The Weiner Component #136 – Part 3: The Sequester

Following is perhaps one of the most important reasons for the Election of 2016.  Its results will strongly affect the future of the United States in terms of whether the country moves toward economic fulfillment for most of the population, stays where it is now, or goes further in the direction of continuing to exist mainly operated by the rich, be run by the rich, and mainly exist for their benefit.


On August 1, 2011, the House of Representatives passed the Budget Control Act of 2011, which was then approved by the Senate, and signed reluctantly by President Obama.  The Act provided that if the Joint Select Committee did not produce bipartisan legislation that made across the board spending cuts then automatic spending cuts would take effect on January 2, 2013.  Its commencement was by law delayed until March 1, 2013.  On that date, with no bipartisan deal having been reached, the initial sequestration cuts would take effect at midnight.  While President Obama signed the bill putting the cuts into effect he referred to them as being “deeply destructive.”


On March 6, 2013, the House of Representatives passed a bill to extend the continuing resolution and to enable defense and the veteran’s programs to adjust to the cuts brought on by sequestration.  Other bills were passed adjusting many of the visible cuts like those made to airport traffic control.  Suddenly most of the airports had long waits for planes taking off and landing as the number of air traffic controllers was cut by the sequester.  This and other visible cuts were adjusted; but many of the invisible ones like a decreases in school breakfasts and lunch programs for the children of the poor or, for that matter, meals on wheels for poor senior citizens, were also cut but they tended to be invisible so there was no large scale objection to these.


The cuts were divided evenly in dollar amounts between the defense and non-defense categories.  Some major programs like Social Security, Medicate, federal pensions, compensation for legislators, and veteran’s benefits were exempt.  Medicare benefits were reduced by 2% a year.  Instead of cutting some Federal pay rates a system of furloughs was set up which resulted in involuntary unpaid time off for government employees was utilized.


The sequester is supposed to lower total Federal spending by $1.1 trillion over an eight year period, from 2013 to 2021.  In 2013 it was supposed to lower non-defense discretionary spending by 7.8% or $294 billion and slightly lower in succeeding years; and it was supposed to lower defense spending by 10% or $454 billion, with slightly lower cuts in succeeding years.


In point of actual face since the application of the bill was delayed from the beginning of January of 13 to March 1, 2013 the actual savings for that year was 85 billion dollars instead of 110 billion dollars.  After two years the cuts have been devastating to both the defense and non-defense sections of the government.


This was the non-compromise compromise that the Republican legislators in both the House and Senate insisted upon to force the Democrats and their President to compromise upon lowering government spending.  Was it a good idea?


Generally, with the exception of 2013, the sequester goes into effect at the end of the year and if the required cuts have not been made in all the programs then those not made by legislation during the year automatically go into effect on January 1 of the new year unless a special bill is passed limiting one or another sequester areas of defense or non-defense spending.  Keep in mind that this process is supposed to continue until 2021 and that only the third installment will have passed by the end of 2015.  There will be an additional six years to go.


The sequester will, if no significant changes are made, lower all Federal Government spending by a total of 1-1 trillion dollars from 2013 to 2021.  It decreased non-defense spending by a range of 7.8% in 2013 and will lower it to 5.5% by 2021.  This is a total of 450 billion dollars for the first year.  Defense spending was also lowered 10% in 2014 and will drop to 8.5% by 2021.


It is also important to realize that the sequestration has significantly cut federal and non-federal employment in the many hundreds of thousands.  In late 2008, Republican President George W. Bush’s last year in the office, the total economy tanked after thirty plus years of constant and sometimes irrational growth.  Bush and his Secretary of the Treasury, Hank Paulson, during the last months of that year spent many billions of dollars bailing out the major banking houses in the country, keeping them from going bankrupt.  The pattern of governments stopping potential bank failures and saving banks became an international operation in many industrial nations.


In the United States the oncoming economic failure became obvious in 2007 when the loans to homeowners became frenzied with mortgage lending 125% of the then value of the property.  The bankers were in complete denial that ever-rising values could ever stop happening.  Most of them had spent their entire prior work life during a period of ever-increasing real estate growth.


With the 2008 Real Estate Crash there was suddenly massive economic collapse with value dropping like bombs from airplanes during wartime.  The value of the dollar dropped to about ten cents overnight.  A good percentage of homeowners, particularly those who had continually refinanced their homes suddenly found themselves owing more on the properties than they were worth.  As a last minute move before the crash some banks were frantically continuing the process.  It had become by 2008 frenzied madness.


The new President, Barak Obama, inherited this problem when he assumed office in 2009.  He spent his first two years in office with a Democratic Congress, successfully working on this problem and getting Affordable Health Care passed.  He continued the bailout of the banks and saved both the financial institutions and the American auto industry with massive loans.  By the 2010 Midterm Election a goodly percentage of the people who had voted for him and change did not vote.  Probably they felt he had not brought any or enough of the change he had promised in the 2008 Election.  Consequently the Republicans achieved a majority in the House of Representatives and thereafter would pass nothing favored by President Barak Obama.  This continued through his first term in office and largely through his second term.  In 2014 Midterm Election the Republicans all achieved a slight majority in the Senate.


Consequently during most of Obama’s presidency Congress has refused to even consider fiscal policy, spending money to create jobs and modernize the infrastructure.  The Federal Reserve has utilized monetary policy, lowering the interest rates paid by the banks to consumers to almost nothing, one tenth of one percent, for most of the money deposited into the banks.  Despite all this in August of 2015 unemployment dropped to 5.1% of the work force looking for jobs, the lowest point since the Real Estate Crash of 2008.


During Reagan’s presidency, in addition to massive military spending, the banks were deregulated.  In 1932, during the midst of the Great Depression, bank reform bills or regulation to avoid another massive depression, which mostly the banks had caused in 1929, were passed.  They had been added to over the years.  All this disappeared during the Reagan Era when the “Free Market” became dominant.  That was during the 1980s.  By 2008 the big banks had again undone the economy.  All this was strongly continued by the two Bush presidencies.


Basically the Republican position has been “No new taxes,” even though Reagan and the first Bush president both oversaw some tax increases.  With the second Bush presidency it was two wars and a large tax decrease, particularly for the wealthy.  If more money is needed for any reason the Republicans would reduce non-military spending, particularly discretionary spending, to make up the difference.  Discretionary spending is programs which aid the elderly, the poor, and the middle class.  In essence their programs have been welfare for the rich at the expense of everyone else.


The Democratic position has been that the country can increase spending by having newer and fairer taxes.  This is the means of paying for new programs and increased costs.  They will not go along with paying increasing or new costs by decreasing the money spent on the lower levels of society.


From these two positions there is no way to achieve a compromise.  Thus we have sequestration, which is in essence squishing the bulk of the population and the functioning of the government. It is an interesting act of spite perpetrated by the Republicans upon the Democrats and the rest of the country.  There is no possibility of compromise.


If the sequester were not in existence unemployment would currently be down to 2 ½ % or lower and there would be a labor shortage.  This would automatically raise the minimum wage and everyone’s standard of living would rise with the rise of wages as employers would be competing for workers.  The FED would have raised interest rates to hold down inflation and the GDP would be far higher than it is now.  The amount taken in in taxes, on all levels of state and federal governments, would have increased substantially and the Federal Government might even be slightly paying down the National Debt.  But instead the Republicans have to be “penny wise and dollar stupid,” holding down economic growth in the nation both as spite and as an economizing measure.


For the end of January 2015 President Obama had asked for an end of sequestration and an overall 7% increase in all areas of spending.  This was an opening position on the 2015 budget debate with a Republican Congress.  He got none of these.  The end of 2015 is coming up.  Both the time for the final cuts to the 2015 sequester and the 2016 Presidential Election will soon be with us.


The military is currently in worst shape than it has been since the end of World War II; when the war ended and the government overnight cancelled all war contracts and began quickly releasing a large percentage of its army back into civilian life.  This continued until the Federal Government realized there was a Cold War going on with the Soviet Union; then it reversed itself.  Currently, according to the armed services top officers another round of sequestration will have dire consequences, which will include the ability to win a ground war.  The size of the navy and air force is shrinking as these services cannot afford to replace outdated ships and air planes.  And this does not include all the other cuts that sequestration is causing.  The military is at present in a worst position of preparedness than it has been since the end of W.W.II.


On a non-military basis poor children are going to school hungry and staying hungry all day while trying to learn.  Senior citizens are doing without food and dying because of program cuts.  They often have to choose between rent, medicine, and food.  They can’t afford all of them.  Food is the first expense to go.  The country will lose a generation of scientists as research funding, which already has been cut 50% continues to decrease.  The Federal Bureau of Investigation released a report at the end of 2013 entitled, “Voices from the field,” that cites the effects of sequestration upon the F.B.I.  It states that, among other things, new intelligence investigations were not opened; criminal cases were being closed; informants couldn’t be paid; and there was not enough funding for agents to put gas in their cars.  And early Head Start programs were eliminated to balance budgets.


All these and many other programs tend to be invisible to the general public.  Also the effects of these and other unnecessary cuts bring about a significant loss of employment in the overall economy and, as we’ve seen, a noticeable drop in the GDP.   Sequestration is hurting the nation.  As it continues the damage increases.  Further cuts will have to be made at the end of 2015.


What amazes me is that virtually all the Congressional Republican legislators have taken an oath/pledge in writing to Grover Norquist, a libertarian-leaning Republican lobbyist and founder of Americans for Tax Reform, who has no direct connection with the Government, that they will never raise any taxes.  These same Republicans have taken an oath to uphold the Constitution of the United States.  It would seem that the first oath here comes before the one to the Constitution.  It would also seem that a number of Republicans would like to get rid of the sequestration but they are bound by their pledge or oath to Grover Norquist.


President Obama has stated that the government can raise the tax revenue to pay for doing away with sequestration by “fixing a tax code that is riddled with loopholes for special interests.  Some of these loopholes were passed during World War II, over a half century ago, to encourage the amount of gasoline produced during the war.  They are still on the books and Norquist sees them being done away with as an increase in taxes.  The current situation and inability of the two parties goes beyond sanity.


My solution to this problem would be to have both political parties appoint a bipartisan committee and lock them in a room without access to a bathroom which they cannot leave until a solution is reached.  And if others in Congress refuse to accept the compromise then automatically appoint them to a new committee and lock them in the same room until they reach a compromise.  This process would be continued until everyone is in agreement on a compromise.  If possible Grover Norquist should be added to all the different committees.


The members of Congress are each being paid 170 thousand dollars a year and take an oath to serve the country.  Each has a budget of over a million dollars for their staffs.  It’s time they did a competent job as legislators.  The taxpayers are spending a lot of money on them and their staffs.  The Republicans seem more interested in a welfare state for the rich than in a country that functions for the benefit of all its members.  Sequestration should never have happened; it’s the type of thing children would do: spite for the sake of spite.  The oncoming 2016 Presidential Election is an opportunity for the voters in America, despite the various suppression of voting in many Republican controlled states, to get rid of a number of legislators that are serving causes other than the welfare of the United States.

The Weiner Component: Part 2 – Taxes & the Republican Party

English: Federal income tax amounts in the Uni...

English: Federal income tax amounts in the United States, based on average pretax household income (2003). The primary source of the information is the Congressional Budget Office’s publication titled, “Historical Effective Tax Rates.” (Photo credit: Wikipedia)

English: Plot of top bracket from U.S. Federal...

English: Plot of top bracket from U.S. Federal Marginal Income Tax Rates for 1913 to 2009. Data are from (Photo credit: Wikipedia)

No one will argue that the Federal Tax System (the income tax) is fair and doesn’t need reform.  The problem is that both the Republicans and the Democrats come at it from totally different perspectives and cannot even begin to come to any sort of agreement about what should be done.


The Republicans are supposed to be the party of balanced budgets.  They have systematically held to two major positions: a balanced budget and not increasing the tax rate for the rich or for large corporations; in fact for a large number of years every incoming Republican to the House or Senate has sworn an oath/pledge in writing to Grover Norquist, a lobbyist with no direct connection to the Federal Government that he or she will not raise taxes.  They have also verbally and dramatically supported raising the rate of expenditure for the military with cuts to entitlement programs.


