Words. Words have meaning.
Two examples came to visit us over the last several days. Last night one of the news shows aired an interview with Mr. Obama. It was, unfortunately, another in a series of scripted interviews designed to capture an audience and deliver the scripter’s message. One part of the message was very revealing. The obeisance interviewer asked Mr. Obama about socialism and the government takeover of car companies and banks. Mr. Obama interrupted to say (TheFundamentals is paraphrasing here) wait a minute, these actions were underway when we got here, started by the previous administration; don’t lay that on me. The obedient newsman said nothing; no follow-up; no simple question like, “Well you signed the legislation; do you stand behind it; was there a better alternative that you should have taken?” Or, the newsman could have broadened the issue and asked, “When do you become responsible for events, actions and legislation that occur during your term?” So the message stands; not my fault. That is prevarication and Obama should have been called out on it immediately.
A few days earlier a man from South Carolina, who knows a prevaricator when he sees/hears one, made a small mistake. No, the mistake was not the audacity of speaking his mind in a simple declarative statement of two words in the people’s chamber. Nor was it the timing of the utterance of the simple two word statement. For these reasons the man from South Carolina should be praised. He should be an example of representing the best of America – the single individual who, upon seeing and hearing prevarication, speaks out; stands alone; willing to subject himself to the disdain of the crowd. No, his mistake was the second word he used. He should have said “prevaricate.”
Mr. Obama is a prevaricator of the first degree. Trained, practiced, slick. And one man, one person out of more than 500 had the audacity to call him out on it. Only he chose an easier word, one more clearly designed to effect his communication. He said “You lie.” The technical and accurate word is/was and will, unfortunately for all of us, be “prevaricate.” He should have said, “You prevaricate.” Before political correctness, when the American male species had higher standards, the term most frequently used in lieu of “prevaricate” was, and for men who still set their own standards is, “bulls**t.” A prevaricator is a “bulls**ter.” And that is different than a liar. Real men do not prevaricate!
It’s a guy thing.
Monday, September 14, 2009
Thursday, September 10, 2009
Tort Reform - Loser Pays
TheFundamentals supports reasonable tort reform. In past postings we have supported the “loser pays” rule and caps on noneconomic damages. Today, we will discuss the reform known as “loser pays.”
“Loser pays” places the economic test of risk/reward on litigants entering into a lawsuit. Under “loser pays” the party losing the case will bear the burden of paying not only their legal fees and costs but will also pay the winning parties legal fees and costs, including witness fees. At present, in the US, the winning party must still pay for their legal fees and costs. This is not the case in most every other advanced country. Court jurisdictions in advanced free societies expect the losing party to pay for all legal fees and costs. Included in “loser pays” are most, if not all, European countries, Canada, England and Japan. They seem to do just fine with the concept. They also find the reduction in frivolous, emotional and petty litigation much to their liking. Their lawyers and litigants are disciplined.
The most compelling argument to support loser pays is that most lawsuits settle out of court. So, most lawsuits never reach the point at which a judge or jury determine who won and who lost and many decided cases are never entirely determined to one party over the other. Instead the parties calculate the cost of proceeding and the likelihood of the outcome and then settle in a range that provides a cost/benefit/risk analysis based on those factors. This is the very logic that needs to be applied a bit earlier in the process. With a “loser pays” rule the parties will enter into a cost/benefit/risk analysis before filing and fighting claims. This discipline exists in virtually all economic decisions except litigation. Without a “loser pays” rule a party can roll the dice that they will get a favorable judge/jury decision and also rely upon the emotional aspects of certain litigants over certain other litigants. And, even if they read the case as too weak to proceed further, they can expect the other side to settle for some amount because the winning party still ends up incurring significant costs in proceeding and will settle to mitigate those costs.
The “loser pays” concept is simple and is the practice in most democracies. It works well. It adds a level of discipline to potential litigants and their attorneys that produce a careful evaluation of the merits of each claim prior to it becoming a lawsuit. The courts will have time freed up so that the costs to the public can be reduced which is vital in this time of deficits and debt. Lawyers will find their reputations and regard skyrocketing in the public view. Well, maybe not skyrocketing but, at least, a significant cause of disdain and derision will be removed. Some lawyers can be retrained and become productive society participants. The public will notice lowered insurance rates. It is a big win – win.
