The Weiner Component #122 – Jobs: A Successful United States

n the United States today we have about 5.5% known unemployment plus, at least, if not more than 5 percent hidden unemployment. That is much too much in a country as wealthy as the U.S.  The known unemployed, register and are actively looking for work; the unknown unemployed have given up, feeling ultimate defeat they are no longer looking for jobs.

 

The existence of both these groups is a sad comment upon this country.  For a nation as rich as ours, with all the needs it has for constantly improved infrastructure there is no excuse for this situation.  We are a modern nation that is still living largely in the last century when most of our infrastructure was created.  In a manner of speaking we are like the young man who has just acquired his first automobile and expects it to last forever without any real care or maintenance.

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In late 2008, under a Republican Administration, after thirty some years of at first gradual and then accelerated economic growth in the Housing Market, the Real Estate Bubble burst and the entire economy of the United States was about to crash, beginning with the major banking houses within the country.  The Treasury Department, under a Republican Administration, extended hundreds of billions of dollars in loans to these banks to keep them solvent and functioning.

In Europe and Asia, on a smaller scale, the nations there underwent the same crisis with similar solutions.  Some of the nations of Europe like Greece and Spain, had lived richer than others on this new wealth that the banking houses had created and were far more in the red than others countries.  This was particularly true in the Eurozone.  Some of those nations underwent extreme austerity measures in order to be bailed out by the European Central Bank or the other nations in the Eurozone.  This was done in 2009. They are still in extreme economic troubles.

In the United States we went from at least 12% unemployment in 2009 to 5.5% by 2015. What saved the country from falling into a deep depression, deeper than that of 1929, was the Federal Government bailouts of the banks and the auto industries, plus innovative use of Monetary Policy by the Obama Administration.

Unemployment today, in early 2015, is still a problem in the U.S., particularly for the young and unskilled.  Another problem tends to be rates of pay.  The Federal minimum wage in the U.S. is $7.25 per hour before social security, assorted taxes, and unemployment insurance are taken out.  While many states have a higher minimum wage the Republicans in Congress refuse to raise the National minimum wage.  It has existed for several years now while prices have gradually increased.

What’s interesting or odd here is that Scott Walker, the governor of Wisconsin, is attempting to gain the Republican presidential nomination on a platform of “right to work” laws.  These laws mean that no business can have a closed union shop; no worker has to join a union where ever he works.  The object of these laws is to break the power of the unions across the U.S. and he probably would like to get rid of the minimum wage, as was suggested during the Reagan Administration.

Henry Ford, in his early factories, discovered or realized that if you pay your workers enough they will buy the product they are producing.  The same premise holds true today: if workers earn more they will spend more.  In essence increased spending equals increased production, and consequently more profit for everybody. Growing productivity creates jobs and raises the standards of living within the country.  And conversely the lower the national income distribution the lower the productivity and the higher the unemployment.

No one can buy goods and services with money they don’t have.  Somehow the Republican understanding of the situation throughout the country is backward; their goal, regardless of what they say or believe, is actually to reduce productivity throughout the nation and increase unemployment.  This they have very effectively done since 2011 when they achieved dominance in the House of Representatives.

If we look at their current goal of keeping the minimum wage at $7.25 an hour.  Working at that rate for 40 hours a week allows an individual to earn $290.00 a week, which works out to about $1,160 a month, and $15,080.00 for a 52 week year before assorted government withholdings.  This puts this person living alone slightly above the poverty line, which is $12,300 for one adult, $15,853 for two adults is slightly below the poverty line, $19,055 for two adults and one child is well below the poverty line, and $24,008 for two adults and two children.  If that amount is doubled by both adults working full time at that rate of pay then their condition improves but who will take care of the child or children.  It’s a sad comment upon a society that will not pay a goodly percentage of its workers enough to not live in poverty or to live just above the poverty level when they are fully employed.  We are a nation with a good percentage of employed being working poor.

There is an interesting note of irony here.  The working poor person earning the $7.25 an hour is almost below the legal poverty level.  In most states this person qualifies for food stamps and government medical aid, as well as other programs.  All these aid programs are paid for by tax dollars.  Ultimately, then, the tax payers in the country are subsidizing those businesses or industries that pay the minimum legal wage.  Consequently a good percentage of these companies’ profits are being paid indirectly by the American taxpayer.

In the April 16, 2015 issue of the L.A. Times there was an article dealing with this subject which cited a UC Berkeley Center for Labor Research study.  They reported that 56% of all state and public assistance in the United States now goes to working families.  That adds up to 153 billion a year, including 25 billion in state funding.  Individually California spends 3.7 billion, New York 3.3 billion, and Texas 2 billion on public assistance programs.  These go to, among others, fast food employees, child and home care workers, and part-time college faculty.

To quote the L.A. Times: “Last week the Colorado Fiscal Institute said 600,000 Colorado employees, or a quarter of the state’s working force earned less than $12 an hour. As a result taxpayers ante up about 304 million a year to cover their healthcare costs… It’s clear these big employers are shifting their costs to the taxpayers.”

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George W. Bush’s presidency ended in 2008 and Barak Obama became president in 2009.  Most of his early efforts were aimed at keeping a deep depression from happening.  Unemployment still increased but it was minor compared to what it might have been.

Today are there enough jobs in the society to keep everyone who wants to work fully employed?  There were jobs for everyone up until the end of 2008 before the Real Estate Bubble burst.  At that time the banking houses in the United States were encouraging people to use their homes as bank accounts and constantly withdraw their equity from their homes and spend it.  The society was flowing with money.  Once the Bubble Burst there was an intense shortage of funds and unemployment was well over 12% overnight.

There has been a large percentage of recovery since 2009 but the bulk of the National Income has gone to the upper echelon of society with very little going to the middle class and even less than that going to the bottom of society.  The distribution of the National Income is completely out of kilter.  It is encouraging, with Republican help, a shrinkage of economic prosperity.  If it were not for the creative Monetary Policy the Federal Reserve used this country would now be in the doldrums with everyone, all Republicans and Democrats, currently well off and otherwise, suffering considerably.

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The odd part of all this is that the country could easily be well off with full employment and everybody having at least a decent standard of living.  The key here is expending money in Fiscal Policy which Congress controls.  The Republicans are loath to spend money on things other than the military.  They are very conscious of the National Debt that they have mushroomed since Reagan took office but for which they claim no credit.

Interestingly the Federal Government currently owns well over 50% of its own debt. Legally, it seems, no one, with the exception of the Federal Government, can owe itself money.

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The infrastructure of the United States is still in the 20th Century.  Some of it was installed over a hundred years ago.  Underground pipes and sewers are continually breaking down and being repaired to the level where they are just usable again.  It’s currently a Band-Aid approach; barely maintaining but no really improving anything.

President Obama had a plan in 2011 to drop unemployment that the Republican House of Representatives chose to ignore for two reasons: one, He presented it and two, it cost money, which they are loath to spend on anything except the military and business expansion like the Keystone project.

The prime example of Fiscal Policy is the New Deal that Franklin D. Roosevelt inaugurated in 1933 when he became President during the Great Depression.  While the Republican, Herbert Hoover was President when the Great Depression broke in 1929, he was incapable of such massive spending Roosevelt began in 1933.

Roosevelt was able to fund the New Deal by doubling the money supply in the nation.  He had government officials collect all the gold coins in circulation and replace them with paper money. The value of the gold was then doubled from $18 an ounce to $36. And suddenly the money supply doubled; there was twice as much money in circulation.

While this did not get the country out of the depression it did significantly improve economic conditions.  In order to end the Great Depression the Roosevelt Administration would have had to, at least, quadruple the money supply beyond that level. That situation occurred during the 1940s when World War II broke out.

The New Deal was a series of domestic programs encompassing Relief, Recovery, and Reform and enacted from 1933 on.  It included laws passed by Congress and executive orders issued by the President.  Programs like the Works Progress Administration (WPA), the Civilian Conservation Core (CCC) made the government the largest employer in the nation.  Others like Social Security, the Fair Labor Standards Act that set maximum hours and minimum wages for most categories of workers and the Tennessee Valley Authority (TVA) are with us today.  Banking reform was reconstituted after the 2008 Banking Debacle.  There were a myriad of other agencies mostly denoted by the letters; all of which created jobs, upgraded whole sections of the nation, and brought about

Did the government have to do this?  Obviously not; but in so doing the Federal Government took on the responsibility of providing for the common man (forgotten man) where he could not then provide for himself.  It was in the mind of Roosevelt and his administration necessary in order to save our free capitalistic society.

This is what the current Republican Congress seems to be incapable of doing. They feel this country cannot afford this luxury today.  I suspect they also feel that the unemployed are really themselves responsible for being in that condition.  Whether there are jobs available or not is immaterial.

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Fiscal Policy is something the Federal Government is going to have to get involved with sooner or later whether they want to or not.  The infrastructure of the United States was built during our period of urbanization and industrial development, from the late 19th Century through the 20th Century.  Our growing needs then were a lot smaller than they are now.  We grew then from a country of 140 plus million to over 350 million people today.  Some of the sewerage pipes in many cities are over 100 years old.  Roads, freeways, and interstate highways have to be maintained and improved.  The electric grid that runs throughout the nation has to be upgraded.  Many schools are antiquated and should be replaced or upgraded.