Yet the last three Republican Presidents, starting with Ronald Reagan and the two Bush’s, father and son, through military preparedness and wars have raised the National Deficit from one trillion dollars to over thirteen trillion dollars and, in addition, the last Republican President, George W. Bush, left the country at the end of his term in office at the very edge of a major depression.  Avoiding this potential Great Depression caused the next President, Barak Obama, in 2009 to have to spend a far greater amount than was taken in in taxes over most of his two terms to avoid economic calamity and to continue the two wars that Bush propagated, bringing the current deficit up to over seventeen trillion dollars.  Finally, toward the end of 2015, the administration may be able to reduce slightly the deficit.


The Republican majorities in Congress are still “Penny wise and dollar stupid,” refusing to spend money on fiscal policy which would both help leave the remnants of the 2008 recession behind us, improve the needed outdated early 20th Century infrastructure of the United States and significantly lower the current rate of unemployment.  They have since 2011, when they gained control of the House of Representatives, refused to pass any spending bills that would upgrade any of the needed infrastructure of the United States, like hundred year old bridges.


Their aim seems to be to lower taxes for the upper few percent of the earners, who they call the “job creators,” and increasing the taxes for the middle and lower classes.  In this process, regretfully, they have been fairly successful.  The middle class has been since 1980 decreasing in percentage of the population and the lower class has been growing, to a point where homelessness can be seen today in almost any major city in the U.S.  In fact poverty is at a higher rate today than it’s been in years and is continuing to increase.


Since the Republicans cannot get the Democrats in Congress to openly go along with tax cuts for the wealthy and paying for this with large cuts in entitlement programs they have in 2013 passed the sequester law, which automatically makes cuts across the board in government spending.  Most of these automatic cuts seem to be invisible but when one become openly harmful to the economy a law can quickly be passed funding it.  Such was the case with the air controllers at the airports throughout the U.S.   Such was not the case in terms of the U.S. military; they are currently in the worst state of preparedness they have been in decades.  It’s as though the Republicans in Congress are saying one thing, getting the nation ready for war with Iran when they completely take over the government after the next election and at the same time, assuming that they will not have to pay for the war or anything else.  Their actions and intent verge on idiocy and irresponsibility or on a total inability to deal with the real world.


One of their major actions during the last thirty-five years has been to systematically reduce taxes for the very wealthy and gradually increase it or make up for the increasing deficit by increasing the tax base for the middle and lower classes.  Some of this has been done by indexing income taxes; that is, with natural inflation incomes rise while purchasing power stays the same or decreases.  This throws many members of the middle class into higher tax categories because their incomes increase but their standard of living actually decreases.


Many or most Republicans legislators probably are not even aware that this is happening because it has been going on for over three decades.  Most, if not all of them, have come into office in Congress well after this process has been begun and have just continued it.  If we look at the pattern of taxation over the last fifty years this is one aspect that we can easily see.


The major responsibility for all these changes rests with the Republicans, their major contributors and the lobbies working for these people.  And the Supreme Court, in recent years, has expedited this process by defining contributions to political parties as just another form of “free speech guaranteed by the First Amendment to the Constitution.”


First off, taxes are either progressive: everyone pays according to their ability to pay, or they are regressive: everyone pays equally, which means the rich pay a smaller percentage of their incomes on these taxes than the middle or lower classes.  In essence the lower one’s income the higher a percentage of his income would be paid on these taxes.  Examples of this kind of tax would be a sales tax or an excise tax.  Everyone pays these equally.


An example of a progressive tax would be the Federal or State income taxes.  They are progressive up to a point, that is up to a little over 400,000 dollars.  Up to this amount the percentage of the tax is gradually increased as incomes becomes larger.  After the maximum, a little over 400,000 dollars is reached the income tax becomes regressive in that the percentage paid becomes fixed no matter how great the income is over this amount.


An individual earning ten or twenty million a year or more would continue paying the same percentage as someone who has only earned 400,000 dollars a year.  In point of fact the higher his income the lower the percentage that individual pays in taxes.


Virtually all other taxes, which are touted as being fair because everyone pays the same amount, are regressive.  The wealthier one is, the lower that tax is in terms of a percentage of his income.


If we look at the 2014 Income tax schedule there are four categories for taxpayers: (1) Single, (2) Married Filing Jointly, (3) Married Filing  Separately, & (4) Head of Household.


Using Schedule Y-1: Married Filing Jointly as our example one sees the sequence of taxes for 1914.  For earning up to $18.150 there is no income tax.  For a couple earning between $18,150 and $73,800 the tax is $10,162 + 15% over $18,150.  For earning of $73,800 to $148,850 the tax is $10,162 + 25% of the amount over $73,800. If a family earns between $148,850 and $226,850 the tax is $28,925 + 28% over $148,850.  For between $226,850 and $405,100 the tax is $50,765 +33% over $226,850.  If they earn between $405,100 and $457,600 the tax is $$109,587.50 + 39%.  At $457,600 up they pay $127,962.50 + 39.6% no matter how much they earn.

The amounts are slightly less for a single person and roughly half for a married taxpayer filing separately.


In essence everyone pays increasing amounts for each category until they reach their total income after legal deductions.  This would be true for those earning over $457,600, except that after that amount they would pay $127,962.50 + 39.5% of their income.  If they earn a million it would be that amount and would remain the same with earnings of a billion or more.


Note that anyone earning any amount over $457,600 pays that same percentage whether his income is one million or over a billion dollars.  While this may seem like a lot of money still in comparison to the percentage of their incomes which most taxpayers have to pay who are under the $450,000 benefit it can be a very much smaller percentage of their yearly incomes.  In the case of someone like the Koch Brothers, who are estimated to have at least a $100 billion each, it can be well under ten percent of their yearly incomes.


Mitt Romney, in 2012 when he was running for the presidency, released one year’s tax percentage.  It was 11 or 12%.  No one earning less than $400,000 a year pays that small a percentage of their income


If we look at the taxes in 1980, the last year of Jimmy Carter’s presidency, the percentage in income paid in income taxes were graduated up to an income of one million dollars.  The more one earned the higher the percentage he paid in income taxes.  At $100,000 the tax was 27.3%.  At $200,000 it was 33.1%.  At $500,000 it was 40%.  Up to $1,000,000 it was 44.6%.  And over $1,000,000 it was 47.9% of the yearly income.  The income tax became regressive on earnings well over the million dollar mark.  But it was still a fairer income tax than that of 2014.


From 1932 to 1935 the percentage of income taxes for those earning one million or more was 63%.  It rose to 94% from 1944 – 1945 and then gradually declined to 92% by 1952 – 1953.  By 2013 for those earning $450,000+ the rate of taxation became 39.6%.


In 1981 Ronald Reagan became President of the United States.  From that point on the maximum percentage seemed to flow toward 39.6% for those earning $457,600 or more.  This amount was fixed, under the guise of tax reform, during the Obama Administration.  The Republicans who then held a majority in the House and were able to freely filibuster in the Senate absolutely refused to go over that amount.  It was that or nothing.


With the oncoming 2016 election this issue hangs in the air again.  A Republican majority currently exists in both Houses of Congress.  If a Republican president is elected then the tax reform will be enacted for the upper few percent of earners in the country.  The rich will keep more of their incomes and the middle and lower classes will get far less than they currently have.  It will truly be Government of the Rich, for the Rich, and by the Rich.  All entitlement programs for the poor and general public will diminish considerably.


In fact in one of his speeches Jed Bush has promised to lower taxes for the upper few percentage of the earning population.  His justification is that this will increase employment in the U.S. because these are the people who create jobs.  Historically this has never happened.  But Bush Jr. presumes he knows best.


If, on the other hand, the Democrats were to win both Congress and the Presidency then we could see genuine reform of our income tax system.  But the probability is that 2016 will give the country another Democratic President and the House of Representatives will maintain, through gerrymandering, a Republican majority.  The Democrats will still not have a super-majority in the Senate, so it will again be open to filibustering.  There will still be no way for real tax reform.  However we can hope for miracles.

Distribution of U.S. federal taxes for 2000 as...

Distribution of U.S. federal taxes for 2000 as a percentage of income among the family income quintiles. Source: Department of the Treasury, Office of Tax Analysis Working Paper #85, “U.S. Treasury Distributional Methodology” by Julie-Anne Cronin (September 1999)- also available here (Photo credit: Wikipedia)

The Weiner Component #136 – Part 1: Thoughts About the 2016 Election – Effect Upon the Supreme Court

Ruth Bader Ginsburg, U.S. Supreme Court justice.

Ruth Bader Ginsburg, U.S. Supreme Court justice. (Photo credit: Wikipedia)

For a variety of reasons it is important whether a Republican or Democrat gets elected to the Presidency in 2017.   One institution that may be strongly affected is the Supreme Court, the third arm of our government.  Currently there are four liberal Justices appointed by Democratic presidents and five conservative ones appointed by Republican presidents in the Court.


The four liberal Justices are, in order of their age, at 2017 when the new President takes office: Associate Justice Ruth Bader Ginsburg (84), Associate Justice Stephen G. Breyer (79), Associate Justice Sonya Sotomayer (61), and Associate Justice Elena Kagan (57).  The five conservative Justices are: Associate Justice Antonin Scalia (81), Associate Justice Anthony M. Kennedy (81), Associate Justice Clarence Thomas (69), Associate Justice Samuel Alito (67), and Chief Justice John G, Roberts (62).  Both Justices Kennedy and Roberts have occasionally supported more liberal positions at different times but currently the overall cast of the Court is Conservative.


There is no retirement age.  Even though former Presidents like Franklin D. Roosevelt threatened to have such a law passed Supreme Court Judges serve for life.  They can, if they wish, retire with full pay; but many do not.


William H. Rehnquist, the former Chief Justice died while still on the court four weeks before his 81st birthday in September of 2005.  He had served eighteen years as Chief Justice and before that he was an Associate Justice on the Supreme Court for a number of years.


Sandra Day O’Connor, the first woman who was appointed to the Supreme Court by President Ronald Reagan, retired in 2006.  She retired because her husband was ill, diagnosed with Alzheimer’s disease; he died in 2009.  Her husband needed her and she wanted to spend more time with her three children and grandchildren.  Today she is 86 and still functioning in legal circles.


Associate Justice John Paul Stevens was born in 1920.  He was appointed by President Gerald Ford, a moderate Republican.   Stevens served on the Supreme Court from 1975 to 2010, thirty-five years and retired from the court at the age of ninety.  Toward the end of his career when he was considered a liberal judge he was asked if he still thought of himself as a Republican.  Stevens did not answer that question.


In the case of Gore vs. Bush, where the majority of votes had been nationally and in Florida for Gore, Stevens wrote a scathing dissent in that 2000 case where a 5 to 4 decision ended the troubled vote count and made George W. Bush president with a minority of both the national and troubled Florida vote.


Associate Justice Ruth Bader Ginsburg was born on March 3, 1933, shortly after Franklin D. Roosevelt came to office as President of the United States, during the depth of the Great Depression.  She was appointed to the Supreme Court by President Bill Clinton on August 10th 1993.  Despite two different bouts with cancer which she has overcome she seems currently in good health at the age of 82.  In 2012 she stated that she would like to serve four more years on the Court.  Now she seems ready for another four years.  I would suspect that the job itself keep her alert and functioning.


Both Justices Antonin Scalia and Anthony M. Kennedy were born in 1936 and both are 80 years of age.  Scalia tends to be a rigid conservative on all his cases and Kennedy has gone both ways in 5 to 4 decisions.


In 2016 the average age of judges on the Supreme Court will be 72¾ years old with the age limits going from 84 to 58.  The mean age tends to be toward the higher number.  This mean that of the nine judges eight could legitimately retire if they so desire during the next 4 year presidency.  Will they?  Probably not.  But through natural causes the country could lose one or more Justices of the Supreme Court.


The significance of this loss could determine the direction of Supreme Court decisions for the next decade or more.  The probability is that a Democratic President will appoint a liberal candidate to the Supreme Court while a Republican President would appoint a conservative one.  If the person to pass were to be Justice Ginsburg who will be 87 by the end of the next Presidential term, then a Republican President would change the balance of the Court to 6 to 3 in favor of the conservatives.  A Democratic President would maintain the current balance.  On the other hand if one of the two senior Republican appointees were to die or retire over the next four years then a Democratic President would appoint a liberal candidate and the current balance would swing to 5 to 4 in favor of a less rigid interpretation of the Constitution.


