Thanksgiving Message

The year that is drawing toward its close has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added which are of so extraordinary a nature that they can not fail to penetrate and soften even the heart which is habitually insensible to the ever-watchful providence of Almighty God.

In the midst of a civil war of unequaled magnitude and severity, which has sometimes seemed to foreign states to invite and to provoke their aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere, except in the theater of military conflict, while that theater has been greatly contracted by the advancing armies and navies of the Union.

Needful diversions of wealth and of strength from the fields of peaceful industry to the national defense have not arrested the plow, the shuttle, or the ship; the ax has enlarged the borders of our settlements, and the mines, as well as the iron and coal as of our precious metals, have yielded even more abundantly than heretofore. Population has steadily increased notwithstanding the waste that has been made in the camp, the siege, and the battlefield, and the country, rejoicing in the consciousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom.

No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy.

It has seemed to me fit and proper that they should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow-citizens in every part of the United States, and also those who are in foreign lands, to set apart and observe the last Thursday of November next as a day of thanksgiving and praise to our beneficent Father who dwelleth in the heavens. And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners, or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the imposition of the Almighty hand to heal the wounds of the nation and to restore it, as soon as may be consistent with the divine purpose, to the full enjoyment of peace, harmony, tranquility, and union.

In testimony whereof I have hereunto set my hand and caused the seal of the United States to be affixed.

Done at the city of Washington, this 3d day of October, A.D. 1863, and of the Independence of the United States the eighty-eighth.

Abraham Lincoln

Dumbing America Down

This video depicts the president of the Chicago public teachers union in a recent presentation to other “educators.”


http://www.chicagotribune.com/videogallery/66091926/News/CTU-president-jokes-about-U-S-Education-Secretary-Arne-Duncan-s-lisp

It needs little editorial commentary. It is truly disgusting.

But we will make a couple of comments regardless.

1. We have made this comment before. How many of you would like this person on any person who would even elect such a person to a position of leadership teaching your child or grandchild?

2. If you are an employer, do you wish to hire youngsters who are being taught by this person or others who elect such a person to a position of leadership?

3. Why didn’t the people in the audience get up and leave?

Sloth and Indolence

Say what you wish about the Chinese, they seem to be able to sum things up in just a few words:

“If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labour laws are outdated. The labour laws induce sloth, indolence, rather than hardworking.”

Source of the quote? Fellow by the name of Jin Liqun who invests about $400 billion of China’s sovereign wealth. Guess it’s fair to say not too much of that capital will be invested in European businesses this year. We hope someone will get Mr. Liqun to communicate his sentiments about the good ole US of A and its disciplined economic environment.

Here’s a link to the article that was sent to us by a loyal follower and supporter of TheFundamentals.

http://www.latitudenews.com/story/china-criticizes-european-sloth-and-indolence/

We noticed that the American president was lecturing the Chinese about behaving like adults. Could someone please help us out with Obama’s thinking behind this remark? In less than three years in office, Obama and his congress and his treasury secretary and his federal reserve chairman have issue public debt totaling $4.3 trillion (all time record for our universe) while incurring incalculable trillions of contingent liabilities (these are the ones that the kids and grandkids get to pay) and spending record amounts of America’s wealth on completely nonproductive welfare like state programs and bureaucracies and, mostly, just over inflated salaries, benefits and pensions to unneeded government employees.

Apparently Obama calls this “acting grown up.” At TheFundamentals, we call it for what it is – sloth and indolence.  The Greeks and other European countries are pretty good at sloth and indolence.  Back here at home, we are even better at it and when we do it there are many more zeroes added to the invoice.

Just how long do you think the Chinese will fund slothful countries?

Capitalism -- Under Attack

Capitalism is under attack.  The movement appears to be growing.  Just wait 'til next summer.  Who started this entire hullabaloo?  Well, here is one possible explanation. 

We watched the movie, Capitalism: A Love Story; written, produced and directed by Michael Moore, a kid who had the good fortune to be born in Michigan when Michigan was soaring as a consequence of the good forces of capitalism.  Prosperity was abundant; the factories were job magnets drawing immigrants from states near and far and even from foreign lands.  The Moore family was part of a Catholic parish in a town that GM built.  Things were good back then.  Capitalism was not under attack back then.

