucracies. The CBO analysis appears to have been correct, the ARRA would have no impact during the fiscal year it was passed. Unemployment has crested 10%. Because of red tape and inherent government inefficiencies communities across the country have nice signs that say "This work project funded by the American Recovery and Reinvestment Act of 2009" that sit on corners or streets for months with no visible work being done. Chalk ARRA up as the first misstep, or failure, of the Obama Administration and his Congressional allies who at the time needed not one Republican vote to pass any legislation--and none in Congress voted for ARRA.

In the past year private sector unemployment has been shrinking month after month. This past week another 485,000 filed for first time unemployment claims. The number of Americans on unemployment roles has stayed somewhat constant because the number of Americans falling off the unemployment roles has about equalled the number going on. Stretched out because part of the ARRA funds went to states to extend unemployment benefits--a jobs stimulus bill that paid states to pay those not working longer, an oxymoron only government cannot understand--the true, or real, unemployment number in the United States is in excess of 10%.

Almost all of the jobs lost in the current economic cycle are from the private sector. Amazingly while Americans working for private companies have seen lay-offs, business closings, salary and bonus cuts, and other economic hardship, government employees have been mostly untouched--especially Federal employees. In California the economic reality of a broke state and many municipalities has caused many workers to share the pain of the private sector with furlough days, but overall employment in the sector has not shrunk, especially compared to their private sector neighbors.

Nationally, the number one industry for job security and growth has been working for the government. While the number of Americans paying taxes has shrunk, the number of Americans benefiting from tax revenues in the form of salary and benefits has increased. And incredibly many are making more today than they did in 2008. This past week it was announced that for the first time in history the number of Americans in public employee unions exceeds the number of those in private sector employee unions (while government owned I believe the GM members of UAW are counted as private sector).

So in the past year Congress and Obama dedicated $787 billion for job growth and protection. Millions of Americans have lost their jobs in the private sector, millions more have seen cuts in salary and benefits. Those collecting paychecks and benefits for working in government jobs have seen increases in their paychecks and an increase in co-workers on the job as government payrolls have grown not only in salary but in numbers of checks issued.

Now as Obama talks about focusing on jobs Americans need to hold on to their pocket books because we know more spending is on the way. Blessed with the inability to acknowledge mistakes, missteps and the people, Obama, Speaker Nancy Pelosi and Senate Majority Leader Harry Reid do not see ARRA as the rush-to-spend that it was, but rather a success. Their myopia, as seen with their reactions to Massachusetts, leads them on a collision course with more bad legislation and policies that will not increase jobs in our country, but more likely add to the dissonance in the private sector preventing investment and growth.

Step one of the next misstep is Obama attacking banks. Trying to rally the mob, Obama attacked the bonuses and salaries of bank executives, bemoaning their paying themselves but not lending and extending credit to start and aid economic recovery. He stated he was going to reform the banking system and establish new rules for them. Ignoring, or ignorant of, the incredible Federal oversight currently going on of U.S. banks, Obama has promised more oversight and accountability.

But banks are not lending money because they have no idea what the repercussions of lending to small and medium businesses will be. Under attack since the TARP funds were put into the system, whether some banks wanted them or not, banks have been very tight on credit. Seeing the PR damage to their industry and to the executives who make the decisions, banks are not going to stick out their necks making small business loans. Risky loans invite federal scrutiny. Federal scrutiny leads to federal takeover. Better to not make risky loans and instead invest in more secure investments like Treasury bills and overnights to major corporations.

Jobs are created by entrepreneurs and those with vision. In a bad economic environment most business owners hunker down. They cut expenses, the number one expense almost always being payroll. They hoard cash and do not expand or invest. Advertising gets cut. Marketing gets cut. A little bit lower grade of supplies are used. This behavior maintains or worsens a recession. To reverse the process risk takers are needed.

Small and medium businesses are the number one employers in America. Towns and cities across the nation are dependent on these companies for economic health and growth. For growth they need capital. For capital they need banks to loan them money. For banks to loan them money they need some room from regulators to be able to extend some risky loans to those willing to expand in a shrinking economy.

Until the rules are set for banks. Until banks are secure in knowing they can extend credit with some risk attached. Until banks are not governed to a zero-loan loss expectation. Until a small business owner with a plan and an idea that needs ten, twenty, fifty thousand dollars to implement is provided the capital. Until these happen our economy will be stuck on unemployed.

Obama's Administrations says they are focused on jobs in America. Great. Connect the dots. Jobs need employers. Employers need capital. Capital needs banks. Banks need firm and set rules.

Quit the rhetoric and playing to the fawning press. Rhetoric is killing the markets and investments in America. Let the banks lend and see what happens. Quit trying to legislate to prevent failure and instead allow for some risk to enable growth.

Friday, January 22, 2010

Just Some Questions

Below are questions I have asked myself throughout the past week. Instead of writing what my answers to them would be I am interested in any answers you may have, or additional questions you have asked yourself.

For the week starting Saturday January 16, 2010 here are some questions I have had:

Now that ObamaCare is dead and the public option nowhere in sight, how many Canadians will now live because they can still get better care here than at home?

Tremendous flooding in the neighborhood by Wilson H.S. in Long Beach was caused by a mattress that floated onto and clogged a storm drain, when they hauled out the mattress was the “Do Not Remove This Tag” tag still attached?

Favorite television theme song?