Loser Pays. It’s time for it to be an American fundamental.
“Loser pays” places the economic test of risk/reward on litigants entering into a lawsuit. Under “loser pays” the party losing the case will bear the burden of paying not only their legal fees and costs but will also pay the winning parties legal fees and costs, including witness fees. At present, in the US, the winning party must still pay for their legal fees and costs. This is not the case in most every other advanced country. Court jurisdictions in advanced free societies expect the losing party to pay for all legal fees and costs. Included in “loser pays” are most, if not all, European countries, Canada, England and Japan. They seem to do just fine with the concept. They also find the reduction in frivolous, emotional and petty litigation much to their liking. Their lawyers and litigants are disciplined.
The most compelling argument to support loser pays is that most lawsuits settle out of court. So, most lawsuits never reach the point at which a judge or jury determine who won and who lost and many decided cases are never entirely determined to one party over the other. Instead the parties calculate the cost of proceeding and the likelihood of the outcome and then settle in a range that provides a cost/benefit/risk analysis based on those factors. This is the very logic that needs to be applied a bit earlier in the process. With a “loser pays” rule the parties will enter into a cost/benefit/risk analysis before filing and fighting claims. This discipline exists in virtually all economic decisions except litigation. Without a “loser pays” rule a party can roll the dice that they will get a favorable judge/jury decision and also rely upon the emotional aspects of certain litigants over certain other litigants. And, even if they read the case as too weak to proceed further, they can expect the other side to settle for some amount because the winning party still ends up incurring significant costs in proceeding and will settle to mitigate those costs.
The “loser pays” concept is simple and is the practice in most democracies. It works well. It adds a level of discipline to potential litigants and their attorneys that produce a careful evaluation of the merits of each claim prior to it becoming a lawsuit. The courts will have time freed up so that the costs to the public can be reduced which is vital in this time of deficits and debt. Lawyers will find their reputations and regard skyrocketing in the public view. Well, maybe not skyrocketing but, at least, a significant cause of disdain and derision will be removed. Some lawyers can be retrained and become productive society participants. The public will notice lowered insurance rates. It is a big win – win.
Loser Pays. It’s time for it to be an American fundamental.
Wednesday, September 9, 2009
Teachable Moment - Accountability
TheFundamentals remembers when the SEC was respected and feared. Not that long ago. Its budget then was a lot less than the current $900 Million. It has failed spectacularly. This government agency has routinely missed investment and accounting frauds and, to this day, fails to warn investors about obvious risks in the financial markets. It cannot find fraud when others point it out to them; it cannot simply identify risk for the citizens as is its stated purpose and it cannot discipline its own staff. It topped itself this past weekend. The SEC has an inspector general and that person/office issued a report (see it at: http://www.sec.gov/news/studies/2009/oig-509.pdf ) on the failings over many years of the SEC in the matter of Ponzi schemer Bernard Madoff. The SEC issued the report last week.
Here are words from the report, “The OIG investigation did find, however, that the SEC received more than ample information in the form of detailed and substantive complaints over the years to warrant a thorough and comprehensive examination and/or investigation of Bernard Madoff and BMIS for operating a Ponzi scheme, and that despite three examinations and two investigations being conducted, a thorough and competent investigation or examination was never performed. The OIG found that between June 1992 and December 2008 when Madoff confessed, the SEC received six! substantive complaints that raised significant red flags concerning Madoffs hedge fund operations and should have led to questions about whether Madoff was actually engaged in trading. Finally, the SEC was also aware of two articles regarding Madoffs investment operations that appeared in reputable publications in 2001 and questioned Madoffs unusually consistent returns.”
Here are the words of the new SEC chairman, Mary Schapiro, that preceded distribution of the full report by several days (i.e. the report was available for issuance at least two days earlier in the week which would have permitted better review prior to the three day weekend.)
“We have streamlined our enforcement procedures and are putting more experienced staff on the frontlines. We also have bolstered our inspection program, started to revamp the way we handle hundreds of thousands of tips received annually, begun to hire new skill sets, increased internal training, and sought more resources to keep pace with financial fraudsters.”