All of this is mentioning only a small portion of what needs to be done.  We can take a piece-meal approach, fixing things as they break down and wait until a point comes when much of the infrastructure can no longer be repaired or the Congress can begin a process of bringing the infrastructure into the 21st Century, rebuilding for today’s population..

Money is not really the problem for the Federal Government since it owns most of its own debt.  Actually spending money would increase government tax receipts.  In fact it would significantly increase the amount of taxes received on all levels of government, city, state, and federal.

What the Republican Congress is doing by refusing to even consider fiscal policy is exacerbating unemployment, encouraging the growing wealth of the upper ten percent, working to shrink the middle class, and radically increase the lower classes.  They are working to bring back the conditions of the 1880s and 1890s when there were massive divisions between the different classes within society.

Interestingly Grover Norquist, the president of Americans for Tax Reform, who has successfully gotten the Republican members of Congress to sign a pledge that they will, under no circumstances, raise taxes, has stated that his favorite period in U.S. history was the last two decades before the 20th Century.  It would seem he has been working very hard to bring us back to that period of inequality.

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More jobs are needed.  The current Congress will do nothing to alleviate the problem; instead they will by their actions increase it.  What will determine our future direction will be decided by the 2016 Presidential Election.  If we reelect a Republican Congress and also vote for a Republican President then conditions will continue as they are now, probably getting far worse.  If, on the other hand, both Houses of Congress are Democratic, then fiscal policy should bring about a radical lowering of unemployment and an overall return of prosperity for all levels of society.

It will be all in the hands of the voting public.  If they all vote their interests then the problem can be solved or, at least, move in the direction of a solution.  If enough people vote their beliefs or prejudices or stay at home and refuse to vote then the country will continue as we are now and probably go downhill economically.

To me the unemployment problem is ridiculous.  It can so easily be solved.  We can have full scale employment and solve our infrastructure problems at the same time.

 

 

 

The Weiner Component #121 – Nepotism & the Los Angeles Fire Department

One of the major problem plaguing the Los Angeles Fire Department for a good period of years has been nepotism. This has been an insipid problem with the LAFD.  As of January 2014 sixty percent of the LAPD recruits were white males with the exception of only one woman.  At that time thirty percent of the LAPD’s recruits had relatives who were already on the force.  Most of the thousands of applicants were immediately disqualified from the hiring process when they failed to submit their paperwork within the first 60 seconds of the application period.  Those with insider knowledge about the procedure had a significant advantage. In addition questions that were to be asked in interviews were given to insiders and practice seminars were held for many of these people. The relatives of LAFD had immense advantages over all the other people applying for these positions.

Toward the end of March, 2014 L.A. Mayor Eric Garcetti suspended the city’s firefighter recruitment program. “I have determined that the Fire Department’s recruiting process is fatally flawed,” the mayor stated.  This action followed a Times report a month earlier that thousands of candidates who passed a written test were excluded from consideration for a new training class because some of their paperwork was not received in the first 60 seconds of the filing period.

The mayor had drawn links between the department’s nepotism, its lack of diversity, and its low morale.  L.A. officials have stated that they want the department to resemble the overall population of the city which contains 29 percent Hispanic and a smaller Black population.

That was a year ago.  Has the problem been resolved?  I doubt it.  It will take years of new recruiting to bring about a fire department staff in balance with the city’s population.

Meanwhile on Saturday, February 28, 2015, there was an article in the California Section of the Los Angeles Times entitled “State faults LAFD inspections.”  The lead paragraph stated that: “Study finds city Fire Department failed to regularly check hundreds of hazardous sites across city.”

It seems that the LAFD is too busy or too lazy to bother carrying out any activity other than putting out fires and rescuing people trapped in fires.  The same criticism occurred in 2011 when an earlier review criticized the LAFD.  That evaluation apparently was ignored.

The current 24 page California Environmental Protection Agency study found that the LAFD’s monitoring of chemical factories, laboratories and other storage facilities that deal with dangerous substances largely does not exist. The LAFD is failing in environmental management.  The fire department is charged with keeping the groundwater, bays, and soils free of dangerous contaminants.  This is particularly true in area near urban dwellings.

City fire inspectors were cited for 19 deficiencies. Among these they failed for years to visit facilities that were required by law to be inspected on a regular basis. One of these would be the Exide Battery Recycling Plant in Vernon, L.A.  It was cited by the U.S. Environmental Protection Agency after innumerable complaints and largely closed down in 2014.  As of early March, 2015 it has agreed to permanently close down and clean the areas that it had polluted.  The L.A. Fire Department apparently never bothered inspecting it.

Jim Bohon, the head of the state unit that conducted the review stated that: “They (the Fire Department) are failing in environmental management in a very gross way.”  This to me means that they are allowing dangerous situations to develop and persist within the city.

Bohon further commented that he did not have a complete count of the hazardous sites in the city. The state study found several hundred that had not been inspected as required, he stated. Apparently many or most of them have never been inspected.

He further said that if a plan to correct the problems isn’t in place in thirty days then the state could strip the LAFD of its inspection duties and assign them elsewhere.  The L.A. Fire Chief promised immediate reforms.  What will happen?  That is an interesting question.

On its internet web page the L.A. Fire Department calls itself one of the best in the country. (If this is true then I’d hate to think what all the others are like.) They define themselves “as a full-spectrum life safety agency protecting more than four million people…Every day the LAFD responds to more than 1,112 calls. Department Rescue Ambulances transport more than 571 people to area hospitals every day.  The firefighters in 106 fire stations respond to traffic accidents, strokes, heart attacks and, without question, fire…The LAFD 3,246 uniformed fire personnel, including 270 Firefighter/Paramedics, protect life, property and the environment in fire prevention, firefighting, emergency medical care, technical rescue, hazardous materials mitigation, disaster response, public education and community service.”

Are these figures accurate?  Does the Fire Department actually successfully carry out all these functions?  Are they too busy to actually carry out all their legal prescribed jobs?  Is the occupation one that requires very little from its members – a sort of working retirement that pays well and actually requires almost nothing from its members? These are other interesting questions.

One gets the impression that a firefighting job in Los Angeles is a plum devoutly to be desired.  It would seem that once someone is hired he is set for life with a comfortable salary, good insurance coverage, and a positive retirement plan.  The competition for these jobs are so great that, as we’ve seen, the department will not accept applications after the first 60 seconds of officially receiving them.  Was that rule set up to limit the number of applications or to insure that mainly the relatives of LAFD employees would be hired?

To read their posted materials one get the impression that they are a very hardworking dedicated group. They may be, in their own thinking, hardworking, but if so, then they are largely disorganized.  They have not been able to function properly since before their 2011 inadequacy report.

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Nepotism, particularly large scale nepotism, as was and possibly still is practiced by the Los Angeles Fire Department, can be a serious problem.  It tends to create a hostile environment.   People see all the working members of their families employed by the LAFD, sometimes for generations, with their fathers, sons, uncles, cousins, and brothers all working for the Fire department.  This is a large elite group and then there is everyone else.  Advancement, promotions would go to this special group.  They, in turn, would feel superior to the rest of the fire fighters.  The others would feel like second class members of the work force and certainly resent it.  All this leads to low moral throughout the department.  Some of the people at work spend their time feeling superior and the others have a negative feeling at work.

Not only does this not lead to a healthy department it can also explain why the LAFD has failed to carry out all its legal functions.  One group redefined its function and the other didn’t care.

Will the department now fulfill all its functions and monitor all the unsafe sites in the city?  That’s a good question. It didn’t after the 2011 evaluation.

On Thursday, March 19, 2015, the L.A. Times on its front page ran an article entitled “Fire Dept. cracks down on cheaters.”  It stated that “a number of Los Angeles Fire Department employees could lose their jobs or face lesser punishment as part of a crackdown on cheating in the agency’s hiring process.  The number of employees who will undergo this process is less than 50.  These employees improperly obtained and shared confidential testing information used in hiring.  A day earlier the department began testing over 4,500 applicants.  The test were given under tight security in order to avoid “favoritism and dishonesty.”

All this is commendable if it continues. But less than 50 cheaters on a staff of well over 2,000 employees seems a fraction of those guilty of nepotism.  And how many years should this process take to match the populations of Los Angeles County?

As a footnote early in April of 2015 members of the LAFD held a picnic in which they lauded the fact that families had multiple employees of the Los Angeles Fire Department.  They were cheering the fact that nepotism existed in their place of employment.

Rescue Ambulance 104

Rescue Ambulance 104 (Photo credit: Wikipedia)

The Weiner Component #120 – The Shrinking Economic World: Interdependence

Seal of the United States Federal Reserve Syst...

English: Clockwise from top-left: Federal Rese...

English: Clockwise from top-left: Federal Reserve, Bank of England, European Central Bank, Bank of Canada (Note: Uploaded for use on Wikinews) (Photo credit: Wikipedia)

Logo of the United States Tennessee Valley Aut...

On the one hand each nation today tends to be strongly nationalistic seeing itself as a unique entity while on the other hand each of the national and regional groups are also strongly interdependent. When any one nation is adversely affected economically then all the others are also negatively impacted. A prime example of this would be the late 2008 bursting of the U.S. Real Estate Bubble whose effect was felt throughout the major industrial nations for at least seven years.

