Wednesday, May 26, 2010
Monday, May 24, 2010
I could not put my finger on the source of my discontent, if it even was discontent. Something was not clicking and evidently it was beginning to show. About this time a local real estate agent whom I knew a bit better than most had introduced me to a new client. Both of the women were older than me, in fact both have children close to my age. Both were active in the community, and both began to encourage me to apply for a leadership program I was aware of and knew several people who had been involved with the program. So insistent committed were Pam Spoo, the real estate agent, and Gayle Clock that I apply for the program that Pam slid an application under the door to our company at 5:00 a.m. on the way to the airport for vacation.
Wow, I thought, someone that committed about this; I should really take their advice seriously.
Before applying for the program I called three or four people I knew and trusted who had been through the LLB program and each of them said, "I cannot tell you exactly what you will get out of it, but I can tell you if you have the opportunity to participate in the program you most definitely should. It will change your life and be very positive for you." The part of me that was feeling disconnected grabbed onto to this recurring theme and said, "apply and see what happens." I completed my application for the Leadership Long Beach Class of 1999 to begin in August 1998.
Soon thereafter I was called for an interview and met with three alumni of the program, Mark Bixby, David Neary, and Minnie Douglas. Three people I did not know, though I had met Mark a few times in the past, but would come to know very well through the years. A few weeks following the interview I was contacted and told I had been selected to participate in the upcoming class.
Late in August I found myself in a stark corridor outside the auditorium at Long Beach Community Hospital. At the time who knew that in a few years I would be a member of the board of directors of Community Hospital of Long Beach after it was shut and re-0penned and later serve as the Chairman of the Board largely because I was standing in that hallway that morning. The class was to start at 8:00 and it was about 7:45, not surprisingly I was early. So were two other people, Janine O'Hare and Jerry Caligiuri. To break the ice with these strangers I said, "we better get to know each other because we will probably be the first ones at every class...we're the early people." Prescient.
And thus began a journey from August 1998 through today. The class met from August through June on the first Monday of every month with a three day retreat in the local mountains in September. I had twenty-eight classmates who were complete strangers at 8:00 a.m. that August morning of our first class and now are all people I know fairly well, some very well having made life-long friendships and relationships. We met at various venues through the city from the hospitals to the new Aquarium of the Pacific to the colleges to the Water Department. Our class had or conceived I believe five children during our class time together (including Leslie and I) and as a class we brought forth five class projects for the Long Beach community.
But my journey with Leadership Long Beach did not end. I was fortunate to serve in various capacities on the Executive Committee and board of the organization, including President. About five or six years I was able to go up the mountain once again as part of a team to facilitate the weekend retreat for new class members in the program. The eeriest was in 2001 when our retreat began days following 9/11. I remember the joy I felt one morning when I looked up and saw contrails in the high mountain sky knowing the terrorists had not won, commerce and travel were resuming following the tragedy.
It has been my fortune to participate in class days through the years as either a day chair constructing the curriculum or being a panelist fielding questions and engaging the members of the class in issues, able to challenge their perspectives.
Central to all of this participation on my behalf however was the engagement and participation in that first year, my class year. As we went through each class and dissected core leadership principles I began to feel more and more complete and whole. I recognized that I was in need of change in my life as there was no congruence between all aspects of my life, that I was being challenged to adhere to my own principles which matched those of the organization. Eventually I did make on major change, I left the company where I had worked for ten years and with some partners we formed Stratis Financial in September 1999.
Also changing during the period of our class was our home, Leslie and I sold our home in Los Altos and purchased our current home in Bixby Knolls. And as stated above, being open to change in my life the ultimate change occurred and Blaire was born in September 1999. I firmly believe that because I was open to change, deep internal change, and a re-alignment of my core values: of committing to living with integrity, been accountable and taking personal responsibility that I became whole. My internal and external balance were restored as I knew that how I wanted to live was how I was supposed to live and there was this great group of people who supported and encouraged such a life. Principled leaders also committed to living principled lives for the betterment of their lives and also our community were all around me, I just never knew them or saw them.
Now I do. I know that if I come from a place of integrity I can offer opinions, offer myself, offer my talents or offer my resources without concern or worry as to how they will be taken because I know the source and intention with which they are being offered. Never one to be shy with my thoughts or words, Leadership Long Beach training and development, both during my class year and in the years since volunteering to assist the organization and classes, has re-affirmed that honesty and integrity are very much valued in our community.
In college we have the opportunity as young adults free, or almost free, from our parents homes and direct influences to form strong relationships that can last a life time. For those of us who lived on campus it enables us to spending prolonged periods of time together with only our friends to help us solve our problems and allow us to help them solve theirs. During four years of living so closely with others and going through the pressure of exams, relationships and the changes that occur as we transition from dependent teenagers to adults starting a new life and careers, we learn who is trustworthy, who is dependable and who has the strength and depth of character we admire and gravitate to.
After college it becomes more difficult to form deep, personal relationships as we do not have the same opportunities. We have work relationships based on hierarchies. We have neighborhood relationships based on proximity. We have children relationships based on our kids schools and activities. But we rarely have the opportunity to develop deep, lasting and strong personal friendships and relationships.
