GOP Race Heats Up

Despite the departure of Tim Pawlenty, the GOP race is heating up. Over the weekend, Tim Pawlenty dropped out, Rick Perry dropped in, and Michelle Bachmann won the Iowa straw poll. Meanwhile, Obama is touring the midwest.

What's this all mean?

Questions.

Let's start with Rick Perry. First, fact checking his speech:

On a blended basis, we would rate this as a Two Pinocchio speech, similar to many of the other announcement speeches — a mishmash of high-flying rhetoric and facts sometimes tethered uncertainly to the truth. We look forward to rating more of the governor’s statements in the future.

There's some interesting stuff about his claims that low-taxes leading to the success he has had in Texas, including:

Texas, as a state rich in oil and national gas, has also benefited from increases in energy prices that have slowed the economy elsewhere in the country. Higher energy prices have meant more jobs in Texas. Though Perry proudly claims the job growth is the result of a low-tax, anti-regulatory environment, others have pointed to a big investment in education in the 1980s that, yes, was the result of a tax increase.

So let's address this point by point.

How does Texas's economy differ from the American economy:

“Because the Texas economy has been prosperous during his tenure as governor, he has not had to make the draconian choices that one would have to make in the White House,” said Bryan W. Brown, chairman of the Rice University economics department and a critic of Mr. Perry’s economic record. “We have no idea how he would perform when he has to make calls for the entire country.”

It's easy to govern when things are going well. Obama inherited a nation underwater and has had to balance his campaign promises with balance to keep the country afloat. Perry's record in Texas might contrast with the needs of the nation:

“The Texas model can’t be the blueprint for the United States to successfully compete in the 21st century economy, where you need a well-educated work force,” said Dick Lavine, senior fiscal analyst at the Center for Public Policy Priorities, an Austin-based liberal research group.

In Texas, Perry has been questioned by democrats for:

And if Mr. Perry were to win the Republican nomination, he would face critics, among them Democrats, who have long complained that the state’s economic health has come at a steep a price: a long-term hollowing out of the state’s prospects because of deep cuts to education spending, low rates of investment in research and development, and a disparity in the job market that confines many blacks and Hispanics to minimum-wage jobs without health insurance.

This does not sound like a recipe for growth.

On a national stage, this could be a huge issue. Education is probably the second largest point of debate coming into the 2012 election. As someone that is hellbent on improving America's future, this does not bode well for Perry. Considering that education is one of the things that has faced the most cuts over the last few years, and clearly, education has started to fall behind:
I'm a staunch believer in one of the few things that government should invest in is education. However, like all forms of government, you have to make sure it is running efficiently, and that is done through incentives. Massachusetts, probably the most liberal state in the union, understands this:

In Massachusetts, Mitchell Chester, state education commissioner of Massachusetts, said his state, which also posts higher than average scores on the national exam, created a plan to "aim high, make sure results count" by holding schools accountable for results and targeting support to help them succeed.

Seems a little bit off topic, but if we're going to make cuts, I expect education to be one of the victims, and without, a economy high in human capital, we're going to continue to struggle. All of these candidates want to lower taxes, and with the budget concerns, we're going to need to make cuts. It'll be interesting to see how these candidates outline their plans. For Rick Perry, you can't ignore the fact that an investment in education played a role in his success as governor, but that his cuts in education will inevitably be a drag in the future. Perry has benefited from rising oil prices, which is integral to the Texas economy. In a more complex national economy, he might struggle to have the same degree of success.

Furthermore, there are questions about whether Perry can win the middle:

The concern for Republicans, however, lies with those swing voters in the middle. Among independent voters, a slight majority of 50% said government should do more, while 44% said it should do less.

I find this very interesting, considering how many people have been critical of Obama. You have to wonder how polarizing an issue this is. It seems like government is taking adaptive measures, while people might want them to do less or more in regards to spending and taxes.

There are still a lot of questions regarding Perry's candidacy, but there's a belief that he can overtake Bachmann:

Logic says that Perry will eclipse Bachmann in Iowa because he’s as conservative but with the bonus of extensive executive experience. As a fiscal and social conservative who’s an evangelical with a background in agriculture, Perry seems a natural fit for the state.

The question is whether he can make the same connection with the voters that Bachmann seems to have done. Bachmann lacks executive experience and while she has won over a lot of supporters, I think her executive experience is going to be crucial in determining her fate. In many ways, she could be the conservative Obama. In the same way that liberals aren't happy with Obama, conservatives might not be happy with Bachmann.

Bachmann has to prove to conservatives she is not (did they steal my headline?):

Americans are already living with the consequences of electing a President who sounded good but had achieved little as a legislator and had no executive experience. Mrs. Bachmann will have to persuade voters she isn't the conservative version of Mr. Obama.

I don't believe she will. To me, she's a political chameleon, always painting herself in a way that will appeal to her desired constituency:

More substantively, her attempt to position herself at all times as the anti-establishment outsider has made her seem on occasion less principled than opportunistic. She quickly distanced herself from Paul Ryan's Medicare reform when it came under liberal fire, even as she purports to be the scourge of uncontrolled spending. Her recent opposition to the debt-ceiling deal on grounds that GOP leaders should have insisted on first passing a balanced budget amendment, while holding only the House, was a political fantasy.

She seems misguided and her candidacy for President of the United States of America seems like a political fantasy.

For the time being, she's up there with the top dogs, so let's not count her out yet. She's going to play a part in the race, stealing votes from the other two top dogs. I just don't think she can beat two candidates with executive experience. That's a big deal in this race.

My top dog in this race is Mitt Romney. I just worry about his electability. While religion is not an issue with me, it is with evangelical conservatives. Furthermore, I don't think he asserts himself well enough. A big thing he's going to have to do is differentiate himself from other candidates:

“I think understanding how the economy works by having worked in the real economy is finally essential for the White House, and I hope people recognize that,” Romney told reporters after touring and addressing employees at a small manufacturer.