We are today in the 21st Century and interdependent; either we all prosper or we are all undergoing stages of recovery from different levels of recessions. This situation seems to be intensified in some of the 19 nations that make up the Eurozone, which is actually a smaller version of the overall economic world. Whether they survive as an economic unit or not depends upon decisions they will make in the next few months

Most countries have a central government bank like the Federal Reserve in the United States or the European Central Bank for the Eurozone but there is a wild card in all these countries or regions and that is the private banks. To some extent they are limited by the National Banking House but mainly they operate for profit in a Market Economy environment. These banks are motivated by profit and their lending policies can create money or shrink the expenditure of funds within an economy.

An example of this would be in the U.S. after the Real Estate Bubble burst in late 2008. The major banks had recently been bailed out of bankruptcy by the Federal Government with loans and were expected to have a loose money policy to enhance economic recovery. The private banks, however, became ultra-conservative, essentially hording their monies and considerably slowing down the rate of economic recovery.

These banks as they exist today are necessary for the functioning of any National economy.  But, mainly, they exist for profit through fees or the interest rate they charge on their depositor’s savings and checking accounts.  The banks are responsible for the flow of money through the entire economy. Their CEO’s or presidents take home salaries in the millions of dollars while the government banking houses like the FED or ECB take home salaries that are in the thousands of dollars. These private banks are necessary, yet they pose a contradiction within the Free Market system.

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The economic system of a nation works simply. It always seems to follow the following

model.

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                                  THE NATIONAL BUSINESS CYCLE MODEL

 

The above model is continuous.  The duration of each cycle can vary from a relatively short period of one to several months to a number of years.  The Great Depression of 1929 lasted until the Second World War, ten to twelve years before recovery was completed.

All of this operates in a Market Economy where the forces of the Market or Free Enterprise determine what is happening.   And what causes the Market to operate is the goal of profit.  During a period of prosperity many businesses that are doing well want to expand and do better.  They generally borrow money from the banks in order to do this. There may in addition be a shortage of labor and wages will be bid up raising the costs of production. Eventually more is produced than can be sold, be it manufactured items or food products; prices drop, there is overproduction, people are laid off, unemployment rises.  The economy moves into a recession which can lead into a depression or if it misses that then directly into the recovery stage, and the cycle eventually begins again with a level of recovery.  This pattern has been endless lasting at times for months and at other times for years, or for some period between the two. And always it has been propelled by profit

This is, of course, a simplification of the many forces at work within each economy during the business cycle but it is essentially the root that powers the economies, the wild card that the Central Banks can never really totally control.  And when one country is affected it is like a virus that then spreads and in different degrees affects other nations.

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It can be and has been argued that a planned economy controlled by central planners in the government, as it was in the Soviet Union, never worked. They were always beset by bottlenecks when production stopped while the factory waited for some necessary part to be produced and shipped to them before they could finish their product. This did occur prior to World War II when the Soviet Union was undergoing its 5 Year Plans that were to turn it into an industrial nation.  And if we check carefully we will find that it did also occur in countries with the Market System.

It can also be argued that this is a form of socialism which is by definition bad and has never worked.  But if one examines the history of socialism he or she finds that it is a late 19th and early 20th century form of utopianism, which in many cases also had religious overtones. They were reaching for a state of being in an early industrial society where everyone could live happily and fairly ever after.  We are looking at a state of being that could not, with the limited resources that existed then, really exist at that time in history.

What we are considering now is a state of being that is utilitarian; that is a possible and logical outcome to what is the most efficient course of action today. Most industrial nations have from some to many aspects of the society that are operated by the government for the public good.

In the United States, for example, there is Social Security, Medicare, and Affordable Health Care to name some social programs.  One can even quote the Tennessee Valley Authority (TVA) which serves only a section of the country supplying water and electricity sold by the Federal Government.  Even some municipalities will sell water and/or electricity to their residents.  These are all social programs run for the public good rather than for profit.

Most industrial nations have many more social and industrial programs that cover their citizens from the cradle to the grave. Their taxes are high but their protections for their citizens are far more extensive than those in the United States where many of these programs cost the citizens far more than these other industrial nation’s people pay for them in taxes.

The problem as it exists in the United States and many other industrial nations is that most of the major banking houses are too big to fail.  They keep a goodly percentage of the cash flowing through the economy.  If they were to disappear by going bankrupt through bad speculation or otherwise then the nation or nations would go into a deep depression.  The banks are in the business of making large profits with their depositor’s money, which generally is insured by the Central or National Government, but their executives make decisions that could lose that money as happened toward the end of 2008 when the Real Estate Bubble burst.  The governments bailed out most of the banking houses like the Bank of America.  The banks were needed for the economy to keep functioning.

If we, as individuals, invest money foolishly we can lose our investment but if the banking houses do it the National Government using taxpayer money will have to pay for the loses. They seem to have an advantage over the rest of the society, a very unfair advantage.

In the March 4, 2015 edition of the Los Angeles Times there was a short article dealing with the J.P. Morgan Chase bank.  They were to pay 25,000 thousand homeowners $50 million for failing to properly review payment-charge notices sent to these homeowners in bankruptcy.  The bank acknowledged that it filed about 25,000 payment change notices without a proper review.  They were signed in the names of employees who no longer worked for the company or who hadn’t reviewed the filings.

If we do a review of the major banking houses from 2009 to the present we find that all of these banks paid fines to the Federal Government of multimillions of dollars for various nefarious and outright dishonest practices with virtually no one going to prison for any of the illegal activities.  Outside of a fine there has been no legal penalty for banking houses instigating illegal activities.  In fact even after the fines were paid the banks, in most cases, still made a profit on these activities.

Are there solutions to these problems?  The banking practices as they now work are completely out of kilter with the needs of society.  In fact in many instances they seem to go against the interests of the general public.  A simple solution to this would be in the United States to expand the powers of the Federal Reserve which would allow them to deal directly with the general public.

The Federal Reserve divides the United States into twelve Federal Reserve Zones. Each has a main Federal Reserve Bank and ancillary banks.  The zones could be expanded to also include Federal Commercial Banks that would deal directly with the public

There are many advantages to this. The Federal Reserve can exercise its power more rapidly over the overall economy as it continually adjusts the business cycle and national cash flow, keeping the economy in a healthier state.  The contradictions in the system disappear with the Federal Banks serving the people for their benefit and not for profit.  It makes for a far healthier economy and the negative shifts in the business cycle should be massively reduced in a positive direction.

As to the concept of interdependence we need a consortium of the heads or leaders from each of the National Banks who would meet regularly and have the power to deal with the problems that affect all the member nations.  They can work toward international levels of prosperity for all the member nations.

Is all of this possible in today’s world?  The major nations are presently cooperating in the direction of ending national flare-ups.  They are cooperating in attempting to wipe out the terrorist group ISIS and other terrorist groups in the Middle East and North Africa.

Setting up an international economic consortium would just be another step in this direction.  Currently there is the G-20, an international forum for the governments and central bank governors from 20 major nations.  It attempts to address issues that are international in content.  Collectively the G20’s nations account for around 85% of the gross world products, 80% of world trade, and 2/3ds of the world’s population.

They have been meeting annually since 1999.  Actually under other names they have been meeting since the end of World War II.  The leaders of these nations confer together and can bring home recommendations to their individual governments.  If the individual nations were to give up a percentage of their sovereignty the group’s representatives could meet more often and they could be given power to implement their economic recommendations as acts of international law.

In addition there is the United Nations which has operated on various levels since 1945, the end of the Second World War.  In part it has been politicalized but that can be changed and it can be brought to operate as a world union

The tools for all these changes already exist. All that is required is that they are positively developed.

German Logo of the ECB.

German Logo of the ECB. (Photo credit: Wikipedia)

The Weiner Component #119 – The Killing of Two Policemen in Brooklyn, New York

Picture of Rudy Giuliani

Most of the news media have been rapped up examining the murder of two policemen on the morning of December 21st in Brooklyn, New York.  Former mayor Rudy Giuliani and Patrick Lynch, president of the Patrolman’s Benevolent Association both stated that there was “blood on the hands” of demonstrators and elected officials who criticized police tactics. Apparently they saw the response to the killing of 18 year old unarmed Michael Brown and the suffocation Eric Garner, in addition to the constant killing of essentially Black teenagers and young adults, as well as a twelve year old playing in a park near his home, as the cause of this murder.

I have a problem with these idiot comments by men like the two above who should know better but insist upon taking a simplistic and political approach to life, going ballistic over an unfortunate event and attempting to gain political points for themselves in the process.

The murder of the two police officers in Brooklyn, New York by a lone assailant, Ismaaiyl Brinsley, who happened to be a Black man that had a history of mental illness and police arrests going back over a number of years; who after he shot the police officers ran a block to a subway station and there shot himself through the head.   If we ask why he did it?  The answer would put him on a level with Giuliani and Lynch except that his reasoning was dark and irrational while the other two thinking would be aimed at political gain for themselves.

There is a protest movement going on in the United States about the killing of unarmed young Black males by police and others. This currently seems to be at least a weekly event if not more often and in practically all cases is ruled, generally by a Grand Jury or District Attorney, as justifiable homicide.  Strangely, in a society that is mostly white, I don’t find any cases of young white males or Caucasian children, while playing with toy guns, being shot by officials or others justifiably when unarmed.  Something seems to be out of kilter.

The protest movement seems to have temporarily quieted down while the memorial and funeral for these two police officers was taking place. Meanwhile a number of policemen have gone ballistic in frustration denouncing anyone who refused to absolutely blame the protest movement and any liberals like the President and Attorney General for this heinous crime.  One of the leading Fox News commentators, who likes to make God-like comments which have no basis in reality, Bill Reilly, has called upon the major of New York City, Bill de Blasio, to resign.  I’m surprised he didn’t call upon the President and Attorney General to do likewise.

