The U.S. "Balance Sheet": $75 trillion in Debt

It seems that American government functions very similarly to its people when it comes to economics: We spent far more than we have and don’t even worry about calculating the related costs.  The consequences of the Bush Administration’s seemingly never-ending bungling are staggering.  Still, few Americans have any idea of the magnitude of the problem.  Perhaps we’re too busy focusing on having to pay an extra dime or dollar per gallon of gasoline.

A recent MarketWatch article tries to get us to focus on what’s really important.  From A $75 trillion fright fest: Eight megahorror debts chilling America:

ARROYO GRANDE, Calif. (MarketWatch) — America’s out of control, drowning in debt, gorging: $75 trillion and getting worse. Now we’re dumping Fannie and Freddie on America’s balance sheet. Every year we pile trillions more on future generations.

Can’t trust McCain? Obama? Time for new leadership! The best qualified for president is the same great American hero we picked as our favorite write-in candidate for the 2006 elections: David Walker, former comptroller general, chief auditor of the U.S. Government Accounting Office for a decade before resigning last spring. He is ready. See previous Paul B. Farrell.

Walker was the “voice of reason” in Washington while Congress and the White House kept wasting trillions like out-of-control drunks, digging America deeper into debt. Nobody listened. Politicians ignored Walker’s warnings, making matters worse as we went from a surplus of $5 trillion in 2000 to crushing debt that’s now $9.6 trillion.

Puns and cliches aside, I found the article to be entertaining and well-written.  keep in mind that this excessive spending that focuses on war, oil, corporate profits, and broken and corrupt systems such as our for-profit healthcare system will take their toll in time.  If you want to see some near-real-time numbers, see the U.S. National Debt Clock

Most of these problems are solvable, but unfortunately they’ll require people to actually think about the costs of our investments and expenditures.  History has proven that fighting issues like materialism, greed, fear, and a thirst for war are often losing propositions.  Americans seem to have drifted so far away from rational thought and have migrated toward religious superstition and “thinking” based on emotions rather than facts.  We continue to support catastrophic policies that have proven to fail time and again.  We pretend that our failing economy needs only a “few tweaks” to get it back on track.  Clearly, it will take a lot more than that.  Unfortunately, I suspect there will be no shortage of related articles for this blog in the coming years.


Breaking Down American Consumer Spending

It seems that the United States is often seen as unique in many different areas of life.  We tend to be far more violent than other nations and have an increasing disparity in wealth.  But where to we stand on consumerism?  While I I would have guessed that per capita spending in the U.S. is among the highest in the world (and, accordingly, our savings rates are among the lowest), it’s interesting to look at where that money is going.

A New York Times interactive page, What Your Global Neighbors are Buying, provides some interesting statistics.  Here’s a sample view of spending on “Clothing and Footwear”:


Without having drilled down into the statistics all that much, the only overall obvious conclusion is that we’re big spenders: In all areas, the United States has the highest per capita spending in every category.  While this might be a dream-come-true for marketing organizations, I wonder where it will leave us in the future.

Welfare for the Wealthiest

I hope it’s no secret that the Bush Administration has consistently and routinely provided large tax cuts and handouts to those who need it least.  In fact, more progressive individuals such as Bill Gates and Warren Buffet have publicly criticized these moves, stating that no one even asked for the tax breaks.  Yet these policies continue, as America seems be losing its middle class.  MSN Money reports on the latest statistics in Ranks of the ultrawealthy soar:

New IRS data show a 62% increase in the number of people with a net worth of $20 million or more between 1997 and 2004. Separate data list the ‘Fortunate 400.’

One of the most exclusive clubs in the U.S. has picked up more members.

About 47,000 people had a net worth of $20 million or more in 2004, the latest year for which data are available, according to new estimates by the Internal Revenue Service. While that was up only slightly from 46,000 in 2001, it was up 62% from 29,000 in 1998.

The IRS also reported increases in the number of people with a net worth between $10 million and $20 million: 79,000 people qualified for this group in 2004, up from 77,000 in 2001 and 51,000 in 1998.

Another MSN Money article, Taxpayers give fat cats $20 billion looks at the rates of pay for America’s richest people:

At the expense of you and me, tax breaks help companies hand ever-bigger paychecks to CEOs. What are the presidential candidates doing about it? Almost nothing.

As our national debt reaches new heights, some elite wealthy taxpayers get a pass when it comes to footing their share of the bill:

Those lavishly paid CEOs in their corner offices.