“I respect the other people in this race, but I think the only other person that has that kind of extensive private sector experience, besides me, in the Republican race is Herman Cain. And I respect Herman Cain, but I also think it’s helpful to have had that government experience that I’ve had,” said Romney.

He has to be assertive. He has been riding too high on his qualifications. He has to make an earnest effort to reach out to the voters and take a stronger stance defending his record and his beliefs. People have questions about him regarding the policies that were passed when he was governor of Massachusetts and about his religion. He needs to defend these stronger. You have to convince conservatives that you have strong socially conservative beliefs.

The best candidate does not always win the nomination. Often times, it's about the best campaign. The best candidate, for me, is Mitt Romney. As of now, it appears Bachmann and Perry are running better campaigns. It will be interesting to see how things unravel as things develop.

The New Front-Runner?

As was widely confirmed, Rick Perry declared his candidacy for President of the United States of America.


With his speech, Perry juxtaposes himself as the business and private enterprise friendly candidate who will restore American pride. As I said before, he is in many ways the anti-Obama.

While I am wary of Perry's social stances in regards to abortion and gay marriage, I was impressed and even moved by his speech. I think he did a great job of appealing to Americans' patriotic values as well as outlining his plans to help America grow in the future.

I believe Perry has a much stronger understanding of what it will take for America to get back on its feet than the current administration. Some of the things that he wants to do is simplify the tax system, repeal ObamaCare, get our credit rating back to AAA, and create jobs - create, innovate, and succeed.

Listen, we're going to need someone who is going to encourage private enterprise. Recovery isn't going to happen through fiscal spending. While infrastructure improvements and updates are necessary, the real long term growth is going to come from a reassurance of our private sector and through the encouragement of innovation. We need a President that understands these needs. Rick Perry understands.

While I will not confirm that he's my favorite candidate, I will say he has catapulted himself to the front of the GOP race for the moment.

The Introduction To The Family Business

The following is my final paper for my Epics, Ancients, and the Mafia class at the University of Michigan. Every once in a while, I like to read the papers that I write for school because I want to see what I think of it after the fact. Usually, when you write these papers, you're so in the zone, that you don't get to appreciate your own work. The Sopranos is one of my favorite television series of all time, and I really enjoyed writing this paper. I hope you enjoy it.

Both as a contemporary representation of the mafia genre and as a contemporary representation of mafia, The Sopranos faced the challenge of connecting with or referring back to previous representations of mafia genre while updating the mafia tradition. To address these challenges, the first two episodes of the series serve a similar role as the proems that begin epic poetry, particularly The Metamorphoses. A proem, in epic poetry, is an invocation that provides the introduction to the story within its context. Usually, it addresses overarching themes, like Achilles’s rage in The Iliad, Odysseus’s suffering in The Odyssey, and transformation in The Metamorphoses. It can, however, also cover underlying problems and consequences or take us to a specific point in time. For example, in The Iliad, Homer takes us to the feud between Achilles and Agamemnon. As a television series that continues the mafia tradition and takes place during a specific period of time, The Sopranos share a relationship of content with the proem of The Iliad. At the same time, it shares a connection with The Metamorphoses in that both stories come at the end of the genre. The major difference is that The Metamorphoses bring us from past to present, whereas The Sopranos makes reference to the past through developments in the present. The proem, the first two episodes, of The Sopranos not only reintroduces the familiar motifs of the mafia genre, but also introduces the relationships, themes, and subplots that will dictate the events of its contemporary story.

In the first scene in Dr. Melfi’s office, Tony gives us insight both into the problems that he is facing and the changes that have occurred since generations past. When he first opens up, Tony tells Dr. Melfi that within the context of the mafia he “came too late” and that he feels that the “best is over.” He goes onto reminisce about his father’s time and how “they had their standards, and they had pride.” The vicarious nature of the second comment reminds us of The Godfather and the first half of Goodfellas when times were better for the mafia and there were no FBI indictments, there was no fear of family members snitching, and there were closer business relationships. These are all the issues that we see introduced in the first couple episodes, which weigh heavily on Tony throughout the course of the show. This struggle between the idealistic past and the less opportune present and future in itself is one of overarching themes of the entire series, but there are many subplots that draw from this struggle.

The subplots within The Sopranos are introduced through Dr. Melfi’s questioning to get to know Tony and to diagnose the source of his panic attacks. As Tony narrates the events that led to his panic attack, we are shown the scenes from that day. We see, however, more than what he tells Dr. Melfi, for he is unable to tell her the details of his business. This invokes the code of silence, referencing past representations of the genre such as Frank Pentangeli’s testimony in The Godfather: Part II or Paul Cicero’s lectures to Henry Hill in Goodfellas. Tony himself admits, at first, that “it’s impossible for him to talk to a psychiatrist.” In the scenes depicting his daily life within the first two episodes, we are introduced to the themes, subplots, and relationships that are generated from the conflict between the past and the present.

The mafia business has been undermined by the downfall of the code, values, and pride that characterized it at its peak. In the first episode, Tony laments to Dr. Melfi that things are “trending downward” and that mobsters today “have no room for the penal experience.” The second episode reinforces this demise when Tony’s crew watches a discussion of the RICO trials’ effect on the mafia, especially in terms of leadership and values. We immediately see examples of these waning values. In the same episode, Junior calls for a sit down with the acting boss, Jackie Aprile, rather than making an arrangement to talk to Tony face to face. After Jackie dies, Junior and Tony continuously spar over control of the family and the spoils of the family tributes. This dispute exemplifies both the downfall of leadership and values, since a solution could have easily been reached had they worked together rather than against each other. Furthermore, there are some in the business who break the code of silence like Big Pussy Bonpensiero when confronted with a lengthy jail sentence (2.1). Pussy is arrested for selling drugs, which mirrors the experiences of Henry Hill in Goodfellas and resonates Vito’s proclamation to Sollozzo in The Godfather Part I that “drugs are a dirty business.” While the business still provides a living for these men and their families, the admirable traits that characterized the “family business” in The Godfather has eroded.