None of these officials or the police seems to be concerned with the endless number of deaths of unarmed black men caused in many cases by armed policemen. They don’t seem to matter compared to two murdered police officers.

In Milwaukee, a policeman who killed a Black man on April 30, 2014 will not have to face charges. The District Attorney called the case “justified self-defense.” The police officer, Christopher Manney, encountered the black man while he was sleeping in a park. He patted him down. The man, Dontre Hamilton awoke. A physical encounter occurred.  Hamilton got hold of Manney’s baton and began beating the officer with it. Manney fired 14 times killing Hamilton with shots to the chest.  Hamilton was 31 years old; his family stated that he suffered from mental illness. The police officer was fired for treating Hamilton as a criminal when he had known he had mental problems.

The issue that emerges here is firing 14 bullets. One shot should have been sufficient to stop him. Firing 14 times indicates a man who has lost control of himself and is blindly responding.  In Ferguson the police officer fired even more shots at the18 year old, Michael Brown. Before the Grand Jury the police officer spoke of seeing the teenager as a living demon. The issue here is: Who hires these people?  They seem to have a secret fear of all Black males.  They certainly don’t have enough emotional stability to be police officers.  Isn’t there or shouldn’t there be a battery of tests, written and otherwise, that can at least determine if the individual is stable enough to be a police officer?

The issue here deals with the value of a human life, of all human beings.  Are the police officers lives worth that much more than the Black youngsters that are killed?  Is the implication in the United States that white lives are very valuable but black ones are almost without any real value? What is happening throughout the country would seem to indicate this.  And if this is true it is a definite breach of the Constitution which states that all men are equal.  The whole system of values seems to be out of kilter.

A human life is a wondrous thing. Each and every individual has a potential for some great achievement.  To deprive anyone of his life goes against what this country stands for.  Even the perpetrators who are taking these lives diminish themselves in the process.  Whatever they feel they are accomplishing they are actually diminished by their act of mayhem, be it legally justified or not.

In the case of the two police officers who were virtually ambushed the question that comes up before me is: How did the shooter get hold of a gun?  To my knowledge no one has asked this question. The man had a criminal record and was mentally disturbed.  By what process could he legally or otherwise acquire a pistol?

I understand that the National Rifle Association, with its influence in Congress and the state legislatures, scores every lawmaker continually on his position toward guns, their sale and use and will financially support those who favor their position, with contributions.  I also understand that they are against gun checks of persons securing weapons as, I imagine, this would lessen the amount of pistols and ammunition sold.  To what extent are they responsible for the current gun culture in the United States? There are more concealed weapons being carried around today than there were in the wildest days of the wild-west in this country.

Are guns so easy to acquire on the East Coast of the United States that anyone, regardless of his background, can get one at will?  Has the NRA been successful in making the laws so inept that anyone can easily and legally acquire a pistol?  There’s certainly something wrong with the laws on the East Coast of the United States when a crazy with a history of mental illness and a criminal record can show up at his ex-girlfriend’s apartment and threaten to shoot himself and then shoot her the day before he goes to New York City and arbitrarily murders two policemen.

If responsibility has to be placed at someone’s doorstep in this case it should rest at the door of the NRA whose goal seems to be to put a weapon in the hands of everyone regardless of their mental state or their criminal history.  Who is responsible for this outrage?  Mostly the National Rifle Association and their continuing lobbying policies are.  Unfortunately this episode will play out otherwise.

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A tragic incident has occurred.  No one will question that. Will we continue to have reenactments of these tragedies?  Isn’t it time for legislation both on the state and federal levels to bring about sensible laws concerning gun culture in the United States for both the perpetrators of these tragedies and for their victims?

I am reminded of John Donne’s 17th Century poem which is as valid today as it was when it was first written.

No man is an island,

Entire of itself.

Each is a piece of the continent,

A part of the main.

If a clod is washed away by the sea,

Europe is less.

As well as if a promontory were.

As well as if a manor of thine own

Or of thine friend’s were.

Each man’s death diminishes me,

For I am involved in mankind.

Therefore, send not to know

For whom the bell tolls,

It tolls for thee.

The Weiner Component #118A – Undermining the President

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

Never in moments of intense fantasizing could I conceive of anyone or any one group in Congress attempting to disrupt the President in foreign policy negotiations. For that matter neither could I visualize the Speaker of the House of Representatives inviting a foreign leader to address a joint session of Congress on a policy directly opposed to that of the President of the United States.

What we have here is a question of Why did these actions occur? What caused the Speaker and 47 out of the 54 Republican members of the Senate to act in this fashion, to go against the policies of the President, who constitutionally is our chief negotiator in dealing with foreign powers? And to do this in the midst of delegate negotiations without knowing anything specific about them except that they are at a critical point.

To what are all these Republicans really objecting? The probability is that if these negotiations fail there will eventually be war with Iran to keep Iran from developing an atomic bomb. If there is a war it will be far bloodier than that fought in Iraq. Iran has four times the population of Iraq and a well-developed military. None of these 47 Senators are or will be volunteering their children to serve in the military.

What strikes me, and does so very sadly, is that these people are basically reacting to their conscious or unconscious feelings about a Black man being President of the United States; they are reacting to their inner prejudices, probably to their feelings of superiority and/or inadequacy. They resent and, in some cases, hate the current President of the United States. They would actually prefer war to having the President achieve a diplomatic victory.  I would suspect that most of them aren’t even aware that these negotiations are not just between the United States and Iran but actually between Iran and the other four permanent members of the United Nations Security Council plus Germany. In point of fact most of the economic sanctions against Iran are being leveled by our allies or fellow negotiators.

The basic objective is to keep Iran from being able to build an atomic bomb.  If Iran were to have its own atomic bomb would she be able to use it? The answer to that is in the negative. If she were to threaten to use it against Israel then Israel could threaten to use a similar weapon against Iran. They would be able to totally destroy each other.

North Korea, which has a totally irrational government, has developed its own atomic bomb. This allows it to bluster a lot against its neighbors and run assorted missile tests into the ocean but there is no way it will use the bomb because it would be an act of suicide. North Korea has an atomic bomb but its enemies like the United States and Russia have much larger atomic weapons.  It would be like someone with a firecracker attacking someone with a stick of dynamite.

Iran, which is far less irrational than North Korea, would be even less inclined to use her weapon.  Also the major reason for the negotiations from Iran’s prospective is to end all the sanctions that have been applied against her, most of which have been placed by United States allies.

If Iran can come to terms with her enemies and openly trade with the rest of the world then the standard of living will rise significantly for all her citizens.  It is greatly to her advantage to become an equal member with all the other nations of the world.

She wants to be free to develop the use of atomic energy in her country.  A proper compromise would be to allow her to do this without her being able to produce enriched material that could be used in making a bomb.  And, at the same time, have the sanctions against her dropped.  Can this be done to everyone’s satisfaction?  That is what the negotiations are about.

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Under the staunch leadership of Tom Cotton of Arkansas, a junior senator, who has taken his seat in the Senate two whole months earlier, the GOP (Grand Old Party) sent a letter to the Ayatollah of Iran trying to undercut the international negotiating currently going on between Irans and P5+1.  This group consists of the five permanent members of the United Nations Security Council: the United States, Russia, China, United Kingdom, and France. The plus one is Germany.

When Tom Cotton was first interviewed after the announcement of sending the letter to the leaders in Iran he acted as though he had just discovered the wheel, the mechanism that would put him in charge of future dealings with Iran.  He seemed to have the impression he was ready to negotiate between both Republicans and Democrats for future outcomes with Iran.  Forty-six other Republican Senators signed the letter, the remaining seven did not

Whether he understood it or not this was an attempt to undermine the Constitutional powers of the President of the United States.  On the internet there is currently a petition to the President being organized, which currently has over 150,000 signatures, requesting that these 47 Senators be tried for treason.  The Republicans have made an international negotiation aimed at limiting Iran’s atomic ambitions into a political party partisan issue not only against the President of the United States but also against five of their allies.. The majority of Republican Senators have lined up with the Iranian hardliners who want no negotiations, interesting bedfellows.

Cotton and his fellow Republicans offer no alternative plan. Statements made indicate that they eventually expect complete capitulation by the Iranians.  The image of their ability that they have given to the rest of the world is pathetic.  In fact both liberal and conservative newspapers denounced their action in the harshest terms.

Imagine attempting to make an agreement with your enemy against the leader of your country. The Iranian leaders have denounced this as a propaganda attempt. The majority of the 47 Senators have come out with lame excuses for what they did.  Senator John McCain blamed it on a snowstorm and wanting to catch a plane out of Washington, D.C. Friday night before the storm struck. He didn’t have time to read the letter; he just signed it.  Others stated it was a joke and President Obama didn’t have a sense of humor by not seeing it.  President Obama said he was “embarrassed” for the Iran letter signers.

Tom Cotton sees nothing wrong with what he did.  For the first time in the history of the United States he has made negotiating with a foreign country a political partisan issue, something that was inconceivable the day before it happened.

If this is an example of Republican dominance in Congress, then God help us for the remaining two years until the next election. For there is no one else that can.