Does your routine change very much with the weather? How?

Split pea or navy bean with ham soup?

What is the radio station on your #1 button in your car?

Which bothers you more cold hands or cold feet?

Raisins in your oatmeal?

Did Scott Brown’s victory in Massachusetts surprise you?

What should Congress do now about health care reform?

When was the last time you said to someone, “You told me so”?

Question I asked at our dinner table this week: What is the most important ‘thing’ or principle in a marriage?

Are you better at math or spelling?

Now that the focus is off health care reform and on jobs, what can Washington do to make a difference in turning around the unemployment numbers?

Will the change in direction as a result of national polls and elections in Virginia, New Jersey and Massachusetts have any impact on California elections, state or national offices, in November?

Will you/did you watch Conan’s final Tonight Show Friday night?


Winter 4th grade: what did you just think of?

Where do wasps go in the winter?

If you were Speaker of the House or Majority Leader of the Senate what would be your top two priorities for legislation before summer recess?

Any chance you will do something spontaneous and child like this weekend?

Cookies or Pie?

So those are the questions, what are your answers? Click on the comments button below and let us know what you think.

Wednesday, January 20, 2010

The People's Seat

This past summer I spoke to my Dad while he was enjoying a prolonged stay in Sweden. He was unusually, but happily, disconnected from the news in America. "What's happening?" he asked.
"Dad you would be so proud of the American people. They are speaking up across the country. Not just activists but ordinary Americans are travelling to town hall meetings and rallies given by members of Congress and demanding answers to questions on the health care legislation."

Americans spoke again yesterday in Massachusetts. On President Barack Obama's 365th day in office the most liberal and Democratic state in the union voted overwhelmingly against his policies, leadership and direction. The cradle of liberty, the home of the Boston Tea Party, the Shot Heard Round the World, John and Samuel Adams, Paul Revere, spoke with a clear voice, "No." The people of Massachusetts voted to fill the people's seat in the Senate with a Republican, Scott Brown, with 52% of the vote and a five point victory of the Democratic candidate.

Throughout the summer the mainstream media and Democrats tried to spin the townhall meetings as foaming Republicans screaming at Democratic members of Congress. They ignored the senior citizens who came out in droves to ask about their Medicare. They ignored the speakers from the audience who would preface remarks with, "I am a registered Democrat" or "I voted for President Obama." As the House barely passed Speaker Nancy Pelosi's health care bill, with one Republican crossing the aisle (a Republican filling a seat created when a Louisiana Democrat was caught with $98,000 in bribe money in his freezer, a district that is over 70% registered Democrat) the mainstream press and far-left partisans cried, "Bi-partisan support!" When in fact it was by-partisan opposition.

Throughout the fall as Senate Majority Leader Harry Reid horse-traded over his version of a health care bill, not publishing the bill, not allowing it to be read except in his office as he brought in recalcitrant Democrats to strong arm their support, the mainstream media and far-left partisans cried, "Republicans are blocking health care reform." When in truth it was Democrats blocking the bill since no Republicans were required to pass the legislation. After bribing Senators with Federal tax dollars, Reid finally got his votes and passed his version of health care reform.

The President cheered, Pelosi cheered, Reid cheered, the editors of the Washington Post, New York Times, Chicago Tribune, Los Angeles Times cheered, the news directors and anchors at ABC, CBS, NBC, MSNBC, CNN cheered, the publishers of Time and Newsweek cheered. And they thought the American people were cheering with them. Ignoring the polls being published daily, ignoring the emails and letters being sent to Washington, ignoring the people back home in real American who vote, they cheered.

Cracks and fissures were visible all over the Democratic party, Pelosi and Reid were urged by Obama and members of his administration to get a deal done. Get the Senate version and the House version reconciled before his State of the Union. He wanted it done before summer recess. He wanted it done before winter recess. He had to have it done before the State of the Union. Obama and the Democratic leadership did not care what was in the bill, just that they passed one to hold up to the American people and say, "See? See what we have done for you?"

With arrogance and contempt of the people who disagreed with the tactics, the process and the content of the bills being reconciled Democrats in Congress were being urged to pass a bill, "we can explain it to them once it passes." "Them" being us, you and I.

But the plan did not work. The plan to arm twist moderate Democrats into voting a bill through was seen as twisting the arms of the people back home. People in Agawam (64% Brown) didn't like the bills or the process. People in Dedham (55% Brown) didn't like it. Adams, Hanover, Rowley, towns across Massachusetts were filled with people who said, "No." And this time they have to listen. But will they?

Since his election there have been three significant special elections where President Obama has travelled to the state to campaign for the Democratic candidate. And each time the Republican has won the race. In Virginia, in New Jersey and now in Massachusetts. Each time the candidate was blamed, certainly it could not be the President. As excuses and blame begin this morning, Brown's opponent, Martha Coakley, will be blamed for running a bad campaign--she did. She will be blamed for not taking her opponent seriously and assuming a Republican could not win in Massachusetts--she did. She will be blamed for costing the Democrats the critical 60 seat super-majority they have held throughout 2009--she did not.

What cost the Democrats this seat was the Democrats, specifically the Democratic leadership, the Gang of Three (Obama, Pelosi, Reid) pushed their agenda with such arrogance and ignorance of those objecting to the reach of the policies and agenda and the costs. The voters in Massachusetts echo almost exactly the national polls: No. No huge deficits and spending. No to your version of health care reform. No to your trying to hijack the democratic processes of the United States Congress.