Thanks to five tax breaks cooked up by their friends in Washington, D.C., top executives and their companies enjoy at least $20 billion a year in income-tax breaks that are unavailable to the rank and file, according to a new study from the Institute for Policy Studies and United for a Fair Economy.

The cost to you, me and ordinary workers around the country is easier to figure out. Every household filing a return pays about $192 extra in taxes to cover these breaks, by my calculation.

For a lot of Americans, that’s real money. But not for this elite group.

While we’re held footing the bill for these costs, it seems that everyone is much more focused on the price of a gallon of gas.  Never mind that we’ve spent trillions on attacking Iraq and that over a million people are dead.  Never mind that our deficit is staggering and the United States’ credit rating has dropped for the first time in history.  We’ve got to focus on the gas pumps as the nation’s biggest issue.

Perhaps part of the problem is that Americans, as a whole, truly respect greed and excess.  We tend to look up to CEOs that make tens of millions of dollars in official compensation each year.  We dream about purchasing our tenth house and owning a fleet of cards and personal airplanes.  With attitudes like that, perhaps it’s no surprise that greed has become a richly rewarding national pastime.  Of course, all of this clearly defies all research on the topic that shows that money just doesn’t buy happiness. 

The Source of American Economic Anxiety?

I have often written about the impact of a growing disparity in wealth in the United States, leading to a shrinking middle class.  The Bush Administration have been open and vocal proponents of tax cuts for corporations and the extremely rich while barely hiding their complete contempt for average working people.  If one looks at history, there’s nothing shocking about – an aristocracy seems to be the inevitable by-product of unbridled government.  But what surprises me is how the American people, in general, seem OK with this.  It feels strange that a Republican candidate could even run for what threatens to be, in the words of Barack Obama, “The Bush Administration’s third term.”  So what’s really going on?

In Where did our financial stability go?, author Jim Jubak provides some interesting insight and theories.  First, some facts from the article:

What’s so extraordinary is that this tide of anxiety has risen during a period of extraordinary national economic growth.

In the past 10 years, from 1997 through the end of 2007, the U.S. economy has grown to $11.6 trillion from just $8.7 trillion, adjusted for inflation. That’s real economic growth of about 2.9% a year. The picture looks much the same when you adjust for a growing population. Real per capita gross domestic product, which equates pretty well with per capita income, has climbed 2% a year, on average, from 1997 to 2007.

In other words, if you look at the national averages, we’re somewhere between 20% and 33% better off than we were 10 years ago. So why aren’t we dancing in the streets?

The pundits, yours truly included, have offered a variety of reasons:

  • Incomes are a lot less equal than they used to be. In 1979, for example, the top 1% of earners had an income 9.4 times that of the average person in the bottom 90%, according to the Economic Policy Institute. By 2006, that ratio had climbed to almost 20-to-1.
  • The economy has become more uncertain, with give-backs, outsourcing, off-shoring and downsizing of jobs. And that’s been especially true for the relatively well-paid workers in the manufacturing economy.
  • Growth in national income in the past decade went disproportionately to corporate profits and not to worker incomes. Even though nonfarm productivity rose at an average rate of 2.63% from 1997 to 2007, the average hourly wage for production workers climbed just 0.79% annually. Corporate profits captured more of the national income in 2006, the peak of the recent economic cycle, than in any other year on record.

The answer?  I’m not going to steal Jim’s thunder completely, but the article talks about the variability in income and its effects on human psychology.  It’s good reading and perhaps will serve as a warning to people that can’t seem to manage their own finances responsibly.

American Imperialism: Military Bases

Perhaps it’s a good thing that people outside of the United States tend no to associate American individuals with American politics.  Despite “homeland” marketing initiatives about how great our nation is, it’s clear that our spending on war and interfering with other nations’ policies is nearly unprecedented.  We spend many billions of dollars on a manufactured war in Iraq every month.  To get the same amount of funding for basic needs such as healthcare or education is almost unheard of.  Yet, Americans seem to be satisfied (or, more accurately, blissfully ignorant) of this.  We engage in “fund-raisers” for aspects of American life that clearly should be the responsibility of government.  The goal: to scrape together a few thousand dollars for causes that actually will help people.  We even have a presidential candidate who feels it’s acceptable to remain in Iraq for another 1,000 years.