To site Will Rogers, the cowboy philosopher of the 1920s and 1930s, the children (Congress) were loose in the China Shop and they were all swinging their little hammers freely. Hopefully the destruction will not be too extensive.

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As a footnote it should also be remarked that there is an interesting level of irony occurring between the United States and Iran.  Both countries consider ISIS a threat to the Middle East and both countries are presently at war with ISIS.  The U.S. is conducting an air war continually bombing the ISIS military and facilities on the ground and Iran is involved in military ground operations against them.  The two countries are currently engaged separately on the same side in a war.

Currently the Iraqi military with Iranian forces and generals are fighting against the ISIS extremists in a hard fought battle to retake the city of Tikrit in the northwest section of the country, which they are expected to win, the first major victory against ISIS by Iraqi and it allies troops.

Interestingly, the article that stated this fact in the L.A. Times on Wednesday, March 12, 2015, made no mention of the Iranian participation; they just called them allied militiamen.  From what I understand most newspapers and TV commentators have made no mention of the Iranian military participating in this war.  For some strange reason this seems to complicate the War against ISIS.  It makes it an anomaly for most Republicans.  How can they accept Iran as an ally in the war against ISIS?

If we go back before the present government existed in Iran, when it was ruled by the Shah, then the U.S. was close allies with that country. We could move in that direction again.

If we think back to the Vietnam War, the longest war in U.S. history, which we eventually lost, then consider that today there is a Hanoi Hilton where Americans stay when visiting that country as tourists and the country, Vietnam, does advertise for tourists to visit their friendly shores.

Many of our enemies of yesterday are our friends of today, for example take one of our closest allies, the British, originally we went to war with them, twice.  The first one was called the American Revolution and the second The War of 1812.  Is this pattern of eventual friendship suddenly likely to change in this instance? After all we are allies with them in the fight against ISIS.

(Footnote: I’m averaging about 250 to 350 comments each day.  Among these I get numerous requests for information.

Official photographic portrait of US President...

Official photographic portrait of US President Barack Obama (born 4 August 1961; assumed office 20 January 2009) (Photo credit: Wikipedia)

Most of these are answered in The Weiner Component #114 – Responding to Your Enquires.)

 

 

 

 

The Weiner Component #118 – Republicans & Democrats

(I’m averaging about 250 to 350 comments each day. Among these I get numerous requests for information. Most of these are answered in The Weiner Component #114  – Responding to Your Enquires.)

Will Rogers, in a lecture he gave sometime in the 1920s, said something to the effect of “All Congressmen”, and I’m sure he included the President, Calvin Coolidge, in that group, “are like small children carrying hammers in a china shop. You just hope they will not do too much damage.”

In the case of George W. Bush his “hope” did not work. Bush naively and stupidly got the country involved with an invasion of Iraq believing that he and Vice President Dick Chaney could turn the country into a small version of the Democratic United States. The failure of this idea and the cost in human lives, both of American soldiers and Iraqis, and the billions of dollars wasted in this pointless search for “weapons of mass destruction” was inexcusable. What Bush accomplished was to destroy the balance of power in the Middle East and stir up terrorism and civil wars which still exist today.

To the best of my knowledge he has never admitted responsibility for his actions. In a manner of speaking he destroyed the china shop Will Rogers was talking about. The irony of the situation is that the Democratic candidate for the presidency in the 2000 Election got a much higher popular vote than the Republican, Bush, but problems developed with the ballot in Florida where his brother was governor and in addition the Chief Justice of the Supreme Court invalidated the problem making Bush the President Elect.

In the 2008 Election, if John McCain had won the presidency instead of Barak Obama the probability is that this country would have fallen into a depression deeper than that of 1929 and that we would still be fighting in Iraq and have full forces in Afghanistan. Bin Laden would still be alive planning new atrocities for Al-Qaida to carry out. We might even have gone to war with Iran. Affordable Health Care (Obama Care) would never have happened and on an overall basis the country would be going through a period of great misery for a very large percentage of the population. He might have saved the banks that generated the Real Estate Crisis by continuing the bailout that the Bush Administration had begun but he would never have done so for the auto industry.

And if Mitt Romney had been elected President in 2012, as he had so avidly wished, then the United States would probably have continued full scale war in Afghanistan and currently be at war with Iran. Affordable Health Care (Obama Care) would today in early 2015 be in the process of just holding out by being filibustered in the Senate by the Democratic minority. In addition his economic policies would most likely follow the principle of the less government the better. This would lead us in the direction of a recession with an increase in unemployment. The decrease in government regulations that he promised in his 2012 campaign would bring the country back to or below the state that existed before the 2008 Economic Debacle with the Market running the country businesswise and profit wise. Most economic decisions would be made by the marketplace.

In foreign affairs remember that Mitt Romney visited Europe for three days during his 2012 campaign. It initially had to do with an equestrian activity with which his wife was involved; a dancing horse contest. Within the first twenty-four hours Romney publically stated something that turned every British newspaper in the country against him. One London paper called him a twit. Other dailies were equally as unenthusiastic about him. He did not rate quite as low in the other two countries he visited, but in each he generated a negative image of himself. With this level of non-achievement just think of how he would have done as America’s chief diplomat. It would have been an unmitigated disaster.

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Of the two major political parties that exist in the United States today the Democrats constitute the majority or largest political party. They were first organized by Thomas Jefferson, the third president of the U.S., whose object was to get himself elected President. He saw himself as representing the small, independent (Yeoman) farmer, as opposed to the Federalist Party which represented the seaboard city business interests. The Federalists ceased to exist after the War of 1812; they supporting the wrong side in the war.

The Republican Party came into existence for the Election of 1860. They sprang from the Whig Party and numerous other small groups including the Abolitionists. The Republicans won the Election of 1860 with about 43% of the vote. The Democrats had split into two parties, a Northern and Southern Democratic Political Party, each running its own string of candidates. Neither had as many votes as the Republicans.

Abraham Lincoln was elected President with under 50% of the vote. In fact he did not even appear on the ballots of any Southern state. When Lincoln ran for a second term it was under the guise of the Union Party, with a Southern Democrat from Tennessee Andrew Johnson, as his Vice-Presidential candidate.

Outside of the issue of slavery the Republicans have always represented the business interests, while the Democrats, following Jefferson, have always held the welfare of the general population as primary. During most of the history of this country the two parties have generally cooperated. In fact up until relatively recently most people in Europe and Asia saw both political parties as two sides of the same entity. During the Cold War Era many, if not most Russians did not understand our criticism of their being a one party state since the United States, in their view, was also a one party state.

The polarization of the two political parties began early in the 21st Century with the emergence of the Tea Party onto the political scene. They and the evangelicals somehow gained control of the finances within the Republican Party and have been able to force their will over all Republican Party members, making them hue to what seems to be the party line, which among other things is limiting free medical decisions for women.

It’s questionable as to whether this will continue or to what extent it will continue in the 2015-2016 Congress. Assorted splits are occurring within the Republican Party. As to cooperation with the Congressional Democrats that is also questionable. We could end up with total gridlock with some compromises occurring on nonpolitical issues.

It is interesting to note that on March 9, 2015 forty-seven Republican senators sent a letter to the religious head in Iran stating that any agreement signed with President Obama will last just through his current term as president; that they will take over the White House in 2016 and the new Republican president will invalidate the agreement. They also stated that they expect to be in control for a long period of time and that they will not sign any future agreement. It seems that the 47 Republican Senators are now undertaking foreign policy agreements; that they are attempting to undercut the President with their own foreign policy. This is something new. It has never happened before in the entire history of the United States. This unprecedented act itself may be illegal. It will be interesting to see what happens.

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As a result of the lowest voter turnout in years in the Midterm Election of 2014 the Republicans have a majority in both Houses of Congress. However to get a bill passed in the Senate they need a super-majority, and sixty votes to avert a filibuster. There are 54 Republican Senators and 44 Democrats and 2 Independents. This means they need the cooperation of a number of Democrats to pass any legislation that the Democrats generally oppose. They also need a 2/3 majority in both Houses of Congress to override any Presidential veto.

It should be interesting, if not tragic, seeing what happens over the next two years.

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Years ago Will Rogers said: “I don’t belong to a political party. I’m a Democrat.” In essence that sums up the Democratic Party, It stands for everyone else who’s not a Republican. They place less emphasis on business and attempt to give the common man an honest deal. With so broad a field of representation the Democrats in Congress seem to have a problem verbalizing many of their objectives or accomplishments.

The Republicans do not have this problem. Actually they seem to come to conclusions before the facts are in and also many times by constant repetition feel their conclusions are true without any factual evidence, repetition of a statement makes it true in their estimation.

As a result of this, and for other reasons, we now have in the United States a fairly large number of people who have grown disgusted with both political parties. They have become Independents. The result is that they don’t give any impute to pre-election ballots, allowing a not true picture to emerge during and after the elections. In addition a large number of these people as well as many Democrats don’t vote in midterm elections, but only in Presidential ones.

Minority groups, particularly Hispanics, have been strongly affected by non-action or negative action being taken upon immigration reform. They stayed away by droves in the 2014 Midterm Election. What they did was to inadvertently reinforce the political party that most opposes them.

Perhaps the major reason for the disinterest and disgust in the United States about politics and political parties is: What do the political parties do?  As we’ve seen it takes a lot of time and effort to understand what is or is not being done by Congress, particularly since the Democrats are relatively quiet about their successes and failures. Most people are too busy to try to concentrate on Congressional actions. This is particularly true with the confusion generated by the different news media, both liberal and conservative. Generally many people consider both political parties equally inept.