This movie is built on the simple theme that unregulated capitalism becomes a tool of the well to do who, motivated by their unbridled greed, amass vast fortunes and live the good life while moving their money around to other places where it can grow regardless of the impact on the local community, state or country.  The message is documented with great tales of heart wrenching woe, particularly from those without employment and those who are having other greedy “capitalists” in the forms of banks foreclose on their homes.

The movie bolsters their case against capitalism with two compelling allies – one, the hierarchy of Michael’s local Catholic parish which has nothing good to say about capitalism.  Think of it this way, “What would Jesus do?”  He’d get rid of capitalism pronto.  The other ally is the greedy Wall Street gang who never miss an opportunity to be opportunistic.  These fellows, led by fools with names like Greenspan, Geithner, Paulson, Rubin, Summers and Bush II (any Catholics in that group?) are straight out of central casting.  Let’s face it folks, these people are greedy pigs looking out solely for number uno. 

So, Moore’s story is rather well told but, it is also unbelievably one sided.  The one thing you can almost take to the bank, pun intended, is that when Michael’s sits on one side of the teeter totter, his side will be well weighted down.  And he doesn’t much care about whether anyone, or any viewpoint, or even any perspective is brought to the device to provide any form of balance.  This is called “literary license.” 

Nevertheless, the movie serves a good purpose.  It makes one think.  About greed.  About foolish, greedy men.  About what changes could be made.  And, more than anything, about what went wrong.  Is it simply the way Michael presents it?  Greed?  Lack of regulation?  Oh, and he does acknowledge this little thing called competition.  He actually brings it up early in the movie so that by the time the excrement hits the oscillator, it is lost in the drama of the mounting problems.  Hmmnn, we wonder if Michael is planning to make a movie about competition.  Does Michael want to regulate competition?  This does happen a lot these days.  It’s called government.  Oh well, time will tell.

Now let’s provide a bit of balance.

One, this essayist and these pages could care less about wall street and the financial industry and their so-called service businesses with their claims to new products and devices and so forth.  We would support a strict and harsh regulation of all they do which is to simply say go back to regulating the banks with high capital requirements and high lending standards and limit them to those services.  By the way, they also would also be required to pay savers that old fashioned concept called “interest” for their deposits.  The only problem with that approach is that it will not support the progressive agenda of the dominant political party.  So the dominant political party will still need to find all sorts of ways to fund their agenda of abundance for all (well really their voting groups – see below) and that means government will print and borrow money rather than greedy Wall Street bankers doing it.  This, by the way, pretty much describes where we are now.

Let’s keep one other thing in mind.  You can tar and feather the greedy bankers and outlaw all their Wall Street shenanigans and all their trading schemes and derivatives and third tranches and option contracts and so forth.  You can drive them out of town; shut them down; tax them into oblivion.  Have at it.  Just remember this one little side effect.  Someone else will be only too happy to pick up the slack and all the jobs that go with it and all the tax revenues it produces for the cities like New York and the states like New York (the state of Illinois is scrambling around with favorable tax packages to keep their financial exchanges in town as we write these words) will be offshore.

TheFundamentals supports strict banking regulation and we support letting a lot of the derivative crap go overseas.  Tax receipts will then decline and jobs will disappear so the price tag will include cut backs on entitlements and expectations.  We also support strict government regulation and that is the part of the story that Michael forgot to tell.  We need a fat boy on that side of the teeter totter. Volunteers?  Michael cannot point to one example, anywhere, where the circumstances of his own country are thriving under socialism with heavy government bureaucracies making key economic decisions.  We don’t think his friends in his parish can either.  On this last observation it would be appropriate for some church hierarchy to use the same long view outlook on economic matters that they apply to church matters. 

Capitalism did not create this mess.  Greedy people did.  Let’s not forget that greed is a relative concept.   Goldman Sachs is not going to be enticed by a chance to grab a payoff of $10,000.00 or even $50,000.00.  But the punks hanging around Springfield Illinois and most other state capitols are.  They are called SEIU and AFSCME and NEA and AFT and AFL-CIO and the fingerprints of their Democrat party friends are all over this mess.

We have said it before.  Democracy without limits is corruption.  Ditto for banking.  Ditto for wall street.  Ditto for financial services.  Ditto for public service unions.  And a big time ditto for government. 

If the attackers prevail, who will pick up the tab?  AFL – CIO?  AFSCME?  SEIU?  NEA?  Their “occupy” movement pawns?

C’mon.  Get real.