If for no other reason than for the future of the Supreme Court, the choice of a president in 2016 is all important.  The majority party in the United States is the Democratic one.  Yet, through gerrymandering, suppression of the vote, endless financing, (since a relatively recent Supreme Court decision has made the endless spending of money in elections a first Amendment right by individuals,) and vociferously denouncing the Democrats, the Republicans have made themselves appear more important.  It struck me as blatantly unfair that the Democrats cast a million and a quarter more votes for their House of Representative candidates in the 2014 Midterm but through the 2011 gerrymandering election boundaries the Republicans set they ended up with the majority of Candidates in the House of Representatives.


Depending upon your political position the outcome of the 2016 Presidential Election is all important.  The potential Democratic candidates are all challenging the 2010 Citizen’s United Case that made almost unlimited political contributions an extension of the First Amendment’s free speech clause and the 2014 McCutcheon v. Federal Election Commission Case which further extended this right.  The probability is that the next elected president will appoint one or more new replacement justices to the Supreme Court.  Whether the next President is liberal or conservative could very well determine the direction in which this country could go for the next decade or more.

English: The United States Supreme Court, the ...

English: The United States Supreme Court, the highest court in the United States, in 2010. Top row (left to right): Associate Justice Sonia Sotomayor, Associate Justice Stephen G. Breyer, Associate Justice Samuel A. Alito, and Associate Justice Elena Kagan. Bottom row (left to right): Associate Justice Clarence Thomas, Associate Justice Antonin Scalia, Chief Justice John G. Roberts, Associate Justice Anthony Kennedy, and Associate Justice Ruth Bader Ginsburg. (Photo credit: Wikipedia)

The Weiner Component #135 – The Republicans & the First Primary Debate

English: Seal of the President of the United S...

English: Seal of the President of the United States Español: Escudo del Presidente de los Estados Unidos Македонски: Печат на Претседателот на Соединетите Американски Држави. (Photo credit: Wikipedia)

Recently the first Primary Republican Debate of the ten leading Republican potential candidates in the upcoming 2016 Presidential Election ended.


speaking at CPAC in Washington D.C. on Februar...

It was supposed to consist of the ten most popular Republican candidates out of the 17 attempting to run for the presidency.  The top ten were chosen based upon the last five national poles.  But the fifth pole tied the percentage of the 10th and 11th candidates, making the number chosen eleven.  Consequently Fox News, who ran the debate, skipped the 5th pole and used a 6th pole that did not have a tie in the last place and ended up with ten potential candidates.


Fox News, the official new arm of the Republican Party, devised the format of the debate that was not really a debate.  It consisted of questions addressed to specifically candidates.  And these questions were not always friendly, particularly many of those aimed at Donald Trump who was the most popular of all the candidates.


Probably because of intense outside pressure, Fox held a separate session for the losing or less popular seven candidates earlier in the day.  They treated them obliquely with contempt, using a large empty stadium and calling them by their first names as the Fox commentators asked them questions.  It was going along with popular pressure in a put-down fashion.


It should also be noted that Fox News sold the candidates a lot of advertising space for the candidates to make themselves popular among national Republicans.  Because Republicans watch Fox News nationally this was the only way the candidates could sell themselves to the general Republican public.  Fox devised the method and certainly profited from it.  Interestingly the one exception here was Donald Trump.  He apparently was known to everybody and needed no additional publicity.


The main event in the evening, which was probably watched by more people than any other broadcast in the history of television was hardly a debate.  It featured three of Fox’s leading commentators asking specific questions and quickly moving on to another participant with another question.  All the speakers seemed well prepared and their answers, even though generally dealing with the topic of the question, did not really answer it.  There was only one  instance of a follow-up question and the answer given still did not reply to that specific question.


The leading Republican candidate for the presidency in terms of being the most popular among Republicans was Donald Trump.  I suspect the overall assumption among the millions of TV watchers was that he would blow his cool at some point and verbally erupt at someone or something.    The closest he came to that was with one of the Fox commentators, Megan Kelly, when she asked him about some of the negative statements he has made about woman.


The candidates attempted to define themselves and denounce President Obama and the Democratic Party.  President Obama was denounced as a week and failed president who essentially did everything wrong and bowed to the Iranians in giving them everything they wanted in order to become the leader of terrorism around the world, giving Iran the money to finance this process and allowing them to develop in order to become an atomic bomb nation.  And all these positive statements were made, I got the impression, without even bothering to read a draft of the 100 plus page agreement.  Most of these candidates practically or directly guaranteed we would go to war with Iran if one of them was elected.


It seemed as though the forthcoming election was all about them, the individual Republican candidates, and not about the disaster they could bring about if elected.  Most practically stated that they would straighten out all the world’s problems.  Their implied method was that they would do this by the use of military force if necessary.  They seemed to also not know that the United States is one of six nations that negotiated the treaty with Iran over a two year period, that if the U.S. rejects the agreement it will likely be the only one of the six nations on the United Nations Security Council to do so.


Basically what was heard in the debate was demagoguery.  They, the Republicans, have taken no responsibility for any of their past actions and blame everything on President Obama and the Democrats.  My response to all this is: Get real!


Mostly by implication and sometimes directly, the ten hopeful Republican candidates for the 2016 Presidential Race blamed President Obama for virtually everything wrong in the society today..  It was as though the Republicans have done nothing to bring about the problems or conditions that exist today.  They would do away with Affordable Health Care (Obamacare) and the Dodd-Frank banking reforms that came about after the 2008 economic crash, or anything else.  I suspect if the weather was inclement it would have been Obama’s fault.


The Dodd-Frank Banking Reform Law was a washed down version (Washed down because of intense bank lobbying.) of what a finance committee, headed by Paul Volker, a former Federal Reserve Chairman, had proposed in order to do away with the causes that had brought about the economic disaster of 2008 which could have sent the nation into a depression far deeper than the Great Depression of 1929.  Today many banking executives feel economically inhibited by some of the few things they can no longer legally do and would like a totally free hand again.


While most of the participants in the so-called debate stated that they would do away with the Affordable Health Car Law, which incidentally has greatly reduced the rate of medical costs by slowing down the rate of medical cost increases, only one of them, Donald Trump, seemed to have a plan for its replacement.  He would, he said, make the insurance companies for its plan members function on a national instead of state level and for those who could not afford to buy insurance he implied obliquely that he would have the government provide a single payer plan for them.  Would he be able to do this if elected?  An interesting question.  Especially if Congress retained its Republican majorities in both Houses.


Of the faults of Obama as a failed president, one by implication was the National Debt.  After all aren’t the Republicans the party that espouses a balanced budget?


Since 1980, when Ronald Reagan was elected to the presidency, the Republicans controlled the presidency for 20 years and the Democrats for 15.  The country had Reagan for 8 years, Daddy Bush for 4 years, and Bush Jr. for 8 years.  The two Democratic presidents were Clinton and Obama, each for 8 years.


Reagan started with a National Debt of $1 trillion and raised it to $2.8 trillion, almost tripling it.  Ever since President John F. Kennedy had lowered taxes during his administration and the government had then collected far more in revenue than it had before the decrease in taxes other presidents had unsuccessfully attempted to do the same thing.  Reagan cut taxes, especially for the well-to-do and upped government spending, particularly military spending.  He believed, wrongly, that the Soviet Union was far ahead of us militarily and that we had to catch up and get ahead.  He introduced the concept of “star wars” and other science fiction type concepts which our scientists were supposed to develop.


What President Reagan inadvertently did was to force the U.S.S.R. to militarily keep up with the United States and that brought them to the edge of bankruptcy and to the fall of the Soviet Union.


But what Reagan did for the United States was to almost triple the National Debt to $2.8 trillion.   George H.W. Bush with his inept diplomacy actually encouraged Iraq’s Saddam Hussein to invade Kuwait and then he organized operation Desert Storm to liberate them.  This and his other actions cost the U.S. Government an additional $1.55 trillion.  Bush Jr. by engaging in two military operations (wars), one totally unnecessary, added another $6.1 trillion to the National Debt bringing it to $11.8 trillion.  And at the same time President George W. Bush also lowered taxes, particularly for the rich.  In fact today anyone earning over $400,000 a year pays no taxes on any amount over $400,000.  Welfare for the very well-to-do.


What has happened is that taxes for the upper 1% has been gradually cut in half or more and the ever increasing deficit has been used to force cuts in services for the middle class and the poor while the middle class with gradual inflation has found its income tax bill increasing.  Currently the Sequester, a law that automatically makes cuts across the board yearly unless Congress passes a bill stopping a part of it like certain cuts to the military for that year is enacted, is slowly decreasing funding for most programs including the military that is now at the lowest point of readiness than it has been for many years.  So far these cuts, which the Republicans insist on having, have been largely invisible.  At some time, probably around the end of this current year or at the most next year, many of them will become blatantly visible and the blame game will begin between the two political parties, with the Republicans, who have brought it about, screaming the loudest.


Under President Bill Clinton the deficit actually decreased slightly.  President Barak Obama inherited a heavy recession from Bush Jr. and had to spend quite a bit to avert a greater economic decline than the Great Depression. Among other things he bailed out the banks, who by their irresponsible behavior had brought this negative economic condition about, and the auto industry.  And, with phenomenal negative interference from 2011 on by the Republican majority in the House of Representatives, President Obama has brought the economy back from the Republican induced total disaster.  In this process he has increased the deficit but he may end his last year in office with a surplus paying down a small percentage of the Republican induced debt.


Taken together the three Republican presidents over their 20 year tenure raised the National Debt 13.5 trillion dollars and left the nation on the edge of a greater depression than that of 1929 which persisted for over ten years.  Electing a Republican president will probably mean another war in the Middle East with Iran.  That will make three separate wars being fought there and the national deficit will shoot up even more.


In the various questions and answers discussed during the debate, with one exception, the economy was not mentioned.  Jed Bush stated that he can achieve 4% economic growth over his 8 year tenure as President and create 19 million new jobs.  He would do this by simplifying the tax code, repealing the 2010 Health Care Law, reducing regulations on the oil and gas industries and putting people in the country illegally on the legal jobs tax rolls.  While Climate change was not mentioned Jed Bush’s proposal would worsen the conditions that bring it about.  Student loan debt and affordable college were also not mentioned.  Gun violence in the United States was also ignored.


In terms of the War on Women, Scott Walker was against all abortions: rape, incest, and even where birth could terminate the life of the mother.  He felt that the medical profession, in every case, could save her life.  Mike Huckabee wants a Constitutional Amendment giving the fetus full protection before the law from conception on.  Apparently the question of choice for women is nonexistent.  Marco Rubio wants no exceptions for abortions in cases of rape or incest.  These men know absolutely what is right for all women; but they will not have the government share in the responsibility for raising or providing for any of these women or children.


The solution to illegal immigration was Donald Trump’s plan to build a wall between Mexico and the United States and have Mexico pay for it.  Apparently he doesn’t understand that a goodly percent of illegals come from all over the world including Canada.  Technically he would need fences on all areas where the United States borders on another country as well as a careful check upon all visitors to the country and how long they are legally allowed to stay in the U.S.


Among the ten candidates none stood out as a dynamic leader.  If anything some of their comments tended to insult a large part of their audience.  Donald Trump kept rationalizing about the disadvantages of being “politically correct,” as if it were some sort of disease.  He justified his verbal abuse of women by naming one.


As I’ve stated, what was most significant was what was not mentioned, global warming was one example.  Bush, if he were to become president, could do away with the EPA (Environmental Protection Agency).  That could create jobs because adding the additional pollution to the United States and the world would probably create a multitude of new jobs.


What came to my mind as I watched the performance was the phrase “Myth & Reality?”  These people were prefabricating and defining conditions that did not exist.  They were creating a situation where verbally everyone would live “live happily ever after” if one of them were elected to the presidency.  Well some people just like them had been elected to the presidency in the past and many people, both Americans and those we were fighting, died or were maimed for life and the National Debt rose like a hot-air balloon.  What we must remember is that they are pandering to the extreme right of the Republican Party in order to be chosen as the Republican candidate in the primary elections.  Whoever gets chosen will still have to defeat the Democratic candidate in the general election.  Are they purposely lying or stating nonsense?  Or do they actually believe the myths they are espousing?  That’s an interesting question.


In any case what is needed is reality.  If that so-called debate is the best they can do then it becomes everyone’s duty to vote against all or any of those self-important candidates, particularly if they want to see their version of changes within our society.