“Since becoming Chairman, I have been impressed by the expertise and dedication of the men and women at the SEC and their willingness to embrace the changes that we have undertaken to better protect investors. I am confident that together we will succeed in our efforts to revitalize the agency and help bolster investor confidence.”
The failings are legion: The fraud occurred over 16+ years during which 3 examinations, two investigations and six substantive complaints occurred and the SEC found NOTHING. And the new head says not a word about terminations of those responsible for the failings; not a word about anyone taking any responsibility. Instead we hear vague blather about streamlining, new skill set, training, more resources (read: Give us more money), dedication of the workers and more pure, simple crap.
The inexperienced man from Chicago could use this as a teachable moment. He could terminate all the senior staff of the SEC and accomplish many good things in one quick action. He would show backbone, accountability and responsibility in one move. This method would follow the treatment extended to a Chicago based auditing firm – Arthur Andersen, when its reputation was tarnished. It went out of business. And, the SEC thought that was just fine. How about applying the same standards of trust and reputation to the SEC? He would send a message to bureaucrats around the US that terminations are not off the table. And then, maybe the voters would see that change is a possibility and that he can be trusted with tackling even bigger jobs such as health care and the epidemic corruption between politicians and special interest groups.
Accountability is a fundamental; not just a campaign slogan.
Here are words from the report, “The OIG investigation did find, however, that the SEC received more than ample information in the form of detailed and substantive complaints over the years to warrant a thorough and comprehensive examination and/or investigation of Bernard Madoff and BMIS for operating a Ponzi scheme, and that despite three examinations and two investigations being conducted, a thorough and competent investigation or examination was never performed. The OIG found that between June 1992 and December 2008 when Madoff confessed, the SEC received six! substantive complaints that raised significant red flags concerning Madoffs hedge fund operations and should have led to questions about whether Madoff was actually engaged in trading. Finally, the SEC was also aware of two articles regarding Madoffs investment operations that appeared in reputable publications in 2001 and questioned Madoffs unusually consistent returns.”
Here are the words of the new SEC chairman, Mary Schapiro, that preceded distribution of the full report by several days (i.e. the report was available for issuance at least two days earlier in the week which would have permitted better review prior to the three day weekend.)
“We have streamlined our enforcement procedures and are putting more experienced staff on the frontlines. We also have bolstered our inspection program, started to revamp the way we handle hundreds of thousands of tips received annually, begun to hire new skill sets, increased internal training, and sought more resources to keep pace with financial fraudsters.”
“Since becoming Chairman, I have been impressed by the expertise and dedication of the men and women at the SEC and their willingness to embrace the changes that we have undertaken to better protect investors. I am confident that together we will succeed in our efforts to revitalize the agency and help bolster investor confidence.”
The failings are legion: The fraud occurred over 16+ years during which 3 examinations, two investigations and six substantive complaints occurred and the SEC found NOTHING. And the new head says not a word about terminations of those responsible for the failings; not a word about anyone taking any responsibility. Instead we hear vague blather about streamlining, new skill set, training, more resources (read: Give us more money), dedication of the workers and more pure, simple crap.
The inexperienced man from Chicago could use this as a teachable moment. He could terminate all the senior staff of the SEC and accomplish many good things in one quick action. He would show backbone, accountability and responsibility in one move. This method would follow the treatment extended to a Chicago based auditing firm – Arthur Andersen, when its reputation was tarnished. It went out of business. And, the SEC thought that was just fine. How about applying the same standards of trust and reputation to the SEC? He would send a message to bureaucrats around the US that terminations are not off the table. And then, maybe the voters would see that change is a possibility and that he can be trusted with tackling even bigger jobs such as health care and the epidemic corruption between politicians and special interest groups.
Accountability is a fundamental; not just a campaign slogan.
Monday, September 7, 2009
Creating Jobs
What better day to discuss jobs than Labor Day?
Creating jobs is easy. It is as natural as breathing and walking.
There is really only one way to create jobs but we will discuss the political way in order to illustrate that you can create jobs the easy way or you can talk about it. Only the easy way works.