Leadership Long Beach provides this opportunity and personally it is the greatest benefit I have received from my decade plus association with the organization. Almost anywhere or any meeting I go to in Long Beach I see people who I have met through the LLB organization. No ice breaker needed. Because of the openness and honesty of the communication in the classes and meetings there is no need to try to play a role, just a need to be myself.
Through the years I have heard many people say, "I don't need Leadership Long Beach I know a lot about this city." Or, "I'm established in my career and I can't see how it will benefit me."
I've also heard executives in the fifties who are deeply involved in the community say "I wish I had done this ten years ago." I have heard small business owners say, "this is the best thing I ever did for my business, not because of what it did for my business but because of what it did for me so I can do better by my business."
Those who think they cannot benefit from Leadership Long Beach, no matter what stage of life or career they are in, are saying they cannot benefit from spending time building new relationships, cannot benefit from sharing common principles such as integrity, accountability, ethics, with others, cannot benefit from learning more about their community and city. No one is above this program, anyone open to principled leadership will benefit and I encourage you to apply for the program.
If you feel you can benefit from associating with an organization whose mission statement is to "connect principled leaders for a better community," that you can benefit from forming and developing new personal relationships that will add a richness to your life, that you can benefit from learning more about the community where you live and/or work, then I encourage you to apply for the Leadership Long Beach Class of 2011 (link below). Who knows, maybe we'll meet as part of your interview for the program.
Click here for an application for the Leadership Long Beach Institute.
If you know a high school student who would be interested in the youth leadership program applications are being accepted for that program as well. Click here for Youth Leadership Long Beach application.
Or for more information contact Executive Director Peter Bostic or Program Director Jeff Williams at 562-997-9194.
Wednesday, May 19, 2010
The primary reason for the growing national debt is the growing deficit, now over $3.56 Trillion, and growing. This number, the federal deficit number, tripled from the fiscal year ending September 30, 2008 to October 2009. With the spending on TARP, the "Stimulus Plan" adding up to over one trillion dollars a then record deficit of $1.44 Trillion while shocking was no huge surprise. Growing two and a half times from October 2009 to now however is staggering. And it keeps growing.
At one point the American public became used to government tossing around the million dollar number. Later generations became accustomed to speaking of the Federal Government spending and borrowing using the word billion. In a little over a year has the American public come to accept "Trillion" in describing budgets and deficits funded by their taxes?
The comparison below has been sent to me, and I'm sure you, many times showing how much one Trillion dollars is relative to money in our wallet. As our national deficit approaches 100% of our Gross Domestic Product I feel compelled to keep it permanently posted here.
Here is the $100 dollar bill. We don't see these as much any more since most of us get our carrying cash in twenties from the ATM or grocery store. If you want a hundred dollar bill you need to go inside the bank, or cash in your chips in Las Vegas.
Put together ten hundreds and you get one thousand dollars, stack one hundred $100 dollar bills and the bank puts a bank around the stack: $10,000. This is the stack we are used to seeing in gangster movies stuffed into suitcases or used to throw horse races, "Here Louie, see that gets to the trainer." Most Americans, even affluent Americans, have never held a stack of $10,000. I remember counting out $10,000 for a customer at Farmers & Merchants Bank in 1985 when I was a teller and thinking "I'm counting Ten Thousand Dollars!" It was a big deal, still is.
Stack up several stacks, one hundred stacks to be exact (sounds like Dr. Seuss) and you have one million dollars. Being a "millionaire" used to be really big stuff. Now shortstops who can't field, hit or run have contracts that pay them $1 million a season. Towards the end of the housing bubble there were Million Dollar homes in almost every market in the country. When reduced to a stack of hundred dollar bills on the floor one million dollars isn't as impressive as we imagine it to be.
Wow! A pallet of hundred dollar bills! This pallet is worth one hundred million dollars: $100,000,000. The standard multi-year contract for a sports superstar. Remember each of the bands is one hundred one hundred dollar bills. This pallet represents one million one hundred dollar bills. In the time it takes me to write this post this morning this amount of money will be added to our national debt obligations.
Take ten pallets and add them up and you have one billion dollars. That is one hundred thousand one hundred bills. This amount of money used to be the combined budgets of several states, now it may be the budget of a small city. We now have "billionaires" who could go to this stack of money, peel off ten of these bills ever day for over twenty five years and still have a few left over.
Each of these stacks is two-tiered of stacks of pallets containing one hundred million dollars, each level is five hundred billion dollars. This is one trillion dollars. One thousand one billions. Multiply this by three and add one more top level and that is our national deficit. Multiply this by thirteen and that is our national debt. Remember to throw on another pallet every forty minutes.
This is what our government is spending and burdening us and our children with. For those who feel the Tea Party protesters complaining about bigger government and government spending are creating false demons take a look at these pictures. Imagine thirteen times the final picture. Now imagine how we begin to make that pile smaller without crashing our economy or culture.
