China And Power

China is slowly becoming a more democratic country because its people will continue to demand it. As they transact more business with the West and the people of China get more exposure to our lifestyle and freedoms they will want to be a part of it.
This will take time and those in power will resist the need to give up their corruption and influence. The rapid expansion of China really begun in the 1970’s with Nixon’s effort to reach out. Forty years have passed since then and now China is a world power and growing. 
It may take another forty years before China’s politics and economy becomes more like the west but it is inevitable. Unfortunately, we seem to be on a path of greater centralization of power and wealth. This power grab is coming not from the government but rather from our wealthy class and their conglomerates who are controlling more and more markets and politicians as a result of buying them with campaign contributions.
Here is a peek of what the year 2030 will look like.

Snyder Needs To Be Publicized

I like many of the things Snyder is trying to do; however he needs a lesson in adapting from the private to the public world.
Snyder definitely has a problem with rules associated with being in public office. He implemented the EAA before it was procedurally and financially ready and they did a sloppy job in applying for the grants desired. The EAA needs to be put on hold until this is under control.
Now it appears he misstepped in the process of hiring an Emergency Manager for Detroit. If you think about it logically, it does make sense to make a list of potential candidates and interview them prior to making an offer. The problem appears that once again the Governor failed to follow the rules.
Personally, I believe Snyder made a good choice in Orr. Orr is taking much heat and handling it well. I hope the citizens of Detroit start supporting him more. He is looking out for their best interest. Unfortunately he will not be able to protect them from all the pain, but it will be minimized by the sale of assets.
Snyder better learn to adjust to working for the state and citizens or he will not be reelected.

Guns and Fourth Branch of Government

It was the fourth branch of government that defeated the bill proposing universal background checks for anyone purchasing a gun. They accomplished this even though 90% of citizens were in favor of such legislation.

This fourth branch is in the shadows and it is not controlled by the voters. Instead, it is controlled by money coming from special interest groups such as the National Rifle Association, the President’s “Organize For Action”, the Koch brothers, Sheldon Adelson, Citizens United, all labor union PACS and approximately 4,600 other political action committees.

In the case of PAC’s, they in theory represent a group of voters who are supporting the PAC. This creates a problem that: 1). Not every voter belongs to a PAC and 2) Not all PAC’s are created equal. The more money the PAC has, the more influence they have. Further, the more one contributes to a PAC, the more influence that person has over the PAC.

Making things worse, these organizations have control over the other three branches of our, tongue in cheek, government. Most of these PAC’S are controlled by a small group of individuals making the decisions. In addition to these Political Action Committees, our elected officials spend much of their time soliciting money from very wealthy individuals in the following industries: Wall Street, Banking, Entertainment, Energy, Home Building, Technology and others.

Politics is the only industry I am aware of that allows its employees to take a paid leave of absence from performing their duties to look for another job; their reelection. I am very pessimistic. If we do not end this corruption the country will continue in its slow decline.

Bank CEO’s Not Too Big To Fire

Banks may be too big to fail; however their CEO’s are not too big to go to jail!

Lately, more and more there is a discussion that banks are too big to fail in that it could cause a repeat of the financial crisis of 2008. On March 17, 2013 in the New York Times GRETCHEN MORGENSON wrote an article titled, JPMorgan’s Follies, for All to See wherein she discusses a trade executed by Chase bank that resulted in a loss close to $6-billion. She reports that we already know such banks are too big to fail and raises the question whether they are too big to manage.

On March 13, 2013 the New York Times reported

“Attorney General Eric H. Holder Jr. responded to a question at a Senate Judiciary Committee hearing last week about the failure to prosecute multinational banks for various transgressions by saying, “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute – if we do bring a criminal charge – it will have a negative impact on the national economy, perhaps even the world economy.”

I can see accepting the premise that some of these banks may be too big to fail at the present time. However, I do not accept that the CEO’s, CFO’s and other senior officers are not too big to fire and stick in jail. There is plenty of talent in the world and markets are likely to cheer if this happened as opposed to panicking.

Let’s do it! If it is not done it means that politicians are also dirty.

Federal Reserve Quantitative Easing

I support the Fed’s actions to buy large quantities of mortgage bonds, and potentially other assets, until the job market improves substantially. However, there will be consequences in the long term. When buying short-term treasuries, the theory is as the economy improves the Federal Reserve, to fight inflation, will pull money out of the economy by not extending their purchases of new securities.

This will not be as easy with the purchase of mortgage backed securities which have an average life of twelve years. An improving economy will result in interest rates rising and thus the value of mortgage backed securities decreasing. If they pull money out of the economy to hold inflation in check the Federal Reserve will incur significant losses that will need to be covered by the tax payer.

Don’t blame the Federal Reserve for this needless loss. Blame the Republicans in Congress for not shouldering their responsibility to stimulate the economy by making sound investments in infrastructure that would create jobs. Also blame Congress and the White House for not going after banks for retribution for causing our near depression. This retribution would save the tax payers billions of dollars. Goldman’s contributions to our politicians is paying off. More