The Weiner Component #134 – China Devaluating the Yuan

Initially it is important to keep in mind that China today is the second greatest exporter and importer, coming after the United States, in the world.  She is a highly developed, mature, industrial nation.  She is no longer an aspiring Third World nation in the process of catching up with the rest of the world.  From June of 2014 to relatively recently the international value of her currency, the yuan, rose 25%.  For China to think or act like a Third World nation is idiocy.


However the Communist rulers of China and their economists have been very disturbed by their recent Gross Domestic Product (GDP) which has decreased from an average of about 8% per year to 2% or lower.  Since the rulers of China are more absolute than those in most other industrial nations the solution they agreed upon has been to devaluate their currency.  This process was begun on Tuesday, August 11th 2015.


When the news of this currency decrease hit the United States and other industrial nations the overall effect for their stock markets was to drop significantly, in the U.S. well over 200 points.  The U.S. DOW consists of the combined value of 30 chosen stocks.  Each point on the DOW is the equivalent of one dollar.  Their combined value dropped well over $200.  On Thursday, August 20th the Stock Market in the U.S. dropped again, this time 358.04 points bring it to its lowest level in a long time   Across Europe and Asia other countries Stock Markets also fell significantly.  On Friday, the 21st there was still another significant fall of an additional 530 points in the U.S. and additional negative results in other industrial nations around the world.


The only stocks in danger of seriously dropping in real value were those for companies that are based in China or those multinational companies that sell large amounts of goods to China.  And these particular stocks will later probably increase far above their initial value when the yuan eventually reaches a new state of equilibrium with all the other currencies.


For Apple and other companies who do quite a bit of their manufacturing in China, their profits should increase significantly in the short run because their labor costs will drop rapidly as the yuan is devaluated against their currencies.  The price of their goods sold in China will rise and that could affect their sales there.   Of course that will eventually reach a new equilibrium as wages catch up to the inflation in China.


If the leaders of China are successful in lowering the value of the yuan then Chinese goods and services shipped to other countries will be considerably less expensive and there will be a significant increase in their sales, overseas sales presumably increasing their GDP to 8% or better.  However many other Asian country seem to be following China’s lead.  The results should be interesting and confusing.


Three days after China began this policy she had dropped the value of the Yuan 1.9%.  The next day she devaluated it another 1.6%.  Will she be able to continue this process?  Probably not at that rate of decline.  Wanting to do something and being able to do it are two entirely different things.  The control the Chinese leaders would like to have over their economy does not really exist.  It is an erratic force.  It is almost like driving a car at high speed on an American freeway.  One can constantly go around slower vehicles easily if they continue at their set speed but one cannot predict when the speed of any of these automobiles change.  Sooner or later one or more accidents will occur.


I remember as a youngster learning, in elementary and high school, about the discovery of the New World in the 16th Century and the phenomenal amount of gold and silver brought to Europe at that time over the century.  It was a heroic period.  What was never taught was the fact that all this precious metal in the form of money, gold and silver coins, entering the economies of Spain and the other European nations rapidly brought about a 90 year period of inflation while wages remain largely fixed.  The general population of ordinary citizens underwent great hardship for the duration of that century.

The Chinese government could be doing the same thing if they can successfully devaluate their currency sufficiently.


For a nation to decrease the value of its currency significantly against that of other nations is a fairly complicated process.  The government economists and the leaders of China apparently made that decision in order to force an increase in national productivity, to bring the GDP back up to where it has been historically.  Their current rate of economic growth to them denoted the beginnings of a recession.  They seem to feel an intense need for more rapid expansion.  Reducing the value of their currency against the fixed general values of all other currencies, they believe, would bring about the desired outcome.


First of it is important to remember that money/currency has no real intrinsic value.  Each nation prints its own and that its money is only usable within its borders.  Specific monies are simply a means of exchange within the boundaries of each specific nation.  Its actual value is determined by the credit rating of each particular country.  And internationally the value of each currency continually oscillates slightly against the value of all the other currencies.


On July 1-22, 1944 toward the end of World War II, 730 delegates from the 44 Allied Nations met at Bretton Woods, New Hampshire, in the United States to establish the rules for commercial and financial relations among the world’s major industrial nations.  It was the first instance of a fully negotiated monetary system intended to govern monetary relations among independent nations.  Among other things they set the standards for all national currencies.  These standards were based upon the value of the U.S. dollar.  The dollar is still the base standard today.


There are three possible ways for China to devaluate the yuan.  The first is to substantially increase the money supply within its own nation.  By over-increasing the National Cash Flow there is more money available than there are goods and services.  Here the laws of Demand and Supply apply.  People, in order to get what they need and want, will bid up the prices of virtually everything and the country goes into an inflationary spiral.  All prices rise quickly except wages and the value of the yuan now buys less.  Internationally the value of the Yuan will also slowly plummet.  This solution brings a lot of hardship to the people of the country initialing this move.


A second method is for the nation to rapidly increase its purchase of raw materials and goods from other nations.  Again the laws of Supply and Demand apply.  If much more materials are suddenly demanded/purchased than are ordinarily bought in regular trade then the prices of these items will become more expensive and prices will increase rapidly.  In this fashion the money paying for these raw materials and goods decreases in value.  This is the slowest of all methods of devaluation.


The third and probably most important method for devaluation is direct currency exchange.  Each individual nation has one or more banking houses, some of which are directly controlled by the government of the particular nation.  These financial institutions trade currencies with one another, regularly making large profit from slight oscillations in the value of their monies.  All currencies tend to rise and fall the equivalent of pennies in value continually.  This is caused by the laws of Supply and Demand.  If one bank buys several million in a currency that has dropped a half penny in the morning from another country and sells it for an additional half penny that evening or the next day then the bank has earned several million half pennies.  All in the period of one day.  Of course all these banks function mainly to exchange currencies for people visiting other countries or doing business between nations.  And all these exchanges are done for fees.


It should also be noted that the value of the yuan had been slowly rising at the rate of about 1% a month for the prior year and any nation that had an excess of yuans gradually reaped a goodly profit.


If a country, like China for example, wants to cheapen the value of its currency then it sells an excess amount of yuans to currency dealers of other nations.  As the excess over what is needed for an ordinary exchange of goods and services between different countries grows then the value decreases and continues doing so until the yuan is reduced in international value to the level the Chinese government wants it to be.


Of course the process may take days or weeks or even months.  And as it goes on there may be potential chaos in one or more national stock markets.  This seems to be happening at present.  These operate upon the perceptions of many of the stockholders.  Many of which seem to function totally upon rumor or blind fear.


As of Monday, August 17th 2015 there had been two devaluations by the People’s Bank of China (PBOC).  The first was 1.9% against the U.S. dollar and the second was for 1.6%, making a total of 3.5%.   Will there be further currency devaluations?  The answer is possibly.  What will the result be?  Further chaos in financial markets and greater hardship for a goodly percentage of the Chinese population.


As a note of irony one of China’s current problems is that the yuan appreciated in value by 12% since June 2014.  If she had quietly devaluated the yuan by a ¼% on a monthly bases she might well have achieved the same devaluation without any other nation noticing what she was doing.   It is also worth noting that a Chinese company looking for a source of cheap labor is currently investing the equivalent of five billion dollars in a facility in India.  It seems that their profits would be greater by producing their goods in India rather than in China.  In the United States a Chinese entrepreneur bought a bankrupt auto parts company and he intends to produce all electric automobiles in his new company located on the West Coast, in Nevada. His comment was that labor was far more expensive but the workers are far more sophisticated.  He intends to sell his product in the Western United States.


China is no longer a country filled with cheap labor; it has become a modern industrial country; in fact, as stated earlier, China has the second largest economy in the world after the United States.  In the U.S. a 2% GDP is not overly exciting but it can be acceptable.  It still denotes economic growth.  China may have to make the same adjustments that other industrial nations have made and live with a far lower GDP.   She cannot recreate her past.


The world’s stock markets have gone essentially into a state of disaster or terror from China’s 3 ½% devaluation of the yuan.  What does this tell us about the sanity of the free market in stock sales?   As of Wednesday, August 25th 2015 the stock market in the U.S. reversed its downward spiral which had been well over 1,000 points and began to rise again.   This did not happen in Asian stock markets. On Thursday the U.S. rose again significantly. On Friday the U.S. stock market seemed to level off.


What will the following week bring?  An interesting question.  If the Chinese government and economists do nothing then the stock markets, including their own should continue to rise.  If on the other hand the Chinese government does something dramatic then there’s no telling what may happen.  It has been announced that they will lower their interest rate.

The Weiner Component #133 – The Free Market & the Cost of Gasoline

English: A typical Valero gas station, in Moun...

English: A typical Valero gas station, in Mountain View. Photographed by user Coolcaesar on August 23, 2005. Category:Images of California (Photo credit: Wikipedia)

Valero Energy Corporation

Valero Energy Corporation (Photo credit: Wikipedia)

Not many weeks ago, on July 31st 2015, there was a short article in the Los Angeles Times entitled “Valero profit rises on high gas prices.  It stated that California’s sky-high gasoline prices brought about a record high second quarter profit for refiner Valero Energy Corporation, that operating income from its two California refineries had soared to $295 million for the quarter which ended June 30 or to more than eleven times more than the $24 million earned in that quarter a year earlier.  Valero had posted a second quarter profit net income of $14 billion up from $651 million for that quarter a year earlier.

About a week earlier, on July 26th there was a one paragraph blurb in the same newspaper: “Record profits at refineries – The surge in California’s gasoline prices this year, coming as oil prices have fallen and refining costs have remained stable, has helped refineries collect record gross profits on each gallon of gasoline – as much as $1.17 a gallon in May.  That compares with a more typical gross profit (equal to refinery costs plus profit) of 49 cents a gallon in recent years, state data show.”

With Exxon Mobil’s Torrance refinery operating at less than 20% of its capacity other refineries in the state have seen a dramatic increase in their profits.  The capacity of the Torrance refinery is ten percent of the state’s total and twenty percent of Southern California’s total refined oil.  The Torrance refinery had an explosion in February of this year and probably will not return to full service until the end of the year.  It seems that one or another refinery in California is always partly or completely off line and there always seems to be a shortage of gasoline in the state.  Presumably these problems seem to continually raise the cost of gasoline at the pump to about one dollar or to one dollar and fifty cents higher that in the rest of the country.  We are supposed to be living in a free market economy where the consumer gets the best product at the best price.  Is this true?

At the end of July of 2015 the price of gasoline at the pump had dropped to slightly less than four dollars a gallon while the price of crude oil had gone down to under fifty dollars a barrel.  About a year ago a barrel of crude oil was one hundred dollars or more.  There are generally 42 gallons of refined gasoline that comes from one barrel of crude oil.  At $4 a gallon that means that $168 is the amount made from each barrel of oil.  That is a profit of over 66 percent on each barrel of crude oil.   Valero has its own gasoline stations and sells its gasoline retail at the going price.


The Free Market as envisioned by the Scottish economist, Adam Smith, in his 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations, was a reaction to the accepted economic system of the day.  At that time mercantilism was considered a proper approach to economics.  That theory stated that the wealth of a nation consisted of how much gold that country possessed.  The more gold it had, the richer it was.  And these economic systems then were usually controlled by the kings.  Smith’s theory brought about the modern development of capitalism and the market economy.

Briefly and simply: The nation’s true wealth is based upon the productivity of the country.  This is all the goods and services produced within a given time, a fiscal year expressed in the currency of the nation, which was mainly gold.  Money, at that time, being precious metals, mainly in the form of gold coins.  The value of goods and services, that is, all the productivity would be exchanged for their specific value in precious metals.  The value of the specific goods and services would be determined by both the levels of skill of the population, the extent of natural resources that are available or can be acquired by the particular nation, and what other people were willing to pay for the product or service.

In terms of what is going to be produced Smith’s theory of production was based upon the concept of supply and demand.  Entrepreneurs would supply certain goods and services in return for the profit they could make by doing so.  This was Smith’s “invisible hand,”  the profit motive which caused the system to operate.  If the item or service was highly desired then the price people were willing to pay for the item would rise because the supply was below the level of demand.  The higher price, in turn, would bring more producers into the field greatly increasing the supply of the particular item.  As the amount of the item increased beyond the demand the price would drop.  It could actually drop below the cost of its general production.  This would force the less efficient producers out of business and the price, as the supply dropped below the demand, would rise again.  Eventually a state of equilibrium would be reached where the supply would equal the demand.  With a large number of product producers it would be difficult to maintain the equilibrium and the price would continually oscillate.