In order to create jobs one must understand the creation of wealth. Wealth is the conversion of something from the ground into something that has perceived value. Wealth is growing or extracting something from the ground and/or the making of something from that which is grown or taken from the ground. Labor (jobs) is required in order to grow/extract/make something. If you want jobs then you want wealth creation. Wealth creation to most humans is as fundamental as breathing and walking. There are some secondary forms of wealth creation. For example, transportation is a form of wealth creation. People like to get either themselves or their goods from one place to another.
If you like jobs, then you will love wealth creation. They go hand in hand.
Can you create jobs another way? No, you cannot. Can Mr. Obama create or save 3.5 million jobs? No, he cannot. Can the government create 3.5 million jobs? No, it cannot.
Well, why do they say they can? :)
What promotes or encourages job creation? Anything that promotes or encourages wealth creation.
What discourages job creation? Unions, rules and regulations, unnecessary costs, government, taxes and payments to people for not working.
What can I do to promote job creation? Move to a place that reads, understands and lives by TheFundamentals. :)
Happy Labor Day.
Creating jobs is easy. It is as natural as breathing and walking.
There is really only one way to create jobs but we will discuss the political way in order to illustrate that you can create jobs the easy way or you can talk about it. Only the easy way works.
In order to create jobs one must understand the creation of wealth. Wealth is the conversion of something from the ground into something that has perceived value. Wealth is growing or extracting something from the ground and/or the making of something from that which is grown or taken from the ground. Labor (jobs) is required in order to grow/extract/make something. If you want jobs then you want wealth creation. Wealth creation to most humans is as fundamental as breathing and walking. There are some secondary forms of wealth creation. For example, transportation is a form of wealth creation. People like to get either themselves or their goods from one place to another.
If you like jobs, then you will love wealth creation. They go hand in hand.
Can you create jobs another way? No, you cannot. Can Mr. Obama create or save 3.5 million jobs? No, he cannot. Can the government create 3.5 million jobs? No, it cannot.
Well, why do they say they can? :)
What promotes or encourages job creation? Anything that promotes or encourages wealth creation.
What discourages job creation? Unions, rules and regulations, unnecessary costs, government, taxes and payments to people for not working.
What can I do to promote job creation? Move to a place that reads, understands and lives by TheFundamentals. :)
Happy Labor Day.
Friday, September 4, 2009
Let's Get Moving
In July the nationwide unemployment rate reported by the Bureau of Labor Statistics www.bls.gov was 9.4%. In the old days, if you didn’t have a job you picked up and moved to a place that had jobs. We, at TheFundamentals, are here to help. We have made a list of those states with unemployment rates two full percentage points above the nationwide average, or 11.4%, and a list of those states with unemployment rates two full percentage points below the nationwide average or, 7.4% (many are below 7.0%.) If you live in one of the high rate states, move to a state with a low rate. People have been doing it for centuries. Here are the states:
High Rate States -- 11.4 % plus Low Rate States -- 7.4 % or less
Michigan 15.0 % North Dakota 4.2 %
Rhode Island 12.7 South Dakota 4.9
Nevada 12.5 Nebraska 4.9
California 11.9 Utah 6.0
Oregon 11.9 Wyoming 6.5
South Carolina 11.8 Oklahoma 6.5
Iowa 6.5
Montana 6.7
Vermont 6.8
New Hampshire 6.8
Virginia 6.9
Hawaii 7.0
New Mexico 7.0
Maryland 7.3
Arkansas 7.4
Kansas 7.4
Louisiana 7.4
There are 6 states over the average, dominated by California and Michigan. 17 states under the average! That’s a lot of choice – southern states, northeast, east, central, west, and even Hawaii. Here is the 800# for U-Haul (1-800-468-4285.) C’mon America. Let’s get moving! It’s an American fundamental.
