The Supremes Vs Chicago

Justice Ginsberg showed that even a very liberal justice has limits. The Chicago gang in the Administration may have met their match by puting the UAW above investors in the Chrysler bankruptcy. It is one thing to push for the change in the law and get the legislature to change it but quite another just to ignore the law when you think it is better to support one group over another. In working towards expanding the dependant class, President Obama has built a team that is choosing the winners and losers based on “fairness’ to the common guy. The problem is the common guy in this case has to be a UAW member. Other unions that had invested in bonds from the auto makers are less important and will have to take their losses. The financial markets and bankruptcy law require the bond holders will be put in the position of owning the company when it comes out.
Obama and team understand the negotiations union style (Godfather) that has been prevalent since the 1950’s. There was a time when the union and companies truly negotiated a reasonable contract for the good of all involved. For more then 5 decades the union would pick a firm to strike, get a contract and then base the other’s contracts on the first. This gives the union undue power over the process. All they do is put a contract in front of management and wait for a signature. If no signature the union just waits for the firm to lose enough money that investors force a settlement. Meanwhile, the rest of the firms continue to operate taking all the sales. Now the UAW wants to own 55% of Chrysler.
Some wonder why so many of the Chrysler bond holders agreed to the deal. Well it goes back to the way the Chicago politicians (Godfathers) negotiate. Most that approved the deal were also TARP recipients. Maybe this is like the BofA takeover of Merrill Lynch – ordered to do the deal even though Merrill Lynch had cooked the books for some $14 billion. Once again a deal was made that could not be refused. A string of activities by this administration is really starting to smell like 3 day old fish.

Update on the Auto Industry

It is Sunday afternoon (6/7/09) and no response from the Supreme Court yet. Why is it important for the Chrysler so called agreement to be reviewed? Because I spent most of my career forecasting the Montana economy, it amazes me that anyone would put the union needs above the needs of a nation. The Miners union killed the Anaconda Company in the 1980’s. There were no negotiations from the union just dictates of what the company had to do to get its workers back into the mines. The union went so far as to tell the workers that the strike had to continue to “make an example of the company” so other negotiations would be easier. After a long strike the company closed the mines and all 2,200 workers were terminated.
About 10 years later the mines were purchased by Dennis Washington of Washington Construction. It took almost another year to have a non-union organization that would be profitable and accepted by the Butte, Montana workers. The deal was the miners would make an average of $28,000.00 base pay and share 50/50 with the owner on any profits over 10%. Bonuses were paid out at the Christmas party each year. After 5 years of operation the union tried to resign the miners to a contract. The 375 miners rejected the proposal at an overwhelming percentage. Notice the employee count. The amount of ore produced did not change.
Now to the auto maker’s plight. Because of work rules, what the workers are paid is secondary. Both mining and auto makers have seen unbelievable productivity changes in production. In both cases the unions have worked tirelessly to maintain employment. Tactics has been similar too – either you sign or we will make an example of you. So it is not so hard to believe the UAW has not negotiated through any of this process. Getting more in the proposed settlement then the secure bond holders is evidence of mafia type tactics instead of true negotiations. So now it is up to the Supreme Court to step in and force the bankruptcy court to do its job. Commerce is a Constitutional issue that is being turned upside down by Obama and the UAW.

Health Care Obama Style

With the President wanting to pass Health Care reform quickly, I wonder why the rush. One reason may be that time is running out before the American public so gets tired of the Chicago style politics. Health care will not pass after the public wakes up. Before we change our economy more to the socialist side, maybe we should spend the time seeing if current changes are actually working. 2008 data shows that the private system costs actually fell by 14% while Medicare costs went up by 22%. Oh, let’s redo a 17% of our economy with a new system that will make it 30 to 35% of our economy.

Raise The Gas Tax!!!!!!