AlterNet has provided some details that highlight our ignorance in The US Has 761 Military Bases Across the Planet, and We Simply Never Talk About It.  From the article:

At the height of the Roman Empire, the Romans had an estimated 37 major military bases scattered around their dominions. At the height of the British Empire, the British had 36 of them planetwide. Depending on just who you listen to and how you count, we have hundreds of bases. According to Pentagon records, in fact, there are 761 active military “sites” abroad.

The fact is: We garrison the planet north to south, east to west, and even on the seven seas, thanks to our various fleets and our massive aircraft carriers which, with 5,000-6,000 personnel aboard — that is, the population of an American town — are functionally floating bases.

And here’s the other half of that simple truth: We don’t care to know about it. We, the American people, aided and abetted by our politicians, the Pentagon, and the mainstream media, are knee-deep in base denial.

Now, that’s the gist of it. If, like most Americans, that’s more than you care to know, stop here.

Of course, most Americans seem to have little respect for facts, statistics, and evidence.  It’s much easier to just stand in front of (or behind) an American flag and to get bumper stickers requesting God’s support for our great nation (or at least some extremely conservative part of it).  Just don’t expect to see any mainstream media coverage about these bases.

Republicans vs. Democrats: Spending Statistics in Cartoon Form

One of the most popular posts on this blog was related to the myth that Democratic presidents spend more than Republican ones.  The facts show that nothing could be farther from the truth.  The original post, Spending Statistics- Republicans vs. Democrats, links to some interesting statistics.  Of course, some people can’t be bothered with that kind of information, so here’s a quick visual recap of recent U.S. Spending:


President Bush is projected to run up a national budget deficit of $482 billion, possibly a lot more. This is a fiscal conservative? In fact, the only president in the last 25 years to not only not run up a deficit, but to actually leave a surplus, was one of them thar “tax-and-spend” Democrats.

You can see more cartoons and blog posts at Steve Greenberg’s Blog, hosted by the Ventura County Star.  If I could start blogging all over again, I might invest in developing my cartoon-drawing skills to get my points across.

McCain’s Lobbyists: An Interactive Guide

Laws exist in the United States that allow us to at least monitor the amounts and types of political contributions that are received by politicians.  Unfortunately, few people (myself included) take the time to look at the magnitude of the issue.  While there’s some talk about the issue in the lead-up to the 2008 Elections, at least John McCain seems to be profiting handsomely from his benefactors. 

While a table or chart might be compelling enough, the web site provides an interactive guide to how much money the Republican candidate has received.  You can read about he details from the site’s Welcome Page:

Welcome to, a Web site we hope will become a resource for anyone — voter, reporter, blogger or activist — who wants to explore John McCain’s numerous connections to powerful Washington lobbyists and the complicated web that connects all of them together.

We decided to launch this site after seeing John McCain tout himself as a campaign reformer all while building a presidential campaign by relying on a who’s who of big money interests and lobbyists. These lobbyists have earned millions working on behalf of their clients, including Big Oil, brutal dictators, and other special interests. After sifting through the data, we’ve chosen 40 lobbyists we think best illustrate John McCain’s immersion in Washington’s pay-to-play culture.

The Internet has brought us unprecedented access to information such as federal spending, political bribes and conflicts of interest.  Now there’s one major challenge left: To find someone who’s interested enough to read (and write) about them.

Bush’s Legacy: Record Deficit

There seems to be no end to the damage that the Bush Administration and associated conspirators.  The Huffington Post reports about yet another national “record” set by King George and his merry men in Bush Leaving Next President Record Federal Budget Deficit.  From the article:

WASHINGTON — The government’s budget deficit will surge past a half-trillion dollars next year, according to gloomy new estimates, a record flood of red ink that promises to force the winner of the presidential race to dramatically alter his economic agenda.

The deficit will hit $482 billion in the 2009 budget year that will be inherited by Democrat Barack Obama or Republican John McCain, the White House estimated Monday. That figure is sure to rise after adding the tens of billions of dollars in additional Iraq war funding it doesn’t include, and the total could be higher yet if the economy fails to recover as the administration predicts.

The result: the biggest deficit ever in terms of dollars, though several were higher in the 1980s and early 1990s as a percentage of the overall economy.

Unfortunately, this sets our next President up for an apparent failure.  Even if we can remove Republicans from power, it will take a lot of effort to address the core issues.  I hope that it will be done and that the American people will place their blame where it belongs.