The maternal authorities have a more significant role in the influence of family matters. Through Tony’s interactions with his mother, Livia, we see the overall toll and effort that Tony must put forth in his interactions with her. When Dr. Melfi presses Tony about Livia’s ability to burden him with so much guilt, Tony cites how his mother “wore [his father down] to a little nub” to indicate her power over him. We also see that same maternal control within Tony’s own household. Carmela does not want Tony’s mother living with them despite his wishes (1.2), and Carmela is the sole decider of Meadow’s punishment for breaking curfew (1.1). This theme recalls the The Godfather Part II, when Michael is powerless to Kay in regards to the abortion and their marriage. Additionally, when confronted with the prospect of losing his family, Michael goes to his mother as the authority figure on family. While the scale of maternal influence is magnified in The Sopranos, it is important to note that Vito tells Johnny Fontaine in the very first scene of The Godfather, “a man who doesn’t spend time with his family can never be a real man.” The influence of women continues in later episodes when Carmela tears up Meadow’s Berkeley letter (2.8) and when she accosts their neighbor, Jeannie Cusamano, to persuade her sister to write Meadow a letter of recommendation to Georgetown. The increased presence of feminine aggression within the household has broken the balance that is idolized in The Godfather.

The differences in generations and their values have created conflicts both in the business and family worlds of the mafia. All of these conflicts derive from the interpretation of what is respect. Junior and Livia believe that the younger generations must treat their elders with respect and dignity. To Tony, his crew, and even Carmela, respect is received on a merit basis. For the younger generation, respect is more about fame and recognition. A good example of this conflict is Tony’s attempt to put his mother in a “retirement community.” Livia refuses to move because, to her, it is a nursing home and not a dignified residence. We also see Christopher struggle with his lack of fame and reputation, when his diseased friend, Brendon, is named as a Soprano-family associate and he is not (1.8). He rashly shoots a baker in the foot after the baker disrespected him by skipping him in line, and later, he becomes depressed until he is told by his mother that he has been mentioned in the Star Ledger in a mafia related article. This provides a Little Caesar moment for Christopher, as he joyously rushes to a newspaper rack to claim all the papers. While Christopher is satisfied with his new recognition, Tony and his crew are unhappy with the immaturity of Christopher in his actions and his jeopardization of the family’s business. The cohesiveness and understanding that we saw in The Godfather has been replaced with unrest between the generations.

Italian identity and culture is constantly rearing its head as a point of contention within The Sopranos. First and foremost, it is important to recognize that the mafia genre is a product of Italian cultural values. The Sopranos features many representations of Italian culture and values through food, assimilation process, and the family. One of the reoccurring viewpoints in The Sopranos is the rape of Italian culture. In the coffee shop with Pussy, Paulie resents the fact that “all these other cocksuckers are getting rich off ” of the coffee business (1.2). Another example of this rape, ironically, is when the mafia has to fight with Native-American protesters at the Columbus Day parade, a holiday that is very important to Italians (4.3). Another example that is riddled with irony is when Tony, Paulie, and Christopher go to Naples on business, Paulie has trouble adjusting to the differences of real Italian food (2.9). On the same trip, Tony is enchanted by the female boss of the local mafia, Annalise, much in the same way Michael was struck by a thunderbolt when he first saw Apollonia in The Godfather. We also see the religious values of Roman Catholicism in Tony’s marriage with Carmela, juxtaposing Carmela as the faithful and Tony the unfaithful. Unlike Michael and Kay in The Godfather Part II, however, Carmela and Tony are binded together by their adherence to catholic stance against divorce, even if their relationship is not mutual. The presence of cultural values is integral to our understanding of the time and place where these characters come from and the world in which they live.

The proem of The Sopranos provides us with the lens and the scope through which we will see the rest of the series. Through this, The Sopranos develops aspects of the mafia world that have never been addressed before. Never have we seen the extent by which the depiction of mafia in such an expansive fashion. In the proem we learn that the story is not just about Tony and how changes in his business are stressing him out, but rather about the world he lives in within the context of a mafia tradition. As a story about America experience and assimilation, we are able to see contemporary depictions of events that are able to exist without sacrificing the necessary focus of the narrative to center on the mafia itself.

Enter The Fray - Rick Perry

So Rick Perry is expected to announce his candidacy for President of the United States of America tomorrow. His foray into the race should see him instantly catapult him to the top of the Republican race. He will probably run on a jobs candidacy, being the only candidate with a strong record of job creation from public office. This should give him a strong leg up over Mitt Romney and John Huntsman, both of whom were successful businessman.

So how does he stack up?

Well, the man can fundraise:

“He is the most successful fund-raiser in the history of Texas politics,” said Craig McDonald, director of Texans for Public Justice, a watchdog organization that tracks campaign spending. “He may be the best in the country. He will have no trouble raising the money he needs for his presidential campaign.”

Only Mitt Romney can compete with Perry in terms of money raised. In the last two weeks, he's raised twice as much as every other candidate. Financially, Rick Perry should be one of the toughest candidates to top.

As I said before, he will be the job's candidate:

Over the past year, Texas' job growth was twice the national average. In fact, of all the jobs created since June 2009, 30 percent – about 295,000 jobs – were created in Texas, according to a report from the Dallas Federal Reserve which analyzed data from the Bureau of Labor Statistics.