I have been silent long enough! This is the most stupid action out of DC yet. The transportation fund will run out of money by September, 2009. Oh really, learn your history people! The same crooks that took the transportation funds out for other purposes now want more tax money to replenish the fund. The answer is NO! So how did this happen? First was the Johnson administration that changed the fund so that surplus moneys could be removed and used for other purposes, then because there were still surpluses, the fund was expanded to include other modes of transportation such as Light Rail. And finally because surpluses still persisted, some of the tax paid at the pump was diverted to fund other than roads. Before the American public has to pay higher taxes put all of the tax paid at the pump all back to roads. The gas tax should only be for road projects period. Then make the program funded again so the funds have to stay for transportation not to leave when there is a surplus. Only after these changes should the tax payer be looked at for more revenue.
Originally there were two funded programs in the Federal system, Social Security and the Transportation Fund. Both had surpluses for decades and are grossly underfunded today. Yes it is 2009 and we are idiots if we accept that our taxes have to go up to pay for roads. What has happened is there was a large surplus that Congress could not let go untapped. Now it is time to replace the money that has been taken out of the fund. Yes other projects will suffer. So what! They were funded improperly in the first place. It is time for the politicians to be called to account for the mess they have created.

Side Show is Ending

The sideshow of Bernard Madoff will soon be out of the press so the real important stories will start to come to the top of the press’ agenda. The reason this is a sideshow to me is because of the rest of the financial system problems. The total of government involvement to get the system turned back up is in the trillions, so 50 billion is kind of small. The really good news with the Madoff case is that Madoff used the same “holes” in the regulations that the rest of the financial firms used. Some of the rest of the employees of the other financial firms will be wearing orange too. The conviction of Madoff has helped the NYSE to be more positive and further convictions will be needed to get a full recovery going.

Other candidates are Franklin Rains, former CEO of FREDDIE MAC and Merrill Lynch COE John Thain. Rains was over FREDDIE when “irregularities” were found in the books. Rains bonuses totaled $90 million for the years in question and after the adjustments were completed his bonuses were calculated to be zero. Rains gave nothing back! In the cast of Thain, Merrill Lynch was in the process of being acquired by Bank of America. Bonuses were paid early to Merrill employees because of the takeover. OK, a little strange but it appears that BofA knew about it. Now for the appearance of fraud on Thain’s part. Just a few days before the takeover, Merrell reports an additional $14 billion in losses from “legacy assets”. So these assets were on the books during due diligence and one of the best banks in the country missed $14 billion? Thain was interviewed on CNBC and tried to explain this as the loss occurred the last month of 2008 even though it was assets on the books for years. How can both statements be true? Either the auditors were from Two Dot, Montana or both couldn’t be true. So watching the Attorney General of New York’s investigation of Merrell and BofA will be fun. As the thieves are caught and prosecuted, the trust of the market will come back so recovery can occur. So lets hope it is soon.

Some Good Economic News (sort of)

The latest proposal of how to take care of the investment firm’s problems and the mortgage problem at the same time just may work. Most of the “toxic assets” have been written down below $0,60 per dollar already. The federal government would pay $0.60 per dollar for the asset then break them into the original mortgages and then offer the reduction of the individual home owner a $0.40 per dollar in the principle. After the mortgages are adjusted and signed, the government will sell them back to the markets.

As long as this proposal remains clean of other restrictions it could really go a long ways to fix the problem with toxic assets at financial institutions. Three restrictions that would destroy this proposal are: 1. Restricting the reducing of the mortgages to some income range of the homeowner. 2. Restricting the toxic asset purchases to US companies only. 3. Not offering a $0.40 to all the mortgages purchased by the government. The expected restriction to help only “middle class” people is just plane class warfare and will have the same negative affect as it always has before. These assets were sold world wide so to get trust back in the US systems we have to fix this problem on a world stage. Some of the homeowners will be made more then whole and some will not. The ones that that will have there equity restored were not involved in the activities that caused the initial problems.

My support of this basic idea comes from it punishes the companies that built these toxic assets, helps the homeowner and at the same time it can start to instill some trust in our financial systems. What this can do over time is get rid of “the best and brightest” that came up with these stupid ideas. Don’t’ think this was stupid? So how is it that every time there has been a banking issue, it has been caused by too much leverage? We have nearly 200 years of experience with this and yet it continues to happen. So yes the people involved in this are stupid! The current joke on Wall Street is that what is the difference between Madoff and all the other financial companies activities? The financial company activities were made legal first. Since this is a joke on Wall Street, it probably contains more truth then fiction of the activities of the markets there.

Again it is imperative to make the same offer to all the homeowners involved. This will make some of the homeowners more whole then others because of where they live. The homeowners in major cities such as New York, Los Angeles and Los Vegas will be helped the least because the highest gains in home prices occurred there. Most all of the small states had less of an over heated market and will be helped the most. This is fair in my mind because they had little to do with the over heating of the markets and still get to pay for there share of the other Obama taxing schemes. Fore once let some of the American’s that have not tried to rip off the system get some kind of reward for being honest.