The Soaring Minimum Wage

The Consumerist reports on the pathetic state of minimal living wage laws in the United States  The article, Minimum Wage Soars To $6.55, Working Poor Still Too Impoverished To Celebrate quotes the Associated Press article Federal minimum wage rises to $6.55 today.  From that article:

Last week, the Labor Department reported the fastest inflation since 1991 — 5 percent for June compared with a year earlier. Energy costs soared nearly 25 percent. The price of food rose more than 5 percent.

So the minimum wage hike is “a drop in the bucket compared to the increases in costs, declining labor market, and declining household wealth that consumers have experienced in the past year,” Lehman Brothers economist Zach Pandl said.

The new minimum is less than the inflation-adjusted 1997 level of $7.02, and far below the inflation-adjusted level of $10.06 from 40 years ago, according to a Labor Department inflation calculator.

Keep in mind that the increase to its previous level – $5.85/hour – was resisted by Republicans for a decade.  It wasn’t until a Democratic majority in Congress made the increase top their agenda that this was affected at all.  Of course, state federal minimum wage laws often exceed these paltry amounts.  But the United States is (or recently used to be) one of the richest nations in the world.  We’re clearly losing the middle class, and the poorer “working” class seems to be almost completely out of sight and out of mind.

Bush vs. the Economy

People in the United States often seem to be surprised at the deterioration of the United States in most important measurable ways.  Our debt is astronomical, we have gone to war based on manufactured evidence with no graceful means of extraction, education is worse off, and the economy… Well, Americans have finally found something about which they can’t remain comfortably numb.  Apart from the dismal outlook of the overall stock market, analyst predictions, the housing market, and rising costs overall, Americans seem to focus on gasoline prices as the biggest issue.  This when, for example, more than a million Iraqi people have died since we invaded and plundered their country (almost all are civilians).  I hope I don’t even have to question out priorities…

In any case, the L.A. Times provides some encouraging news – that people finally “get it”.  From 75% blame Bush’s policies for deteriorating economy:

WASHINGTON — Three out of four Americans, including large numbers of Republicans, blame President Bush’s economic policies for making the country worse off during the last eight years, according to a Los Angeles Times/Bloomberg poll released Wednesday, reflecting a sharp increase in public pessimism during the last year.

Nine percent of respondents said the country’s economic condition had improved since Bush became president, compared with 75% who said conditions had worsened. Among Republicans, 42% said the country was worse off, while 26% said it was about the same, and 22% thought economic conditions had improved.

All together, 82% of respondents said the economy was doing badly, compared with 71% who felt that way when the question was asked in February. And the pessimism has intensified: Fifty percent of respondents said the economy was doing “very badly,” compared with 38% in February.

The Times/Bloomberg poll, conducted June 19-23 under Pinkus’ supervision, interviewed 1,233 adults nationwide. The poll’s margin of sampling error is plus or minus 3 percentage points.

The article provides some interesting charts and graphics that illustrate the results of the survey.  My only issue is that people seem to be surprised.  But what did we expect?  The U.S. elected (or, more correctly, the Supreme Court appointed) a bumbling fool as our highest-level elected official twice. This guy routinely talks about “evil-doers”, messages from God, and shows a lack of knowledge that is staggering.  His administration talked about bombing Iraq back to the Stone Ages.  But what effect has it had on the United States?  By most measures, we’re poorer, less educated, less competitive in the field of science, and most of us think (know?) that things will get far worse before they get better.

Helping Troubled Mortgage Owners

If there was ever any question about the Bush Administration’s motives, perhaps the treatment of the sub-prime mortgage disaster would help clear up the issue.  We have already seen the architects of this abuse of power receive record bonuses.  And Bush was quick to make sure that the mortgage companies’ profits were protected.  It took months before he even thought about helping actual people affected by unbridled profiteering.  But certainly it would be expensive to help people who really need it, right?  That doesn’t seem to be the case.

MSN Money reports in A bailout that wouldn’t cost you a dime.  From the article:

Congress is considering a plan that could prevent foreclosures for about half a million homeowners. The legislation, which passed the House earlier this month, would do the following:

  • Allow strapped borrowers to refinance into more-affordable, federally guaranteed mortgages.
  • Aid only homeowners, not investors or speculators.
  • Require those homeowners to split any future home profits 50-50 with the government.
  • Cost taxpayers an estimated $1.7 billion, according to the Congressional Budget Office.

That price tag isn’t as hefty as it seems when compared with how much the rest of us could lose because of foreclosures. Homeowners who keep their houses, but who live in areas where foreclosures are rising, are expected to lose $356 billion in home-equity wealth in the next two years as neighborhood foreclosures whittle away at the value of their homes.