Monday, May 17, 2010
Most of those who had immediate visceral reactions to SB 1070 had not, and still have not, read the Arizona law, most famously our esteemed Attorney General Eric Holder admitted before a Congressional committee that he had not read it. (Please note that I did read SB 1070 as then amended prior to writing my post on May 3rd.) The AG going as far as to admitting he has formed his opinions on SB 1070 from "television and newspapers." Joined by his boss who immediately condemned an entire state under his leadership as President, presumably without reading the law, Holder exemplifies the speak first learn later (if at all) politics of emotion that consumes the left.
Now city councils consisting almost entirely of Democrats and leftist politicians who have overseen the decline and incredible financial failures of their cities are spending time and resources denouncing enforcement of federal immigration laws rather than tending to the business of fixing the messes they have wrought in their cities. But rather than see any connection between their inability to separate law from their ideological positions they see greater personal benefit from passing condemning legislation rather than fiscally responsible legislation.
To date in California Los Angeles, West Hollywood, San Francisco and the San Diego Unified School District have passed boycotts of the state, while the city of San Diego has passed a resolution of condemnation. Given the liberal leadership in many cities that still have not chimed in, including my own City of Long Beach, it will not be surprising if more California cities follow suit. As with the Attorney General one wonders how many, if any, of those voting for the boycotts have even bothered to read the law. Los Angeles is deeply in debt and looking at laying off up to 2,000 workers, but feels it necessary to not have any official travel to Arizona or buy from companies headquartered there.
The obvious purpose of the boycotts and resolutions is to pressure the citizens and businesses of Arizona to push their elected representatives to repeal SB 1070. "Dear Citizens and Businesses of Arizona, we will hurt you economically unless you can get your elected representatives to repeal a law that requires the enforcement of the law. We ask that you not enforce the law, as we do not enforce the law, and encourage lawlessness and illegal activity. Thank you."
Residents in Arizona are striking back. San Diego fills in the summer with Arizona residents looking to escape the heat. Less so this summer as hotels throughout the city have received cancellations from Arizonans who cite the city's politics and not feeling welcome. Not getting the connection between their city's politics and the financial impact on Arizona versus their own, Joe Terzi the President of San Diego Convention and Visitor's Bureau stated regarding the cancellations pouring over the Colorado River into his members' hotels, “This affects all the hardworking men and women who count on tourism for their livelihoods, so we’re saying, don’t do something that hurts their livelihoods.” Yes it does, just as the message sent from the San Diego City Council and Unified School District does.
Meanwhile someone in the private sector gets it, Charles Holladay is the manager of a Ramada in Mission Valley. “I understand the City Council was being passionate about their politics, but I don’t think they thought it through,” Holladay said. “If it negatively impacts hotel revenue, it impacts the transient occupancy tax, and that goes right into the general fund, so they’ll have less money for their programs.”
Which is exactly what those who are boycotting Arizona want to occur in Arizona. It is okay for us to boycott you, but please ignore our politics and come spend your money in our cities. Sorry, I and many others will not due that.
But it strikes both ways. While I am just one person with control, or rather influence, over one family's budget, I am boycotting any city or agency that boycotts Arizona. I will take my own stand to support the enforcement of the law and support the people of Arizona who are taking a stand against human smuggling, kidnapping, drug dealing and violence and huge public burdens to legal taxpayers for services required for the health, education, protection and law enforcement due to illegal immigrants. I support the people of Arizona for strengthening their laws to prosecute businesses that hire illegal immigrants. I support the federal immigration laws and their enforcement.
Any city includes my city of residence, Long Beach. If our city passes a resolution boycotting or condemning Arizona I will cease spending any money in the city as much as possible. I will buy gas near my office in Huntington Beach or Seal Beach. I will no longer shop and Ralph's and Trader Joes near our home but rather will drive to Lakewood. While convenient to stroll to dinner in Bixby Knolls, I will pack the family in the Pilot and drive across the border. My message to local businesses will be to encourage those on City Council to repeal their anti-Arizona resolutions that show support for lawlessness and illegal activity and I will return to spending my hard earned money that generates tax revenue in Long Beach, or any other city that does not stand against illegal activity and does not support federal immigration laws. Is such a stand fair to local businesses? No more or less so than a city council's actions against another state or city refusing them revenue and business based on politics.
Given the press given the Attorney General's admitting having not read the law, however I feel somewhat secure in our city council, somewhat, that once they read SB 1070 and not the newspaper, blog and television accounts of the law they will see that it makes no new immigration laws, does not allow profiling and addresses illegal immigration in a manner intended to protect the citizens of Arizona. Again, somewhat secure with one or two exceptions, okay maybe three or four.
As for Mexico, I decided a long time ago I am not visiting there again. I would rather spend our vacation dollars in Hawaii, Palm Springs, or Scottsdale, than Cancun, La Paz or even Ensenada. The corrupt government who insists on meddling in American sovereignty, supports and aids illegal immigration from its country to ours, and has created a dangerous environment along our borders deserves no support from me nor any tax revenue from my family.
