GET THE FACTS BEHIND THE NEWS No.1
An important part of our effort to improve the present economic situation depends on building confidence in govt and industry. The public cannot have confidence in a gov’t that looks the other way whenever wrong doing is discovered, no matter what the reasons for the neglect. This is particularly true when the guilty parties indicates they knew they ware doing wrong.
Recently the Dept of Justice released torture memos. The Pres released a statement
that the torturers would not be prosecuted because the Dept of Justice had okayed
the procedures. WRONG ANSWER. These people have committed a crime they should stand trial. The statement added that you are looking to the future and don’t want to dredge up the past. WRONG ANSWER. The writers of these memo’s should also be brought to Justice.
At the Nuremberg trials the Nazi generals tried this “only following orders” ploy. The Nuremberg Court rejected this ploy and so should we. This is one of the poorest discredited excuses for avoiding justice. It is also important to point out that the rash of destroyed files and videos probably indicates the torturers knew they were doing illegal acts and were trying to destroy incriminating evidence. How can we respect a gov’t that protects law breakers?
The second statement about focusing on the future is true. All our efforts should not be focused on the mistakes of the past. However some effort has to be made to bring criminals to justice. This is a bizarre and complete co-out. I don’t recall FDR or Winston Churchill telling this to Hitler, or the FBI saying this to Al Capone or John Dillinger.
The President’s statement on April 20th. that he understands the hard choices people in the agency had to make as an excuse for not prosecuting tortures is the worst. Does this mean that torture is okay if the struggle is difficult? This is beneath a good Pres and good leader.
Furthermore these crimes strike at the very foundation of our democratic society, the
Bill of Rights and should not be taken lightly. This together with your complete indifference to prosecuting the greedy and shady business people who brought on our economic problems,the readiness to overlook illegal surveillance by the CIA that is still going on under your administration and your deference to the National Rifle Association clearly anti- public policies indicate a lawless administration that is failing to protect and further the interest of the public. The public can have no confidence in the Obrama Administration.
Monday, April 20, 2009
Friday, April 17, 2009
Leadership and Moral Responsbility
GET THE FACTS BEHIND THE NEWS
Guest comment by David Gibbs, prominent Boston Attorney--Mr. Gibbs is commenting specifically about the "bailout bonuses". His observations also have a far wider applicability for our private and public leadership.
"Every contract has a covenant of good faith and fair dealings. Diretors, officers and those in a position of trust owe a fiduciary duty of the highest level. I believe those doctrines and others would be a basis for a refusal to pay the bonuses or to litigate their return. Oliver Wendell Homes often wrote that a party may choose whether to perform a contract or pay the damages. Prof Fried is simply wrong when he states that damages are not a substitute for performance. Finally Pres Truman nationalzed the steel industry after World War II duing a labor dispute.
If all else fails Congress should consider reinstituting the draft. If the executives and traders who lost billions and now collect bonses of millions were drafted they could not cause further loses and serve their country rather than themselves.
We must remember that those in service and their families are the true heroes and patriots who deserve bonuses, our thanks and prayers.
Guest comment by David Gibbs, prominent Boston Attorney--Mr. Gibbs is commenting specifically about the "bailout bonuses". His observations also have a far wider applicability for our private and public leadership.
"Every contract has a covenant of good faith and fair dealings. Diretors, officers and those in a position of trust owe a fiduciary duty of the highest level. I believe those doctrines and others would be a basis for a refusal to pay the bonuses or to litigate their return. Oliver Wendell Homes often wrote that a party may choose whether to perform a contract or pay the damages. Prof Fried is simply wrong when he states that damages are not a substitute for performance. Finally Pres Truman nationalzed the steel industry after World War II duing a labor dispute.
If all else fails Congress should consider reinstituting the draft. If the executives and traders who lost billions and now collect bonses of millions were drafted they could not cause further loses and serve their country rather than themselves.
We must remember that those in service and their families are the true heroes and patriots who deserve bonuses, our thanks and prayers.