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One of the major problems concerned with politics in the U.S. today is the price of running for office and of remaining in office. In addition the Supreme Court has decided that the spending of money in political campaigns is an expression of free speech as stated in the first amendment of the Bill of Rights. Consequentially they have allowed almost unlimited contributions in any kind of political contest. This does not only affect Congress but also state and municipal government elections.

Imagine a contribution of $300 million such as the Koch brothers seemingly are willing to spend in a Presidential Election or $100 million that Sheldon Adelson did spend on the Republican candidate in the 2012 Presidential Election. What influence would that give these individuals over the President and Congress?

Everything involved with political campaigns cost money, much more money than most candidates have or are willing to spend. This includes signs, buttons, radio and television time and productions or personal communications with constituents to mention just some of the costs. We can also add that their staffs and all the commuting they do during an election is quite expensive

All of this gives large donors in particular unlimited access to their candidates and to the candidates, if they are elected, an affinity to want to satisfy their large contributor’s needs and desires. All this, of course, are not bribes but putting useful measures up as laws, or so we are told.

For example the Koch brothers have been pushing in Kansas, laws that limit or forbad the use of natural sources like light or wind to produce green energy. They earn much of their money from the use of oil. Sheldon Adelson, who owns casinos in Las Vegas, wants laws that forbid the use of the internet for gambling.

Whether you agree or disagree with these men’s actions the question remains: How do candidates remain honest? When does a contribution become a bribe?

If we look at the Pharmaceutical Industry, specific medicines cost more in the United States than in any other nations. It is less expensive to have your prescriptions filled in Canada or Mexico, or for that matter in any European country, than it is at your local pharmacy. And this includes the price of shipping it to you. How can this be? You get the exact same medicines, manufactured by the same company in all cases. The answer, of course, is that Congressional laws fix the price in the United States but all other countries have contracts with the drug companies lowering the cost of these same pharmaceuticals.

It’s interesting to note that these companies are one of the major contributors to political parties, particularly to the Republican Party. Most medicines, particularly new ones fresh out on the medical market have high prices that are fixed by law and their price cannot be legally reduced in the United States.

The Republicans tend to loudly disbelieve in climate change; in fact it is illegal to mention that term on any official document in the state of Florida. Companies run by the Koch brothers make multi-millions each year selling and transporting oil and oil products. They are adamantly against the concept of climate change and their millions strongly fund the Republican Party. It is convenient if you are a practicing Republican to not believe in climate change.

There are innumerable other examples of this type of behavior. Isn’t it time that simple principles of funding were established for all elections. In both state and federal elections, radio and television stations can by law be required to grant a certain amount of free time as a public service. Legally limits can be set for all different kinds of elections. Government services can be set up for a fixed amount of written material and TV commercials keeping an even amount for each candidate so that the playing field is the same for all candidates depending upon what office they are after. Limits can also be set as to how much can be spent on each type of election. Even though this would take a Constitutional amendment contributions can again be limited. It is time to take all elections out of the hands of the millionaires and the billionaires. It is time for fairness for all Americans in elections.

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)

 

The Weiner Component #117A – The United States & the Eurozone: Growing Interdependence: Working For the Common Good

English: A map of the 12 districts of the Unit...

English: A map of the 12 districts of the United States Federal Reserve system. (Photo credit: Wikipedia)

Countries using the Euro de jure Countries and...

Countries using the Euro de jure Countries and territories using the Euro de facto Countries in the EU not using the Euro (Photo credit: Wikipedia)

Toward the end of the year 2008, while George W. Bush was still President of the United States, the Real Estate Bubble exploded in the U.S. causing phenomenal economic misery throughout that nation and, on a slightly lesser level, throughout the Industrial World.  Many of the major European banks and many European citizens had purchased and held onto Hedge Fund Real-Estate bonds that now became worthless or nearly worthless. In essence the entire civilized world took a downward economic fall. This included for both banks and many individuals, particularly in Greece, Spain, Portugal, Iceland and Italy. In fact the three major banking houses in Iceland all went bankrupt. Some nations fared better than others but all were hit to some extent.

The real estate hedge fund sales, dividing up mortgages into microscopic parts, selling them through numerous hedge funds, and continually driving up real estate values,   had been going on for over thirty years. The process had existed through the entire careers of many bankers and investors. It had been a traditional safe hedge or investment which paid reasonable dividends. Suddenly all this ended with trillions of dollars’ worth of bonds being virtually worthless.

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The Federal Reserve tends to supervise the United States and the European Central Bank controls the Eurozone. They can add or subtract money from within their domains. Unfortunately this process can work toward solving economic problems but within a relatively slow period of time.

Economics tends to be a loose science that seemingly becomes better understood as time and situations happen.  Economic recovery is a gradual process and the FED or ECB does not have total control of the tools of recovery.  In the case of the United States the legislators, whether they understand it or not, control fiscal policy and by some of the laws they pass can hinder or aid recovery . In the case of the ECB there are 19 separate nations, with separate histories, languages, and a sense of nationalism, that have agreed to cooperate together with a single currency, for the mutual benefit of all of them.

Some of these 19 nations are currently in a dire economic condition with high unemployment and heavy debts exceeding their GDP and undergoing extreme austerity as they attempt to pay off their killing loans to those members who have supported the bailouts of their economies. Greece, for example currently is the worst off of all the nations in the Eurozone. She has 25% unemployment, has been bailed out at least twice by the ECB and is needing another loan in order to not go bankrupt.

In addition the agencies within each country that control the currency flow, and can increase or decrease it by their actions, are the banks within each nation.  These operate separately and for profit. Under both the Federal Reserve and the ECB the interest they can charge is largely controlled. They, however, until the end of 2008, were the instruments that filled the void where the societies needed freer flowing cash. They did this for three decades and finally continued forcing the process in such a way as to bring about the recessions of 2009 throughout most industrial nations.

In the United States the Federal Reserve, despite the actions of the Republican led House of Representatives whose policies tended from 2011 on to shrink the size of the Federal and State Governments creating even more unemployment, was able by creative Monetary Policy to work toward improving economic conditions within the country

The Federal Reserve largely solved this problem for the United States by both adding money at the rate of 40 billion dollars a month to their economy and by buying up 45 billion dollars a month’s worth of mortgage paper. Without ever announcing what they were doing the Fed forgave the mortgage holders their property debts. This, in turn, added much of this money to the cash flow as it was spent on new productivity rather than retiring debt.

The European Central Bank is currently facing a similar problem; they are currently facing the beginnings of deflation. Their GDP is actually decreasing while their population is increasing. The ECB’s immediate solution for all 19 nations in the Eurozone is to add 60 billion euros to the overall economies every month until September 2016. This is a giant economic stimulus plan that will hopefully boost the sagging economies and fend off deflation bringing about recovery.

Will this help countries like Greece, Spain, Portugal, and Italy who are currently following intense austerity programs in order to pay back their debts to other Eurozone countries?  This is an interesting question?  These nations have been directly aided by the ECB.  At different levels they are undergoing stringent living in order to pay off individual and government debt.  Will the people in these states continually be willing to undergo a lower standard of living than the rest of the Eurozone?

Greece, which is probably in the worst shape of all of these countries, has voted No in its last election. Their new government, with the support of the bulk of their population, is currently attempting to negotiate an easing off or forgiveness of some or all of the debt.  Will they succeed?

If the negotiations break down and nothing is resolved then Greece will be forced to leave the Eurozone and probably, sooner or later, declare bankruptcy and the ECB will collect nothing. If the ECB attempts to force payments from Greece, who currently needs a further bailout of a billion or more euros and attempts to make the repayment even more stringent than its current state, then the Greeks will be forced to withdraw from the Eurozone. If a compromise is reached then, at least, part of the debt will have to be forgiven.

If that happens then the other countries that are in extreme debt to the Eurozone will also want and expect their debts to be modified.  Spain, for example, has an extreme left party that will be running in the next election on a platform of ending stringent living in Spain.

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There are certain factors we should keep in mind.  Up to the 2008 Crash virtually all the banking houses were encouraging all the people and governments to borrow money. Times were good and could only get better was the popular belief. Not all the nations within the Eurozone took this up; some were much more conservative in their borrowing and spending habits than others. Five or six within the Eurozone did take it up and carried the borrowing as far as they could. There was a similar situation within the United States and in some of the other industrial nations.

It should also be remembered that money is no longer gold coins. That ended in the 1930s. Today money is paper which is used as a means of exchange and has nothing behind it except the word of the government that prints it. Also that the amount in circulation is determined by the particular government or the ECB or in the case of the United States by the Federal Reserve.

The amount is arbitrary and can be increased or decreased at any time. The Federal Reserve forgave many of its debtors and the country now seems to be rapidly moving toward recovery. The ECB needs to rethink its position. Many of its members still have the fixation that money is gold or that those who had been living freely through 2008 must pay their debts. It is time for these people to mentally enter the 21st Century and ask themselves what is best for all of its members. After all, Europe is probably one of the major industrial centers of the world and cash or money serves only as a means of exchange. Punishing the people of a country for careless living which was encouraged by the financial institutions does not solve major economic problems. It can, if fact, exacerbate them so that everyone will economically suffer.