That should make him a favorite in this recession. People want someone who will be business friendly and help the economy grow. Not someone who will continuously mislead the economy and not give a certain outlook over their future actions.

So what's been the secret to his success? Taxes:

Yucel said much of this job growth can be attributed to Texas' low tax rate – the state has no income tax -- few regulations and a law limiting tort litigation. Texas, according to Perry, is the "epicenter of growth."

Low taxes and few regulations are business friendly. Limited tort litigation is doctor friendly. In many ways, Perry is the anti-Obama. From the two and a half years we've seen so far, an anti-Obama is just what we might need to grow as a country.

Or is he? According to Joseph Henchman, while Perry decreased franchise taxes, he increased margin taxes, resulting in increased revenue:

"I think Perry's margin tax in Texas is a destructive type of tax," said Joseph Henchman, the vice president of state projects for the Tax Foundation. "You have taxes being levied on taxes based on how many levels of production a product has. It basically encourages people to form conglomerates purely for tax reasons which is economically destructive. You have these taxes pyramiding on each other so the effective rate is higher."

But what did Perry's opponents do? Unemployment under Pawlenty as Minnesota governor:

Still, 25 states had a lower unemployment rate in June 2011 than Texas, including Pawlenty's state of Minnesota in which 6.7 percent of the population is unemployed.

And the budget:

Pawlenty took office in 2003 when the state's budget was facing a $2 billion shortfall. Within his first year as governor Moody's rating agency downgraded Minnesota from a perfect AAA credit rating to AA1, one step lower, citing short-term fixes to long-term budget woes as the reason for the downgrade.

Despite the unemployment rate, Pawlenty has let his state's debt get down graded. He didn't solve the state's problems, but rather slowed it down by slowing down spending. It sounds very similar to what Boehner's plan appears to be doing.

Romney helped raise Massachusetts's credit rating:

Conversely, during Massachusetts Gov. Mitt Romney's tenure from 2003 to 2007, he petitioned the S&P credit rating agency to increase his state's credit rating from AA- to AA, which they did in 2005, according to a report obtained by Politico.

But did he raise taxes:

But the credit upgrade did not come without a cost. In 2002 Massachusetts raised more than $1 billion in additional tax revenue and in 2004 the state increased fees such as those for drivers' licenses, raising an additional $271 million annually, according to the report.

Actually, no:

Henchman said former Romney is the only GOP candidate who saw income taxes decrease while he was in office, albeit slightly, from 5.6 percent when he took office in 2003 to 5.3 percent by the time he left in 2007.

The article seems a bit misleading about this fact.

Meanwhile, Huntsman went with a flat tax:

"Huntsman's flat tax achievement is an achievement," Henchman said. "It reduced complexity and it made it a much more growth-friendly tax system."

You may ask why I'm focusing on taxes, the credit rating, and job creation. Because it's going to be the most important talking point for debate for the 2012 election. It should have been for the 2008 election, but instead they focused on healthcare, immigration, and the war. As I said then, the economy is always the most important issue whether it's good or bad.

The 2012 election will be about creating jobs, solving the debt crisis, and restoring the credit rating of this country.

However, since people do like to focus on other, relatively minute details, let's look at Perry's social stances. He is staunchly anti-abortion and anti-gay rights:

Governor Perry and the supporters of "the Response" can say all they want that the prayer rally was a non-political event, but the fact is the event was sponsored by the American Family Association, an exclusively Christian group with a narrowly-focused political agenda that revolves mostly around outlawing abortion and curtailing gay rights.

I have a hard time taking these types of people seriously. You know, the ones that not only are intolerant in their private lives, but also feel it is their mission to force their views on your publicly. For me, it's hard to trust someone for this. One of the founding principles of our country is the separation of church and state and when someone's viewpoint is derived from religious beliefs, you are blurring that very sacred line.

Carl Medearis feels similarly about the political implications of Perry's religious rally:

But here's my suggestion for the next politician that feels the need to call the nation to prayer, and wants to do so in a way that honors Jesus. Why not make the event open to people of all faiths and political persuasions? And rather than focusing on a narrow set of political concerns, why not make the focus of prayer something that Jesus actually talked about, like removing the planks from our eyes before we judge others... and loving our neighbor as ourselves?

Regardless, the "Response" may have been a political move to consolidate support of the conservative Christian base:

By leaving politics out of The Response, Perry formed a bond with the evangelical community that no other 2012 Republican presidential candidate has, at least on such a large scale: He earned their respect.

"I think by him not saying anything [political], that shows he kept his word," Stringer said. "I think if he had said something, he would have totally lost any equity with anybody. By not doing anything, even those that don’t ever vote for him, those that don’t agree with his politics, they can say ‘you know what, we can pray for that guy, and he went up a notch in my book.'"
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Yes, but the event was still sponsored by a anti-abortion and anti-gay rights group. So what about that homeboy? It's all politics, right?

Whether or not I'm a fan of Rick Perry, he might be the candidate to beat. Regardless of how annoyed I get with social issues entwined with religion and politics, this election might be about jobs. I think we have a lot to learn about all of these candidates in regards to what they intend to do to help grow our economy. However, on record, Rick Perry appears to be one of the stronger candidates. I can't really knock him for that, and it appears the Obama administration is already taking notice.

The 2012 election is about jobs. When you're voting in the caucuses and primaries as well as the general election, keep this in mind. The economy should outweigh everything else.

Jamie Dimon Believes in America

USPS - Does it have a future?

I walk my dog in the late afternoon. The past couple times I've walked him, there has been a USPS truck with the driver just chilling in the front seat. Now, I was going to take a picture of this today, but I decided not to because I don't want my mailman to lose this job if this actually becomes more publicized, but I wanted to use it as an opportunity to get into the USPS debate.