Ironically the results in Massachusetts is the best result possible for Democrats facing re-election this fall. The Senate cannot pass a reconciled bill because there are now only 99 Senators until Brown is sworn in. In the House, Pelosi can try to strong arm her fellow Democrats one more time, this time to pass the Senate version of health care exactly as presented; but those who already voted against it won't change their vote and those who compromised before see Massachusetts' results and will say "no thanks." So the current versions of health care reform die in conference. And when they hit the campaign trail this summer and fall the Democrats can say, "Republicans blocked health care. We didn't get a chance to pass a bill that would help all Americans." They have their blame, and they are not blamed for passing a bill that would add trillions in debt and forever change how health care is delivered and paid for in our country.

For Democrats in swing states and 50-50 districts, no health care bill is better than the ones being presented in Washington. The people of Massachusetts told them that.

Moving forward for the Republicans, what Scott Brown delivered was an opportunity and a rallying cry. In a debate last week Brown was asked about filling "Ted Kennedy's seat." Brown replied, "This is not Ted Kennedy's seat, this is not any party's seat or any individual's seat. This is the people's seat." That statement pointed out the arrogance and assumption of the Democratic leadership in Boston and in Washington D.C. This underdog candidate who was behind by 30 points when his election started pointed out to the nation what our Constitution states, our leaders are representatives of the people. Not of parties. Not of special interests. Not of corporations or unions. Of the people, for the people and by the people.

This is the slogan and talking point the Republicans need to take to the Hastings this summer and fall. Rekindling the voice the people felt in last year's town hall meetings and the nascent Tea Party movement that has remained strong, remind the voters that they control government. They are the ones who actually vote and whose votes are counted. So speak! Make your district's seat the people's seat.

As for opportunity, now is the time for Republicans in Washington to come together and make a united statement regarding health care. I have written several times in the past about how I feel health care reform should progress, and I hope Republicans adopt some of the process. Primarily to put together a Pledge For Health Care Reform. Much like Newt Gingrich's Contract With America that led to GOP victories in 1996 during Clinton's first term, the Pledge would be a simple to read and understand step-by-step outline of what the Republicans wish to see in health care reform. Once drafted they can work with Democrats who have been resistant to Reid and Pelosi and Obama to have them sign the Pledge.

The Pledge should state that health care reform is needed, but needs to proceed methodically and incrementally and not all at once. Reform Medicare and Medicaid to eliminate waste and fraud. Tort reform to take the practice of defensive medicine from the burdens of our doctors and hospitals. Allow insurance companies to offer insurance across state lines to increase competition and lower costs to consumers. Remove the burden of providing insurance from employers so people do not lose their insurance when they change jobs, freeing people to shop for health care insurance that is best for them and not their employers. Protect hospitals and health care providers from the over-burdensome regulations and bureaucracies that prevent growth and expansion. With each of the items provide a timeline. Project into the future that the Pledge will be offered to all candidates for Federal office to ensure work will continue when they are gone.

In what might be the biggest upset in modern politics a Republican won an election for United States Senate in Massachusetts. A simple man ran a campaign on issues, on substance and on integrity speaking directly to the people he will represent. He let them know it is their seat he will fill. The people of Massachusetts fired the shot heard around the country.

But are the people in power in Washington able to hear a shot from the people? We will see.

Monday, January 18, 2010

Martin Luther King, Jr. Day 2010

Today is a federal holiday in honor of the Reverend Dr. Martin Luther King, Jr.; and rightly so. No single man has done more to advance human rights, freedom, equality and liberty in our nation since the Founders wrote the Declaration of Independence and the Constitution establishing those ideals and values as the basis for our country. While just over one year old at the time of his speech in August 1963 at the Washington Mall as part of the March On Washington, it is a speech I make a point to listen to and read every year at this time.

"I Have A Dream" echos within every parent, white or black, Latino or Asian. It is all of our dream that our children are judged by character, and our hope we can instill the character in them that they be judged as honest and loving. As we look into our children's eyes we too dream that they will sit with others of different races, religions, ethnicity, ideologies and opinions; sit without rancor, sit without injury and sit without judgement or accusation. We all have dreams for our children that they may grow to live with integrity and openness, make positive contributions to their communities, engage in work that is fulfilling and strive for success in that work.

America has come very far in race relations since Dr. King's speech over 45 years ago. The signs of racism have been pulled down in the diners in Alabama and the schools in Arkansas. Travel to South Carolina and you will see white hand in black hand as young lovers stroll the mall. Go to Boston and you will see fans of all ethnicities joined together to scream for their ballclub that consists of several races. Travel to a riverboat casino on Mississippi and see friends whose only concern with color is the green of the felt and the red on the chips and not the black or white on each others faces.

America still has far to go in race relations. There are still bigots and racists in our communities. There are still those who will label someone because of the color of their skin, position, associations. There are those who know not the content of another's character but judge them anyway. And because of this we have, as a nation and as individuals, more need for dialogue, more need for conversations on the values and ideals of our nation centered on freedom and liberty, and more need for exposing racism when and where it occurs.

And as we move forward many Americans will be absent from those dialogues, from those conversations. Some by choice and some by exclusion. As we travel farther from the lifetime of Dr. King, it seems we travel further from his values and his messages as well. The conversations on race relations have been captured and held somewhat hostage by a few who wish to exclude the many. Accusations of racism have become so widespread as to disinterest many. Many of those who wish to have conversations on race with others outside of their race do not out of concern of the labels and judgement that may accrue to them.