Health Care Costs in the US of A

The cost of health care in the United States is now expected to rise above a staggering $10,000 per worker. How many people working in the private sector do you really think would be able to pay $10,000 just for their health insurance coverage?  How many people working in the private sector can afford to pick up this tab for public sector workers?  Who can afford these costs?  For just themselves to say nothing about spouses and children?    These numbers come from the large human resources business, Aon Hewitt. 

“According to Aon a number of factors are driving the projected increase in health care cost for 2012. Employers continue to experience an increase in the quantity and cost of catastrophic claims, as slower levels of hiring have resulted in slightly older workforces who are more prone to costly medical conditions. In addition, generally poorer health – leading to increases in costly conditions such as diabetes and heart disease – make it difficult for employers to deploy tactics that drive short-term cost savings.”

Please note some key words in the above revelation:  older workforces; catastrophic claims; costly conditions such as diabetes and heart disease; generally poorer health.

Why would this study and this information be of import to a blog that deals with the fiscal and financial matters of the US economy?

There are almost too many reasons to list in an essay of 900 words.  Here are a few:

1.    Businesses no longer wish to do business in the United States.  They go elsewhere.  Costs for things like health care insurance are among the most significant reasons why they go elsewhere.

2.    Sure there are many other reasons; having to do with out of control costs for unemployment insurance, social security/Medicare taxes, litigation concerns, union meddling and rules and too high taxes from every level of government – federal, state and local.

3.    But, take it from a former small business owner and take it from the many other small business owners this small business owner speaks with; health care insurance is no longer affordable for most business owners anywhere in this country.  That’s for its own employees.  Who on earth can afford to pay it for “public servants?”

Ask yourself this simple question, if interested.  Why should a person running a small to mid size business, say 20 to 150 employees; much less a large business, have to pay health insurance costs that are extremely high and rising because of an increase in the “quantity and cost of catastrophic claims”; “older workforces who are more prone to costly medical conditions” and a population beset with "generally poorer health -- leading to increases in costly conditions such as diabetes and heart disease?"

Could someone please explain why a business that is trying to compete with businesses domiciled in countries where these conditions do not exist or where there is no health insurance safety net for the general population or where such costly procedures are either not performed at all or are performed at a fraction of the cost in the United States should be forced much less even asked to pick up the tab for this nonsense?

Some folks seem to grasp that a massive rise in the cost of residential real estate is a bubble that cannot be sustained because no one can or could afford the cost of the inflated house prices.  But those same people cannot grasp that there is no difference between a real estate bubble and the bubble in health care costs.  Or the bubble in education costs.  Or the bubble in all government costs.  All three are now completely unaffordable for most Americans.  All must burst.  All must decline.  As with housing, heaven forbid that we should step in and stop the madness before it collapses.  Better to follow the Greenspan/Bernanke/Obama/Bush bubble madness wherein government supports everything until the whole thing collapses under its own weight.  Absolute and utter nonsense!

In the past these pages have displayed a health care cost per capita chart that compares the US of A with all other developed and developing countries and also measures the life expectancy in each of the listed countries (see: TheFundamentals, September 24, 2009.) The US is off the charts for cost – two to three times greater than most developed countries, even more with others, and no; let’s just repeat that, NO improvement in life expectancy.  As a matter of fact its life expectancy is less than most.

When will someone get it through their thick skull that burdening business with these health care costs and burdening taxpayers with the cost of insurance for 22+ million government employees is a sure and fast route to ruin?   Is it too much to set a limit?  Is it too much to say NO, you can’t have that procedure or that medicine or that therapy unless you pay for it yourself?  Is it too much to say that first American industry must remain competitive or all will be lost?

Folks, a democracy that does not set limits is no different than a dictatorship that knows no limit.  They both benefit the bureaucrats and insiders who get in on the goodies and destroy opportunity and comfort for all others.

The Boys

So I said to him, "Barack, I know Abe Lincoln,

And you ain't no Abe Lincoln."

OBAMA, A DEMOCRAT, IS FOND OF QUOTING ABRAHAM LINCOLN.

SO WHY DOESN'T HE USE THIS FAMOUS LINCOLN QUOTE:

You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away people's initiative and independence.
You cannot help people permanently by doing for them, what they could and should do for themselves.

- A. Lincoln

Capitalism: RISK and REWARD

If you were asked to define capitalism in two words, TheFundamentals would suggest these two:  RISK and REWARD.  What do you call it when you base your economic actions on the meaning or the definition of these two words, RISK and REWARD?  We, at TheFundamentals, call it capitalism.