Wednesday, April 8, 2009
TO FIX OUR MORTGAGE SYSTEM
Get the facts behind the news
Our current mortgage system has broken down in large part because of a structural defect that should be corrected to help our economy avoid similar problems in the future.
At the present time mortgage originators do not retain any part of the credit risk. Therefore they are motivated to maximize their fee income by closing as many mortgages as possible. Once the mortgage is sold it is usually without recourse. The originator if
unscrupulous has no interest in the welfare of the mortgagor than
to close the sale and get the commission. The interest of the
mortgagor is not identical to the interests of the property owner. Even
if the originator has credit risk originators who wrote sub prime and no
down payment mortgages have very little capital. Probably some
form of insurance would have to be written to cover this credit risk.
There are mortgage systems where the originator is either responsible
or shares the credit risk. One of these is the Danish system. In the Danish systemrvice companies retains the credit risk. Theyhave to replace the mortgages that are in default. In contrast to our reliance on government sponsored enterprises (GSEs)—namely Fannie Mae and Freddie Mac.
The Danish is an open system in which all mortgage participate on equal terms and it operates without government guarantees. Yet Danish mortgage bonds are traditionally very highly rated; often they yield less than government bonds.Their distinguishing feature is that they are identical to and interchangeable with the underlying mortgages. House owners can redeem their mortgages at any time by purchasing the equivalent mortgage bond in the market and xchanging it for the mortgage. Since bond prices and house prices normally move in the same direction, this feature--called the principle of balance--reduces the chances of householders having negative equity in their houses.
The mortgage originators are strictly regulated, and their interests are closely aligned with those of the bondholders. They pass on only the interest rate risk to bondholders, retaining the credit risk. That is why the bonds are so highly rated.
When Mexico wanted to securitize mortgages in order to promote house ownership, it opted, for the Danish system.
Our current mortgage system has broken down in large part because of a structural defect that should be corrected to help our economy avoid similar problems in the future.
At the present time mortgage originators do not retain any part of the credit risk. Therefore they are motivated to maximize their fee income by closing as many mortgages as possible. Once the mortgage is sold it is usually without recourse. The originator if
unscrupulous has no interest in the welfare of the mortgagor than
to close the sale and get the commission. The interest of the
mortgagor is not identical to the interests of the property owner. Even
if the originator has credit risk originators who wrote sub prime and no
down payment mortgages have very little capital. Probably some
form of insurance would have to be written to cover this credit risk.
There are mortgage systems where the originator is either responsible
or shares the credit risk. One of these is the Danish system. In the Danish systemrvice companies retains the credit risk. Theyhave to replace the mortgages that are in default. In contrast to our reliance on government sponsored enterprises (GSEs)—namely Fannie Mae and Freddie Mac.
The Danish is an open system in which all mortgage participate on equal terms and it operates without government guarantees. Yet Danish mortgage bonds are traditionally very highly rated; often they yield less than government bonds.Their distinguishing feature is that they are identical to and interchangeable with the underlying mortgages. House owners can redeem their mortgages at any time by purchasing the equivalent mortgage bond in the market and xchanging it for the mortgage. Since bond prices and house prices normally move in the same direction, this feature--called the principle of balance--reduces the chances of householders having negative equity in their houses.
The mortgage originators are strictly regulated, and their interests are closely aligned with those of the bondholders. They pass on only the interest rate risk to bondholders, retaining the credit risk. That is why the bonds are so highly rated.
When Mexico wanted to securitize mortgages in order to promote house ownership, it opted, for the Danish system.
Wednesday, April 1, 2009
HOW DOES THE US ECONOMY RATE TODAY?
GET THE FACTS BEHIND THE NEWS
In judging measures to help our economy we should look at the effect on the “forest” and not get completely lost in the woods. The OECD, Organization for Economic Cooperation and Development an international non-gov’t and non-profit group dedicated to furthering growth and competitiveness completed Nov 08 a study of 144 nations for eleven categories from Institutions to Business Sophistication.