What’s frustrating is that lawmakers had a solution that could have helped even more homeowners and would have cost you, the taxpayer, exactly nothing. This free-to-you plan would have allowed bankruptcy judges to modify mortgage terms and helped as many as 600,000 homeowners avoid foreclosure.

Who talked Congress out of this solution? Why, the very lenders and mortgage brokers who got us into this mess.

None of this should come as a big surprise to anyone that has been objectively watching politics in the United States.  The people are left to fend for themselves while organizations are allow to abuse their power and seem to have a right to receive rewards for it.  Clearly, few people are blameless in this situation, but mortgage borrowers were clearly mislead.  Brokers have been unethical in their lending practices, but there’s little chance that they’ll pay for their actions.

A common tactic used by dictators throughout history is to keep people poor and ignorant – a goal on which the Bush Administration seems to be working quite diligently.  The only risk, of course, is when the disparity in wealth becomes too great.  I can only guess what Dubya’s version of Marie Antoinette’s “Let them eat cake!” affront would be.  You can be sure it won’t be grammatically correct (assuming he writes it), but Americans as a whole will still likely ignore or tolerate it.

Spending Statistics: Republicans vs. Democrats

Politics, at least in the United States, seems to be an industry that’s based on emotional, irrational thinking.  Often, the method of fear, uncertainty, and doubt (FUD) is employed to confuse those voters who think with their “stomachs” rather than their heads.  Most Americans seem to have no problem with the trillions of dollars spent on attacking Iraq, but they are outraged by paying an extra dollar or two per gallon of gasoline.  We live in a nation where hysteria over a manufactured threat – terrorism – has given government free reign to curtail liberties.  We ask for no evidence related to the effectiveness of unbridled spending on war and “Homeland Security”. 

Economics will be an important part of our next Presidential election.  One of the main arguments against the Democratic party seems to be that it will raise taxes and increase spending.  But is there any statistical information to backup that claim?  R.W. Bradford argues just the opposite in The Politics of Presidential Spending.  While the article is several years old, the information is still quite valid (and if you factor in Bush’s War and his administration’s bungling of just about all aspects of American government, it would help support the results).  Here are some statistics and excerpts:

Most people believe that Democrats are big spenders and that Republicans are tight-fisted. The evidence leads to a very different conclusion.

Since 1970, spending has grown 64% faster when a Republican sits in the White House than when a Democrat does.

  • In the twelve years that a Democrat has sat in the White House, spending has increased at an average rate of 1.29% per year; during the 22 years of Republican presidencies, government spending has risen at an average rate of 2.12%. In other words, spending has grown 64% faster when a Republican sits in the White House than when a Democrat does.
  • During the 20 years Democrats have controlled both houses of Congress, spending has grown at an average rate of 1.84% per year, more than double the average rate of 0.89% per year during the six years the GOP ran Congress. (During the other eight years, when control of Congress was split between the two parties, spending grew at an average rate of 2.52%. The split-control years all occurred during Republican presidencies.)
  • When Democrats controlled the White House plus both houses of Congress, spending grew at 1.70% per year, slightly below the average growth rate of 1.83% for the entire period.
  • The slowest spending growth occurred when a Democrat sat in the White House and Republicans controlled both houses of Congress. Spending rose by an average of just 0.89% during the six years of this situation, which all occurred with Bill Clinton as president and Newt Gingrich as Speaker of the House.
  • During the 14 years Republicans controlled the White House and Democrats controlled both houses of Congress, spending grew at an average annual rate of 1.92%. During the eight years with a Republican president and a split Congress, spending grew at 2.54% per year.

The results are quite clear – not only do Republican presidents spend far more money, but they often spend it on such “necessities” as creating wars.  Sadly, the American people are extremely unlikely to let the use of any for of facts, figures, or statistics inform their decisions.  So, it looks like the Republican Party can continue with it’s campaign of FUD, and people will listen.

The Value of a Bachelor’s Degree

I have often question the value of a college degree.  While I have one (and do think I have benefited from the education), the soaring costs of four-year colleges raises questions related to the Return on Investment of making the choice to go to college.  A well-written essay, America’s Most Overrated Product: the Bachelor’s Degree provides some very interesting statistics.

I have a hard time telling such people the killer statistic: Among high-school students who graduated in the bottom 40 percent of their classes, and whose first institutions were four-year colleges, two-thirds had not earned diplomas eight and a half years later. That figure is from a study cited by Clifford Adelman, a former research analyst at the U.S. Department of Education and now a senior research associate at the Institute for Higher Education Policy. Yet four-year colleges admit and take money from hundreds of thousands of such students each year!