Global Warming II

Looks Less Real Then Just A Month Ago

I received a comment on my global warming post that thought I was full of bull. The person suggested that I go to Google for better sources. Well ok Google is good but not the only source for this type of data. First let me say that the first statements on how plants and animals use O2 and CO2 came from a Elementary School Book. The costs of wind power compared to coal generation came from a report from North Western Energy who is building wind generation facilities to produce 10% of Montana’s power needs. If you don’t think electric cars are not stupid then answer me this: Where do you plug them in, the wall! Guess what. That electricity more then likely came from a coal fired generating plant so your CO2 footprint just went up not down. The cost of electrical production comes from the wind plants currently in production and the coal cost of production was in the North Western Energy’s provided tables for a comparison. The calculation of increased cost is simple arithmetic and mine. I would think that “real” data is much better then most other sources.

Ok now for the Google search. Using NASA data when I have the NOAA data to look at seems a little strange. NOAA is full of the scientist that believe in global warming but have not been caught over laying data from one month to the next like NASA. So on one of the MFAQ sites of http://www.nws.noaa.gov/om/coop/newsletters/08spring-coop.pdf , page 2 there is a very interesting graph. Notice that it is provided by the Intergovernmental Panel on Climate Change Fourth Assessment Report (AR4) (part of the UN). This graph goes from 600AD to 2000AD. The graph is of high and low temperatures with two very interesting time periods. On is from about 800AD to 1005AD and the other is from 1800AD to the end of the graph. The graph ends at 2000 because of the scale is centuries. So what has happened since 2000? A clue is in another graph in another study on UN bias at: http://scienceandpublicpolicy.org/images/stories/papers/originals/McLean_IPCC_bias.pdf This graph shows global cooling since the beginning of 2002 through 2008. These numbers are from NASA GISS, RSS MSU, UAH AMSU AND HADLEY. This added to the first graph gives a little more evidence that warming has peaked and cooling has started. So now the model that was built in the 1990’s has not worked for half it’s life! McLean has an article on the so called 4000 UN scientists that supported global warming was actually only 40.

Then the following was found:
“Japanese scientists have made a dramatic break with the United Nations’ view on man-made global warming with a report asserting that “this hypothesis has been substituted for truth.”
Three of the five researchers involved in the report disagree with the view of the U.N.’s Intergovernmental Panel on Climate Change (IPCC) that recent warming is due primarily to industrial emissions of greenhouse gases, and say it is instead driven by natural cycles.
The report was issued by the Japan Society of Energy and Resources, an academic group representing scientists from the energy and resource fields that acts as a government advisory panel. The report has been translated from the Japanese by The Register in Britain.”
Source:Newsmax.com

Headline:Swedish Scientist Accuses UN’s IPCC of Falsifying Data and Destroying Evidence

Source: NewsBusters

The bottom line to all this is: The debate on global warming is far from over. Even though global warming may not be more then a natural cycle, the projects that drill for oil on and off shore, develop clean coal, hydrogen fuel cell cars, cheaper wind and solar energy, nuclear development and natural gas engines to replace diesel for large trucks should all be pursued. The USA produces more then anyone else in the world because we have utilized energy sources over animal ones. All of these together could lessen the use of oil but will not take need to zero. Just try to live without the plastics around you as you are reading this and think I am full of BS!

Housing

I have listened to the debate on housing until I am about to throw up The only differences in this go down is the scale and place of the losses. No one in NYC worried about this problem when it occurred in Montana, Colorado and Texas. Some locations in these states took 12 years to recover with no help from the Fed. The only place to get any Federal help in Montana was Butte and recovery took almost 20 years because of that “help”. Housing has to be priced at a level that normal working people can afford before pricing stops dropping. It is just that simple!

Global Warming is Real?

In second grade science class I learned that plants used CO2 to produce food for the plant and expelled O2 into the atmosphere. In turn, the animals on the planet suck in O2 and exhale CO2 that the plants need. This was called the cycle of life many moons ago. So how is it that CO2 production is going to destroy our planet?