As long as I am told, "you can't talk about race because you are white," as I have been told. As long as I read "Republicans are racists who just want to keep blacks poor" as I have read in our editorial pages. As long as I hear cries of racism when a man pleads guilty and is convicted of abhorrent crimes and then upon his release from prison continues to pursue a lucrative career. As long as those who make racist remarks but have the "proper" political affiliation are routinely forgiven their remarks. As long as incidents like these occur is as long as our racial divide will continue to exist and at times drift further apart.

And that is a shame, a damn shame.

There are many conversations I would like to have regarding race in America. The shifting dynamics. The political ideology linkage. The relationships between races and cultures in a free nation. The identity politics and sociology that shapes policies and dialogues. But in our current environment I feel I cannot, and shall not.

Unfortunately I am not alone.

Many white Americans are fearful of dialogues on race for fear of words and statements being taken out of context and being used to label them bigots or racists. Trepid of conversations where their intention is either misinterpreted or purposefully misconstrued. Tired of seemingly every negative action by a person of color is labelled "racist" by someone, to the extent that the labels and accusations begin to fall on deaf ears so we start to miss it when real racism occurs.

A few years ago our city, my part of the city, saw a horrific scene of physical violence. The victims were white and the perpertrators were black. There was outrage in the community, and also reticence to address the issues. Rather than speaking publicly many members of the community spoke instead to local columnist Tom Hennessey. He wrote at the time of the number of emails and communications he received from people who wanted to express their views and opinions, but wanted to do so anonymously. Which is how many of our dialogues on race now occur. Anonymously or intra-racial instead of inter-racial.

And this too is a shame. A shame that people willing to engage, to learn, to teach, to interact and to come together feel unable to do so.

I am very grateful to have had the opportunity to learn about Dr. King and his messages. A great orator, his speeches are still captivating. I am grateful as well that my children will learn more about his messages at a younger age than I was. That they have already learned that the color of the skin of their classmates matters not, but how they behave and act do.

I too have a dream. A dream that one day my children will feel safer having conversations about differences physically imposed by circumstance of birth than I do today. A dream that as our great nation hurls into the 21st Century that others will allow, encourage and invite them to have those conversations. While as a nation we have come so very, very far to combat and eliminate racism throughout so many corners of our nation, we are not finished.

Thank you Dr. King for the movement you shouldered and carried through our history. Thank you for shattering barriers of racism that are unthinkable today.

Just Some Questions

Below are questions I have asked myself throughout the past week. Instead of writing what my answers to them would be I am interested in any answers you may have, or additional questions you have asked yourself.

For the week starting Saturday January 9, 2010 here are some questions I have had:

Would Hillary have been better?

Did McGwire confess what everyone knew so he would be voted into the Hall of Fame?

Best place to get Pho in Long Beach?

Do you think the Democrats and media giving Harry Reid a pass on his “light skinned African-American” and “doesn’t have the Negro dialect except when he wants to” remarks?

Did you have a special moment with one of your kids this week?

Who will win the special election for Senate in Massachusetts?


Should Congress be able to levy back taxes on employees because they loaned their employers money?

Is it Constitutional to require that you have health care insurance?

Can you articulate in less than twenty words a policy or proposal to stimulate growth of jobs in the private sector?

Barbecue brisket, chopped or sliced?

Will Senate Majority Leader Harry Reid run for re-election or drop out of a race it appears he cannot win?

Who will be Obama’s running mate in 2012?

What is more politically damaging, passing a bad bill the majority of Americans are against or not passing any bill?

Cookies or Pie?

So those are the questions, what are your answers? Click on the comments button below and let us know what you think.

Wednesday, January 13, 2010

Hall Pass

In the past few days I have been sent links, articles and found on my own several articles and opinion pieces on the housing/mortgage crisis, Fannie Mae and Freddie Mac. In particular was a piece from my Dad from the Wall Street Journal, "The Fed Crisis: A Reply to Ben Bernanke" (subscription may be required), by John B. Taylor who created the "Taylor Rule". The Taylor rule is a model by which central banks can determine whether to increase or decrease rates and by how much. Taylor takes Bernanke and the Fed to task claiming the primary factor in the housing crisis was rates that were too low and created an expanding housing bubble with really cheap credit.

Bernanke is being grilled in the media and on Capitol Hill regarding rates and how Fed policy in the early to mid-2000s created the housing bubble and ultimate crashes of housing, mortgage and credit industries. In reading these articles and opinions one thought kept resonating with me: Fannie Mae and Freddie Mac are getting the biggest hall pass in economic history by a majority of politicians, media and pundits.

Sure Fannie and Freddie are taking some heat now for huge bonuses being paid to executives, for essentially unlimited credit from the Treasury after being given lines of credit in excess of $100 billion each, but the roles of Fannie and Freddie in the housing and credit crisis is being deflected to blaming low interest rates. Sure low rates were a factor, but from the inside of the business I still assert not the factor. Low rates expand the availability of credit, loose underwriting standards explode the availability of credit.