Over all the US ranked first. However many will be shocked to see how low the US economy is rated on several important economic categories.
For instance US workers want to be paid high wages. High wages are usually paid to highly skilled well educated workers with good experience. This is one of the reasons Prof Michael Porter (Harvard School of Business) and others including Pres Obrama believes our educational system must be upgraded. Data from OECD reports show the US IS 12TH out of 144 nations IN THE NO. OF COLLEGE GRADS 25 TO 34. We have not made any progress in this vital area in 30 years. We have to compete with the best skilled workers of other countries and regions of the world. It is in our national interest to make it possible for intelligent people who desire to do so can get an education and become skilled people,
Fallowing are some figures from the Global Competitive Report
2008-2009.as to where the US rates as a free market economy.
US
Out of 144 countries
1) Openness to Capital Flows 20
2) Low Trade Barriers 21
3) Absence of Distortion from 35
Taxes and Subsidiaries
We will continue to examine in greater detail where the US ranks on several important t categories.
In judging measures to help our economy we should look at the effect on the “forest” and not get completely lost in the woods. The OECD, Organization for Economic Cooperation and Development an international non-gov’t and non-profit group dedicated to furthering growth and competitiveness completed Nov 08 a study of 144 nations for eleven categories from Institutions to Business Sophistication.
Over all the US ranked first. However many will be shocked to see how low the US economy is rated on several important economic categories.
For instance US workers want to be paid high wages. High wages are usually paid to highly skilled well educated workers with good experience. This is one of the reasons Prof Michael Porter (Harvard School of Business) and others including Pres Obrama believes our educational system must be upgraded. Data from OECD reports show the US IS 12TH out of 144 nations IN THE NO. OF COLLEGE GRADS 25 TO 34. We have not made any progress in this vital area in 30 years. We have to compete with the best skilled workers of other countries and regions of the world. It is in our national interest to make it possible for intelligent people who desire to do so can get an education and become skilled people,
Fallowing are some figures from the Global Competitive Report
2008-2009.as to where the US rates as a free market economy.
US
Out of 144 countries
1) Openness to Capital Flows 20
2) Low Trade Barriers 21
3) Absence of Distortion from 35
Taxes and Subsidiaries
We will continue to examine in greater detail where the US ranks on several important t categories.
Friday, March 20, 2009
What is the US Economic Position? I
Is what has driven our economic success starting to erode?
GET THE FACTS BEHIND THE NEWS
While our immediate goal is to halt the present economic recession, we must be careful to be sure that the measures that are taken will lay a foundation for economic growth and prosperity.
Diogenes believes most people do not realize how far our economy slipped in relation to the other nations and economies we compete with. Noted Harvard School of Business Professor Michael Porter believes” a series of policy failures have offset and even nullified “US “ strengths just as other nations are becoming more competitive”.
1) “An inadequate rate of reinvestment in science and technology is hampering our feeder system for entrepreneurship. Research and development as a share of the GDP has declined, while it has risen in other countries”. This is well recognized but policy makers have failed to act.
2) Our belief in competition is waning. “A creeping relaxation of antitrust enforcement has allowed mergers to dominate markets”. “We are seeing more interference in competition with protectionism and favoritism.”
3) US colleges and universities do not have a serious plan, such as GI Bill or National Science Foundation programs, to improve access to them. The US now ranks 12th in educational attainment for 25 to 34year olds. For 30 yrs we have not improved ourselves in this area. This is an “ominous trend in an economy that must have the skills to justify our high wages.”
4) At a time when job insecurity and turnover are high the US gov’t has not taken responsibility to provide a transition safety net for US working people. The job training system is ineffective and receives less funding each year. Pension security is declining. Social security is not being adjusted and strengthened. Access to affordable health insurance is a major worry to most people. The gov’t could equalize the tax deductibility of individuals purchasing insurance to assist those not covered by their employers, but has failed to do so.
5) The US is energy inefficient. Public policies fail to promote energy conservation.