Yes it is true that I do not have a science degree but with 25 years of experience building all kinds of computer models some questions have not been answered in the global warming crowds model: 1. Why is there only one independent variable (CO2)? 2. Why has the model not tracked the average temperatures for the last 9 years? 3. How is it that a person like me caught NASA posting of daily temperatures in October of 2008 was bogus and the scientist had published an article “Warmest October in History”? 4. Why is it that NASA claims that it does not have enough money to checkout the monthly data when model program highlights outlyers? Answer these before I give you more?

Spending 25 years forecasting local and state economies has taught me that government can make the pain of loosing a job less when transitioning into a new job but can do little to create the job to go to. So in a down economy many of the unemployed will have a hard time finding work. Infrastructure projects will help in the current recession because of construction employment has been falling for several years now. The work will pay well and workers exist with the skills to do the work. Most of those who are criticizing this portion of the stimulus bill have no idea of what it takes to build and plan a project. The ones that are truly shovel ready can start when the weather will allow it.

Ok, what does this have to do with global warming? A lot when the projects are considered. Much of the normal infrastructure projects could be put on the back burner for exotic projects. Like most proposals this one has some history. The magneto hydro dynamics (MHD) was a project to take efficient electrical production from the lab to the plant. After many years of trying the project was abandoned, so Butte, MT was left with another failed business. The point is that many of these processes work in a lab situation but can not be put into full scale production. There is on real and one not so real energy problems here. President Obama, we do not all know that global warming is a real issue and the model that the climate experts are using is not working!

There is an energy problem that we need to fix in this country. We have the tools to do it without destroying or economy. Electric cars are stupid! They just move the production of CO2 from on location to another. Totally wind generation is too expensive, North Western Energy has been building wind generation for years now. The actual costs of generation is $0.10 per kilo watt while coal generation is $0.02 per kilo watt hour. Don’t know about you but I do not want my electrical bill to go from $100.00 to $500.00 per month. Over time this technology will get cheaper as wind generators become more efficient and that will make the price more competitive.

If you really want a transportation fuel that is not polluting then hydrogen is the only answer. To get there we need to build all the types of energy but the ultimate goal must be renewable and clean. So President Obama, I am on your side in that we do need to become energy independent but we do not need to destroy our economy. We have real clean coal generation methods now. Nuclear plants have already been made safe, The big three are making efficient cars. So stop this crap that we need to catch up with the rest of the world. We are still the leaders, all you have to do is get the hell out of the way and let us do our work!

Trust!

Listening to CNBC to get my daily business news is becoming so painful that I am working on finding other sources for the information I need to keep my portfolio in good shape. It seems like nothing from or attached to NYC can be trusted. The latest is the Federal Reserve Bank President of New York, Timothy F. Geithner. This is the appointee for Treasury Secretary in the Obama Administration. Geithner was born, raised, educated and works in the corrupt systems of NYC. Now we are going to have him run Treasury? Oh great, this guy has at least three strikes against him that if a Republican committed any one of them would stop any attempt at confirmation by the Senate. I love the excuse; “he is the only person that can get us out of this current recession”. Don’t think so! First what makes the person closest to the current failures of the TARP the best to make it work and why the NY President. There are 12 regions of the Federal Reserve, each has a Bank President and all provide economic information. Seems to me that one of these other Bank Presidents would be more informed on the “real” economy by not being influenced by the Wall Street (unreal) economy.

All of the news outlets seem to think that if the Wall Street problems have not been fixed then the real economy will never be fixed. In the first place, none of these so-called banks on Wall Street were banks. They were investment firms that blew smoke up all out Asses. Banks normally lend money for there primary reason to exist. Wall Street firms sold things. Some of these things actually contained some real assets but mostly was just smoke. If you bought a box and did not open it you could sell the box for more money. Guess what! One of these “best and brightest” (idiots) opened a box and it when the smoke cleared there was about 2% of the box that was real asset. Oh yes, a big problem. How could he now sell it with the seal broken?

How does all of this go to the confirmation of our Treasury Secretary? This is the business environment that Geithner was raised in. He could not recognize a real business transaction from a one that is based on fraud. The Bank of America and Merrill Lynch is one to watch and see if this bunch will actually believe that the BofA group did actually overlook $14 billion in write offs to pay a 70% premium. Cannot prove it but there is more smoke here that smells like fraud to me.

With all of the indicators that Geithner has the same attitudes as the “normal” CEO on Wall Street, we need someone that will call it BS when it occurs, not one that thinks that this is normal business operations.