So boycott away American cities. Ignore the real problems you have in your cities, the fiscal issues that are bankrupting your treasuries and leading to job losses in the public and private sectors. Just know that the actions taken by the state you condemn is supported by an overwhelming majority of Americans. We support the law, and Arizona's enforcement of the law as written by the federal government. We do not support you and until your laws are repealed we boycott your cities to condemn your ignorance of the law and in support of the State of Arizona and its citizens.
In the meantime having been to Scottsdale twice in recent months, I look forward to our next family vacation in the wonderful city.
Wednesday, May 12, 2010
Number two went down yesterday in the West Virginia Democratic primary when Alan Mollohan was defeated in his bid to defend a seat he has held since 1982. That is not a typo, he has won fourteen straight elections for the seat, a seat his father had held for the fourteen years before that. In 2008 Mollohan was re-elected with almost 100% of the vote, only 130 voted against him.
Upcoming is the interesting re-election bid of Senator Arlen Specter in Pennsylvania. Specter switched his party affiliation from Republican to Democrat in 2009 figuring it would help his chances of re-election. Specter is tied in some polls and behind in some others against Rep. Joe Sestak. Things are so bad for Specter that President Obama has pulled his support and will not visit the state for him or show any support--thanks for giving us the 60 seat majority in the Senate Arlen but I've lost enough elections lately appears to be the message.
So for twenty Republicans have announced their retirement from Congress and seventeen Democrats. What is of importance in the retirements is that almost all of the Republican vacancies will be in "safe" seats whereas almost all of the Democratic retirements are in seats where a challenge to the incumbent, either in the primary or general election, can prove successful. Democrats in Congress when faced with a challenging election fight and possible defeat versus retiring have mostly opted for the latter.
None of this should be a surprise, though many in the media who have discounted the citizen unrest that rose throughout last spring and the summer over Obamacare seem surprised. Despite efforts of the Mainstream Media, the left and Democratic leadership to portray Tea Party activists and those who attend their rallies as racist, extremist, dangerous or otherwise disconnected from Main Street America, the citizens and voters across the country are saying otherwise. The general sentiment in most Congressional districts is one of "enough."
Enough of the arrogance and entitlement of incumbency. Enough of putting down the American people as not smart enough to understand what is good for them. Enough of passing life changing legislation against our desires. Enough of huge deficits and growing public debt. Enough of fiscal policies that guarantee more and more taxes and regulation in the future. Enough.
The unrest is not just focused on federal politicians but also state and local incumbents are taking heat and facing difficult re-election bids. What can be challenging in California is gauging the sentiment in other parts of the country. With a vast majority of our population concentrated in the mass urban areas of San Francisco-Oakland-San Jose and Los Angeles-Long Beach-San Diego the liberal mindset of the general populace and media has far more impact than say Oklahoma with two relatively small cities in Tulsa and Oklahoma City, or Ohio with spread out smaller urban areas of Cleveland, Cincinnati, Dayton and Columbus. The bubble in California has enabled and supported a strong movement to big government from the cities through the counties up to Sacramento. Gerrymandered districts ensure incumbency, even with term limits the replacements are the same ideologically as their predecessors, and continued government growth.
Are even Californians becoming sufficiently dissatisfied to start challenging the government status quo at all levels of government? In Long Beach the recent elections suggest perhaps not as three out of three incumbents on the ballot easily won re-election to City Council, as did the Mayor, and of two incumbents running write in campaigns one has made a run-off. With primary elections approaching in June there is little competition for any of the incumbents up and down the ballot from within their party. I say party as with the exception of Rep. Dana Rohrabacher who represents the southern part of Long Beach, all of our incumbents are Democrats.
The main exception is a challenge to Rep. Laura Richardson from Terry Ponchak in the Democratic primary. In many parts of the country Ponchak may have a good shot at defeating a member of Congress who has voted lock-step with Speaker Nancy Pelosi, including the $787 Billion Stimulus bill that has done nothing and Obamacare. Added to that are her well documented personal financial problems, including a foreclosure that was mysteriously reversed and several local merchants who have been stiffed by her for services and goods provided in the past. She blatantly sold her seat on the Long Beach City Council to the unions in a bid to force unionization on local hotels just before her run for State Assembly then leveraged those same connections to beat better qualified Jenny Orepeza in the Democratic primary for her current seat. Unfortunately Ponchak is running against an incumbent with $1 million in funds in a not very educated voting base. While I wish Ponchak well in his run I feel any chance to beat this incumbent will come from the Republican side in the general election from Star Parker.
The citizen unrest does not begin and end at the ballot box. More and more citizens are demanding answers from the bureaucrats and leaders of the various levels of government as to how their tax money is spent on salaries, benefits and pensions. Fueling the unrest is the growing realization by the citizenry of the immense power and influence the public employees unions have in selecting candidates and funding political campaigns to ensure labor friendly votes in the legislatures. With the State of California running deficits into the tens of billions of dollars, voters want to know why departments are buying whole new fleets of cars, why many employees receive up to 50% of their income in overtime, why we have an unfunded pension obligation approaching $500 billion dollars, and that is just at the state level.