6) “Trade and foreign investment are fundamental to the success of the US economy but the US has lost its focus and credibility in shaping the international trading system.” “With no strategy the US has failed to work with other advanced countries to assist poorer countries to feel confident about opening markets and internal reform.” “Our foreign aid is still tied to the purchase of US goods rather than the actual needs of countries.”
7) “The federal gov’t has failed to recognize and support the decentralization and regional specialization that drives our economy.
8) Lack of regulatory oversight combined with lack of a strategic plan has resulted in a hodge-podge of policies that have driven up the costs of doing business. TO SUM UP WE HAVE HAD POOR ECONOMIC MANAGEMENT.
9) Is good strategic economic plan possible considering our political system?
It requires political parties and private leaders to come together and chart a long term plan. Prof Porter recommends a bipartisan joint planning group to coordinate priorities,
Does the new Stimulus Bill help solve these problems?
GET THE FACTS BEHIND THE NEWS
While our immediate goal is to halt the present economic recession, we must be careful to be sure that the measures that are taken will lay a foundation for economic growth and prosperity.
Diogenes believes most people do not realize how far our economy slipped in relation to the other nations and economies we compete with. Noted Harvard School of Business Professor Michael Porter believes” a series of policy failures have offset and even nullified “US “ strengths just as other nations are becoming more competitive”.
1) “An inadequate rate of reinvestment in science and technology is hampering our feeder system for entrepreneurship. Research and development as a share of the GDP has declined, while it has risen in other countries”. This is well recognized but policy makers have failed to act.
2) Our belief in competition is waning. “A creeping relaxation of antitrust enforcement has allowed mergers to dominate markets”. “We are seeing more interference in competition with protectionism and favoritism.”
3) US colleges and universities do not have a serious plan, such as GI Bill or National Science Foundation programs, to improve access to them. The US now ranks 12th in educational attainment for 25 to 34year olds. For 30 yrs we have not improved ourselves in this area. This is an “ominous trend in an economy that must have the skills to justify our high wages.”
4) At a time when job insecurity and turnover are high the US gov’t has not taken responsibility to provide a transition safety net for US working people. The job training system is ineffective and receives less funding each year. Pension security is declining. Social security is not being adjusted and strengthened. Access to affordable health insurance is a major worry to most people. The gov’t could equalize the tax deductibility of individuals purchasing insurance to assist those not covered by their employers, but has failed to do so.
5) The US is energy inefficient. Public policies fail to promote energy conservation.
6) “Trade and foreign investment are fundamental to the success of the US economy but the US has lost its focus and credibility in shaping the international trading system.” “With no strategy the US has failed to work with other advanced countries to assist poorer countries to feel confident about opening markets and internal reform.” “Our foreign aid is still tied to the purchase of US goods rather than the actual needs of countries.”
7) “The federal gov’t has failed to recognize and support the decentralization and regional specialization that drives our economy.
8) Lack of regulatory oversight combined with lack of a strategic plan has resulted in a hodge-podge of policies that have driven up the costs of doing business. TO SUM UP WE HAVE HAD POOR ECONOMIC MANAGEMENT.
9) Is good strategic economic plan possible considering our political system?
It requires political parties and private leaders to come together and chart a long term plan. Prof Porter recommends a bipartisan joint planning group to coordinate priorities,
Does the new Stimulus Bill help solve these problems?
Monday, March 16, 2009
Irresponsible Journalism--Dick Cheney
GET THE FACTS BEHIND THE NEWS
Chicago Tribune headline read “Cheney: Obrama puts US at risk”. The Tribune and CNN and others seem to headline any criticism of Obrama whether, it be a former VP or an unknown senator or representative, like it is the definitive opinion on the subject. The headlines fail to mention that the public was exposed to Obrama’s opinions and republican opinions and choose Obrama’s. Obrama won the presidential election. Basically Obrama is following his campaign platform.
