Tuesday, December 31, 2013

2013-A Close Call With Armageddon

2013 has been a hard year for many of us. We have seen friends lost, dogs lost, and some deep personal crisis. We have also seen some very great people on the world stage lost including Nelson Mandela and James Gandolfini (aka Tony Soprano).
But what many of us in the world failed to take note of was the battle to raise the United States debt ceiling. This is usually a routine procedure that attracts little or no attention.
This time some 44 Republican congress men and women who ally themselves with the Tea Party decided that enough was enough. They decided that it was time for the United States government to start living within its means.
I am not a political supporter of these people. But they do support a universal truth-all of us must live within our means or suffer dire consequences.
These 44 politicians took the simplistic view that it was time to "cut up the credit cards" and start living on income actually collected. (Almost 5 years ago Elena and I did this and it has improved our lives. We exhausted our savings account paying credit card companies.). I suspect that there are many of you around the world who have done this and understand where I am coming from.
The personal finances of a household or the finances of a company are not the same as the finances of a country.
Had the US debt ceiling not been raised, we would have had a technical default on US government securities. (This is not to say that the US government would not stop paying its debts. Rather it would not pay them right on time.) An international panic would have followed. Money would move quickly to other areas of perceived safety (Swiss francs, gold, other viable government bonds, etc.) Stock markets would have temporarily crashed. Unemployment would go up all over the world.
The US Secretary of the Treasury would find himself in a position of a household where there had been a big drop in salary. Priorities would have to be set. The debt service on bonds and T-bills would have to be paid first. Then whatever was left would go to pay for the military. Social Security. medicare, etc. There would be a big legal question as to whether the secretary of the treasury had the authority to do this without the approval of congress. Conservative groups would have filed lawsuits challenging the whole procedure. Chaos would have followed.
These 44 politicians had billions of dollars in support from conservative groups like the Heritage Foundation. They had Republican house speaker John Boehner totally intimidated and "backed into a corner."
What happened to avert a cataclysmic international disaster? On the senate side, Senator Mitch McConnell got a new $2.9 billion dollar dam project in his native state of Kentucky. This will create a large number of jobs there. It will help him to be reelected in 2014.
What happened to get the 44 Republican politicians in the congress to ease off their demands for a balanced budget? I honestly do not know. I suspect that literally a huge amount of money "went under the table" in some way to them. The politicians will never tell the truth about what happened here.
We came within one tenth of one percent of a worldwide financial catastrophe. All of us should be thankful that it did not come to pass.

Sunday, December 29, 2013

An Incredible Little Lady At Christmas

Who Turned Off The Lights In Buenos Aires?

My dear friends those of us in civilized countries tend to take our electricity for granted. We can only experience power outages when there are unusual storms or other natural disasters. I spent many years of my life in Third World countries like Mocambique, Angola, the Congo, Zimbabwe, Brasil, etc where electric power failures were and are common.

I feel sad for Elena's friends and relatives in Buenos Aires who are suffering major power failures when the temperatures are in the 90's and the humidity is 100%. (Imagine all of the food spoiling in ice boxes and freezers in homes and restaurants. Then we also have to consider all of the ill people in hospitals there. Also imagine numerous elderly people dying of heat-related problems)

Argentina is not a Third World country. It has educational institutions that are world class. It's road system is good. It's medical care in excellent. (For example Elena graduated from the University of Buenos Aires Medical School. Her training there prepared her so well that she scored in the top 5% of US doctors on tests for her US medical license.) It's people are sophisticated and cultured. Some 100 years ago Argentina was one of the five wealthiest countries on planet Earth.

What's going on here? The president is a beautiful woman with a brilliant mind. Sadly she has little common sense when it comes to economics. To keep her political supporters happy, she keeps electricity prices ridiculously low. This is great for the bill payer but not good for the electric companies. They do not have the money to do maintenance on their grid or to build new capacity to handle the always-growing population of Buenos Aires. Despite shale oil deposits that would make Argentina another Saudi Arabia of energy production, fuel must be imported to run the worn out electric generators that provide power.

Imagine what would happen in winter with major power failures. You would have a possibility of a substantial number of people freezing to death.

The object lesson here is that political ideology cannot be used to make practical economic decisions.

The Classic 1946 Film: "It's A Great Life"

An important part of each Christmas season is the opportunity to watch the classic 1946 film; "It's A Wonderful Life." It was filmed in 1946 right after the end of World War II.The great actor Jimmy Stewart played George Bailey. He was just back from being a combat pilot in the war. His co-star was Donna Reed, who was all of 24 years old at the time, and not far removed from Dennison, Iowa.She played his wife Mary Bailey.

I's a great film about love, sharing friendship, and the difference that one person can make in the lives of so many different people. The film always touches my heart.

Last night Elena agreed to watch the film with me. She might have found it corny. But she observed it. I was so happy to be able to see it again.

During my years in South Africa, 1990-1995, the film was always shown on television during the day. I pointed out to my South African employers that the film was an important part of my American culture and heritage. They were always gracious enough to allow me either to go home to watch the film (An excused absence with full pay) or they allowed me to haul one of those heavy old portable televsions to work to watch the film as I worked.