The consumers, on the other hand, would attempt to get the goods or services at the lowest price possible.  Presumably the lower the price the greater the demand.  This would be their part of the “invisible hand.”  Both sides would be motivated by profit and cost.  There would be a continual process of exchange going on that would allow the consumers to eventually have most of their needs met by getting the goods and services they need at the best possible price and at the most efficient level of production.  Both the successful entrepreneur and the consumer would emerge positively from this exchange.  The inefficient entrepreneurs would have gone bankrupt.

To work properly this system requires a very large number of producers so that the consumers would have a large variety of choices as to how to spend their money and acquire the various products they require.  Today outside of regional agriculture, which produces perishable food products, and the stock market, which can work on rumors or general assumptions that may or may not have any relationship to reality, the principles of supply and demand only function in a very general way or not at all.

The reason for this is the fact that the number of producers of goods and services is limited.  Product manufacture is expensive, setting it up requires large amounts of money.  Consequently the factory system was developed from the 19th Century on.  Having limited producers or factory owners gave them more control over price than the consumer had over demand or price.  This, in turn led to monopolies toward the end of the 19th Century.  These gradually fell under partial control from the governments of the countries in which they existed.  Outside of the two examples of the free market has never really existed.

It is also important to realize that monopolies are not just giant concerns like Standard Oil was at the beginning of the 20th Century, they can also be regional or contained within a small city.  If a city contains only one hospital or only one supermarket, or, for that matter, one anything that provides some product or service, then that is a monopoly and it can charge virtually any amount for the good or service.  Of course it can’t be so high that it will force the consumers to go to other areas to acquire the good or service, but the price could be higher than it would cost in other places.  And that, it seems, is the situation with gasoline in the state of California.  To a slightly lesser extent it is the situation with gasoline throughout the United States.

Presumably the goods and services, the productivity of the country would constitute the wealth of the nation and the people of the nation would determine by their demands for the various products of what that wealth would consist.  Is this theory true?  The answer is obviously sort-of.

The products needed for a society to exist can be rated as necessary, pleasurable, and extravagant.  Necessary services and products are what is needed for life: food, clothing, a proper shelter, in most areas of the country an automobile for necessary transportation.  Anything that is required to maintain a functional standard of living would fit into this category.  Pleasurable items would be raising the necessary items to a higher level of comfort.  The choice of foods would be much more varied and expensive, clothing and housing could be carried to the level of ostentation.  The automobile would be far more fancy and expensive and there would probably be additional vehicles for every member of the family.  The extravagant level would mean that he or she could afford to have anything that money could buy.  All this would be bound to levels of income or in the case of many executives to their level of compensation.


In the United States during the period after the Civil War (1865) to shortly after the turn of the 20th Century, 1917, when the U.S. entered the Great War (W.W.I), the country underwent a rapid movement into industrialization.  The railroads were extended westward from shore to shore, the westward movement occurred, the country changed from being mostly a rural nation to an urban centered one, and the factory system developed and became universal.  It was during this time that the country moved from being a nation of multitudes of small concerns to oligopolies and monopolies.  Virtually every major industry had become a monopoly or oligopoly.  John D. Rockefeller, the owner of Standard Oil, had a reputation of refining not only oil but also many of the state legislatures and even parts of the Federal Government.

It was at this time in 1913 that the 17th Amendment to the Constitution was passed bringing about the direct election of U.S. Senators by the citizens of each state.  Prior to that time the Constitution had the Senators directly elected by the State Legislatures.  The Senate was originally set up as the direct agent of the individual states and represented the states.  What had happened was that by the late 19th Century the Senators had become agents of the monopolies and oligopolies elected by bribed legislatures to represent the companies to which they were originally and still operated as their lawyers.  The monopolies and oligopolies had subverted many of the state legislatures through bribery.  The 17th Amendment was a reform amendment by the Progressive Movement to return the government of the United States to the People.

The Sherman Anti-Trust Act of 1890 went into operation around the turn of the century when both the Progressive Movement and Teddy Roosevelt became President after the assassination of former President William McKinley.  During his term in office Roosevelt became known as a Trust Buster.  The Reform Movement would end with the emergence of World War I in 1914 and would not begin again slowly with the Great Depression of 1929.  It would emerge strongly with the Administration of Franklin D. Roosevelt from 1933 on.  The Great Depression would not end completely until about 1940 with the emergence of World War II.

Since 1945, the end of World War II, the United States has gone continually in and out of social reform.  The Republicans generally have represented big business and the Democrats generally have pushed social reform.  Currently many large companies (corporations today) have been going through mergers and getting bigger.  Even though the Federal Government watches and attempts to keep monopolies from coming into being we seem to be moving in that direction with, it seems, an ever-growing tendency toward companies that are “too big to fail.”


In the United States and in many other industrial countries of the world the individual owned automobile has become a necessity for general existence.  The distances are too great to walk from one place to another.  The children are taken to school and brought home by car or bus; general shopping requires an automobile; going to and coming home from work requires an automobile.  Virtually most of the general population requires a car.  And, of course, the key to having a car is availability and price of gasoline (oil).  As an example, I have spent my entire working life driving to and from work.

During my lifetime the cost of gasoline has gone up from well under a dollar a gallon to a high of five dollars a gallon.  It currently dropped from over four dollars a gallon to  under three dollars a gallon.  The price of o barrel of oil is currently under $50 a barrel and going down.  If the agreement with Iran is ratified and becomes a treaty there will be a major increase in the world’s oil supply.

In the state of California just enough oil is refined to just meet the demand.  If one of the refineries has to limit its production for any reason then there is a shortage and the price of gasoline and oil profits goes up.  If this isn’t price gouging then I don’t know what is.  Either we need more refineries in Southern California or enough gasoline storage so that the price can follow the supply.  Perhaps the State or Federal Government needs to set up its own storage and supply facilities or/and its own refinery.  After all, the biggest employer in the country is the government.  They sell water and electricity in many municipalities directly to the consumers.  The Federal Government also run agencies like the Tennessee Valley Authority.  If the so called Free Market gouges consumers for their own profit why can’t the Government equally provide the needed goods or services at a reasonable price?

The Weiner Component #132 – The Iranian Nuclear Deal

During the second week of July 2015, slightly past the set deadline for the negotiations between Iran and P5+1 to end, the two sides finally came to terms on a potential agreement that now has to be sanctioned by all the countries involved in the settlement.

After a period of about two years of negotiations between P5+1 (The five permanent members of the United Nations plus Germany,) and Iran a potential treaty has emerged that will allow Iran to develop and utilize atomic energy to produce essentially pollution free energy in its country but stop her from being able to produce an atomic bomb.

The nations that have been directly negotiating with Iran are China, Russia, the United Kingdom, France, and the United States. They all have permanent seats on the Security Council.  The Plus 1 is Germany.  These nations have been negotiating with Iran to keep her from developing her own atomic bomb, which Iran has continually stated she is not doing.  But Iran has continually refused to allow inspections of all her possible sites.  The fear is apparently that if Iran succeeds this will start the other Middle East nations doing the same thing and an arms race will result.

In July of 2006 China, Russia, and the United States joined with the other permanent members of the Security Council to expand harsh sanctions on Iran.


Under the terms of the agreement Iran will get rid of practically all its centrifuges that are used to enrich lower grade uranium and all of her enriched uranium and all regions within the entire country will be open for inspection.  The agreement is over one hundred pages, detailing every possibility.  As the treaty terms are carried out the sanctions by all these nations will be gradually lifted.  If at any point or at any time Iran backs off its agreement the sanctions will be immediately re-imposed.  This treaty is far more extensive than any previously agreement between nations during peacetime.

Among the numerous sanctions that will be gradually removed there is one that has been mentioned numerous times and that cannot be rescinded and that is the assorted Iranian government bank accounts that were frozen by the various industrial countries which Iran had originally dealt with.   On November 4, 1979 the Iranian Hostage Crisis began.  Sixty-six American diplomats and citizens were taken as hostages by Iranian students from the American Embassy in that country and held for four hundred forty-four days.  Some were released earlier but fifty-two were held until January 20, 1981.

Oil exports from Iran to the U.S. ended November 12, 1979.  President Jimmy Carter issued Executive Order #12170 which froze all Iranian assets in the U.S. on November 14, 1979 by the office of Foreign Assets Control.  It was eight billion dollars.  This money was in the hands of assorted banks and has gained interest since that time. Later the Iranian financial assets of many United Nation members were also frozen. According to Western financial experts the amount today is at least 100 billion dollars. The Iranian Finance Minister places it at 28 billion dollars.  Either way this much money could noticeably raise the standard of living of all Iranian citizens.  It could also be used to shore-up Hezbollah and other Shiite movements in the Middle East.

Another advantage, in this case to countries of the Western World, is that Iran rests upon ¼ of the world’s oil deposits. This resource would then be available to all the countries that had imposed sanctions upon Iran lowering the present price of oil that is currently under $50 dollars a barrel.  This could substantially reduce the price of gasoline in all the western industrial nations and upset a number of bank executives in institutions where the money has been stored.


Israel’s Prime Minister, Benjamin Netanyahu, has opposed this treaty since its inception, calling it a bad deal.  In fact, well before it was completed, with an invitation from the United States Speaker of the House of Representatives, John Boehner, he stated so to a joint session of Congress.  He has, since the treaty has been agreed upon, reiterated this position, saying that the deal will enable Iran to develop its own atomic weapon.

Currently President Barak Obama has diplomats from the State Department in Israel reassuring Netanyahu that even with the treaty the United States is a closer ally of Israel than ever.  Not everyone in Israel supports their Prime Minister’s position.  I get the impression that Netanyahu would like to see Iran at war, preferably with the U.S., and certainly not with Israel.  And in this way, see her ability to produce an atomic bomb totally destroyed. Is his position realistic? Certainly not in the long run.

Many Republicans have vociferously denounced the treaty without reading it as soon as its completion was announced.  In fact many of them had done so well before it was completed.  Scott Walker, the Republican 2016 presidential candidate from Wisconsin, stated in one of his primary speeches that he is willing to go to war with Iran as soon as he becomes president.  The House of Representatives Republicans have threatened to pass a bill denouncing and invalidating the treaty.  Interestingly the Constitution only gives the Senate the “advice and consent” powers.  With the House of Representatives involved they would be stretching the Constitution and changing its definition of the government, changing the organization of the Federal Government by taking over a good percentage of the executive powers and making future presidents ceremonial figures.  President Obama stated that if this were done and the bill was passed in Congress he would veto it.  The Republicans do not have enough of a majority in either the House or Senate to override a veto and even if they did the issue would go before the Supreme Court and they would be forced to declare the law unconstitutional.

It should also be remembered that young Senator Tom Cotton, a Tea Party Republican who was elected from the state of Arkansas in 2014, and whose name sounds like that of a Disney character in a full length cartoon, wrote a letter to Iran’s Ayatollah Khamenei, that was also signed by 46 other Republican Senators, denouncing the negotiations and saying any settlement would cease to exist once President Obama’s term ended in 2016.  Lately he has stated that the Secretary of State, John Kerry, sounds like Pontius Pilot.

Ted Cruz, who is currently not ranking very high in the national poles as a potential presidential candidate in 2016, has stated on Tuesday, July 27, 2015, to reporters in Washington, D.C. that “millions of Americans will be murdered by radical zealots” if the treaty is approved.  He also laid out a doomsday prediction that if Iran acquires an atomic bomb it will drop it over Tel Aviv. It seems that he feels he can clearly predict the future without any real evidence.  It also seems that he has not read the treaty which according to President Obama will hamstrung Iran’s nuclear ability to produce an atomic bomb.

And by not signing the treaty the United States would be accelerating Iran’s ability to make a bomb.  Also we have no control over the behavior of the other five nations that were negotiating with Iran and the probability is that some or all of them would go along with the treaty. The remaining sanctions would then be partial and frozen funds being held in these countries would then be released. There is also the possibility that the rigid boundaries imposed by this treaty would be relaxed if P5+1 is broken up.  This could place Iran fairly close to developing its own atomic bomb.