In July I wrote about the Automated Underwriting Systems (AUS) of Fannie Mae and Freddie Mac (How Fannie Mae and Freddie Mac Crashed An Economy) detailing how the systems work. For those who missed it, don't remember it or do not want to read about it here is a summary. Essentially starting in late 1990's Fannie/Freddie developed software that would read mortgage application packages and provide loan approvals that lenders would follow. As more and more mortgages went through the system they had statistical ability to read foreclosure and default data and tweak the guidelines. Of course from 2000-2007 there were almost no foreclosures because housing prices increased and anyone in trouble could pretty much sell and get out of it--or get a sub-prime loan from New Century or other lender.

As we headed into 2005 and 2006 the guidelines became so loose that we would see loan approvals for borrowers with debt-to-income ratios of 65% of their gross income, for 100% financing. That means a borrower could have dedicated 65% of their gross income for their mortgage payments, property taxes, hazard insurance and any debt such as credit card payments, auto loans, student loans, etc. That would leave 35% of their gross income for state and federal withholdings and taxes, health insurance premiums, retirement contributions, clothing, entertainment, food, gas, water. Further, many of these approvals did not require full verification of income.

I stand very firm in stating that this, the loose standards of Fannie and Freddie, were far more contributory to the housing bubble and ultimate collapse than low rates. Let me provide and example using real numbers from 2005 and real numbers from 2010. First, note that in December Fannie Mae tightened criteria for lending to require a minimum FICO score 640 for purchase transactions (680 for cash out refinances) and a hard debt-to-income limitation of 45% of adjusted gross income.

In looking at interest rates from 2005, the were higher than they are today spending most of the year above 5.5% for 30 year conventional (Fannie/Freddie) fixed rate mortgage. Prior to 2005 rates hit 5% or came close, but never pierced the 5% barrier. Since December 2008 rates have been consistently below 5%.

For my example I am going to use a borrower making $63,000 per year, or $5250 per month. I am going to assume the borrower has a debt load of 10% of gross income--about average for most borrowers.

In 2005 this borrower would have had available 100% financing using "piggy-back" financing with a 1st trust deed covering 80% of the sales price and a 2nd trust deed (usually a home equity line of credit) for 20% of the sales price. Both mortgages would be approved using the Fannie Mae Desktop Underwriter. Both mortgages would be underwriting using interest only minimum payments for qualifying. The interest rate on the first would be 5.5% and on the second 6.5%.

This borrower would have been approved and funded for the purchase of a $500,000 home. The interest only payments on the two mortgages would be $2800 per month, over 50% of the borrowers gross income with taxes, insurance and every other expense still left to be paid with the remaining $2450 of gross income.

Flash forward to January 2010 with the same borrower. Today there is no piggy-back 100% financing available, so at a minimum the borrower will need 5% down payment. The interest rate on the 1st will be 5% and the borrower will have to pay for private mortgage insurance.

In 2010 the same borrower making $63,000 per year qualifies for a purchase price of $260,000. Same borrower, same income, debt, credit record and a lower interest rate and he qualifies for $240,000 less in home value. Oh, and the borrower needs $13,000 for down payment.

The largest contributing factor to the housing bubble was not low interest rates, it was low qualifying standards set forth by Fannie Mae and Freddie Mac. Qualifying standards that got looser and looser as the decade progressed until finally the system collapsed starting in 2007.

Further contributing to the financial mess was that Fannie and Freddie would package the 2005 borrower with the loose underwriting standards as an "A paper" loan and sell it on the secondary market as such. Investors were purchasing billions of dollars of Fannie and Freddie mortgage backed securities where the investment was in fully leveraged borrowers with debt to income ratios exceeding 50% of their gross income. Because they were sold as A-paper, or prime, mortgages there was little risk associated compared to the sub-prime mortgages that are blamed for collapsing some financial houses. In fact the Fannie and Freddie mortgages were as risky as those labelled and securitized as "sub-prime." Will there be any lawsuits from investors?

While certainly not every loan in the Fannie and Freddie portfolios from the period had debt to income ratios up to 65% many did; and a significant amount of the portfolios had borrowers with debt to income ratios in excess of 50-60%. With everyone wanting to be a homeowner as prices started to spike Fannie and Freddie underwriting criteria loosened seemingly in proportion to demand. Lesser and lesser qualified borrowers were buying homes with higher and higher prices.

Interest rates do not account for being able to qualify for almost twice as much loan and home value for the same borrowers, underwriting criteria do. Every time I hear someone opining on the Fed and low interest rates as the cause of the housing bubble I shake my head, knowing that someone is taking blame and someone is avoiding blame for the root cause of the housing price run up. The proof is in doing the math using the guidelines of the period.

I will repeat, Fannie Mae and Freddie Mac have gotten the biggest hall pass in economic history from politicians, media and pundits. Until they are put under investigation and their underwriting standards examined and questioned they will continue to be over-looked for their contribution to the housing bubble and crisis.

Monday, January 11, 2010


With a nod to Jets fans, the cheer in the title is what all Americans should be cheering in unison in front of their state houses and the nation's Capitol. Particularly here in California, the chant of "Jobs, jobs, jobs" should be loud, clear and constant from all sectors of the economy and state as it appears our political season, commonly known as "budget discussions" are starting up again.