Going further back, I lived in Los Angeles in 1989. My domestic partner at the time, Antonieta Fuentes, and I got an invitation to attend a Christmas eve service at a Presbyterian church in Beverly Hills. The guest of honor was to be, none other than, Jimmy Stewart. We eagerly accepted the invitation. For some reason now forgotten after 24 years, our attention got side tracked. We did not attend the service. How wonderful it would have been to meet the great man in person. What would I have said to him. Perhaps it would have been a stupid question like: "What was it like to work with Donna Reed?" But at least I would have had a moment or two with George Bailey from "It' A Wonderful Life." I regret not attending that church service every day of my life.

Systemic Risk, International Regulation, and the Limits of Coordination | The Big Picture

Systemic Risk, International Regulation, and the Limits of Coordination | The Big Picture:

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The Big Lie About NSA Spying | The Big Picture

The Big Lie About NSA Spying | The Big Picture:

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Friday, December 27, 2013

Insurers may be at the centre of the next big crisis -

Insurers may be at the centre of the next big crisis -

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My Wonderful Christmas Gift

I got back in the pool today after a long absence due to flu. After my 1.5 hour swim I ran into a dear friend who is very lucky to still be with us. He was having some pain in his neck and shoulders. He went to see his cardiologists. Her first diagnosis was a problem that could be treated by nitroglycerine tablets. My friend took the tablets and felt better. Fortunately this cardiologist is a super thorough doctor like my wife Elena. She was suspicious that the problem was worse. She called him back in for an ultra sound. Sure enough one artery was totally blocked. My friend was right on the verge of a heart attack. The cardiologist sent him to ICU. The following morning some stints were put in the clogged artery and it was cleaned out. I told him that his survival was my wonderful Christmas gift.

Tuesday, December 24, 2013

An Old Friend Leaves Us Much Too Soon

Like many harried Christmas shoppers I was standing outside waiting for UPS to come with packages for my wife and I as well as our daughter in law and our grand daughter. They were a "no show." A dear neighbor Marilyn walked by with a dog. We started to talk. She told me that one of her dogs was dying of cancer. I mentioned that her next door neighbor Mike had also been diagnosed with cancer. She gave me the shocking news that Mike had died of cancer some two weeks before. His wife Sue had left the house with her relatives and moved elsewhere. I asked about funeral arrangements and she knew nothing about that. I thanked her for the update.

My dear dog Copernicus was up in the back yard barking. He soon will be 12 years of age. I was thankful that he was not dying of cancer as Marilyn's dog was.

Then the shock and the sadness hit me. Sue and Mike had been my neighbors for all of the ten years that I had lived in Pacifica. For many years Sue had owned the local Ace Hardware Store. Mike was an ex-marine and a Vietnam veteran. He had worked for decades at the port of Oakland.

I was sad that we live such isolated lives here that we do not even know when a dear friend dies. It also shows how quickly one's life and circumstances can change with little or no warning.

I'm so sad for Mike and Sue but thankful that Elena and I have great health. We have been very lucky.

Christmas is a time to reflect, be generous, and give thanks.

Thursday, December 5, 2013

Jack's Africa: Madiba Has Left Us

Jack's Africa: Madiba Has Left Us: Thousands of pages on the life and loss of Nelson Mandela have been written this afternoon. Let me give two examples on how he touched me...

Wednesday, December 4, 2013

Some Unintended Consequences Of A Massive Increase In The Minimum Wage

I hear a lot of talk about raising the minimum wage up to $15.00 an hour. I have a lot of empathy for low-wage workers. I was one for many years. I also lived in Australia from 1981 to 1986. At that time it was a society with a high minimum wage. The good news was that there was virtually no poverty except among aborigional people. The high minimum wage did not destroy jobs. In fact the unemployment rate was very low. But there were some serious consequences for most middle class people. First restaurant meals were so expensive that eating out was a once a month treat. Second the cost of repairing anything was prohibitive. People had to learn how to do it yourself to make house hold and vehicle repairs. Third the cost of clothing and necessities like that were high. The better-off Australians flew out of Australia to South Korea with empty suitcases. They did a lot of their shopping with shadowy vendors who sold all sorts of goodies from US military bases around Seoul. People of more humble means always had a sewing machine in the house. Women often had to make a lot of their own clothes. Please consider my words here before advocating a massive increase in the minimum wage.

Mish's Global Economic Trend Analysis: What Will Your Bank Look Like 5 Years From Now? How Will Pizzas Be Delivered? Do You Tip a Drone?

Mish's Global Economic Trend Analysis: What Will Your Bank Look Like 5 Years From Now? How Will Pizzas Be Delivered? Do You Tip a Drone?:

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Mish's Global Economic Trend Analysis: Pension Battle Shifts to San Jose, San Bernardino, Stockton; Rights of Dinosaurs vs. "Right Thing"

Mish's Global Economic Trend Analysis: Pension Battle Shifts to San Jose, San Bernardino, Stockton; Rights of Dinosaurs vs. "Right Thing":

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United Airlines Flight 629 - Wikipedia, the free encyclopedia

United Airlines Flight 629 - Wikipedia, the free encyclopedia:

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Mish's Global Economic Trend Analysis: What Will Your Bank Look Like 5 Years From Now? How Will Pizzas Be Delivered? Do You Tip a Drone?

Mish's Global Economic Trend Analysis: What Will Your Bank Look Like 5 Years From Now? How Will Pizzas Be Delivered? Do You Tip a Drone?:

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