Locally Long Beach is running a deficit of almost $20 million, again, and the same targets are on the radar of unrest, the size of the city government and number of employees and the salaries, pension and benefit obligations being paid by the citizens. Incumbents get re-elected and city leadership throughout the top levels stay the same and deficits continue. While the size of the government does not shrink basic services such as road repair, library hours, and public safety decline.
To show the issue the Long Beach Post yesterday posted a link that lists every city employee, their classification and salary. It has caused quite an uproar with the employees who feel their privacy has been violated, but the information has been made public by the city under a public records request. While the ethics of posting names is debated the underlying issue is the sheer number of employees and the total financial obligation in salaries, benefits and pensions.
I presume that very few Tea Party attendees are government workers. Assuming that I am correct and most are in private industries, employed by small and medium sized businesses, or small business owners themselves, it is easy to see their anti-big government position. It is natural for them to make the observations regarding their companies and industries in comparison with government: While our industry has become much more efficient through technological advancement and investment, government has not. While we have been able to grow our business by leveraging technology instead of employees, government has not. While our industry has had to lay off 20% of its workforce due to economic down turn, government has not--in fact it has added jobs.
As an ideological outsider to most I come in contact with in Long Beach and California I am amazed at the lack of understanding of those upset and dissatisfied with government and its fiscal irresponsibility from Long Beach to Washington D.C. The echo chamber of local opinion and ideology creates a sense that everyone thinks the same way and an incomprehension of how the people in Nevada, Florida, Wisconsin and Pennsylvania can some how unseat their incumbents and those who share their ideas of big government.
Well it is happening. Maybe not here in Long Beach or in California, yet, but on the other side of the Colorado River citizens across the country are saying "enough." While the publishers and editors of the Long Beach Post are taking considerable heat from city employees, and may suffer some economic consequences if their advertisers do not stand by them, by posting for all citizens to see who gets our tax dollars they are starting the conversation in Long Beach that could lead to true fiscal reform and an overhaul of our local government.
Or maybe not. Incumbents are pretty comfy in California, therefore so are top managers, leaders and workers in the government offices...at least until the majority of voters decide to change how they vote.
CORRECTION: I inadvertantly used 2008 revenue for Richardson's campaign funds, here is link to her 2010 campaign funds, as you can see she has only $40,000 in the bank and over $330,000 in debts---not at all ironic given the deficit she has helped rack up in Washington.
The opensecrets.org site does not yet have campaign finance information on the other candidates for the seat, Democrat Terry Ponchak or Republican Star Parker.
Monday, May 10, 2010
Another way to limit access to ballot boxes is the use of a literacy test. Before receiving a ballot a voter must proof he or she can read in English. The justification being that if you cannot read how can you properly vote and know for whom you are voting? Literacy tests while not specifically banned in the Constitution as Poll Taxes are have been ruled unconstitutional, for the most part, by the courts.
Laws and judicial rulings protect the right of American citizens to vote. It is the most fundamental and important right of all citizens, our voice in determining who shall govern us. But who are we voting for? What, if any, restrictions are there on who can be placed on a ballot?
In general the only requirements for most jurisdictions to be eligible for a ballot are age, citizenship, eligibility to vote, residency and whatever the local rules are for getting on the ballot by collecting signatures and/or paying a filing fee.
It seems simple to me. To become a fire fighter or police officer you must pass a series of exams and have a minimum qualification criteria. To enlist in the military you must take the Armed Services Vocational Aptitude Battery exam. To work for most branches of government you must take and pass a Civil Service exam or similar aptitude test. To argue a law case on behalf of another before a judge representing the judicial branch of the government you must pass a state bar exam.
But to govern and make rules and policies for fire fighters and police officers there is not test. To hold office and determine the budgets or duty of our military personnel there is not test. To preside over the management of civil servants, appoint and/or confirm judges, and make the laws upon which they rule, you merely need to win an election.
Shouldn't there be some intellectual standard, some basic knowledge, some degree of exhibiting an understanding of our Constitution and simple principles of economics before someone is eligible to govern us? In looking at the laws passed, the statements made, the arguments made in debates by elected officials, from local through national, I am amazed at the seeming lack of understanding of basic economics or the Constitution by many of them.
I propose that before someone is eligible to be placed on a ballot to be elected to represent any citizens of the United States that they pass a basic test, or at minimum take the test with their results made public. The test should include topics that are relevant to their jurisdiction and representation and should encompass economics to show an understanding of budgets and fiscal policy, the Constitution and government, United States history and geography.
Here are some sample questions I propose, feel free to add your own in the Comments section below:
- How many amendments are there to the U.S. Constitution?
- Name four states considered in the United States Midwest.
- If demand is constant and supply increases what happens to prices?
- What is the Bill of Rights?
- Name two causes of inflation.
- The primary source of illegal immigration into the United States is from its Southern or Northern borders?
- Who were our Allies in World War II?
- What is the "velocity of the dollar" and is better during times of recession to have a high or low velocity?
- Are our income tax laws regressive or progressive?
- Are sales taxes regressive or progressive?
- Which Amendment to the U.S. Constitution states "their shall be a separation of Church and State?"
- Name five states that border Canada.