As for my postman, is he off the clock? Did he already finish his routes and is he just waiting for quitting time? What's the deal here?

If you are unaware, USPS posted a $3.1 billion loss in its third quarter:

Total mail volume for the quarter that ended June 30 fell to 39.8 billion pieces, a 2.6 percent drop from the same period a year earlier, as consumers turn to email and pay bills online.

And what might exacerbate the system is a series of prepayments that will create cash concerns for the struggling postal service:

"We are experiencing a severe cash crisis and are unable to continue to maintain the aggressive prepayment schedule," Joseph Corbett, the agency's chief financial officer, said in a statement.

"Without changes in the law, the Postal Service will be unable to make the $5.5 billion mandated prepayment due in September."

With the government's debt as it is, it is unlikely that the government will be able to assist the USPS as it could in a more stable financial situation.

Additionally, like many government run bureaucracies, the post office isn't run efficiently and isn't allowed to be run in that way without the permission of congress:

Postal officials have called for Congress to change the way USPS operates, saying it needs more flexibility to close failing post offices, cut Saturday delivery and raise rates.

The agency is studying about 3,700 of its 32,000 post offices, stations and branches for possible closure. Officials plan to replace post offices by contracting with private retailers to sell stamps, offer shipping and provide other postal services.

The losses have caused postal higher ups to take shady measures in order to limit costs and to maintain its public image:

Managers at the U.S. Postal Service have skirted the agency's performance evaluation rules, reducing or eliminating employee salary increases in some cases to avoid the negative publicity that bonuses could bring the financially ailing agency, according to a new audit.

Here's how it was done:

Forty-six percent of evaluators and 40 percent of second-level reviewers surveyed reported that employee ratings were lowered during the review process. Respondents said they were instructed by a superior to bring ratings into line with average scores or believed that ratings should be lowered to avoid raising suspicion. Others were concerned that employee performance targets were too easy to meet or that the public would react negatively to workers receiving bonuses given the agency's fiscal condition, the IG found.

I don't want to get into an argument about whether these measures were right or wrong. I understand why they did them, but it doesn't make it right. The problem is the system.

As far as solutions, there are many. These range from finding cost savings or getting rid of the postal monopoly all together. Here's a bit of a cost reduction argument, regarding those pre-payments:

The problem lies elsewhere: the 2006 congressional mandate that the USPS pre-fund future retiree health benefits for the next 75 years, and do so within a decade, an obligation no other public agency or private firm faces. The roughly $5.5 billion annual payments since 2007 — $21 billion total — are the difference between a positive and negative ledger.

Mail is not the problem. It's these pre-payments that are the problem:

Furthermore, USPS' financial problems have surprisingly little to do with delivering the mail. In the past four fiscal years, despite the worst recession in 80 years and despite Internet diversion, revenues from postal operations exceeded costs by $611 million.

Mack Julion of the National Association of Letter Carriers has this to say in defense of the postal services:

The fact remains that everyone does not pay their bills online or even have access to the internet. Those who live in rural communities, low-income areas, and the elderly would be impacted the most by the slower delivery time that would result from just one less day of mail service. The Postal Service is still very relevant and for only 44 cent a stamp we don't require a dime of your tax dollar! If it was not for the congressional mandate to pre-fund our retirement, the Postal Service would have seen profits of over a half a billion dollars over the past five years. Right now the United States Postal Service does not need to close post offices, reduce services or a bailout -- we just need Congress to fix the law that is breaking your Postal Service.

The cause of the trouble is something everyone agrees on. It's the pre-payments.

How to solve this issue is the disagreement. Some think this should be done directly. While the proposed solution is to close down branches.

Personally, I believe the solution is more institutional than anything. The constraints put on the USPS put them in this situation. They need more leeway in how they can manage these things. They cannot make decisions regarding it's financial viability without the approval of congress. This puts them on an uneasy plain. It is not efficient to have this bureaucratic liability. The post office needs more freedom.

As far as getting rid of the post office, I think it's a bad idea. While most services have become digital, the post office still serves a purpose. It would be unwise to disband it.

Welcome To London

Out of control?

Vigilance At A Premium

It seems like vigilance is at a premium. If you're a long term investor, you're probably raising an eye brow and wondering what you should do with your money. People have been selling frantically the last couple weeks and the market has taken a sharp drop. The money has come out of equities and been shoved into fiat currencies like gold and to a lesser extent silver. At the same time, oil and copper prices have fallen, while the US dollar has gained on the Euro as greater concerns arise in Europe.

So what do we make out of all of this? Do we follow the experts and take our money out as well?

I don't think you can panic sell. Cutting your losses seems like a mistake when you can hold and accumulate higher dividend yields and reinvest them into more stock, which will increase in value as the stock recovers. If you sell, you're letting your losses stand.

You're probably also worried about this credit downgrade. I don't think it's necessarily a bad thing. Here's the bottom line:

Neither side can easily claim the high ground. The downgrade laid bare a distrust of both the Washington political system and the independent firms tasked with standing in judgment of it. Ultimately, investors are likely to be responsible for deciding who has more credibility.

The downgrade was down to one thing: democracy. Because of the quibbling between the two parties and the time it took for the deal to get done, S&P felt compelled to downgrade.

The Obama administration say it's down to an accounting error, and while that may be the case, I still don't think this is a bad thing. At the very least, it will make them work that much harder to address the debt situation, so we can get back the AAA rating. In the meantime, do you really believe that the US will default on their credit now? You think not having that rating means we're less likely to pay off our debts? We came close, but we got the deal done. Are we going to not do that next time? In the end, these people know the importance of paying off our debt. They're not complete idiots, though they may seem like ones at times. I'm not saying that the rating downgrade is meaningless, but it doesn't mean as much as it is made out to be.

