Thursday, July 24, 2008

A brief history of the economy

The cyclical nature of the economy has always existed, although we have many people still alive that remember the last great depression over the next 20 years there will be very few that have a good memory of what a real economic disaster is and I fear people will always believe they are living in the worst of times.

I hope you already know some of this but I have to make sure we are on the same page. There are two major areas in economics being macro and micro. Macro is the study of the larger picture on a country or world scale, micro is the study at the transaction level or between people. This paper will focus on the macro economy.

At any given point in time there is a local, regional, national and world economy. They interact but are not always in the same condition as far as growth, retraction, inflation or deflation. If you live in a farming community and have a massive flood your town could be devastated for years. If a major employer closes in a smaller town, it may destroy that town forever. However, that doesn’t mean that even the state you are in is suffering the same. Even if all of these areas are in a recession that does not mean the whole country is in one, and the federal government or Federal Reserve should not act as such. The last “recession” was 8 months long from March to November 2001, however, because of the sluggishness of the economy it did not fully recover until 1st quarter 2003.

This is why no single solution will solve everyone’s problems and why others will use this to their political advantage by saying leaders don’t feel their pain or act as if one thing can fix all. So what is a President or Congressional body to do?

First you create an atmosphere of equal opportunity, I stress here opportunity not equity, no one has figured that one out yet. You do this by creating a consistent educational system for the citizens, a tax code that is both family and business friendly, and an infrastructure of roads, sewage, electricity and now broadband internet services that promote business and freedom of movement. In larger cities freedom of movement include mass transit and in small communities this is a well maintained freeway and street system.

Second, you have laws that protect individual rights, ensure that there is equal opportunity to resources giving no group an advantage over another through political, religious or racial differences. These laws would have to be written by officials elected by the population of the area or country and a court system that is willing to strike down laws that are inconsistent with the constitution but not create or see new rights that are not either laid out in the constitution or by legislation.

Finally, you need a sound monetary system that keeps inflation in check. Inflation rips away at the value of products and services. In a longer period wages can catch up with inflation, however, during the time of turmoil, wealth is destroyed and creates unstable social and thus political atmosphere that can lead to rash decisions or allow groups like the Nazi’s or Communists to come to power.

Specifically:
The Feds will reduce the interest rate on money in order to stimulate borrowing for business and since the “Great Depression” the government will increase its spending to make sure that someone is moving the economy along.

The current economic troubles are similar to the 1970’s in that we have a spike in fuel prices. In the 1970’s it was OPEC flexing its muscles buy reducing its output of oil. However, the killer was Pres. Nixon’s freeze on wages and prices! Yes, there was a federal freeze on pricing and thus the market reacted the way it always does to a limit on prices, there will be a limit on quantity supplied. This created the long gas lines.

Under Pres. Carter it happened again (I remember the lines for this one) and we had the double whammy of inflation and higher then normal unemployment and price controls leading to the recession of 1980. The raising of rates by the Feds broke inflation and has been policy ever since.

However, because we are having another spike in oil prices an increase in Fed rates would have the opposite effect and close down the economy. The rate raise would tighten money and even small increases of a few years ago lead to the “sub-prime” mortgage situation of today. Some Banks may fail or get bought out. S&L’s of the 1980’s were completely wiped out. Credit card companies will have massive right offs, killing their stock and reduce taxable income, thus taxes either paid by them or through dividends paid out.

What to do?
We don’t have to go much farther then the constitution which states that its purpose is to “establish justice, insure domestic tranquility, provide for the common defence, promote the general welfare and secure the blessings of liberty…” Tranquility & Welfare gives the federal government control over commerce, Justice and Defence is our boarders and Welfare also means health (of the economy), and the family unit.

First, much like the cover of, “The Hitchhikers’ guide to the galaxy”, “don’t panic.” Second, don’t have the federal government spend anymore, just change were it is spending. Along with giving money out through extended unemployment benefits or expanded welfare programs, the government should expand college education. By having more people enter the college ranks it will delay their need for work and in a couple of years they will be ready for a better job with a higher education. The flip side is to expand vocational schools.

We still need money available to borrowers by having lower Fed Rates, and I would exempt the first $10,000.00 of interest and dividends earned from the tax return. This would help seniors on fixed incomes and give investments with lower interest rates a leg up on its effective tax rate and keep money in banks to lend out.

Through the tax code I would give bonus deductions on expansion of business equipment and other improvements that include job growth. Increase credits for lower income filers who put money into their retirement plans. Expansion of child tax credits for higher income people, currently limits begin at 100K, I would increase to 200K.