Constantly repeating rejected republicans programs appears to be beating a dead horse. One of the reasons the Republicans lost is they kept repeating the same old programs that most of the public felt have failed. In the case of Cheney he has a very low approval rating with the public. His program has been soundly rejected. With his latest speech one might think he has hardening of the arteries. It’s almost word for word the same thing over and over. It never changes. In the last presidential campaign his own party’s candidate did not want him to campaign.
Cheney and Senator Claghorn deserves to be heard but not treated as gospel in headlines on the front page. This is UNHELPFUL AND IRRESPONSIBLE NEWS REPORTING.
Chicago Tribune headline read “Cheney: Obrama puts US at risk”. The Tribune and CNN and others seem to headline any criticism of Obrama whether, it be a former VP or an unknown senator or representative, like it is the definitive opinion on the subject. The headlines fail to mention that the public was exposed to Obrama’s opinions and republican opinions and choose Obrama’s. Obrama won the presidential election. Basically Obrama is following his campaign platform.
Constantly repeating rejected republicans programs appears to be beating a dead horse. One of the reasons the Republicans lost is they kept repeating the same old programs that most of the public felt have failed. In the case of Cheney he has a very low approval rating with the public. His program has been soundly rejected. With his latest speech one might think he has hardening of the arteries. It’s almost word for word the same thing over and over. It never changes. In the last presidential campaign his own party’s candidate did not want him to campaign.
Cheney and Senator Claghorn deserves to be heard but not treated as gospel in headlines on the front page. This is UNHELPFUL AND IRRESPONSIBLE NEWS REPORTING.
Wednesday, March 4, 2009
The Danish Mortgage System
Our current mortgage system has broken down because the originators of mortgages have not retained any part of the credit risk. They are motivated to maximize their fee income. As agents, their interests
are not identical with the interests of the ultimate owners.
In the Danish system, the service companies retain the credit
risk--they have to replace the mortgages that are in default.
In contrast to our reliance on government sponsored
enterprises (GSEs)--namely Fannie Mae and Freddie Mac--
the Danish is an open system in which all mortgage originators
participate on equal terms, and it operates without government
guarantees. Yet Danish mortgage bonds are traditionally very
highly rated; often they yield less than government bonds.
This could not be replicated in the United States at present
because of the demoralized state of the market, but it may be
achieved later. Danish mortgage bonds are highly standardized, and their distinguishing feature is that they are identical to and interchangeable with the underlying mortgages.
House owners can redeem their mortgages at any time by purchasing t
the equivalent mortgage bond in the market and exchanging it
for the mortgage. Since bond prices and house prices normally
move in the same direction, this feature--called the
principle of balance--reduces the chances of householders
having negative equity in their houses.
The mortgage originators are strictly regulated, and their interests are closely aligned with those of the bondholders. They pass on only the interest rate risk to bondholders, retaining the credit risk. That is why the bonds are so highly rated. The U.S.Treasury has supported this plan in certain situations.
are not identical with the interests of the ultimate owners.
In the Danish system, the service companies retain the credit
risk--they have to replace the mortgages that are in default.
In contrast to our reliance on government sponsored
enterprises (GSEs)--namely Fannie Mae and Freddie Mac--
the Danish is an open system in which all mortgage originators
participate on equal terms, and it operates without government
guarantees. Yet Danish mortgage bonds are traditionally very
highly rated; often they yield less than government bonds.
This could not be replicated in the United States at present
because of the demoralized state of the market, but it may be
achieved later. Danish mortgage bonds are highly standardized, and their distinguishing feature is that they are identical to and interchangeable with the underlying mortgages.
House owners can redeem their mortgages at any time by purchasing t
the equivalent mortgage bond in the market and exchanging it
for the mortgage. Since bond prices and house prices normally
move in the same direction, this feature--called the
principle of balance--reduces the chances of householders
having negative equity in their houses.
The mortgage originators are strictly regulated, and their interests are closely aligned with those of the bondholders. They pass on only the interest rate risk to bondholders, retaining the credit risk. That is why the bonds are so highly rated. The U.S.Treasury has supported this plan in certain situations.
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