High Rate States -- 11.4 % plus Low Rate States -- 7.4 % or less
Michigan 15.0 % North Dakota 4.2 %
Rhode Island 12.7 South Dakota 4.9
Nevada 12.5 Nebraska 4.9
California 11.9 Utah 6.0
Oregon 11.9 Wyoming 6.5
South Carolina 11.8 Oklahoma 6.5
Iowa 6.5
Montana 6.7
Vermont 6.8
New Hampshire 6.8
Virginia 6.9
Hawaii 7.0
New Mexico 7.0
Maryland 7.3
Arkansas 7.4
Kansas 7.4
Louisiana 7.4
There are 6 states over the average, dominated by California and Michigan. 17 states under the average! That’s a lot of choice – southern states, northeast, east, central, west, and even Hawaii. Here is the 800# for U-Haul (1-800-468-4285.) C’mon America. Let’s get moving! It’s an American fundamental.
Wednesday, September 2, 2009
Late Summer Reading
Please read yesterdays posting on Safe Districts, Seniority and Term Limits if you have not done so. It is rather imformative reading. We also suggest the following with particular emphasis on the Call to Action report about athletics and our colleges. Your comments are most welcome.
George Will on the military’s Afghanistan adventure:
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/31/AR2009083102912.html
Christopher Hitchens on Edward M. Kennedy:
http://www.slate.com/id/2226780/
Detroit’s Mayor Bing on how to save his city:
http://www.freep.com/article/20090901/NEWS01/909010377/1322/To-save-the-city--Bing-says-he-will-make-cuts
LATimes on teachers unions:
http://www.latimes.com/news/opinion/editorials/la-ed-teachers31-2009jul31,0,6170898.story
Grey Swan on public sector unions:
http://greyswan.net/2009/01/public-sector-unions-must-be-banned/
Compliance Services Office website – The University of Michigan:
http://www.mgoblue.com/compliance/article.aspx?id=97424
A Call to Action – Reconnecting College Sports and Higher Education (2001):
http://www.knightcommission.org/images/pdfs/2001_knight_report.pdf
Government monitoring resale sites:
http://www.cpsc.gov/cpscpub/prerel/prhtml09/09299.html
George Will on the military’s Afghanistan adventure:
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/31/AR2009083102912.html
Christopher Hitchens on Edward M. Kennedy:
http://www.slate.com/id/2226780/
Detroit’s Mayor Bing on how to save his city:
http://www.freep.com/article/20090901/NEWS01/909010377/1322/To-save-the-city--Bing-says-he-will-make-cuts
LATimes on teachers unions:
http://www.latimes.com/news/opinion/editorials/la-ed-teachers31-2009jul31,0,6170898.story
Grey Swan on public sector unions:
http://greyswan.net/2009/01/public-sector-unions-must-be-banned/
Compliance Services Office website – The University of Michigan:
http://www.mgoblue.com/compliance/article.aspx?id=97424
A Call to Action – Reconnecting College Sports and Higher Education (2001):
http://www.knightcommission.org/images/pdfs/2001_knight_report.pdf
Government monitoring resale sites:
http://www.cpsc.gov/cpscpub/prerel/prhtml09/09299.html
Tuesday, September 1, 2009
Safe Districts, Seniority and Term Limits
The older gentlemen known as the founding fathers got most everything right. Most everything. As TheFundamentals has noted, these fellows had jobs, professions, callings, farms, plantations and other forms of revenue producing activities that we now call “careers.” They did not view their banding together to kick out the slimy Red Coats as a career. They did not view their debating and embryonic political braying as a career. They did not view their drafting of documents (note to the current 536 – the founders wrote, read and understood the documents they considered) as hourly work. They did the founding work pro bono. No pay, no overseas trips, no staffs of interns, no private coaches, no fancy meals paid for “by the people.” So how did we ever mutate into the group of fools who “serve the people” in the House of Representatives and the senate today?
Mostly safe districts and seniority. The founders did not see these distortions coming. Let’s look at safe districts and seniority. There are five dominant members (below) of the house in leadership positions and several more in key positions. The following data show the name, district, date first elected and the Obama/McCain vote split in the district. The nationwide popular vote for O v. M was 53 to 46%.