Make transfer of wealth from parents to children much easier by raising limits on yearly amounts and erasing the death tax. Families need to take care of each other. Ease the ability of parents to keep children on their health insurance to 25 even if they are not in college.
Security of the boarder between the U.S. and Mexico to limit drugs and crossing of people shrinking the work force available and have more jobs available for our citizens. A better migrant work program needs to happen. Then during times of strong growth and a need for workers we can increase the number that can come in for short periods of time. This needs a double edge with increased ability to check Id’s and a more standard Id system for none citizens.

Much like your home you want secure doors, the ability to take care of your children, and save without it costing you in the long run.

Saturday, February 23, 2008

If I have plagairized you.....

If I have plagairized you I am sorry, every word I have written has been written before. No two words can I put together that someone eles hasn't done already. I doubt I have had an origianl thought, with 6 billion people on Earth, most Ideas have been worked out. If I say, "The sky is blue" do I have to credit "theskyisblue.co.uk" website? Or do I hae to give credit to Bruce Willis in "The Last Boy Scout" because he said,"The sky is blue, water is wet, women have secrets." Or the writer of the script?
It is very confusing to know what has been said and what hasen't. No candidate speaks without a writer so it is they who need to reference source materials and not the candidate. Obama, may have said the words, but it is one of his writers who stole the phrasing.

- C. Mendelsohn

Thursday, October 11, 2007

Review: "Collapse of the American Empire" by Kirkpatrick Sale

© WithComment.com 2007 (Article) Link

This article is a link from The Middlebury Institute about why empires fail. Of course the premise has to be accepted that the United States is an empire. Although the term, “lone superpower” has been used since the mid 90’s buy both Democrats and Republicans, empire it is not.

This article went after “neocons” in D.C. as the power using the U.S.as an empire with the fall of the Soviet Union. However, a “Google” search found only leftist articles using the term “empire” against the neocons. I found no articles written by the right that advocates an American empire, and the only interesting thing I found was an article by a self claimed “associate” of the neocons, that indicated the original neocons were former liberals who became disenchanted with the excesses of the Democrat party of the 60’s and 70’s, and still saw a need to stand strong against the Soviets and be pro-Israel.

This is probably why the liberals are so obsessed with neocons, they were once one of them. Much like the guy who stops smoking and becomes overly anti-smoking, current smokers hate them.

Kirkpatrick’s proof of the fall of the “American Empire” is as follows:

Environmental degradation – Destruction of land and water by over use & climate change.

  • The examples given by Kirkpatrick such as erosion of topsoils, over fishing and depletion of oil & minerals, are happening mostly in other parts of the world and not in our “empire”. Topsoil is eroding but we know were it is. At the end of the Mississippi river. We can always dredge it up and bring it back north. It just costs too much right now. The quote Kirkpatrick uses is, "ecological footprint is already too large for the planet to sustain, and it is getting larger." Uses the word, “planet” I think Europe & China might argue that they are part of our “Empire”

Economic meltdown – Excessive resource exploitation, colonizing.

  • Although the numbers the author uses are correct and disturbing, he has nothing to compare them too. What was Rome’s percent of manufacturing? What was their percent of GDP used for military or trade deficit? Why is the manufacture worker so cherished by the left but the owner of that company is such a villain? Our economy is not fragile, it is the continued over spending of our government and our own selves that needs to change.


Overextended military – Because of colonizing they are forced in more and more engagements.

  • We don’t colonize! Iraq is not and never will be a U.S. colony. Is Germany a colony of the U.S.? We have troops there since 1945! Every soldier in Iraq has over $17,000 worth of equipment on them. Democrats can help the military by just supporting the President and thus sending a signal to our enemies that they have no choice but to deal with us.

Finally, Domestic dissent and upheaval – Collapsing from within and attacked from without.

  • Well overextending the military is to fight the attack from outside, and it is mostly the liberals that are trying to destroy us from within, with its persistent demand for increased social programs, welfare, Medicaid, Medicare, Universal healthcare, making every minority group equal to the majority of the country. This leads to the bad economics point out previousely. Also other social issues such that homosexual marriage is an important issue for everyone, populations of 5% (Muslims & Jewish religions) need to have equal stance in our society like schools and city hall lawns, like the majority.

This is how you destroy from within. It use to be in America you could live your life they way you wanted as long as you left the rest of us out of it. Now you have to stick my nose in it too. Yuk!

Chris Mendelsohn

Wednesday, October 3, 2007

Government Obligation and future costs.