You can remain calm about it.

Burton Malkiel had this to say in this morning's journal:

Investors who have sold out their stocks at times when there have been very large declines in the market have invariably been wrong. We have abundant evidence that the average investor tends to put money into the market at or near the top and tends to sell out during periods of extreme decline and volatility. Over long periods of time, the U.S. equity market has provided generous average annual returns. But the average investor has earned substantially less than the market return, in part from bad timing decisions.

My advice for investors is to stay the course. No one has ever become rich by being a long-term bear on the fortunes of the United States, and I doubt that anyone will do so in the future. This is still the most flexible and innovative economy in the world. Indeed, it is in times like this that investors should consider rebalancing their portfolios. If increases in bond prices and declines in equities have produced an asset allocation that is heavier in fixed income than is appropriate, given your time horizon and tolerance for risk, then sell some bonds and buy stocks. Years from now you will be glad you did.

The US market has grown over time. To not be in the market is to miss out. To cut your losses is to miss out.

I think we're getting into the time where it's time to buy. Listen, over the past couple weeks, some of the best stocks have declined with the markets, coming off highs as a result of solid earnings reports. I see this as more of an opportunity to get these stocks on the cheap than an opportunity to sit on your hands. Fundamentally, these companies are still doing well and there's a reason that they were as high as they were. Now the shares are more affordable. You've seen the upside they have when things are normal. The last couple weeks, everything has fallen save for gold mining companies. Find a company you like and think has a lot of upside and dig in.

I'm a soon to be buyer, not a too late seller in this current market. I'm vigilant. I don't think this is going to get much worse. To think that this decline is the end of the world is short term thinking. You can't let volatility and declines get to you in the short term. You need to let it ride in the long-term. I am still a bull on America, as hard as that might be to be right now.

North London Is Burning

I love a good riot. I think they make more compelling television than normal news. If this feed is still working, you can watch the live happenings on Sky News.

So what happened? What has caused the people to strike back at the police and now the media? Well, a young man was killed by the police earlier today. The Sun provides some nice background information:

Suspected gangster Mark Duggan, 29, fired a handgun at an armed cop, whose life was saved when the bullet hit his radio.

The officer returned fire with his Heckler & Koch MP5 sub-machine gun - blasting dad-of-five Duggan twice in the face before slumping to the ground.

There's more information about why he was being followed in that article.

It started off as a peaceful protest:

"It wasn't like this before," said one woman standing close to one of the two burned-out police cars. "It started out as a peaceful demonstration. The police shot a guy here last week and they lied about what happened. They said he pulled a gun but he wouldn't have done that with armed police. They shot him so badly that his mother could not recognise him."

But has exploded into a full out riot. There's a double decker bus on fire. It's a quite unbelievable sight.

Hails of bottles and bricks were intermittently thrown at police from side streets as reinforcements arrived. Rioters also aimed fireworks at police. At one stage, four firework rockets were shot at a line of horses, prompting a charge and a nearby crowd to disperse in panic.

Needless to say, I'll be watching Sky News for the rest of the evening.

Michelle Bachmann Overdrive

The WSJ had an interesting front page piece on Michelle Bachmann. For the most part, it focuses on her positives:

But here in Iowa, the tough rhetoric is sheathed in a soft presentation. Ms. Bachmann hugs, dances and offers girl talk on the campaign trail—"That's a rockin' shirt!"—as if baking her steely conservatism into a warm apple pie.

But it also, highlights some of her faults as well:

"I found out real fast that the Michele I knew publicly is not the behind-the-scenes Michele," said Ron Carey, who was hired as Ms. Bachmann's staff chief last year and says he quit less than six months later. Mr. Carey said that Ms. Bachmann was consumed with getting herself on television and seemed indifferent to the task of tending to her district, a view expressed by more than half a dozen other former aides.

While she may appeal to many socially conservatively individuals:

Ms. Bachmann's supporters say they are energized by her stances against abortion rights, gay marriage and government bailouts.

She clearly lacks the experience to be commander-in-chief.

Furthermore, her interests seem to be driven more by personal ambition than anything else. That's what bothers me with politicians more than anything else. I think this part is a good example:

For months, Mr. Carey said, the staff tried to get Ms. Bachmann to stop saying in speeches that Mr. Obama had added more to the federal debt load than all other presidents combined. "It was simply not true, and yet I could never get her to drop that line," he said.

You can't stretch the truth to win votes in my book. I understand speaking negatively about the opposing party's leader because it does help rally your constituency and supporters, but lying is simply not something I support at all.

I don't know how the Republican race is going to play out. I'm concerned that we will have another election where the best candidate to lead our country will not be in the race. No one in the race thus far has really inspired confidence in me.

Song Of The Day: Miss You By Rolling Stones

The Other Side

Quite recently, in the eye of this debt deal, President Obama has been lambasting oil companies and other corporations for avoiding taxes through loop holes:

He also goes after corporate jet owners. It's been going on like a broken record. I get why he wants them to be burdened with more taxes, considering they can probably afford it, but I don't know if it's "fair" or "equitable."

Nobody wants to pay taxes because they have no say into what the way that government is going to spend it. Government is inefficient both with layers of bureaucracy and wasteful programs such as Medicare, Welfare, and now ObamaCare. I'm not saying these programs aren't necessary, but rather that these programs aren't efficient.