Representative - District - Elected - O v. M % - RLE
Nancy Pelosi - CA 8th - 06/02/1987 - 85 v. 12 - 5 Years
Barney Frank - MA 4th - 01/05/1981 - 64 v. 35 - 5 Years
Steny Hoyer - MD 5th - 05/19/1981 - 65 v. 33 - 5 Years
Henry Waxman - CA 30th - 01/14/1975 - 70 v. 28 - 5 Years
Charles Rangel (a) - NY 15th - 01/03/1971 - 93 v. 6 - 5 Years
There are several facts that jump out from this analysis. One, these five leaders of the party in power have been in their congressional office at least 22 years and as many as 38 years. They have virtually no real life (RLE) experience (see TheFundamentals July 29, 2009) working a job or profession where they are subject to market and competitive forces and the possibility of job termination with or without cause. And, very importantly, the popular presidential vote margin in their districts was at least 11 percentage points higher than the nation and as many as 40 percentage points higher. Simply stated, their districts DO NOT reflect national preferences.
The seniority system in congress is dominating but not absolute. There are a few examples of high seniority representatives not holding committee chairmanships or party leadership positions. Darn few. When either party gain a majority it gets to advance its senior members who, as displayed above, come from districts where there is little or no opposition party strength (the other side of issues can be discarded) and they end up writing legislation and dominating the debate. Bad situation for the country. Not noted by the founders. (By the way, it is a very bad situation for the organizer but we will address that issue later.) Requires two changes: one, term limit amendment to the USConstitution and substantial legislation enforcing the limit of jurisdiction of the national government to the eighteen designated powers enumerated in Article 1, Section 8 (see TheFundamentals June 8, 2009.) Reminder: The USConstitution limits the national government powers! Do you need to be a constitution lawyer or expert or professor to understand that simple fundamental?
(a) This gasbag runs the most powerful committee in the people’s house – Ways and Means. His district voted 93 – 6 for Obama. Google this guy and check out his taxpaying and rules following peccadilloes. He makes Geithner look like a choirboy.
Mostly safe districts and seniority. The founders did not see these distortions coming. Let’s look at safe districts and seniority. There are five dominant members (below) of the house in leadership positions and several more in key positions. The following data show the name, district, date first elected and the Obama/McCain vote split in the district. The nationwide popular vote for O v. M was 53 to 46%.
Representative - District - Elected - O v. M % - RLE
Nancy Pelosi - CA 8th - 06/02/1987 - 85 v. 12 - 5 Years
Barney Frank - MA 4th - 01/05/1981 - 64 v. 35 - 5 Years
Steny Hoyer - MD 5th - 05/19/1981 - 65 v. 33 - 5 Years
Henry Waxman - CA 30th - 01/14/1975 - 70 v. 28 - 5 Years
Charles Rangel (a) - NY 15th - 01/03/1971 - 93 v. 6 - 5 Years
There are several facts that jump out from this analysis. One, these five leaders of the party in power have been in their congressional office at least 22 years and as many as 38 years. They have virtually no real life (RLE) experience (see TheFundamentals July 29, 2009) working a job or profession where they are subject to market and competitive forces and the possibility of job termination with or without cause. And, very importantly, the popular presidential vote margin in their districts was at least 11 percentage points higher than the nation and as many as 40 percentage points higher. Simply stated, their districts DO NOT reflect national preferences.
The seniority system in congress is dominating but not absolute. There are a few examples of high seniority representatives not holding committee chairmanships or party leadership positions. Darn few. When either party gain a majority it gets to advance its senior members who, as displayed above, come from districts where there is little or no opposition party strength (the other side of issues can be discarded) and they end up writing legislation and dominating the debate. Bad situation for the country. Not noted by the founders. (By the way, it is a very bad situation for the organizer but we will address that issue later.) Requires two changes: one, term limit amendment to the USConstitution and substantial legislation enforcing the limit of jurisdiction of the national government to the eighteen designated powers enumerated in Article 1, Section 8 (see TheFundamentals June 8, 2009.) Reminder: The USConstitution limits the national government powers! Do you need to be a constitution lawyer or expert or professor to understand that simple fundamental?
(a) This gasbag runs the most powerful committee in the people’s house – Ways and Means. His district voted 93 – 6 for Obama. Google this guy and check out his taxpaying and rules following peccadilloes. He makes Geithner look like a choirboy.
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