© WithComment.com 2007

Elected officials believe they have their constituent’s best interest in mind when they vote on a program or a project that will spend some money now and in the future. Programs like Social Security, Medicaid, Medicare and Welfare have had both positive and negative influences on our society. However, all of these programs had a current expense and a projected expense when they were first created and all of them, without exception, have been wrong in its projection of future expenses. Not just wrong, but devastatingly wrong by factors of 10.

Thirty years ago the City of Urbandale entered a contract with the Urbandale School District to open and operate an indoor pool on the school property. The operation costs were split out 60% for the city and 40% for the school. The lease was for 50 years and apparently no one did a good job at projecting costs out that far ahead or envisioning the need for massive repairs down the road. Something I might add that every home owner knows they will need to have done when they buy a home and that is why we ask about the furnace, roof and water heater.

Now 30 years later the building needs 2.8 million in repairs. The school can only pay for it out of its general funds and so voted to support the park and rec.’s suggestion to close the pool and void the contract.

The school district will still be on the hook for 40% of the cost to close and demolish the building and apparently that number is unknown at this time, although usually the costs of all project outcomes are calculated so that the managers involved can determine the best course of action, in this case it was not.

It is becoming more and more clear that any project or program that any politician, either elected or appointed, wants to pursue must not only have the cost of today and 10 years from now, but the cost of renovations and population growth and changes decades down the line, otherwise we are just sticking our kids and grandkids with a bill that can not be paid.

Follow up: If the pool is closed the school district will get out of the lease. Why not just ask the city to renegotiate the lease? One that is user based and not a set percentage. Then the city can raise rates on public swimming to make up difference, have a vote on a bond for the repairs & improvements and for god's sake allow the school to have enough money in to teach our kids to read, write, solve math & learn how to learn.

Follow up to the Follow up: The city council punted on Sept. 25th and will now hold open meetings to get the opinion Urbandale's citizens on the issue. Dates TBA.

Chris Mendelsohn

Wednesday, August 1, 2007

Legal Americans

© WithComment.com 2007

Well I know it has been a while since I updated the site but I’ve been on vacation and working on big projects for my business.

My vacation was a 10 day trip starting in New York City then a train ride to Delaware and then a drive to Washington D.C... It was a long yet educational trip on several levels. It helped me understand the “East Coast” attitude towards the “Fly over country” and why they are more liberal then most of the rest of the country.

New York has a lot of energy and I can see why it has inspired many people to greatness in the arts and science, yet has my friend Frank told me, (he lives in Delaware) “100 million people live within 4 hours of his house, yet 95% of them are idiots. But that still means 5 million are smart, and that is more then all the people that live in Iowa.” And I believe I met a lot of those “95 percenters” on my trip.

However, New York’s energy leads the nation and world in change, unlike Washington D.C. where I loved the giant buildings and monuments of granite, but I realized that it also meant that change was slow and honoring the past was more important then fixing the present or the future.

Commentators like Rush Limbaugh talk about how Republicans who first get elected to Washington fall for the trap of being in the “in crowd” and alter their views to be accepted and get on TV because they differ from other Republicans. I believe the city also traps men into moving slow and not making the choices that will make real change, not realizing the only people with monuments or buildings named after them are the ones that separated them selves from the crowd and made changes.

The recent immigration legislation is an example of why the solution can not come from the east coast but must come from the southwestern states who are directly involved with the situation. The east cost has such a vast population of immigrants that the average height of its population must be 5’7”! I am 6’0 and I don’t normally feel that much taller then people here in my home town of Des Moines, but in New York I felt like a giant.

This made me look around harder had who is an immigrant and I realized that almost all the service jobs were done by first or second generation immigrants. It was amazing that the first 6 cab rides had only guys from the middle-east, all the maids, doorman, fast food order takers. It had to be 75% or more from the places I went to and saw in N.Y. which lead me to the conclusion that there is an almost “Master/Slave” relationship between the wealthy, middle class and everyone else.

I believe that easterners believe that if we get tough on immigration that this “service” class would disappear and who would take care of them? Or that they fear some sort of uprising or labor strike that would close down the city and states. That’s why they don’t want the legislation to include having to go home to them come back. This would cause too much interruption in services.

The truth is that we need to first just stop the inflow by building the fence on the border. Then we work on a system to get those who have skills we can use to get into the system, get the criminals out, also we need to overhaul the whole thing to allow immigrants from other countries with skills and cash to get in easier too.

This also needs to be tempered with welfare reform. If there are “Job’s American’s won’t do” then that is because welfare pays better then those jobs, if it didn’t then they would get those jobs wouldn’t they?