Mike Huckabee, the former pastor, former Republican governor of Arkansas, former Fox News anchor, and former presidential candidate, is again running for the presidency in 2016. Saturday, June 26, 2015, Huckabee stated in an interview with a conservative news outlet that the nuclear agreement would be a bad deal for Israel and will “take the Israelis and march them to the door of the oven.”  After facing intense criticism for this statement Huckabee refused to apologize for this remark.  He further stated, “This president’s policy is the most reckless in American history.  It is so naïve that he would trust the Iranians.  By doing so, he will take the Israelis and march them to the door of the oven  This is the most idiotic thing, this Iran deal.”  At a later date Huckabee the 2016 Presidential candidate stated that the Iranians cannot be trusted to ever carry out an agreement. He implied that they would never carry out any treaty.  I suspect that Mr. Huckabee would rather go to war with them.

Perhaps the greatest charlatan of the protesting Republicans is Donald Trump, whose father probable named him after his favorite Disney character.  He has said that when he becomes president he is going to beat-up the world so that every nation and group within those nations will do what he, President Donald Trump, wants them to do.  He has stated, among many other bits of idiocy that he feels sorry for ISS because of what he is going to do to them.  Trump called the Iran deal “terrible,” on Tuesday, July 27, 2015.  And he probably came to this conclusion without even reading the terms of the treaty.  After all, it is over 100 pages long.  He also said the President negotiated the agreement “from desperation.”  It’s amazing how much innate knowledge these Republicans have with no facts to back their conclusions.

Trump also stated earlier: “First of all, we’re giving them billions in this deal, which we shouldn’t have given them. We should have kept the money.”  Apparently he was referring to the gradual sanctions relief for Iran under the parameters of the agreement. “Second of all we have four prisoners over there. We should have said ‘Let the prisoners out.  They shouldn’t be over there.”  He also stated that any deal should also stipulate that inspectors have 24 hour immediate access to all nuclear sites in Iran.

Interestingly we’re not giving the Iranians any money.  These were Iranian funds that were frozen in the United States during the 1980s and have gathered interest since then.  The funds belong to the Iranians.  They are their monies, held and used by American banks for profit since that time.  This is also true for funds frozen in other countries.

One of the most important treaties in years, a document that could stabilize the Middle East and make the entire planet safer to live in, is being used as an attention-getter by Republicans, particularly by aspirants for the 1916 Presidential campaign.  A large number of Republican hopefuls are competing to see who will be the Republican presidential candidate in 2016.  To them nothing is more important than attracting Republican voter’s attention in the Republican primary elections and being chosen the Republican candidate for the presidency of the United States.  Anything that helps them achieve this goal, even if it means further destabilizing conditions in the Middle East and bringing about a war with Iran, is okay as long as they get chosen to become the Republican candidate for president in 2016.


It is important to remember that the current treaty is over 100 pages long.  President Obama has urged everyone in Congress, particularly in the Senate, to read the treaty before deciding what to do.  It needs a 2/3ds “advice and consent” vote from the Senate before it can go into effect.  The treaty also needs the concurrence of the five other negotiating countries and of the Ayatollah Khamenei and the Iranian Parliament

President Obama has given the Senate 60 days to study the treaty and vote upon it.  It will take a 2/3 positive vote to pass. The probability is that if it is voted down the he will pass it as an agreement with another county by executive order.  It could then be kept that way or re-voted upon by the next administration in 2016.

The President has stated innumerable times for everyone to read the treaty before evaluating it.  He has also said that many of the Republicans who are loudly against it had very strongly advocated the invasion of Iraq to stop it from using its weapons of mass destruction that never existed.  The members of Congress and particularly those in the Senate have sixty days to read the 100 plus pages that make up the treaty and then make up their minds whether to approve or disapprove it.

Presumably they can then give reasonable reasons for their decisions.  Early in July of 2016 the major comments against it were: It’s not a good idea or a bad deal.  Those are very generic and meaningless reasons.  He has asked for alternative reasons.  Scott Walker has proposed war as his alternative.  Other Republicans have not stated this solution but have implied it in their rejection comments.  Is this what the Republican Party wants?  War with Iran?  I suspect the other five United Nation members, who also negotiated this treaty, have different thoughts about it.  The United States could end up standing alone against Iran.  I would suspect that that is a position that Scott Walker nor any other possible Republican president would want to be in a position to cope with.


The one aspect of this agreement that no one seems to have made or considered is that with this treaty it will take Iran at least ten years to develop an atomic bomb.  Ten years is a long time.  Within that period, with no sanctions and utilizing its wealth in oil Iran will change or grow considerably.  Its people will have better lives.  Their standards of living and expectations will grow considerably. They will positively be connected to the rest of the world.  In essence they will have no need of having any atomic bombs.

Still another consideration is that if they were to use atomic weapons then atomic weapons would be used against them.  Even though Iran has four times the population of Iraq and is a much larger territory they could be totally destroyed as a nation if an atomic war broke out.  And it is an open secret that Israel has had atomic bombs for a number of years.  Also, perhaps the craziest nation in the world today that has atomic weapons is North Korea. They have not threatened anyone with their atomic weapons. North Korea having the bomb is the same as North Korea not having the bomb.  It is a weapon that cannot be used because using it would be an act of suicide.

President Barack Obama and Israeli Prime Minis...


English: A group photograph of the former host...

English: A group photograph of the former hostages in the hospital. The 52 hostages were spending a few days in the hospital after their release from Iran prior to their departure for the United States. Location: WIESBADEN AIR BASE (Photo credit: Wikipedia)


The Weiner Component #131 – Texas & the United States

Many Texas Republicans, and this includes the present governor, Greg Abbott, seem to have a variety of problems with President Barak Obama and the United States Government. They believe that they are constantly being plotted against by either or both of these entities.

Currently there are two major fears in their minds. One has to do with the Jade Helm 15 military training exercise.  According to the U.S. Army website this is a training exercise that will take place from July 15 to September 15 utilizing members of the U.S. Army Special Command and service members from the military’s four branches.  The training will take place over seven states.  Primarily the exercise will occur in Texas because the Special Operation Command requires large areas of underdeveloped land as well as access to towns.

The far right wing of the Republican Party in Texas have organized Operation Counter Jade Helm.  The state is rife with conspiracy theories.  The newly elected governor, Greg Abbott, has called out the state guard, at taxpayer expense, to keep an eye on the U.S. Military as it carries out its training.  Abbott stated that “It is important that Texans know their safety, constitutional rights, private rights, and civil liberties will not be infringed upon.”

The Republican candidates for the presidency are unwilling or don’t want to denounce right wing extremism.  Marco Rubio, Scott Walker, and Jeb Bush have been silent on this issue.  Rick Perry, Rand Paul, and Ted Cruz all stated something to the effect of that they would look into the matter.

In Texas and some of the other southern states, where the exercise is currently occurring, there have been public protests.  Republican leaders continue to embrace these conspiracy theories.  One is that President Obama plans to declare martial law in Texas and deprive the population of their guns.  Another, which is even crazier is that President Obama is getting ready to make himself Dictator of the United States for life and cancel the 2016 Election.  And to these people, if none of this happens that will be proof that it was planned and their objections stopped it from happening.  We go from the ridiculous to the totally insane!


On the last Friday in June of 2015, shortly before the June 30th end of their session, the Supreme Court decided by a 5 to 4 decision that same sex marriage was constitutional. In Texas both Houses of the State Legislature went ballistic. They considered making that decision null and void within the state. They threatened to pass a law making same sex marriage illegal in Texas.  So far they have not acted upon this threat.  And then apparently took their case to the ultra-conservative Fifth Circuit Court which had overturned the Texas voting ID decision from a lower Court that had declared that law as being the same as a modern day poll tax.  The Fifth Circuit Court, which is lower than the Supreme Court but higher than the first court, declared the same sex marriage decision as the law of the land.   The Texas legislature is very unhappy with this current situation and some are still threatening to pass a law making it unconstitutional in the State of Texas.

The only way this could work was if Texas went back to being the Lone Star State.  She would first have to secede from the Union.  The last time that was tried was in the 1860s and she was forcibly brought back into the United States at the end of the Civil War.


Currently Texas does not trust the United States monetary policy, apparently she feels that the value of the dollar may crash at any time, and she wants to be ready in case that happens.  Texas would like to have a gold backed currency ready if this were to happen.  She will develop in Huston a state owned Fort Knox. Obviously neither Governor Abbott nor the members of the Texas Legislature have recently read the Constitution, particularly the first paragraph of Section 10, Article I, wherein it states that “No state shall, without the consent of Congress . . . coin Money, make any Thing but gold and silver Coin a Tender of Payment of Debts;”

On June 12, 2015 the Texas legislature passed a law setting up a “Texas Bullion Depository.” The newly elected Governor Greg Abbott’s office stated that the facility would increase “the security and stability of our gold reserves.” The bill’s sponsor, state Representative Giovanni Capriglione, a Republican Tea Party member, said that the depository will give Texas a hedge if there are problems with the U.S. economy.  The law was passed in the Texas House by a vote of 140 to 4.

This law will repatriate over one billion dollars, worth of gold bullion from the vault of the  HSBC Bank in Manhattan to Huston where the depository is to be built underground. There are two big pension funds in Texas that together own more than one billion dollars’ worth of gold. One is the Teacher’s Retirement System and the other is the University of Texas. The Teacher’s Retirement Fund made headlines in 2011 when its board made the decision to take delivery of its money reserves in gold bars. The other gold holdings belong to the University of Texas Investment Management Company which was created in 1996 to oversee investments for the University of Texas and Texas A&M University systems.

The Texas Management Company (UTIMCO) pays about $600,000 a year to store the gold.   Its officials are amenable to moving any gold that is part of their portfolio, but under conditions which would limit the cost to no more than they are currently paying, if the depository does come into being, and the depository is a ”robust member” of the Chicago Mercantile Exchange.  The Teachers’ Retirement System also stores its gold bars at the same place and, I assume, pays additional funds for the privilege.

The question then arises as to who will own and control the gold?  Is it to be the Board of the Teachers’ Retirement System and the University of Texas Investment Management Company or the State of Texas?  Clearly it is owned by the University Management Company and the Teachers’ Retirement System and not by the State of Texas.  Can they legally usurp possession of the gold?  Apparently from statements that have been issued by the legislature and the governor’s office they seem to believe that they control the gold bullion.


If the gold was purchased prior to 2005 the cost was about $400.00 per ounce.  If some of it was purchased at a later date then the price gradually rose to about $1,800.00 per ounce by 2011.  It then descended to $1,155.21 an ounce where it closed on Monday, July 13, 2015.  I would imagine that the Texas Investment Management Company has done quite well on its investment, even with the heavy fees paid to the N.Y. bank for storage but the Teachers’ Retirement System has taken a financial bath on its investment.  Still the question remains as to who actually owns the gold, the University or the State of Texas?


The current new law will build an underground depository.  It’s not quite clear who will pay for this construction.  Many critics accuse Governor Greg Abbott of playing to the secessionist right.  Apparently a large percentage of Texas Republicans support the move, seeing the depository as the first step in a declaration of state independence.  It can be a step in the establishment of a currency system and bring about independence from Washington, D.C.  The independence sentiment surfaced after the governor signed House Bill 483 into law in June of 2015 and issued a statement declaring that the Texas Bullion Depository was to become “the first state level facility of its kind in the nation.”

This move has massive support among advocates of a return to the gold standard. Many of these people believe that the Federal Government and the Federal Reserve have mismanaged the dollar and are afraid for the security of their holdings. They see this as a hedge against their fear of the collapse of the dollar.

The initial Depository Bill was first introduced in 2013.  It failed because of the expense involved.  It was estimated then that moving the gold would cost $23 million.  In 2015 the bill was rewritten by State House Representative Giovanni Capriglione, a Tea Party Republican, allowing private companies to move the gold and manage the depository with no cost to the state of Texas.  The bill provides for the Depository but does not spend any money to bring it about.


The concept of going back to gold backed currency is both interesting and crazy.  In the second half of 1969, then President Richard M. Nixon removed the last vestiges of gold that was presumably held behind all paper money.  Currency from that point became only backed by the word of the issuing country, in this case the United States. Today there is no precious metal behind any currency issued throughout the world.  The basic reason we went off the gold standard in 1933, the lowest point of the Great Depression, was that there was not nor had been enough gold in existence to supply the currency needed for all the possible business transactions necessary for the economy to function properly.  In point of fact, essentially the industrial world went off the gold standard in the 1930s and created the fiction thereafter that all the paper money was backed by buried hordes of gold bullion.   There was never enough gold bullion to really back the amount of money in circulation.  This was particularly true after World War II because during the war all the American Allies had shipped their gold to the United States for safekeeping and had spent it there during the war.