Even worse, most of those college dropouts leave the campus having learned little of value, and with a mountain of debt and devastated self-esteem from their unsuccessful struggles. Perhaps worst of all, even those who do manage to graduate too rarely end up in careers that require a college education. So it’s not surprising that when you hop into a cab or walk into a restaurant, you’re likely to meet workers who spent years and their family’s life savings on college, only to end up with a job they could have done as a high-school dropout.

Such students are not aberrations. Today, amazingly, a majority of the students whom colleges admit are grossly underprepared. Only 23 percent of the 1.3 million high-school graduates of 2007 who took the ACT examination were ready for college-level work in the core subjects of English, math, reading, and science.

The opinion also provides some excellent recommendations for trying to make colleges more accountable.  Clearly, universities make money (and increasing amounts of it) regardless of the quality of their “product”.  With some of these suggestions, it’s hopeful that we can make a more educated decision about four-year college education and it’s potential benefits and drawbacks.

Quantifying Excessive Pay for CEO’s

In recent years, we have seen an explosion in the amount of pay given to company leaders vs. compensation given to their employees.  In some countries, this ratio is capped.  In Bush’s America, however, the apparent disregard for maintaining equity and a middle class seems to have taken over.   Conde Nast helps readers visualize the numbers in What Excessive Pay Package? 

To spare any suspense, in 1970 U.S. CEO’s were paid 28 times more than the average worker.  In 2005, it has increased to 465 times.  Personally, I wish that our society would look down on people that seem to want or need ludicrous amounts of cash.  Instead, we reward the same CEO’s that have caused the downfall of numerous companies and have led us to national crises such as the sub-prime mortgage situation.  Perhaps if we gave all of our money to CEOs, there would be nothing left for them to lose?

Update (05/04/2008): A related story from ABC News, CEOs Rake It In When Their Companies Tank, provides some more statistics of how much CEOs (even the worst ones) make in income. Tracking the Best Politicians Money Can Buy

Money and politics in the U.S. are almost inextricably related.  Even the most optimistic among us realizes that political decisions are bought by private interests.  There’s perhaps no better example in history than that of the Bush Administration.  Laws and policy are created to favor the few (but rich), who end up having a profound impact on the entire nation. 

We all know this, but when it comes time to look at details, they’re extremely difficult to quantify.  For example, does a particular representative really believe that we shouldn’t protect the environment, or did someone pay her/him to state that?  And how often to politicians flip-flip on issues, driven by currents of cash?  The majority of the data we need to dig up the truth is freely available (often by law), but it’s notoriously difficult to make correlations.

A new startup, is hoping to change all that.  Its small group of developers provide valuable (and often shocking) insight into the effects of contributions on politicians’ voting records.  From the site: brings together campaign contributions and how legislators vote, providing an unprecedented window into the connections between money and politics. We currently cover the California Legislature and U.S. Congress.

You can find out much more about this organization in eWeek’s article, Public Interest Mashup Follows Political Money Trail.

The information is extremely insightful and should be used by every voter to help make decisions.  I could even see the evolution of an “honesty score” based on voting records vs. campaign contributions. 

There are two challenges, however, that I see with this.  First, the American people are just not accustomed to using facts and evidence to make their decisions.  They’ll vote for George Bush, knowing full well that the guy is an idiot (and even after he had sufficiently proven it in his first term).  They’ll listen to religious zealots scream and yell about minor scientific research issues.  They believe that God is the answer to our problems.  No amount of research will help resolve that issue.

The other challenge is one related to gaining support for this initiative.  In a more progressive nation, this would be a government program.  One or more politicians would decide to support transparency and even the most crooked officials would have a hard time disagreeing with it.  The total cost would be far less than what we spend on Iraq every minute of every day. 

Unfortunately, if recent history is any teacher, I wouldn’t hold out hope for an initiative like this to change the face of American politics.  We have gone too far in the wrong direction, and restoring rational thought will likely take decades (assuming that it ever happens).  Still, it’s great to see innovative groups light try to address the problem.