On the other end of the spectrum, you have Republicans like Paul Ryan, who have consistently criticized the Democrats' irresponsible spending habits. Ryan was extremely pleased with the spending caps put on by the new debt deal:

But that did not stop him from writing a scathing op-ed in the WSJ regarding Obama's budget inadequacies:

Since then he has offered a lot of rhetoric but no real plan to avoid a spending-driven debt crisis. His speeches and press conferences are no substitutes for actual budgets with specific numbers and independently verified projections of future deficits and debt. Meanwhile, it has been over two years since the Democrat-controlled Senate passed any budget at all. This is a historic failure to fulfill one of the most basic responsibilities of governing.

The necessity of controlling federal spending is better illustrated by these graphs:

Needless to say, this problem isn't going to go away. In fact, it's only going to get worse unless we find a solution to this problem. ObamaCare was unnecessary bloated program that compounds the already horrible spending practices of our government.

When you have government handouts with lax rules, people are going to take them. Why wouldn't you want free money? If you can get it, why not? It's costing governments millions of dollars as a result.

To illustrate this problem, I'll use the Michigan Bridge Card program as an example. This program had very lax rules, so many people, in particular, students took advantage of this program. Although their parents were paying for their school and housing, they used the fact that they had zero income to get these cards and to get free groceries. As a result, the state had to make tighter regulations (From MLive):

"We're ready to extend a helping hand to any citizen who is truly in need — including college students who care for young children and are taking the right steps toward becoming self-sufficient," said Maura D. Corrigan, Michigan Department of Human Services director. "Those who don't meet federal guidelines won't be able to take advantage of what is meant to be a temporary safety net program."

It turns out that certain government programs have the same type of loopholes as the corporate tax loopholes that Obama has so vehemently argued to close. The whole system is creating a sort of reverse incentivization to work less and get more for the government. That's not a driver for growth, that's not a driver for productivity, that's not a driver for innovation. You have to wonder whether part of the reason the unemployment rate is so high is because the benefits of being on unemployment is so good. Now Obama wants to lengthen unemployment benefits again:

A top goal for Obama and congressional Democrats is to extend both unemployment insurance and a payroll tax break. These measures were enacted at the beginning of the year. Obama could not achieve those extensions in the budget deal with Congress.

I understand why we have unemployment insurance, but at what point are we going to cut this off? If we keep extending these benefits, why should anyone try to get employment? Where is the incentive to work?

Right now, we have more benefits offered to people than ever before, yet we sit at 9.2% unemployment. It's hard to say the economy is struggling when companies' earnings are generally beating estimates. Part of this might be from job cuts, but even with these stronger earnings, companies like Cisco and Merck are still cutting jobs.

Closing corporate loopholes are just going to cut into these companies' profits. The time honored solution to increasing costs is job cuts. This will only serve to exacerbate the problem. I'm not saying that these loop holes should not be closed, but closing them now might not be the best solution.

The first response for these companies will be to protect their profits and margins in their shareholders' best interests. You have a difference between what Obama thinks sounds reasonable and what will actually happen. We are already in risk of another economic recession. It is important to wait until the economy shows real signs of health before taking constrictive measures like increased taxes.

In the meantime, you should incentivize people to get back in the work force. The extension of unemployment allows people to take their time getting back into the field and pick and choose jobs. Jobs should not be something that people should be picky about right now. The government is shouldering a burden of costs that it needs to pass on to the private sector. As a result, they need to push people to get jobs and remove the uncertainty of future taxes.

In doing so, the government will alleviate the pressure of future costs on companies, while providing a sense of urgency at the bottom of the work force to be more aggressive in the labor markets.

Whereas the threat of taxes casts uncertainties over the overall economy, incentivizing the job market has the opposite effect. With more people employed and less people claiming benefits, you're automatically going to see a shift in revenues and costs. If you tighten up the loopholes or the ease with which people can get other government benefits in order to reduce unnecessary government handouts, you will see savings there too.

The best way to economic recovery and solving this debt crisis is not through taxes, but the other side. We are spending way too much on all of these programs. We need tighten up the restrictions of these programs and provide incentives for growth. The government isn't going to spend its way out of this recession, but rather, they are going to stunt a potential recovery with these backwards measures.

I would urge President Obama to take measures that actually work rather than to get into the weary debate on revenues versus spending cuts. His best path to reelection in 2012 is not by playing party lines, but rather by making a strong effort to right this country's economy and to make positive strides on the issue of debt.

The Super Horse

Horse Racing hasn't had a Triple Crown winner since Affirmed in 1978. While I will contest that there's nothing like a Triple Crown race, the fact of the matter is that horse racing as a sport has been suffering in the US.

Well, we might have found the answer. Jess Jackson has decided to breed Rachel Alexandra and Curlin. These two horses have won a combined three Horse of the Year titles. With those genetics, people are hoping that we will have a Super foal on our hands. I sure hope so because the sport needs an exciting horse.

The Budget Debate

There has been a general societal movement towards greater savings in the post-financial crisis period. Households and firms are saving more than they used to due to the weakened economy. Government has been faced with the choice of stimulating economic growth or confronting the budget deficit. To date, it has tried to spur the economy through low interest rates and increased spending. However, now, the big issue has become the budget deficit. Legislation to cut spending on both the local and national stage has been met with scrutiny and protests. The alternative to cutting spending would be to increase revenues through revised taxation. Republicans and Democrats disagree on this issue fundamentally, which has spurred the debate. Both sides have preached rhetoric attacking the American people’s fears about the job market. The problem with these two issues, cutting the budget deficit and creating jobs, is that may conflict with one another. Cutting spending directly addresses budgetary issues, but may hinder a recovering economy. Attempting to stimulate the economy and increase tax revenue through tax code revision might not address either issue. Cutting spending seems like the best way to tackle the budget deficit, but it is important to keep in mind what is being cut such that economic recovery is not negatively affected.