- Can/do tax revenues increase if gradual income tax rates are reduced?
- What are the three branches of government?
- Why do we have an Electoral College?
- How is the Constitution amended?
- What is the size of the city/county/state/federal debt?
- What is GDP?
- Which of the following are specific rights enumerated in the Constitution: education, health care, ownership of a gun, retirement/social security benefits, privacy?
- Which branch of the government is most important and why?
- Increasing the number of individuals employed by the government is good for the economy in the short and long term. True or false and why?
Should our political candidates who will be voting to tax us, to restrict our liberties with more and more legislation, soon to be controlling our access to health care, determining the debt our children and grandchildren will be burdened with, should they not have some equal and level examination by which the voters can measure them? Rather than endorsements and fliers from the standard groups would you not rather receive a copy of their Ballot Test Results and answers to a wide variety of questions?
What questions do you feel someone should be able to answer before representing you?
Wednesday, May 5, 2010
Because of New Century's size and footprint in the subprime market its inability to capitalize for continued lending was big, big news on Wall Street. Big enough that the investment houses and credit lenders to the mortgage industry decided to take a ride down to the mortgage departments and sniff around their mortgage portfolios.
Hmmmm. It seems that the issues that led to New Century's credit drying up, high loan to values, stated income and assets, low credit scores, were fairly common factors in their subprime investments. Not a lot of equity created a difficult situation should the lenders need to foreclose, just a minor shift in the housing market and entire portfolios would be underwater.
Wait a minute. What's this? It appears our "conventional" and "prime" mortgages underwritten using Fannie Mae and Freddie Mac guidelines and automated underwriting have some common factors as well: little to no equity with mortgage debt up to 100% of the property values, no income or asset verification in the files, many files with no appraisals, no pricing adjustments for median credit scores, minor adjustments for low credit scores.
It appeared that much of the "prime" debt had similar aspects to the "subprime" debt and here is a major subprime lender losing its ability to obtain funds and going under. Uh-oh, time to worry.
The New Century domino fell and soon others followed through Greenpoint, Ameriquest, Countrywide, Lehman Brothers, Merrill Lynch, Washington Mutual, Wachovia, and on and on. The housing bubble was exposed as being built on cheap money due to low interest rates and low scrutiny due to loose underwriting guidelines. Cheap money and loose credit standards support expanding markets and prices. Like a balloon, once stretched it does not take something as sharp as a pin to pop it, any pressure will due. Pressure like a company in Orange County being unable to obtain credit and fund its pipeline of mortgage applications.
History provides lessons that cross many boundaries, unfortunately too often those who need to know and understand history feel lessons from history are confined to similar social, economic and political situations and occurrences. Not so, as we are about to learn from the lessons from the history of our housing, mortgage and credit markets in the last decade.
Many, perhaps most, Americans pay little attention to the daily news for what is happening within America. Others are engrossed in the economic, political, lately environmental and social news on the front page and leading the evening news. Most Americans are somewhat ignorant of international news, and even more unaware of the impact events across the oceans have on our country. Let's take a look at what is very big news.
First, instead of property value let's use the term Gross Domestic Product (GDP) and instead of mortgage let's say national debt. Instead of borrower income or debt to income ratio let's use budget deficit. For the mortgage market the higher the loan to value, i.e. the greater the percentage of the value of the home that is covered by a mortgage, the riskier the mortgage and the higher the interest rate for the borrower, or it should be higher. Further, if a borrower has a high income to debt ratio that means that his debts, his monthly payment obligations, are a high percentage of his income. High debt to income ratios are bad, low debt to income ratios are good.
In the 1970's Northern European countries began to coalesce under economic agreements to provide leverage and economies of scale to compete in a global marketplace dominated by the United States, the Soviet Union, Japan and increasingly China. Slowly the economic agreements led to the creation of the European Economic Community, the EEC. Economic policies and treaties were made that treated the EEC as one economic entity in negotiations with non-EEC trading partners. Trade barriers internally to the EEC were lifted. A stated objective became the union of the nations under more than just the economic umbrella but also political and social. Eventually the EEC evolved into the European Union, or EU.
Like most most economic and political organisms the EU had members that wanted to grow and expand. Countries on the outside looking in started making noise about equality, equity, fairness and European social justice. Fearful of looking like the Haves and shunning the Have Nots, the EU allowed in several countries with inferior economies and sketchy political stability and integrity; namely Portugal, Spain, Italy and Greece as they became members became the Have Nots in the Haves group. The theory being with the EU serving as an economic umbrella the economies of the marginal nations would be lifted and all of Europe would benefit.
The EU established elections for leadership and representation from member nations. A standard currency was established, the Euro, and individual currencies were discarded. The EU established not only economic policy but social, environmental and political as well.
As the EU was gaining power over sovereign nations' policies and laws, member nations governments became more and more extravagant in their expansion of services and entitlements. Government jobs in some countries almost outnumbered those in the private sector. Government spending grew rapidly and tax rates climbed to feed the spending.
Popping the housing, mortgage and credit bubbles in America was a sharp decline in housing prices in major markets. Suddenly credit portfolios had liabilities that exceeded asset values. As values declined, foreclosures and defaults increased, assets were sold at lower values, lower values led to more defaults and the spiral started.