More Welfare for Subprime Lenders

Most of the Bush Administration’s policy-related decisions have been unmitigated disasters.  Therefore, it comes as no real surprise that the current state of our economy is a direct result of it.  However, Bush and his cronies continue to protect only the financial institutions that caused this mess while leaving consumers completely out in the cold.  MSN Money’s John Marman reports in Why the Fed cuts won’t help you.  From the article:

In its efforts to keep irresponsible bankers on Wall Street afloat, the Federal Reserve is spurring inflation, crippling the dollar and cutting into retirees’ incomes. And mortgages and car loans won’t get any cheaper.

If that sounds unfair, welcome to the latest episode of a brutal new American business ethic, in which the government bails out bad bets by risk-taking banking executives in New York with money that it borrows from middle-class families and foreign investors. The effort is gilded with fancy financial language and cloaked in the guise of a rescue that helps all citizens, but the reality is that Washington is essentially robbing the poor to help the rich.

Sadly, the American people seem to be standing idly by why an out-of-control government continues its profiteering.  It makes me wonder how they can get away with this.  It looks like the level of pain will have to get much higher before people start considering the removal (or imprisonment) of King George.

As mortgage holders face foreclosure and shareholders take a bath, troubled Washington Mutual takes action — to protect executive bonuses. It could be a trend.

Around the country, Washington Mutual (WM, news, msgs) regularly plays the tough guy with homeowners who fall behind on mortgages. This as foreclosure filings overall rose 60% nationwide in February.

And its involvement in the subprime mess has been tough on stockholders. Since last summer, the company’s shares have lost nearly 80% of their value.

But the bank is a softy when it comes to bonus pay for top brass.

After CEO Kerry Killinger and other top executives missed all or a big part of their bonus pay last year, Washington Mutual wasted little time taking steps to apparently make sure it won’t happen again — even if the mortgage market and the company remain in the tank.

A "Comical" Look at American Policy in Iraq

The unmitigated disaster of the United States unprovoked attack on Iraq is anything but funny. recently posted a comic that seems to sum it up nicely:See This Modern World by Tom Tomorrow for a great summary.  For those who have been paying attention over the last the last several years, here are some interesting statistics (in comic form):


Of course, there are some people who should be laughing.  Terrorists certainly far exceeded their goals – the Bush Administration does far more damage to the United States than could an army of suicide bombers.  Sadly, like the terrorists, it looks like Dubya and his cronies are going to get away with it. 

More Estimates on the Costs of War

Even if Americans can find some way to justify our baseless attack on a nation which posed no threat whatsoever to the United States, they should have trouble denying the staggering costs of such a fiasco.  The New York Times reports on some sobering statistics that underscore the costs to our society in The $2 Trillion Nightmare.  From the article:

On Thursday, the Joint Economic Committee, chaired by Senator Chuck Schumer, conducted a public examination of the costs of the war. The witnesses included the Nobel Prize-winning economist, Joseph Stiglitz (who believes the overall costs of the war — not just the cost to taxpayers — will reach $3 trillion), and Robert Hormats, vice chairman of Goldman Sachs International.

Both men talked about large opportunities lost because of the money poured into the war. “For a fraction of the cost of this war,” said Mr. Stiglitz, “we could have put Social Security on a sound footing for the next half-century or more.”

Mr. Hormats mentioned Social Security and Medicare, saying that both could have been put “on a more sustainable basis.” And he cited the committee’s own calculations from last fall that showed that the money spent on the war each day is enough to enroll an additional 58,000 children in Head Start for a year, or make a year of college affordable for 160,000 low-income students through Pell Grants, or pay the annual salaries of nearly 11,000 additional border patrol agents or 14,000 more police officers.

I have posted these types of statistics and details many times before.  Even though we have a seriously flawed economy, people just don’t seem to place the blame where it should be: On the hands of an administration that has squandered our money on pointless aggression.  As always, I have to wonder how American adults will explain this to their children.  Most likely, they’ll claim that “those were different times”, and “we had no idea what was going on.”  That excuse has certainly been used before, but it’s hardly a feeling that will keep people warm in unemployment lines or entertained while they’re in hospitals recovering from war injuries.

America the Indebted

Many years ago, I started feeling really astonished at the amount of money that the United States would pour into “investments” that provided little (if any) return.  One case in point is our unprovoked attack on Iraq.  As I have mentioned in earlier posts, the costs of this war clock in at trillions of dollars, and we’re not borrowing hundreds of millions of dollars per day.  At the same time, the Bush Administration has dramatically cut (or diverted) funding from education, science, the environment, and truly important issues that could improve our world.  It’s difficult to justify, yet Americans still seem to be largely ignorant of the magnitude of these issues.