To understand why the GOP is so concerned with the budget deficit, it is important to understand the underlying economics. While it may seem counterintuitive to say it could have a negative impact on output, government spending can be bad when the government is increasing the national debt. First, increased government spending through increases in output and money demand increases the overall domestic interest rate, which can have a negative impact on consumption, investment, and net exports. Secondly, increasing the national debt through the deficit increases the size of interest payments on that debt. Recently, we have seen countries like Greece and Ireland seek bailouts because of the amount of debt they faced due to mounting debts. The GOP seeks to avoid that sort of situation by reducing government spending. It might be more important to decide what to cut rather than to unleash an all out assault on spending.

Wisconsin has come under the public eye both because of their attempts to pass legislation to cut spending as well as the heated reaction the legislation has received from unions. The key part of the legislation, which Republicans are having trouble passing because the Democrats have boycotted the vote, seeks to increase cost sharing of healthcare and pensions between government and government employees. These savings to government from increasing cost sharing would potentially save 5,500 state jobs and 5,000 local jobs. Private companies have already employed this type of cost sharing plan, so it makes sense for government to do this as well, particularly in Wisconsin where public employees enjoy higher salaries than their private counterparts. Why should government both provide better salaries and full benefits when private employers are not facing the same costs? It is not an efficient use of government funds to provide more than what the market dictates. While the pending issue is the limitation of collective bargaining, the spending cuts in this bill are in line with how government should target spending cuts. Government should try to make its spending more efficient while not hurting jobs.

The Wisconsin legislation gives us insight on the debate between Republicans and Democrats on the national level. After the House passed a $61 billion cut in government spending, Republican House Speaker, John Boehner, said, “we will not stop here in our efforts to cut spending, not when we’re broke and Washington’s spending binge is making it harder to create jobs.” In response, House democratic leader, Nancy Pelosi, disagrees “the Republican spending bill destroys jobs and their reaction is, ‘so be it.’” The key here is to understand what spending is being cut. In Wisconsin, they want to make spending cuts through cost sharing, taking measures similar to private enterprise and saving government jobs. The concern from Democrats is that spending cuts will slash program funding instituted to create jobs. Whoever is right in this regard is dependent on what the spending cuts actually intend to cut. The Democrats seem more intent on tackling the jobs issue than the budget problem.

The Democrats do not seem to have a definitive response to the budget issue, but certain actions that the Democrats are preaching could both help stimulate the economy and indirectly address the budget issue. In his State of the Union speech, Obama preached the need to revise corporate tax code, particularly in closing loopholes. The US corporate tax rate of 35 percent is amongst the highest in the world, but some companies pay much less than that. Obama hopes to simplify the code to lowering the rate, but making sure all companies pay the same rate. He believes this can be done without increasing the deficit. While it might not stimulate investment from these companies, it would resolve a key issue concerning these companies.

Many companies are currently cash rich, but are choosing to issue debt. Much of this money is overseas, so to bring this cash over, these corporations would be subject to the corporate tax. Since interest rates are low, companies are issuing cheap debt rather than bringing over foreign earnings. Companies would rather use foreign earnings to invest in lower yielding foreign assets, borrow money, or even not invest in a potentially profitable project in the US with foreign earnings all because of the tax rate. This is hurting investment in the US and taking away jobs. Whether a lower corporate tax rate would stimulate corporations to bring their foreign earnings into the US remains to be seen, but it is clear that the current corporate rate is discouraging companies from bringing over foreign earnings. This could have significant implications on tax revenues.

The financial crisis and the recession have caused a notable decline in tax revenues. Tax revenues are down nearly $400 billion since 2007, and corporate tax income is down $175 billion over the same period. This is not due a change in the tax code because President Obama has maintained the tax status quo, recently extending the Bush tax cuts. The big difference, however, is that the unemployment rate has risen significantly, meaning less people have jobs, and therefore, there is less income to be taxed. They also had less money to consume, hurting companies’ revenues and their incomes that they could be taxed upon. If simplifying the corporate tax code can spur investment in the US and create jobs, it would help reverse this trend. Unfortunately, there is no definitive effect from taking such measures. Changing the tax code does not mean that companies will invest, thus creating jobs and increasing tax revenues. It does not tackle the deficit problem head on like cutting spending.

Both Republicans and Democrats will debate this issue because they think they know what is best for the country. While the budget deficit is of significant concern, it is further complicated by the recession and the need to create new jobs. Cutting spending is complicated because it can save jobs by making government spending more efficient, but it can also cut programs that would create new jobs. However, it guarantees to tackle the issue head on. Hoping that spending and changing the corporate tax rate will stimulate job growth and tax revenues is not a certainty. In deciding a compromise, Democrats and Republicans must decide what measures will have the most positive impact on the economy.

The Grammys Fashion

Normally, I don't fuck with fashion, but watching The Grammys last night has set me off.

Look at the above picture. When did it become fashionable to look weird? When was it acceptable to come out looking like an alien dinosaur baby freak? When was it okay to wear christmas decorations as a dress? And what the hell is Nicky Minaj wearing?

Are we in a time where it's more important to make a statement than exhibit class, style, and sexiness? I remember back in my day, Jennifer Lopez wore this dress and it was sexy.

Is that the most clean conservative dress ever? No. The colors are kind of garish, but the style was risque. She was pushing standards and flaunting what her mama gave her. That was the main purpose of award show fashion. To find new ways to flaunt your body. Instead, it's about drawing attention to yourself wearing these outrageous costumes.

I mean let's be truthful, it's working. People are talking about these artists today. Though, it's not for what it should be: their music. They're not talking about how beautiful some of them are, but rather how crazy they must have been to wear what they did.

But what do I know about fashion? May be I'm just old school. May be I'm just that old man who doesn't appreciate these things. I just think these women are drawing attention to themselves like attention whores rather than for their music. That's what The Grammys are supposed to be celebrating right?