Greece has a national debt that far exceeds its GDP, somewhere in the neighborhood of 125%. Basically its loan to value is upside down, like many American homeowners who purchased homes in 2006 or 2007 with 100% financing. Greece recently had a tough time selling any debt to finance its government, its credit lines dried up. Greece, on the very thin edge of massive defaults, needs a bailout to the tune of approximately $150 billion. Chump change for America given the bailouts we experienced in the past two years, but a staggering sum for the European Union.
Seeing that allowing Greece to fail is not in the best interests of the EU, nor themselves, the Germans have been working to provide a bailout for Greece. Problem is they want to make sure that if they do provide a bailout that Greece makes some changes. Changes that are not sitting well with many Greek citizens, changes like cutting the pay for government workers and entitlement payouts. Perhaps watching our bailout of General Motors with the massive pension and benefit payouts still looming in the future that will require further bailouts, Germany is wanting Greece to only come to the well for one drink. Greeks want the money with no strings attached.
Greece desperately needs the bailout funds as its borrowing rates on its bonds have ranged from 13% to 18% for short term notes (U.S. notes meanwhile are cruising between 1% to 3%). Further impacting Greece is the sizable downgrade in rating for their national bond issues from virtually everyone. The downgrades began before the latest crisis started boiling a few weeks ago.
Also downgraded recently have been the bonds of Portugal, Spain and Italy with Ireland moving in that direction. Each of the downgrades has been directly related to the national debt vis-a-vis national Gross Domestic Product, with the latter being higher than the former.
With member nations lining up to be bailed out more and more burden is placed upon those still working in Germany, France, the Netherlands, etc and politically fewer and fewer German autoworkers, French wine makers and Dutch cheese makers are willing to throw their Euros to the failing economies of EU member nations most of them did not want as part of the Union anyway. As more nations fly to the brink of economic chaos and fewer nations are able or willing to help them the dominoes across Europe start to fall.
Is there a bridge for the dominoes to cross the Atlantic? Already the Greek crisis in impacting our markets as the stock markets fluctuate wildly daily on news of bailouts (stocks rise) and concerns that bailouts won't work or are not available (stocks drop). The current beneficiary are U.S. borrowers as mortgage rates, and government bond rates, have stayed low and dropping through the crisis as investors park their money in the safety of American bond yields.
Back to that bridge. Europe's economic woes begin with national debt that exceeds national Gross Domestic Products, their mortgages are greater than their property values. Continued deficit spending by the EU countries creates less ability to pay back their over extended credit, resulting in higher interest rates they cannot afford but must borrow. Deficits that are too big and debt that is too high and Greece is leading several nations to the cliff of financial collapse.
In the United States we have a current national budget deficit (national we are not including the multitude of state deficits) is at $1.4 Trillion with future budget calculations projecting deficits up to or beyond $3 Trillion. Currently the U.S. GDP is at $14.4 Trillion and the U.S. national debt is at $13 Trillion, or 90% loan to value. Add interest and future deficits to the debt and we are quickly approaching national debt exceeding national GDP.
Would you loan $250,000 to someone who is spending 70% more than they earn on a home worth $275,000? If you purchase U.S. Treasury bills that is what you are essentially doing.
Greece, like New Century Mortgage, is the first domino to fall inside the bubble. Who is next and how many will fall?
Monday, May 3, 2010
It took about five minutes for the first protest against the law from the left. In watching the protests and vitriol hurled at Arizona from the left is reminiscent of their behavior throughout the Bush Administration. Ignore the issue before them, ignore the consequences of the behavior and actions legislation is meant to curb and fix, offer no solutions of their own, cast up and label a group of people whom they oppose and their position on the issue.
SB1070 states "No official or agency of this state or a county, city, town or other political subdivision of this state may adopt a policy that limits or restricts the enforcement of Federal immigration laws to less than the full extent permitted by federal law."
United States immigration law requires all non-U.S. citizens to carry with them at all times proof of identification and residency in the United States. This has been federal law for over fifty years.
SB1070 as amended states that law enforcement may only request identification from any person as part of their routine duties as law enforcement. Law enforcement may not walk up to someone not committing a crime or suspected of doing so and ask for proof of residency and identification. If however an individual is pulled over at 3:00 a.m. with no tail lights on their vehicle and police in the process of writing a ticket may ask for legal driver's license and proof of residency for non-U.S. citizens.
In every state in the union individuals are required to obtain a permit from their state of residency to operate a motor vehicle, a driver's license. Every state in the union also provides identification cards for those who do not drive that serve in the stead of driver's licenses for purposes of identification of that individual. Post-9/11 the REAL ID Act was passed to standardize the requirements of state issued identification cards and drivers' licenses. While protecting the rights of the states to provide driver's licenses and requirements to obtain one, the federal government wanted to standardize the requirements regarding non-U.S. citizens since driver's licenses are the most common form of identification in the nation.