What is the concept behind the process by which RISK and REWARD operate?  Well, that question may cause confusion.  So let us explain what we mean by the question. The interplay between these two words, RISK and RETURN, defines a process by which the old adage, “nothing ventured; nothing gained,” is actually put into real life, living action.  This is the process of placing something in jeopardy (something ventured) in order to create the possibility of receiving something (something gained.)  The act of placing something in jeopardy or exposing something to the possibility of loss is taking a RISK.  If that something works out, you may receive a REWARD.  The REWARD is usually wealth; that age old measurement stick of success.  But, behind this process is a concept.  What is that concept? 

The concept is called discipline.  First comes discipline; then comes RISK and REWARD.  Capitalism depends on discipline for its existence so we can really say that wealth creation depends on discipline for its existence and the process for attainment is RISK and REWARD.  (Aside:  there is a bit more to capitalism, particularly predictable return opportunity and hard work, but the discipline of risk and reward is genetically wired in most species.)

These pages have previously documented the abandonment of RISK and REWARD as a governing process in the United States.  The abandonment of RISK and REWARD is now rampant throughout the country.  Losing RISK and REWARD as a controlling process is not workable beyond the immediate which explains why the long term rules and fundamentals of the past have now been replaced with short term satisfactions and remedies.  But behind the abandonment of RISK and REWARD in the United States is the gradual but consistent abandonment of discipline.  Everywhere you look, discipline is gone.  Nothing is more discouraging to the future of America than the loss of discipline by its leadership and believers.

Predictable?  Perhaps so.  Today even those Americans defined as “poor” have more comforts; more belongings; more freedoms to state expectations and claim entitlements than 90+% of the human beings on the face of the earth.  And the middle group, the widely heralded middle class, has wealth, possessions and leisure time that would place even the royalty of just a few generations ago into fits of jealous rage.  The well to do travel in private jet airplanes unencumbered by contact with the hoi polloi and their annoying rules and ways.  They even suggest that they would willingly throw a few more of their devalued dollars to the hoi polloi if only they would just leave them alone.  “Just don’t bother us if you please.”   What they are really saying is, “We’d like to keep our heads attached to our necks.”

And what does all this mean?  This caterwauling about paying your fair share and doing your part and spread the wealth around and down with business and Wall Street and bailouts for the rich?  What can one make of it?

RISK and REWARD are gone. Left the station.  Caught the last train to the coast to snitch a phrase from a classic song.  When RISK and REWARD depart the scene; you know one thing for sure.   Discipline left earlier.  Without discipline there is no fairness.  There are no standards.  Up becomes down; expectation becomes entitlement; measurement becomes mythology.  It is now a free for all.  Who can grab the most while there is still something left to grab? 

Without discipline there is nothing.  Without limits there is nothing.  Discipline and limits are both the master and the servant of progress.  Democracy is meaningless without discipline and limits.  As is capitalism.

Today the worker who takes no risk still receives great reward.  Why take risk if you can get great reward without it?  This simple new fundamental is the discipline of SEIU, AFSCME, AFL – CIO, NEA and AFT.  It dominates professional sports cum entertainment; dominates Wall Street, politics, government, education, health care and large business.  (See:  http://www.bloomberg.com/news/2011-10-19/beltway-earnings-make-u-s-capital-richer-than-silicon-valley.html   Washington DC has more people earning more than anywhere in the country.)  If you glance back at the words of previous essays you will find numerous examples on these pages of reward with no risk.  If you look around you, you will identify even more examples of reward without risk.  More than likely you could write your own essay with your own examples.

Much of today’s caterwauling is coming from folk who like their attainments under this new idea of reward without risk.  But don’t be surprised if you find a growing awareness among the hoi polloi, particularly the younger hoi polloi, who know something is amiss.  Something is wrong.  Something doesn’t make sense.  They will not see it for what it is right away but they will come around to seeing it clearly, we think. 

What the young will see is an undisciplined, no-limits culture around them that discarded RISK and REWARD and replaced it with expectation and entitlement.  And they can see that the train has left the station for them.  They can see that they cannot become part of the largesse of reward without risk because all they get are the scraps and the due bill.

They are not going to like what they get.  They don’t grasp now that a reward without risk culture is not their friend.  And few teach them that hard work is still a key fundamental basis of any wealth creation system.