Last week Governor Schwarzenegger gave his State of the State speech and presented his budget; which needs to fill a $20 billion plus budget gap. Naturally the opposition immediately decried the budget because the Governor is requesting significant cuts to many programs, departments and sectors of the state government. Programs, departments and sectors that have grown exponentially in the past decade, primarily in the early part of this decade when unemployment was shrinking, incomes and property values were increasing and tax revenue was flowing into Sacramento like never before. The members of our Assembly and Senate during those boom times behaved as one would expect selfish, narcissist, self-serving politicians to behave: they gave political favors (read: money) to their friends and supporters, expand pet projects and liberal programs, and entrenched the primary financiers of the State Democratic party and its politicians, the public employees' unions, as the most powerful political force in the state.

Complicit in the spending increase has been the myopic California voter. Voting for measure after measure focused solely on the short term and/or the feel good "progressivism" of the measures on the ballot, the majority of California voters have saddled the state's income (or rather deficit) statement with hundreds of millions of dollars in interest payments on bonds. Bonds for water, bonds for science, bonds for rail, bonds for prisons, bonds for schools, bonds for bonds. Without any ability to connect the dots, without any desire to see the burgeoning budgets eating up temporary tax revenue windfalls, without any vision to see the long term consequences not only of the cost of the bond measures but the costs of expanding the size of the state government and subsequent salaries, benefits and pensions, the California voter checked "Yes" "Yes" "Yes" and (D) (D) (D) on their ballots.

Since January 1, 2008 the American economy has shed over 7.25 million jobs, almost 4.2 million in 2009 (U.S. Bureau of Labor Statistics). The worst hit states, as you can see from the map at left, are the far West, and swath from Michigan down to the Southeast. In a boondoggle of public spending and waste, in February Congress passed and President Obama signed the Stimulus Act whose purpose was to prevent unemployment from reaching 8% and would be used for "shovel ready" infrastructure projects. While some of us at the time screamed, "Pork!" now more are seeing how correct that cry was.

While Schwarzenegger complained in his State of the State that California only gets a little over seventy cents back on every tax dollar sent to Washington from California, he should have followed Texas Governor's Rick Perry's lead and refused any of the American Recovery and Reinvestment Act ("Stimulus") money. The funds are going overwhelmingly to public agencies which perpetuates their inefficient use of funds, creates more salaries, benefits and pensions on public payrolls and budgets, and do not create jobs. While title the ARRA, it should have been titled the Public Employee Job Guarantee and Expansion Act. Perry recognized this and did not want to burden his state with long term liabilities and government growth as a result of a Federal bribe to public employees.

Our state Legislature is behaving the same way as Congress. Their primary purpose at this point seems to be more about saving public jobs than improving conditions in the private sector and economy of the state. Since their campaigns, "their" being the Democratic majority who control budget negotiations, are financed primarily by public employee unions they focus their efforts on protecting those jobs, protecting those payrolls and protecting those automatic payroll deductions into the labor PACs. Schwarzenegger is properly focused in his budget to cut spending to reduce the budget gap.

With gerrymandered districts protecting the incumbent Democrats there will be little political consequences when the primaries coincide with the annual budget negotiations as the June 30, 2010 "deadline" approaches. The guaranteed majority in the districts will follow their same voting patterns with the result being zero accountability for the politicians who have created and perpetuated our budget crisis. And we can expect those same voters to protest and complain about the budget cuts being called for by Schwarzenegger and the members of the GOP in Sacramento. The guaranteed result is budget cuts and tax increases, and a budget deficit next year over $30 billion as the cycle repeats itself.

In order for the unemployment rate in January 2015 to reach 6% it will take 225,000 new jobs added to the economy every month for sixty consecutive months. This rate of job growth has occurred once in history: 2006. We will not add 225,000 jobs in January 2010, or February, or March, in fact we will see more job losses. So the number of jobs needed to get back to 6% unemployment increases accordingly. By adding more tax burdens to employers state and federal governments are disincentivizing job growth and hiring. Higher taxes reduces tax revenue, it has been proven time and time again. To create jobs and income tax revenue taxes must be cut, or at least the current tax rates retained, federally.

For California, we are losing jobs, people and wealth to other states by the tens of thousands. Who is left and what is the level of employment those left are able to achieve? We have a negative environment for new jobs in energy and manufacturing. Our service industries are leaving because with the technology and taxes available in other states it is easier and cheaper to work from another state, or country, than California. Our income tax, and sales tax, revenues will continue to decline as long as the Legislature is anti-business, anti-growth and pro-taxes and regulations that kill businesses and industries.

This past week saw typically bitter and freezing winter weather over much of the country east of the Rockies. In Southern California our weather has been over seventy degrees for the past few weeks. It, beautiful weather, is one of our primary resources that should draw and attract businesses, entrepreneurs and vital economic growth. Unfortunately our political climate is sufficiently foul as to counteract the incredible climate Divinely provided.

Jobs. Jobs. Jobs. Private sector jobs should be the only focus of our Legislature as they tackle the current and future budgets for California, and the United States.

Wednesday, January 6, 2010

Turn On The Cameras, Open The Doors

It is increasingly clear that Joe Wilson spoke some truth, not with much decorum but nonetheless his outburst as President Obama addressed a joint session of Congress is showing to be not far off the mark. Of course he could have been addressing Senate Majority Leader Harry Reid or House Speaker Nancy Pelosi. This Gang of Three, Obama, Reid and Pelosi, are trampling all over their prior statements and pledges to the American people as they conspire to complete a health care reform bill.