In the United States a goodly percentage of the homeowners in 2008 ended up owing more on their properties than they were worth. The Federal Reserve forgave many of them what they owed. It never admitted that it did this. If it had there might have been a hue and cry against this action.   If that had happened the U.S. would probably still be in a deep recession or another Great Depression.

This is a strange issue. Given a choice, what would the American people have chosen? Allowing a large number of people undeservedly to be forgiven their debts and see the country head in the direction of a return to prosperity or fair and equal treatment of everyone and a major depression.

This is actually the problem the Eurozone is facing now. Currently the Greek government is negotiating to either reduce or be forgiven its debts. Germany and France want it to pay its debts.  After all, they have to be punished for overspending prior to 2009.

Is the issue economic justice or a solid return to prosperity for all the nations in the Eurozone? Which is more important to see immediate justice or deal with what is best for all the nations within the Eurozone? An interesting question!

Fortunately the Federal Reserve in the United States was able to act surreptitiously. The European Central Bank does not have that option. The only realistic action it can take is to partially forgive the loan in the present and eventually drop it completely. If it does this, combined with the stimulus the Eurozone will once again reach a high level of prosperity. If the ECB demands the full return of what is currently owed in order to negotiate a further stimulus, that is, equal fairness for every country; then these nineteen countries face a hard economic future.

On Friday, February 20, 2015 at a negotiating meeting of Eurozone finance ministers a compromise was reached giving Greece four more months on its bailout. One result of this temporary compromise sent the Dow Jones industrial average and S&P 500 to new highs. The Euro resounded to $114 and Germany’s DAX index closed at a record high.

Depending upon the actions of ECB in June the situation could be back to where it was a week before the temporary compromise. By then it should be obvious to everyone involved that rigid enforcement of the original agreement would have strong adverse effects upon all the nations involved. What will happen will depend upon the ability of all these people to define the best common goal for all of the Eurozone.

English: The European Central Bank. Notice a s...
English: The European Central Bank. Notice a sculpture of the euro sign. (Photo credit: Wikipedia)

The Weiner Component #117 – Following the Federal Reserve’s Example: the European Central Bank

The 2008 Real Estate Debacle affected not only the banks and economy in the United States but also those in Europe and other parts of the industrial world. And like conditions during the Great Depression each country or region has had to fend for itself, work its way through the economic disaster.

The United States followed a method of creative monetary policy, adding gradually trillions of dollars to its national cash flow in order to bring about a return to the direction of prosperity. In essence it created and added 85 billion dollars a month to its economy for well over two years. The result of this was partial recovery with national unemployment dropping to slightly over 5 percent.

(It should be added that had Congress also applied fiscal policy unemployment would probably be down to 2 1/2 to 3 percent.  But that would today be impossible with a Republican majority in both Houses of Congress.)

The European Central Bank (ECB) is the equivalent of the Federal Reserve, controlling monetary policy for its 19 member Eurozone economy. Mario Draghi, the director of the ECB has begun their version of creative monetary policy to bring about economic recovery within the 19 nations that make up the Eurozone. It should be remembered that this economic union was initially called The Common Market.

The European Central Bank will buy $69 billion or 60 billion euros in bonds each month until September 2016. They do not have the mortgage dilemma that had existed in the United States but they do have a debt crisis in a small number of their member states that they are currently essentially attempting to ignore. The ECB is beginning this process with traditional monetary policy. But even this is a radical step for the ECB because they will be adding 60 billion euros to the cash flow every single month. This will be done by buying back bonds.

In all they will be adding a total of over one trillion euros. Where is all this money going to come from? The ECB will print it and add it over a twenty month period. At the end they will be adding 1.2 trillion euros to the Eurozone cash flow.

Remember, currency has no real value. There is nothing behind it but the word of the agency or country that provides it. This is true for all nations today because there are not enough precious metals in existence to conduct all the business that occurs within and among all the nations. The value of this currency is set in the nations using the money by their governments and by what other countries are willing to trade for it.

There are several major problems the Eurozone is facing. To use a historical example: When the United States was first formed during and immediately after its Revolutionary War in the late 19th Cwntury its government consisted of thirteen separate states and a Continental Congress made up of representatives of these states. In order for Congressional legislation to pass, each of the individual states had to sanction it. Also only the states could tax. Congress had to request money from each of the states which each of the thirteen states could send or not send. What existed was 13 sovereign states with an essentially powerless central government.

This is largely what exists in Europe today, nineteen sovereign nations that largely speak different languages who have bound themselves into an economic union. Some are wealthier and more efficient than others. It is to everyone’s advantage to belong to the union but some of the members are currently in dire straits.

In the period prior to 2009, some of these countries using creative bookkeeping, which was largely created for them and their citizens by large American banking houses like Goldman Sacks, slowly incurred extensive debt. The basic premise, I assume, was similar to that used by the banking houses in the United States that their increasing prosperity would grow the debt out of existence. At the end of 2008 the Housing Industry collapsed in the U.S. shrinking economic growth throughout the world and leaving these nations and many of their citizens hopelessly in debt.

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The Eurozone is a monetary union of nineteen European states that have adopted the euro as their official currency. They are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. Other European states are getting ready to join and some have adopted the euro unilaterally.

The current major problem facing the ECB is deflation. Their Gross National Product (GDP) has been slowly shrinking; it is currently down .02%. This means, particularly with their population slowly increasing, that the average standard of living for most of the people is slowly dropping.  In order to avoid this and to begin growing the GDP again the ECB will, using monetary policy, increase the cash flow throughout the Eurozone by 60 million euros per month for about twenty months. Obviously they believe that this will reverse the current pattern. Hopefully in this they are right.

The euro tends to be a far better currency than most of the 19 nations had before the Common Market. It has been between 1.2 to 1.5 percent above the U.S. dollar. The only currency that has been higher has been the British pound which has been between 1.5 and 1.7 cents above the U.S. dollar.

All the nations involved have benefited from this economic union, but all these countries are not economically equal, and all of them have otherwise remained independent sovereign nations with strong feelings of nationalism. Currently Greece, which had a youth unemployment level of 53.5% in November of 2014, had its government for a number of years borrowing off the books billions of euros. In November of 2010 Eurostat revised the debt of Greece putting the deficit at 15.4% of GDP and public debt at 126.8% of the GDP. This was the greatest deficit among all the EU member nations. The European Central Bank (ECB) bailed Greece out with money and an austerity package.

Despite the austerity measures, possibly because of a continuing recession, the deficit continued to grow and in the beginning of July 2014 there was a second bailout of one billion euros that was due to be paid back in late July. Greece ended its six year recession in the second quarter of 2014 but was still facing, economic and political instability and heavy debt

There has been spontaneous protests strikes, heavy unemployment, and large scale discontent ever since the bailout loans were first made. In the January 25, 2015 Election the Left Wing Syriza Party won the majority position with 149 out of 300 seats, 36% of the popular vote. The second, out of the 20 functioning political parties in Greece, was the (NO) New Democracy with 27.81% of the vote.

Syriza campaigned as the anti-austerity party. They are a radical left-wing political party whose platform was to end Greece’s austerity measures. In a manner of speaking by the way they voted the Greeks held out their middle finger to the European Central Bank (ECB).

It’s understandable in a country which, for whatever reason, has been in an ever increasing recession for the last seven years, has seen its GDP decrease about 25% and unemployment rise above 25%, with the ECB now asking for further austerity.

The new Prime Minister, Alexis Tsipras, has promised to renegotiate the country’s 270 billion bailouts. He is also seeking forgiveness for most of Greece’s 270 billion euro debt. He has pledged to reverse many of the austerity reforms, such as cuts in pensions and the minimum wage and public sector layoffs.

Germany and France want the ECB to adhere to the original austerity agreements; in a sense they want to continue to punish Greece and the other nations who overspent and received bailouts from the ECB. Some of the other countries are Spain, Portugal, Ireland, and Italy.  In Spain a radical left party is presently organizing protest marches in the country. They may well emulate Greece in their next popular election.

As of now nothing has been done. The European Central Bank has put off any possible settlement for several months. What will happen then is anyone’s guess.

The ECB needs agreement from all its members in order to act. If it demands that the austerity continue then Greece will be forced to leave the Eurozone and go back to its old currency, the Drachma, and eventually be forced to declare bankruptcy since at the present it is at the point of needing another bailout for which its new prime minister swears he will never ask. If, at that time, the ECB accepts a compromise it will be establishing a precedent that will apply to the other nations that have overspent in the past and need or will need bailout funds.

All this is an interesting dilemma! This is particularly true since the euro has no intrinsic value. Additional funds can be printed and issued as needed. In fact this is the Monetary Policy plan that the ECB is about to start that will hopefully reverse the current deflation cycle the Eurozone is presently undergoing.

This problem is another result of the U.S. Real Estate Bubble bursting in late 2008 and causing a world-wide recessions. Both the Eurozone and U.S. property dilemmas were caused by the major banking houses.

In the United States the Federal Reserve, with the approval of President Barak Obama, by its monthly purchase of 45 billion dollars’ worth of mortgage paper, essentially forgave a large percentage of the multitude of homeowners who found themselves over their heads in debt on their homes. The result of this has been to solve the multi bundling of mortgages and return the housing industry to sanity and to move the country largely in the direction of economic recovery. Hopefully the dual actions will eventually occur.