In late 1969 the U.S. Federal Government began selling gold for $36.00 an ounce, which at that time was the legal price of gold in the country. The price rose rapidly as buyers rushed to invest their money and the value of gold gradually rose to $800 an ounce, then it dropped slowly to about $200 an ounce.  By 2005 it was at $400 an ounce, then by the seventh or eighth month of 2011 it had risen to over $1,800 an ounce. From there, with gyrations it gradually dropped to 1,131.90 an ounce by Friday, July 17, 2015. By the end of July 2015 gold had decreased to a little over one thousand dollars an ounce.

Unfortunately the Teachers’ Retirement System bought their gold in 2011. They have lost over $700 an ounce on their retirement fund, not to mention the cost of storing it in the New York bank vault. The good-old-boys on the Teacher’s Retirement Board had probably dealt with a bunch of good-old-boys who sold gold on a commission basis. The size of the Teacher’s Retirement Fund has dropped over thirty-three percent.  That doesn’t do much for teacher retirement in Texas.  This is doubly true if the state usurps the gold bricks for its new money system, which the state will have to do if it puts out its own money.  Remember, according to the Constitution states can’t print money; they can only mint it. The state would have to melt down the bricks and turn them into coins. Currently a one ounce coin would be worth about $1,100, a half ounce coin would be worth $550. It would be difficult to get most stores to make change on these coins for shopping.  In addition gold seems to be still in the process of decreasing in value.


The Republican Party of Texas has shown a distrust for the Federal Reserve and the Treasury of the United States. They want a return to the so-called gold standard of the 1930s and beyond when the American dollar was backed by buried bricks of gold and silver and they would like an end of the Federal Reserve. Many of these people are arguing that Texas can eventually set up a system of currency exchange that could eventually supplant that of the U.S. Government.  Obviously they haven’t read or intend to change the U.S. Constitution.  Interestingly the U.S. dollar internationally has not only maintained its value but has also increase in worth against other currencies.

The State Comptroller of Texas, without any separate funding, is currently in charge of the gold transfer and depository project.  The law doesn’t state where the Depository will be or how it should be built or secured.  According to the law there is a provision allowing ordinary people to deposit their individually owned gold or silver into the facility.

Currently the Comptroller’s office has a four man task force working out all the details of building the Texas Billion Depository without any special funding.  Presumably securing and moving the gold from New York City to a Texas’ city, not yet designated, is estimated to run into millions of dollars and building the Depository will cost additional millions of dollars.  All this will be done by private enterprise and then run by private enterprise charging the State of Texas and the assorted individuals using the gold fees for storing their gold and other precious metals and making a profit.  Somehow it all sounds like fancy day-dreaming.  The fees that would have to be charged by the private company would be prohibitive for it to recover its gold moving, maintenance, and protection costs if it were to make a profit.  And this would be true even if Texas were to be able to secede from the Union and become a lone star state again.  The probability is that nothing can come from this move.  It is just Texas Republican paranoia, or to use a trite phrase, Pie in the sky by ultra conservative Texans.

(Footnote: I will be away on vacation for the next two weeks.  The next blog will appear after the middle of August.)


The U.S. Gold Bullion Depository at Fort Knox.
The U.S. Gold Bullion Depository at Fort Knox. (Photo credit: Wikipedia)



English: Seal of Texas

English: Seal of Texas (Photo credit: Wikipedia)


Seal of the United States Mint. The design is ...

Seal of the United States Mint. The design is the same as the Treasury seal with a Mint inscription. (Photo credit: Wikipedia)


Highway Map - State of Texas


The Weiner Component #130 – The World Economies & the Greek Crisis

On Monday, June 29 2015, the leading indicators on the American stock market took a sharp dive; the DOW dropped 350.33 points and the NASDAQ went down 122.04 points.

All this because Greece was at the point of near bankruptcy, with a massive payment that was due Tuesday June 30, which the government couldn’t and didn’t meet. Negotiations for a new loan broke down the Friday before, when the Greek negotiating team walked out of the meeting. The Greek Prime Minister, Alexis Tsipras and the leftist Syriza party who were elected to end austerity, called for a referendum to be held a week later, letting the people decide what to do. The next day, Tuesday June 30th 2015, Greece defaulted on its debt.  On Wednesday, July 1, the Greek government attempted to come to an agreement with the European Central Bank. When the referendum was held a week later the majority of Greek citizens voted against paying back the debt.


The Greeks through nefarious practices for the last decade or so were able to hide the fact that the government was spending far more than it was taking in in taxes. They continually kept spending far more than the GDP (Gross Domestic Product), the amount of wealth the country produced. In addition Greece apparently has a lot more tax cheaters than any of the other European nations, consequently they estimate that about 20 million euros worth of taxes and their earnings were/are going into numbered Swiss bank accounts.   The American firm, Goldman Sacks, had earlier engendered creative economics for multi-million dollar fees and allowed the government and people of Greece and other countries, some of which were part of the 19 nations of the Eurozone, to engage in picturesque bookkeeping and spend far more than they should have.

At the beginning of 2010 it was discovered that Greece had paid Goldman Sacks and other banks millions of dollars in fees since 2001 for arranging transactions that hid the actual level of borrowing. The most notable is a major currency swap that hid billions worth of Greek debts and loans which were factiously converted into yen and dollars, thus hiding the true extent of the debt. The purpose of this and similar actions was that these various Greek governments could continue spending. An interesting short term solution to an ever growing long term problem that would eventually explode.

The process of paying back its debt, currently set at 270 billion dollars, began toward the end of 2008 with a massive economic collapse. The financial crash that occurred at this time in the United States and beyond, diversely effected Greece, Portugal, Spain, and Italy of the Eurozone Nations. These countries had been working since that time to get themselves out of debt. They have not succeeded, actually Greece has significantly increased her level of debt.

Greece has now essentially defaulted on a repayment instalment of 1.7 billion dollars that was due on June 30, 2015. She could only meet this payment if she borrowed all of the funds from the European Central Bank plus an addition 50 to 60 billion dollars to keep herself functioning.  It’s a movement of figures in different columns of the banks bookkeeping that seems to go on forever with the debt never disappearing but continually growing.

On the first Saturday in July the people of Greece voted on a referendum determining whether or not they should pay back their debt to the nations of the Eurozone.  I understand that the referendum was fairly complex and that a lot of people had a problem determining exactly what it meant.  Also the government recommended a no vote.  They came out with a strong no vote.  Consequently the Greeks defaulted upon their debt but may still un-default it.

Currently Greece’s unemployment level is over 25%.  For the last six years the government has been paying back this debt without really diminishing the principle because she has to borrow to do so.  And the country has undergone ever increasing levels of privation in order to do this and accomplished nothing.  The banks were closed in Greece by government order and the amount of cash that could be taken out of ATM machines was very limited. The country essentially limped along close to total bankruptcy.  Much more money was needed than the country had in order to make the installment payments that Greece seemed to have or could reasonable get.  A real solution to this matter seemed highly problematic.


One of the major basic questions dealing with Greece and the Eurozone is what is really National Wealth?  Is it money or the goods and services produced within a given amount of time, usually a fiscal year, stated in terms of money value?

Money, for about the last fifty years has had nothing behind it but the word of the government issuing it.  Its domestic value is determined by what people will sell or take for it and internationally by what other countries will trade for it.  Basically, today, it is a tool, which allows the exchange of goods and services within the particular nation and throughout the world.  In essence it is the grease that allows the economies to function. Without an acceptable form of currency a nation faces complete economic disaster.

The problem with printing more money, which is a power the Greek Government does not have as a member of the Eurozone, is that too much money in circulation tends to force up the price of goods and services as people compete for these items.  It will eventually bring about a depression.  On the other hand too little money in circulation tends to reduce the amount of goods and services needed, as people are limited in what they can afford.  This can also bring about a recession leading to a depression. The trick is to have enough in circulation so that maximum productivity can be reached and maintained.  This also has to be gradually increased as the population of the nation increases.  In Greece today there is not enough funds left to service either the needs of the country or the debt.

People are taking their funds out of the country leaving the banks with a shortage of cash. The banks were closed several weeks ago to end a run on them with long lines waiting to withdraw their cash. The country was either days or hours away from total bankruptcy when the banks were closed.  Currently Greece is trapped in an ever increasing cycle of growing debt in order to just maintain its existence.


The Eurozone today is in a situation fraught with contradictions.  When the Eurozone were first formed in 1999 the 19 nations agreed to function as a single economic unit with a single currency working through a central bank.  Meanwhile, with the exception of currency control, each of the 19 independent states gave up none of their sovereignty and still continued to act as an independent entity. Some of these 19 nations were far more economically secure than others.  Greece was one of the poorer nations that acted like the wealthier states and continually spent more money than it could realistically afford.

Up until the end of 2008 the U.S. and other industrial nations were a-flow with money. Then, starting with the United States, the Housing Bubble burst and property values in that country went down the toilet.  Internationally the flow of money tightened.  Suddenly Greece and these other countries were heavily in debt.  In order to meet these debt payments the governments had to divert a good percentage of their taxes.  An ever larger percentage of the GDP left these countries and there was not enough left to perform the regular services which the governments ordinarily provided.  This in turn forced the governments to lay off large numbers of government employees which, in turn, exacerbated unemployment and decreased the GDP.  In order to meet these payments Greece had to borrow more funds from the European Central Bank, actually increasing its debt.  With a shrinking economy the government had to further economize in an attempt to meet its payments.  This caused more and more economic shrinkage in the country.

What currently exists in Greece is a lose, lose situation with no hope in sight and well over 50% of the population in the referendum have voted for permanent default.  But if the Central Bank in the Eurozone grants this then Portugal, Italy, Spain and Ireland may demand the same treatment.  In fact it could become a pattern with some of its members.  Yet if it doesn’t grant relief they also face an impossible situation.  Greece is currently just days ahead of its banks running out of money and going into bankruptcy. It’s quite a dilemma.


In the United States toward the end of 2008 a similar situation existed.  This was caused by the explosion of the Real Estate Bubble brought about by the large banks in the country over a thirty year period.  The banks had divided each of the many home mortgages into hundreds of pieces and the different pieces were combined and sold in a multitude of different Hedge Funds.  Actually no one owned the mortgages, just fractional pieces of them.  The large banks financed or refinanced the mortgage paper, then sold the pieces, administered everything and charged fees for everything they did. Once the mortgages were sold the money was lent out again.  It was an endless process with the banks collecting multimillions in fees. In this way a million dollars could fund one hundred million or more in mortgages.  The banks were in such a hurry to continue the process that they devised an unbelievable sloppy system of record keeping that was fraught with error.  This meant there was no accurate record keeping of the multitude of transactions.

When the Real Estate Bubble burst in late 2008 the large banks began foreclosing on properties that they did not own.  It took a while for the courts to realize the fraud and all the large banking houses were fined heavily for these and other illegal actions.  What the country faced was a possible twenty years or more of insane confusion in the housing industry and a depression greater than that of 1929.  With the addition factor that most of the large banking houses in the U.S. could go under and the movement of money throughout the country would become a trickle.

The first actions were taken by President George W. Bush during his last few months in office when the Federal Government began the process of bailing out most of the banks. This was followed by President Barak Obama who successfully continued bailing out most of the large banking houses and also the auto industry and avoided a deep depression.

The housing crisis was largely solved by the Federal Reserve under the sterling leadership of Ben Bernanke, who for a period of over two years bought 45 billion dollars’ worth of mortgage paper every month, spending well over a trillion dollars.  The mortgages came from all 50 states and were all fractional shares of an endless number of properties.  In essence what the FED did was to contribute well over a trillion dollars to this enterprise with no way of collecting any of it back.  In fact it contributed this amount of money to the general welfare and growth of the economy.  And the process brought back a level of prosperity and solved the mortgage dilemma in a period of just a few years.

The difference between this solution and the current problem in the Eurozone is that no one in the United States has ever mentioned what was being done.  All that the FED announced was that they were buying back mortgage paper.  There was never any discussion about the morality of the issue or the fact that they would never be able to cash these mortgages.  To my knowledge no one questioned the meaning of this statement.  If the country and Congress had been aware of what was happening we might still be in the middle of the mortgage crisis that the banks in their greed caused. People do not like someone else to get something for free even if it indirectly benefits them.