Our nation is a republic, it is a nation governed by laws not by (wo)men. While the laws are crafted by elected representatives, signed by elected Executives and presided over by judges both elected and appointed by our elected representatives, it is the law that rules not those who create and enforce them. Today our republic is in transition to being a nation ruled not by law but by men, and one tough woman. And if they are successful our future will be changed, not only because of the changes in health care delivery and coverage for all future generations, but because of the precedent they will have set in ruling our country. Not governing but ruling.

As you have probably been aware both the House and Senate have now passed health care reform bills. Both were passed with the minimum of votes. In the House of Representatives one Republican, who is in office because he replaced a Democratic Representative arrested after $90,000 was found in his freezer and despite efforts by his party to save him ultimately gave up his seat in a district that is as deep blue with registered Democrats as you will find in America. In the Senate the bill passed despite never leaving Reid's office for a reading or public debate. Whoever on the Democrat side of the aisle spoke out against the bill and what may have been in it got a call from Reid's office and the White House and invited to a sit down. Most left with something nice for their state to buy their votes. Nebraska got their Medicaid deficits created by the bill covered and guaranteed by the Federal Treasury, Louisiana got a cap on Medicare premium increases for all recipients, current and future, Florida got guarantees that Medicare reimbursements for providers would not get cut and in some instances where providers in other states get cuts Floridian health care providers would get Medicare payment bumps. A vote in the middle of the night and it was "Here you go Mr. President a bill."

Throughout the debates Obama stayed out of the fray, publicly saying it was not his job to craft the legislation and to let the process work. Despite his constant rhetoric on the campaign trail about inclusive government, reaching across the aisle, open debate for Americans to see and experience, he said nothing of Reid's behind closed door meetings, nor members of his Administration arm-twisting Democrats to back any bill presented. In the end several closed door meetings with just the President and Democrats, if your registration says "GOP" you're not welcome, resulted in a bill.

And now we are on the precipice of, as defined by Obama and Reid and Pelosi, the most significant legislation to change America since Civil Rights legislation in the 1960s. Crafted behind closed doors. With legislative bribes used to gain passage. That an overwhelming majority of Americans oppose.

At this point the legislative process calls for a reconciliation of the two bills passed by the Senate and the House so one bill can be presented for passage by both. A Conference Committee is appointed by the leadership of the Senate and House, typically bi-partisan with membership determined by party representation in each chamber. Thus a Health Care Reform Conference Committee would consist of Senators and Representatives with a majority of each being Democrats; as is their right they have the majority in both houses as a result of the elections in 2008. This committee with argue and debate and trade and eventually should reach agreement and produce a bill--often not resembling at all the original bills presented. This bill is then voted up or down by both chambers and then presented to the President for signature and passage into law.

Small problem. The gaps between the two bills are so great that everyone appears dissatisfied. As evident as it was before that the purpose appears not to reform health care so much as to give the President a huge legislative victory before his first year in office is over, it is becoming more evident now. It is not about listening to the American people, or the members of their own party, for Obama, Reid and Pelosi; it is about passing any bill to say they passed monumental legislation reforming health care. Consequences be damned.

As evidence of this consider the plan being worked on by the Gang of Three to obviate the Conference Committee and instead work over members of their party behind closed doors and control the reconciliation process. Instead of having an open Conference Committee with representatives of both chambers of the legislature and both political parties, Obama, Reid and Pelosi are planning to shut out the opposition party and the American people and craft a new bill to gain passage. This is not about health care reform, this is about personal victory for narcissists ruling our country.

Promises of transparency from Pelosi in her campaign to gain Democratic majority in the House, promises of open leadership from Reid in his support of Obama's Presidential campaign, speech after speech by Obama about new day, and change, and transparency, and no more back room deals or governance by lobbyists. Rhetoric or deceit? You decide. In the meantime the representative elected by the American people are aiding and abetting their take-over of the government and disregard for the rules and laws which govern us. And complicit in the take-over is the majority of the American people who have elected those representatives. Will they continue their complicity in 2010? Will it be too late? Obama, Reid and Pelosi are betting it will be too late, that they can get to their fellow Democrats to pass their version, the Gang of Three version, of health care reform before the American people get to them in the ballot box in 2010.

I am not a Democrat, that should be pretty obvious by now. My Congressional Representative, Laura Richardson is, my two Senators, Diane Feinstein and Barbara Boxer, are, the majority of my neighbors and fellow Californians are Democrats or historically vote that way. Will those neighbors and Californians that Richardson, Boxer, Feinstein and other Democrats in California depend on for votes and support contact their elected representatives and demand openness? Demand they tell Reid and Pelosi that the American people deserve and demand open debate on reconciliation of the health care bill that will not only change their lives but also their children and grandchildren? I am hopeful but doubtful.

In the end I'm just a guy in Long Beach, California with a laptop a teeny piece of space on the internet and lots of opinions. Opinions that are not too popular for many in my region but mine nonetheless. Hopefully however the American people who voted for Hope and Change and a new attitude in Washington will follow the lead of C-Span Chairman and CEO Brian Lamb who wrote our Congressional leaders asking that cameras be allowed to cover health care reconciliation. Hopefully other guys, and gals, across Long Beach, California and the United States with laptops and pencils and phones will contact their elected representatives and demand the same thing. Don't hide from us, don't forever change our country behind closed doors.

One can hope.

Here again is link to C-Span letter

UPDATE 3:00 PM 1/6/10: Here is collection of video showing then Senator Obama promising 8 times to have televised health care debates and transparency. Click here.