Ultimately the ECB will have to take a similar type of action, largely forgiving the debt of the few nation’s that are currently in dire straits and add over a trillion euros to their overall economy or see the Eurozone largely fall apart. And if this happens and the Eurozone is largely broken up then Europe could see a return to the conditions of 1929 when each individual nation had to fend for itself during the time of the Great Depression.

(Footnote: Many of my readers have asked me questions in their comments. I carelessly did not number the original publication of “The Weiner Component #114.” However all the questions are answered in that blog: “Responding to Your Enquiries.”)

English: Clockwise from top-left: Federal Rese...

English: Clockwise from top-left: Federal Reserve, Bank of England, European Central Bank, Bank of Canada (Note: Uploaded for use on Wikinews) (Photo credit: Wikipedia)

English: Various Euro bills.
English: Various Euro bills. (Photo credit: Wikipedia)

The Weiner Component #116 – The U.S. & the Federal Reserve

In 1935, Cret designed the Seal of the Board o...

English: Janet Yellen being sworn in by Fed Ch...

English: Janet Yellen being sworn in by Fed Chair Ben Bernanke (Photo credit: Wikipedia)

By Friday January 9, 1915, the Federal Reserve had turned over $98.7 billion to the Treasury for the year 2014. In 2013 it was $79.6 billion and in 2012 it was $88.4 billion. All of this was the interest on the National Debt bonds, much of which the Federal Reserve had purchased since 2009.

In 2008, the last year of the Bush Administration, the country faced the explosion of the Real Estate Bubble that had been gradually building over the prior thirty years. The big banks had been going crazy with denial in 2007 with their abuses when the oncoming failure became obvious. In essence every dollar in circulation suddenly dropped in value to about a dime. The Obama Administration did two major things in 2009 and 2010. They were able to avoid through rapid action an economic crash potentially larger than the Great Depression of 1929 and they passed Affordable Health Care (Obamacare). In 2010 the country elected a Republican majority in the House of Representatives and thereafter nothing was done by the House to alleviate conditions caused by the Real Estate Bust. In fact Congress passed laws to exacerbate the negative conditions.

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It should be noted that the Federal Government has two major tools to deal with downturns in the economy. One, used by the Federal Reserve, is Monetary Policy and the other, used by Congress and the President, is Fiscal Policy. This is Macroeconomics.

Fiscal Policy has to do with Congress passing bills that add money to the economy. Keep in mind that all currency has nothing behind it other than the word of the National Government. All money is now a means of exchanging something of value for something else of value, goods and services for goods and services.

In 2011 or 2012 President Obama proposed a bill that would create jobs by updating the infrastructure of the United States. The electric grid across the U.S. is well over fifty years old, much of it predating World War II, and parts of it are in constant danger of breaking down. It has not dealt with the changes in demography or increases in population that have occurred over that period. The country has come close to power outages because of cold weather conditions or for other reasons. Many of the bridges throughout the nation are also well over fifty years old. A number have collapsed; many are still waiting to be refurbished.  Also many schools, some of which were built over one hundred years ago, also need refurbishing or replacement throughout the country. Many of the sewers in cities are well over one hundred years old; a few have collapsed in parts.

All of these and many other projects will have to be done at some point in the future. Maintenance is required to keep all aspects of society properly functioning. From 2011 on the House of Representatives with its Republican majority has tended to squeeze the society, downsizing government and adding to unemployment, in fact at one point it closed down the Federal Government by refusing to fund it. The present is an ideal time to do a lot of these fiscal projects as interest rates are at just barely above 0.

Monetary Policy is a tool of the Federal Reserve. It can be used to increase or decrease the amount of money in circulation. Ordinarily the Fed adjusts the money flow in the economy by increasing or decreasing the amount of money it borrows through the sale of bonds. What happens is decided by the rate or non-rate of inflation. The Fed is always cashing out and selling bonds. There are short term, medium term, and long term bonds, lasting from a few months to a number of years. The rate of sale is determined by the level in interest paid on these bonds. The higher the interest the greater the sale and the lower the interest the less the sale. These interest rates are determined by the level of inflation in the country. The higher the inflation the higher the interest. Here money is taken out of the national cash flow so that there is less available to be spent, thus gradually forcing down the rate of inflation. If the opposite is true then the Fed will sell less bonds than it cashes out and continually add currency to the national cash flow.

With no help from Congress during a period of recession or depression the Fed under the chairmanship of Ben Bernanke had to be quite innovative to pull the nation out of the Real Estate Debacle. This was done by the Fed buying $85 billion worth of bonds each month for well over two years: $45 billion in mortgage paper and $40 billion in government bonds. The effect of these two actions was to add well over a trillion dollars to the national cash flow per year; and also to essentially resolve the big banks activity in splitting up individual mortgages into well over one hundred parts. By my estimate it would have taken well over twenty years to straighten out the housing mess if the Fed had left it alone. The Fed did it in a relatively short time by buying most of the pieces. We again have new construction and older houses are being resold.

What is interesting to note here is that 40 billion was utilized on traditional monetary policy while 45 billion dollars was used to purchase mortgage paper from the assorted hedge funds which each owned fractional pieces of mortgages in each of their funds that had been very sloppily catalogued. For the Fed to collect or foreclose on any of these properties it would have to set up a table of all the homes on which it held mortgages within the 50 states and gradually build up its portfolio to the point where it owned over fifty percent of each particular mortgage. The cost of setting up this information bank would have been prohibitive even for the Federal government. The probability is that the Fed did nothing with this paper and a percentage of the population ended up living in their homes for nothing, in essence the government forgave these loans.

Of course the people living in these houses still had to pay property tax. If they did not the municipality would eventually foreclose on the property and sell it for back taxes. These people would suddenly have a lot of disposable income, which many of them spent freely, and they could not claim any home interest payments on their income taxes. This, in turn, added billions of dollars circulating in the National Cash Flow throughout the country.

The practice of adding money to the economy was ended in October of 2014. Janet Yellen, the new Fed chair left the ending of the policy tentative. It could be started up again if the need arose.

Interest rates had also been dropped to a fraction of one percent, practically giving the banks free money from all the savers and checking accounts which they could lend out at a decent rate of interest. Currently the Fed is considering when to raise interest rates. Meanwhile most of the larger banks have announced large profits for 2014.

What is interesting here is that the Federal Reserve used part of the National Debt as a means of positively controlling the amount within and the flow of national currency. They actually increased over time the flow of money by trillions of dollars and, in this way, diminished the effects of the Real Estate Debacle caused recession.

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What Bernanke did was to use part of the National Debt as a means of getting the country out of a serious recession. Since Congress would not act he used the Debt itself as the tool by which a large percentage of recovery was gradually brought about.

The National Debt is divided into two parts: public debt which the government owns and private debt which is held by private countries and by individuals. For example the two largest holders of U.S. debt are China which as of November 2014 held 1.25 trillion and Japan had 1.24 trillion.

All foreign holdings at that time were 6.11 trillion dollars. It should be noted that the National Debt currently is 18 plus trillion dollars. Who owns the balance? Private individuals and companies within the United States and elsewhere would hold at least another trillion dollars. The balance would then be held by the U.S. government and its agencies. For example Social Security has well over 2 1/2 trillion in government debt. All this means that the Federal Government holds well over 50 percent of its own debt and pays the interest on that debt to the U.S. Treasury.

It should be noted that Treasury securities are seen as one of the world’s safest investments. This has been the situation in the world and will, in all probability, remain so.

The 114 Congress, which recently met for the first time and has a Republican majority in both Houses, shows no indication that it is even slightly interested in fiscal policy. While unemployment is down to 5 plus percent for the first time in the nation since the 2008 Debacle it still could be a lot lower with fiscal policy.

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Another factor of importance here is population; it is always gradually increasing. According to the Census Bureau’s Population Clock: there is one birth every 8 seconds, one death every 12 seconds, and one international migration every 33 seconds. The result of all this is a net gain of one person every 16 seconds.

That is an increase in the population of the United States of 3.75 people per minute, 225 per hour, 5,400 persons per day, and 1,965,600 people per year, if we count each month as 30 days and do not allow for each leap year. The current overall number of people in the country is in excess of 350 million people.

Most of these new settlers will reside along either of the coastal areas. In order for standards of living to not decrease with this additional population the GDP (Gross Domestic Product) has to increase one or two points yearly. If it stays at exactly the same point or decreases slightly then the overall standard of living has dropped for the bulk of Americans.

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What will happen with this new Congress should be interesting and economically uninspiring. From now until July 2016 when the Republicans hold their Presidential Convention there will be a lot of jockeying for the lead position in the Republican Party. The major issues like immigration, fiscal policy, job creation, plus whatever else comes up will be largely ignored. They will try forms of blackmail with the President in order to achieve some of their goals. This will be done by attaching riders that he will not approve of to necessary bills. That means that President Obama will probably have to veto the necessary legislation causing all sorts of economic and other problems. The question there is who will take the blame for causing all these disasters?

The Republicans will certainly not be creating any new jobs. Janet Yellen, the current chair of the Federal Reserve may have to restart the program of buying bonds for economic recovery to continue since the Republicans will be doing their dandiest to constrict the economy and inadvertently increase unemployment. What will probably occur between the present and the next presidential election is two years that the future historians will in all likelihood essentially ignore.

Description: Newspaper clipping USA, Woodrow W...

Description: Newspaper clipping USA, Woodrow Wilson signs creation of the Federal Reserve. Source: Date: 24 December 1913 (Photo credit: Wikipedia)