Over the July 4th Weekend the majority of the Greek population voted to reject the current austerity negotiations with the other Eurozone nations.  As a result the European, American, and other stock markets dropped on the following Monday.

Basically the issue is with what is the Central European Bank dealing? Is the issue the Greek default on an impossible debt?   Or is it a problem the Eurozone is facing regarding one or some of her members?  If it’s the former then default is inevitable sooner or later with the lack of stability that would follow this action.  If, on the other hand, the issue is the latter then it becomes a problem of the entire Eurozone and its solution is one involving all the states of the Eurozone.  The result of this could be a new stability for all the states within the Eurozone.

We’ve seen that dealing with this issue totally as a Greek problem is insolvable from any aspect.  If other members of the Eurozone want to punish Greece for excess spending over a decade that ended 6 or 7 years ago they are not only hurting Greece but also themselves and their own futures.  But if this issue is dealt with as a Eurozone problem then there are possible solutions from which all of the Eurozone states can benefit.

What is required is a consortium of all the Eurozone states to handle not just Greece’s economic problem but also that of Spain, Portugal, and Italy. They are also in debt to the European Central Bank. If it is everyone’s problem they all need to participate in its solution.

Basically what these states have to deal with is the setting up of a central legislative body representing all of the states that can determine what is best for all of the states. They need to bring about a United States of Europe that has the authority to function for the benefit of all the states within the Eurozone.  And all the states need to give up some of their sovereign rights for the good of the union. This, incidentally, was their original goal

Numerous problems will have to be faced and resolved, particularly in terms of the extent of representation each state will have in this new union.  With a union each state would be stronger than it currently is and the euro would be back on a solid footing as one of the world’s safest forms of money. The European Central Bank would be the European version of the American Federal Reserve and the world’s stock markets would again be more stable.

Is this possible? That’s a good question. There are innumerable problems that have to be solved before this can come about.  But if the answer is, yes, then there would be more stability not only in the Eurozone but also throughout all the industrial nations.


It would seem that the interests of Germany, France, and some of the other members are against Greece defaulting and exiting from the Eurozone.  Rather than fall out of the Eurozone on Thursday, July 9, 2015 the Greek government capitulated by delivering a new package of economic reforms to the ECB, raising taxes and the retirement age. Faced with the collapse of the country’s banking system and total economic catastrophe the government yielded on the issues that led to the previous collapse on a new rescue plan.  The retirement age is being pushed to 67 and government pensions are being cut by 15% for government workers who retired at age 62 after 40 year of employment.  The government will also withhold more taxes from state salaries and pensions and deduct a 6% healthcare premium from retirees’ checks.  The reforms are projected to generate at least 13.2 billion dollars in revenue over the next two years.

Currently the Greek debt is over 175% of its GDP.  It needs to be reduced or rescheduled over a longer period of time with the interest rates kept low to prevent the debt from growing. The Greek people need to take a more realistic attitude about repayment.

On Monday, July 13, 2015, after long hours of deliberation, with some states of the Eurozone arguing that the Greek prime minister’s word could not be trusted, the other states agreed to bail out Greece with a loan of about 50 billion euros.  Presumably Greece will pass further economizing measures and the loan will be implemented gradually. There is a payment due on the debt in about two years and Greece will be able to reduce her debt somewhat at that time if she adheres to her agreement.

The problems that the Greek government has to meet at this time is to economize enough to at least make a payment on her debt and also to restore the confidence of her own population in her banking system. The probability is that as soon as the banks are reopened within the country there will be at least a light run on them.  Presently the Greek Government’s solution is to reopen the banks and only allow very limited withdrawals.  Many people with large enough incomes may deposit the salaries in other countries, fearing that the bank closure could happen again.  It will take time for domestic confidence to be restored.  And a payment must be met in about two years.

Another problem which effects the entire Eurozone is one dealing with the declining value of the euro. The euro when it first appeared was worth about 1.5 dollars.  Last year with the infusion of a large amount of euros by the European Central Bank into the national flow of the Eurozone it dropped to about 100.3 percent of the dollar. On Monday July 13 with the current solution to the Greek Crisis the euro was worth 90.51 cents to the dollar. On Tuesday, July 14, the euro had risen to 1.1034 to the dollar. What will happen to its value in the future?  I suppose that is dependent on how well the Eurozone continues to function.

Greece will have a payment due in about two years. If she is able to make a payment  and not have to borrow more money then, the Eurozone will function properly and the value of the euro will have risen.  If, on the other hand, Greece has to borrow money again to just stay alive then there is no telling what the disaster will be for the Eurozone.

On Monday, July 20, 2015 the banks in Greece reopened; but the amount that could be withdrawn from any account was severely limited. What does this portend for the immediate future?  We’ll have to wait and see.

(Footnote:  To my readers: you must forgive me for not responding to your enquiries.  I get innumerable requests daily.  If I answered all of them I wouldn’t have time left to write the blog.  Virtually all your enquiries are answered in The Weiner Component #122 – Responding To Your Enquiries.)

English: Alexis Tsipras in a press conference ...

English: Alexis Tsipras in a press conference in Komotini. Ελληνικά: Συνέντευξη Τύπου του Αλέξη Τσίπρα στο ξενοδοχείο Ξενία στα πλαίσια της επίσκεψης του στην Κομοτηνή 13.11.2008 (Photo credit: Wikipedia)


English: Greece's recent debt history, between...

English: Greece’s recent debt history, between 1999 and 2010. (Photo credit: Wikipedia)


The Weiner Component #129 – The South Carolina Hate Crime & its Consequences

African Methodist Episcopal Church

African Methodist Episcopal Church (Photo credit: Wikipedia)


On Wednesday afternoon during a Bible Study session on June 17, 2015, a young man, Dylann Roof, visited the Emanuel African Methodist Episcopal Church in Charleston, South Carolina, spent about an hour there watching a bible class, then during the prayer session that followed he took out his new pistol with a laser sight and shot nine parishioners, killing them all.

Dylan Roof, who had recently turned 21 years of age, was an unemployed high school drop-out. He had failed and had to repeat the ninth grade of high school. To look at a photograph of the youngster one would guess that he was about 16 or 17 years old.  He had purchased the pistol probably after receiving a money gift from his father as a birthday present on his 21 birthday.


Looking at a picture of this youngster and reading about him one gets the impression of a total loser.  High School had been too much for him.  He had been unemployed, very possibly incapable of holding a simple job.  At 21 he was an absolute nobody, dependent still upon his father for support.  He is the perfect example of what Southerners would call “white trash,” a nobody, a nothing.

I remember being stationed during my two year stint in the military during the second half of the 1950s, shortly before the Civil Rights Movement took off in the U.S. in both Georgia and South Carolina.  And I remember that the raunchiest and poorest white man considered himself superior to the richest and/or best educated black man in the cities of Augusta, Georgia or Aiken, South Carolina, the two major cities located near the bases where I served in the military.

It seems, even with the Civil Rights Movement and the 1965 Voting Rights Law, that racial superiority is alive and still flourishing in the United States, particularly in the Southern States.  This nothing youngster, who had his own hate sight on the internet, in which he showed himself wearing white symbols of former ruling Black States in Africa and burning an American flag while waving the Southern battle flag with his other hand, apparently felt that it was his mission to help purify the white American race by killing a number of Blacks, who in his words “were raping white women and taking over the country” from superior Whites. What confused me about this act of so-called purification was why he shot more women than men.

Dylann Roof apparently had thought of killing himself directly after the shooting but changed his mind or didn’t have the nerve to carry it out.  Instead he fled the scene and was picked up over two hundred miles away from Charleston.  He had been captured on television in the Church and readily admitted his deed.


The news media has been vigorously covering this story and following all its ramifications.  One of the items they seem to have missed was the question of to what extent was his father responsible by giving his unemployed, high-school drop-out son enough money to buy an expensive pistol?  I’ve read nothing about the father other than he exists and that his wife left him at some point in the past.  Is this a standard operation in South Carolina, to allow your son to arm himself when he turns 21, regardless of his mental state?  Is the boy an extension of his father or did he develop his superior attitude by himself?  Are these questions being investigated and is it still too early to answer them?

Another question that has developed is the questioning of the Civil War flag flying from the front of the state capital.  This flag was readapted in 1962 by the State of South Carolina as a protest against the 1962 lunch counter sit-in by Blacks in that state. It was a reaction to one of the first Civil Rights protest actions in the South.  It continued to fly until recently at the state capital.  It still flies throughout many states in that part of the country and exists on the automobile license plates of several Southern states.

Initially Senator Lindsey Graham of S. Carolina stated that the flag denotes to the people of the state who they are.  Days later, after the governor of the state, Nikki Haley, had stated that it was time to get rid of the flag which is a symbol of slavery and segregation or hatred by the two groups.  She also stated that it is time to reconcile the entire population as one people.  Graham agreed that it was time that the flag came down.

Other Southern states, North Carolina and Virginia are going to take the flag off of their automobile license plates as soon as possible and one of these states is going to remove a commemorative statue of a Civil War hero and Klansman that stands in the area of its capital building.

Interestingly I’ve heard no comments from the National Rifle Association but it may be too early for them to comment.  They usually wait for the emotions to die down in mass shooting incidents before they say anything, which usually consists of having the pastors or teachers or whomever go around armed in case of an emergency.  Can you see college or high school students walking around their compasses with concealed weapons?

These statements by the NRA are understandable when one realizes that a part of their Board of Directors is made up of gun, magazine, and ammunition manufacturers.  These companies fund them with millions of dollars each year.  They would love to extend their base of customers.  Particularly since most of these companies that have been around for a long time are not doing well on the stock market.


One would assume that there are some laws about gun ownership in South Carolina. And they would be right there are some. There are none for rifles or shotguns but there is one for handguns. There is no permit, registration, or licensing required but a non-drug police arrest record is required for carrying a concealed handgun.  Apparently anyone purchasing a handgun has to wait three days to be cleared by the F.B.I.  Root had been picked up a year or so earlier for drug possession but somehow the F.B.I. never found this out within the three business days and he was given the weapon. Apparently the F.B.I. receives twenty to thirty thousand requests for this type of information per day.

Because of an error Dylann Roof, who had been arrested several times, once for drug possession, and was a white supremacist with his own internet blog, was able to purchase a pistol with a laser sight.  I would assume that much of what he believed he had heard not only from his friends but also from his father and his father’s friends. The statement that Blacks are always raping white women and taking over the country would be generic among his group and the white supremacist’s blogs he, no doubt, followed on the internet.  Apparently derogatory statements of hate can go a long way with some people!

This brings up an interesting question: How far does freedom of speech extend?  There are libel laws where an individual can sue someone who wrongly libels him.  But to what extent is someone on the internet calling for mayhem and violence responsible for an act committed by one of their adherents?  If someone is targeted for death by a hate group and then someone else commits the crime then is only the perpetrator guilty? Where does responsibility for verbally proposing hate end?  Are there or should there be limits on this type of free speech?  Does change always have to follow tragedy?


There have been positive responses to the shootings.  South Carolina has taken down its Civil War flag by the capital building.  Other Southern states are in the process of taking similar actions. No doubt many Ku Klux Klan heroes of the past will now fade and many street names will be changed.  Apple sells Civil War games at its stores.  These apparently all contain the Civil War flag and have all been removed from Apple stores. Walmart is no longer selling anything that contains images of the Civil War Battle Flag.

The one exception seems to be Governor Scott Walker of Wisconsin.  He just signed a bill that ended the waiting period for the purchase of handguns.  Originally anyone buying a pistol in Wisconsin had to wait 48 hours before receiving his merchandise; now the individual can just walk out with his new pistol at the time of purchase.

There is a very happy looking picture of Walker posted on the internet signing the bill, which he said, had been planned before the Charleston incident.  He saw no reason to delay this planned event.


President Barak Obama gave the eulogy for the nine murdered individuals at the Emanuel African Methodist Episcopal Church in Charleston, South Carolina.  He said, among other things, that the Lord works in strange ways.  The killings strongly indicated that the South consists of two societies, one White and one Black; and that all the symbols permeating the societies engender strong negative feeling among the White population.  Beginning with the Civil War flag and going on to all the statuary of Klansmen and the streets and boulevards named after these individuals have and are engendering lasting bigotry and racial hate, feelings of superiority and inferiority.  It is time to follow what Republican governor, Nikki Haley stated, it is time for the Southern states to become a government of all its people.