Now Arizona wishes to codify its commitment to federal immigration laws. It is forbidding law enforcement personnel and agencies from ignoring the federal laws. SB1070 is not making up any new laws, but rather saying that throughout the State of Arizona the law will be enforced.
And this is a problem with the left.
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
So reads the 10th Amendment to the Constitution establishing states rights and federalism in our republic. Certain powers are delegated to the United States, all others unless prohibited are reserved for the States and/or the people. SB1070 is acknowledging the federal powers of immigration law, and acknowledging it will enforce those laws. As it does federal laws against robbing banks, smuggling drugs, or violating federal gun sale laws.
The left has a problem with the 10th Amendment and States' rights, unless the States are enacting laws the left embraces. As we have seen under the Obama Administration and the current Congress, the purpose of the federal government is to control as much of the power as possible. Centralize banking and control over the financial industries within the Executive Branch. Centralize health care delivery and payment within the federal government and the Executive Branch. Centralize manufacturing and energy rules and policies under the federal government and Executive Branch.
The federal government, to the left, is the end all be all of ruling the country and its individuals; provided those rules fall in line with their perspective of liberalism. After our nation was attacked on 9/11 and President Bush and Congress moved to enact laws to protect our nation and its citizens the left waited the appropriate one year waiting period before attacking the Patriot Act (still in effect and extended by Obama), interrogation techniques (most still in effect and extended by Obama), and efforts, however weak, to secure our borders (the Fence is still being built). Rather than present any solutions to the problems of terrorism entering the United States they just castigated the solutions presented by others. While popular to call the Republicans the "Party of No" they are the party of "Look At This" presenting alternative ideas and legislation ignored by the Democratic majority. The original Party of No was the Democrats under Pelosi during the Bush Administration--I encourage my liberal and Democratic friends to go back through the news articles and statements made by Pelosi and other Democrats throughout the Bush Administration, see how much opposition they presented and how little was offered in exchange. It seemed okay for you then to have a "Party of No" because you did not like Bush or Republicans, now however opposition to your party and leadership is a bad thing.
On Friday I engaged in an exchange on a friend's Facebook page regarding Arizona's SB1070. It started with his saying that University of Arizona and Arizona State University students were transferring because of SB1070. Someone else posted that California colleges should take those students. I saw this as typical knee-jerk response from the left, let's enroll more students in our universities and colleges that are not admitting all qualified California residents as a sign of protest and also to show our liberalism. Ignore that California parents paying taxes are seeing their children denied enrollment in the educations systems they support with their taxes, let's instead shove more kids aside because another state chooses to enforce laws ignored within our own state.
Through the exchange I presented my views, that anyone pulled over by the police must show legal identification, why not illegal immigrants? Further why should Arizona not step in when the federal government is refusing to uphold the law and control the flow of illegal immigrants into their state? I also asked what he, the owner of the Facebook page, would do for solutions to 10+ million illegal immigrants in our country impacting our health care, education and penal systems. No response. Later another individual asked someone, "what is your solution?" No response.
On the campaign trail both Hillary Clinton and Barack Obama said regarding illegal immigration that they would secure the borders, enforce current laws on the books (which includes maintaining proof of legal residency I presume), and crack down on employers who hire illegal immigrants. Even today Obama makes the same statements. Yet when the Arizona people say this they are vilified. The ones who are paying for the immense failure of the federal government to control our southern border for the past decade and more are vilified for saying, "enough, the federal government is ignoring our security, our financial burden and our safety."
The Greater Phoenix area, the Valley of the Sun, has over one reported kidnapping per day related to the Mexican drug trade. Each requires police response and investigation. Arizona has approximately 1,000 illegal immigrants sneaking across the border daily into their state. In the past month a rancher on the Arizona-Mexico border was fatally shot on his land by drug or immigrant smugglers using his land, a deputy was shot over the weekend by a band of illegal immigrants running from his pursuit. Arizona, likes its neighbor to the west, is deeply in debt and spending tremendous resources on law enforcement, hospital and health care costs and education due to illegal immigration.
Instead of protesting Arizona enforcing federal laws why don't the protesters turn their attention south? Where are the protests against a nation with incredible natural resources, and obviously a very industrious native citizenry that is mired in illegal drug production and trafficking, wrought with corrupt and inept government, and failing its citizens with poor education systems, employment opportunities and health care? Why is not the source of illegal immigration being vilified rather than the recipients of illegal immigration?
To follow my own advice rather than just complain about the complainers here are some solutions for illegal immigration:
- Follow Arizona and detain and deport illegal aliens caught when in violation of U.S. or state laws
- Stiffen penalties against all employers, contractors, plumbers, golf courses, agriculture growers, who employ illegal aliens
- Sanction Mexico economically to force Mexican government to cooperate with stopping flow of illegal immigrants into the United States
- Incentivize and pressure Mexico to allow U.S. to intervene and assist in Mexico's fight against the drug cartels
- Tax transfer of funds from the U.S. to foreign countries between individuals unless legal proof of residency by the sender is provided
- Require any institution receiving state or federal funds to require proof of legal residency before providing services
Arizona is not creating any new laws. The left is not presenting any real solutions. Who's right?