Wouldn’t it be a great way to celebrate “Independence day” by making more legal Americans, and making more American’s independent of the government.

Wednesday, January 24, 2007

A Mad World and a President

© WithComment.com 2007

Elections matter! Tuesday’s “State of the Union” speech by President Bush has been viewed by most as a “good” speech. However, I saw it as a president who has been brought to his knees.

Most of the president’s problems have been self inflicted. His plan for a quick victory was brilliant and correct, however, his plan for winning the peace has been just as bad and slow as any guy off the street could have designed.

President Bush’s speech did point out very clearly the problem in Iraq, on the one hand you have the Sunni minority who had supported Saddam Hussein and were seen as the problem in Iraq. Those Sunni’s that have decided to take up arms have aligned themselves with Al-Qaeda. On the other hand you have the Shiite majority who has the support (openly) of Iran. So what are we to do?

The answer, not an easy or simple one, is to kill the leadership of the Shiite & Sunni militias and organize a strong central government. However, that government is always going to have to have a strong hand in dealing with religious thugs.

Because of the problems in Iraq, President Bush can not deal with N. Korea and Iran in the way that he needs to as he pointed out so correctly in 2002 as the “Axis of evil” We now get reports that N. Korea is directly helping Iran with its testing program. Ahmadinejad has promised an active enrichment process and bomb in their new year, which begins on March 20th, 2007. He has also continued his promise to end the “United States and the Zionist regime of Israel” Words that we must listen too. Although I know Iran is not ready to “destroy” the U.S. it would not take much to devastate Israel.

The Democrats have made it very clear they do not want to do anything that would expand the war in Iraq or move on to Iran. They won’t say they want to cut and run, but instead continue to use words like, “precipitous withdrawal”.

Tuesday night, newly elected Sen. Webb (D-VA) said, “…immediate shift toward strong regionally based diplomacy, a policy that takes our soldiers off the streets of Iraq's cities and a formula that will in short order allow our combat forces to leave Iraq." Sen. Webb’s words seem reasonable, but he doesn’t give us specific information on how the peace will be won, if our troops are off the streets and out of Iraq. I guess they will just come together, hold hands and sing some song from the 60’s.

President Bush is weakened and now we are in a more dangerous place, in this mad world.

Chris Mendelsohn
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Tuesday, January 23, 2007

It is lonely being the world leader

© WithComment.com

These are the main areas that the world has a problem with us in: http://news.bbc.co.uk/2/hi/americas/6286755.stm

*The war in Iraq: an average of 73% of respondents disapproved (57% in the US). Disapproval was strongest in Argentina and France, while people in Nigeria, Kenya and the Philippines were more likely to approve.

*Detainees in Guantanamo: 67% disapproved (50% in the US). Backing for America on this issue was highest in Nigeria, where 49% approved.
Israeli-Hezbollah war: Washington's role met with approval from respondents in Nigeria and

*Philippines, but on average 65% disapproved across the 25 countries (50% in the US).
Iran's nuclear program: again, support for US actions appeared strongest in Kenya (62%), Nigeria (53%) and the Philippines (52%). But, overall 60% of respondents disapproved (50% in the US).

*Global warming: more than 80% of respondents in Argentina, France and Germany disapproved compared to 56% overall (54% in the US). But the White House had 50% or more support among those polled in Nigeria, Kenya, the Philippines and South Korea.

*North Korea's nuclear program: opposition to US policy was strongest among respondents in Argentina and Brazil. On average across the 25 countries 54% disapproved (43% in the US).

The heart of this poll was to see if the US was a stabilizing power in the world. Countries that have never liked our “cowboy” diplomacy don’t like it now even more. France and Argentina have never been real friends to the US and I doubt anything we do gets a positive response.

As far as the War in Iraq and Club Gitmo I disagree but understand their problem with our involvement. However, I don’t understand the negative view of the Israeli-Hezbollah war (we weren’t involved there militarily) other then we support Israel. Same with our handling of Iran’s nuclear program. What are we to do, nothing? Allow a country that supports terrorism to have a nuclear program? Again, anti-Israel.

Global warming is a bill of goods sold to people who are self haters. That the world would be great if it were not for man. Specifically the US and its industry, which isn’t as pronounced as it use to be. But we are just energy wasters as we produce 20-25 percent of the world’s GDP.

N. Korea is ran by a whack job and what are we to do, nothing? I guess we would be much more popular if we did nothing and just went a way. Then there would be no check on evil people in the world. The world may hate us but they need us on the wall.

Chris Mendelsohn
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