Monday, January 4, 2010

2010: Welcome To The Deficit Decade

On Friday we entered the new year and decade loading the Odyssey with the dog and kids and heading home. Having spent the week at my sister's in the hills of Marin County we ended the decade refreshed and relaxed, ready to head south and get ready for the routine of school, work, community service and recreation.

Not atypical for our annual sojourn, our journey home began under thick clouds and occasional showers as we wound through the green hills of Marin and the East Bay before connecting with the great Interstate 5 near Tracy and heading through the crops, orchards and ranches that feed California and beyond. Our ride into the new decade was bumpier than the year before due to lack of adequate road maintenance. Along the way we saw the familiar signs posted on the side of trailers and billboards put up by the farmers "Water is Food" "No Water, No Jobs = No Future" and "I Don't Water, You Don't Eat."

Very noticeable was the increase in CHP activity, leading Leslie to comment "the state needs the revenue." Also noticeable was the relative lack of traffic, the advantage of travelling on New Year's Day that falls on a Friday keeping most home at least one more day.

As we drove through the heart of the nation's state with the most population, the highest GDP, the most retail spending, the most international trade, the highest unemployment and biggest state deficit, I pondered, "What is the biggest issue we face in this decade?"

As I hit a small hole in the road driving past yet another closed state operated Rest Area (Next One Also Closed. And the One After That. And The Next One.) I knew it was money. Money, it is said, is the root of all evil; certainly true in political evil and most generally for the population at large as well. As we start the Twenty-Tens public money will be the root of future evil, and also our largest problem as a state and nation. Public finance will be central to the 2010 elections, and the 2012, 2014, 2016 and 2018 elections as well as our state and national budget problems are not going away very soon.

The State of California enters the new decade with a budget deficit of over $20 Billion and growing. As employment continues to shrink, foreclosures continue to grow and the economy continues to decline, future revenues look to continue to drop. Faced with this our Legislature's majority continues to complain about lack of revenue and rather than looking for even more cuts from the budget they bloated in the last decade with a 100% increase in spending, they continue to look for more taxes they can levy on an increasingly disgruntled populace.

Similarly the United States Treasury enters the decade awash in red ink, well over One Trillion Dollars and counting. With major health care reform measures passed in the House and Senate that add several trillion more to future budgets, and therefore deficits, law makers in the majority in both houses and the White House appear prepared to ignore the laws of economics, and politics, and widen deficit even further. Like their counterparts in Sacramento, the elected majority in Washington is looking who and how much to tax to pay for their spending.

When just the "rich" are being taxed the majority of Americans are fine with the proposition. They got theirs, they should share more of it. When the definition of "rich" starts to creep further down the income scale that is when political calculations and slogans begin to fall apart. Slowly the tax creep down the income scale overcomes the political rhetoric and one day a couple looks at their finances and realizes how much more it costs to register their car, how much less is in their paychecks due to higher withholdings, how much more it costs to buy gas, and shoes, and backpacks for their kids. Reading the news they know that inflation has been mostly absent from the economy, and their receipts show this. They also show higher sales taxes.

Entering a decade with huge deficits presents not only economic and budgetary problems for government, but also political and ideological challenges for the electorate. An electorate that has just made it through a whip-lash decade that began with a recession and then a lengthy and steady period of economic growth followed by an economic crash, is a bit shell shocked. Most Americans learned many lessons about consumption, spending, budgeting and saving. As they apply those lessons to their home economics they pick up the paper and learn that the lessons they learned from the last few years of the previous decade have been completely lost on those they voted into office. While we learned to not buy the shoes just because they are on sale our politicians are passing another multi-billion dollar bond measure we will have to pay interest on, or another multi-hundred dollar spending bill that pays for intersections in some backwater Midwest town among other items.

While asking us to pay more taxes our elected officials in Sacramento and Washington continue to spend more of the taxes we are already paying. With no plan to stop the deficits from growing there certainly can be no plan to wipe out the deficits entirely, or at least bring them down to an acceptable percentage of Gross Domestic Product.

And this will be the issue of our nascent decade: Government Deficits. How to pay for them? How to shrink them? How to prevent them?

Politically the question in California becomes when will the electorate change its voting habits and patterns to ensure these questions will be answered by our Legislature. Will the voters determine this issue of budget deficits is significant enough when it comes time to vote for Governor? When it is time to re-elect their current members of Assembly or Senate? Is there any chance the electorate will wake up to its collective responsibility and realize the size of government in Sacramento is way too large, spends way too much and is way to complacent in giving tax money to the public employees that control most elections? At what point does the California voter realize his/her vote has consequences and repercussions and we are living those today from votes s/he made over the past decade?

Our state is on the verge of bankruptcy. Our nation is heading to financial insolvency based on the current deficits and spending bills passed or in the legislative pipeline. The amounts of money and percentages of the overall economy tied up in debt and debt service is staggering. Like the economy as a whole that became over leveraged on a real estate pricing bubble, our state and national debt has become over leveraged on tax revenue bubbles that grew tremendously in the previous decade. What happens when that bubble pops? It is already leaking air, and we are seeing the initial reactions of our elected officials: pump in more air in the form of taxing more.

The Deficit Decade is upon us. With the public at large already showing signs of reducing spending on consumer goods, paying down their debt and increasing their savings, how long before their personal changes in habits will trickle into the ballot box?

Happy New Year.