Michael Hodges has created a site titled the Grandfather Economic Report series.  While the site layout and graphs are unlikely to win any presentation-related awards, the information is interesting (and sobering).  Here are some statistics from the introduction:

America has become more a debt ‘junkie’ – – than ever before
with total debt of $48 Trillion – – and the highest debt ratio in history.

That’s $161,287 per man, woman and child – – or $645,148 per family of 4,
$45,514 more debt per family than last year.

Last year total debt increased $3.9 Trillion, 5 times more than GDP.
External debt owed foreign interests increased $1 Trillion;
Household, business and financial sector debt soared 9%.

72% ($35 trillion) of total debt was created since 1990,
a period primarily driven by debt instead of by productive activity.

And, the above does not include un-funded pensions and medical promises.

Sadly, the fact that we’re putting such little money into education means that most Americans are completely helpless to understand the magnitude of these numbers and their potential impact on society.  Many seem to barely understand the costs of personal debt, even with credit card interest rates that are nearly 30%. 

What bothers me most, however, is that very few Americans are even aware of this problem.  They’ll complain incessantly about gasoline prices while the financial foundation of this country could be on the verge of crumbling.  They’ll support pointless wars while funding for children’s healthcare is slashed.  I don’t see any of this changing anytime soon, but a step in the right direction would be to elect an intelligent President.  One ray of hope is that just about anyone would be smarter than George Bush.  Still, just paying off our current debts seems almost insurmountable, even if we enjoyed decades of prosperity.  If only there were an international bankruptcy law…

Bush: Spending on War Not Linked to the Economy

Well, here’s a relief: ThinkProgress reports about one brilliant financial mastermind and his opinion on the cause of the poor state of the U.S. Economy: Bush Dismisses Iraq Recession: The War Has ‘Nothing To Do With The Economy’.  Here’s the transcript, as posted in the article:

Some Americans believe that they feel they’re carrying the burden because of this economy.

G. BUSH: Yeah, well…

CURRY: They say we’re suffering because of this.

G. BUSH: … I don’t agree with that.

CURRY: You don’t agree with that? It has nothing do with the economy, the war — spending on the war?

G. BUSH: I don’t think so.

I think actually the spending in the war might help with jobs.

CURRY: Oh, yeah?

G. BUSH: Yeah, because we’re buying equipment, and people are working.

I think this economy is down because we built too many houses and the economy’s adjusting.

For full effect, be sure to watch the video (keep the antacid close).

Overall, to me, this is a real relief.  And to think – this morning I was afraid that the $300 million per day we’re borrowing to finance our groundless war on Iraq had something to do with the fact that the Dow Jones Industrial Average closed at below 12,300 points today.  What was I thinking?

Update: In completely unrelated news, ThinkProgress also reports that Bush’s Approval rating is now down to 19 percent.  From the article:

President Bush’s latest approval rating, according to an American Research Group poll, down from 34 percent just one month ago. Seventy-seven percent of Americans disapprove of the job he is doing, and 79 percent disapprove of his handling of the economy.

The Fall of the American Empire?

The events of the last several years has often made me thing about America’s empire.  With the reckless spending, needless and unjustifiable wars, and a general lack of accountability in government, it seems that the stage is set for this nation’s downfall.  Add in the general apathy and ignorance of American voters, and it’s hard to see how things could change for the better.  Historically, numerous empires have toppled, seemingly soon after the height of their success.  The United States recently lead the entire world’s economy, but our position is fading fast.

Ian Welsh at FireDogLake seems to agree in an article entitled American Parallels.  The first comparison is with the British Empire:

History, they say, does not repeat – but it does echo. Looking back at other situations, other republics and empires, one is tempted to draw parallels between then and now. The parallel drawn most often is the decline of the British Empire.

American world dominance, as with British, was based on a military dominance that came out of economic dominance. From about 1890 on America had the world’s most powerful economy, outproducing Britain industrially, and backed moreover by a continental resource base. At the end of World War II the US was producing about half the world’s goods. Since then there has been a gradual decline, and the rise of larger powers – China and India, whose populations are significantly larger than that of the US. As in the decline of Britain, capital is fleeing the old empire, heading for the rising powers.

The article also compares the U.S. with Spain, Rome, and Athens.  All of these economies tumbled relatively quickly.  It makes me wonder – were all of the people that lived during these times caught off-guard?  Or, did some of them see it coming?  Clearly, the outcome wasn’t inevitable, but people didn’t do enough to stop it.  I also agree with the article’s conclusion, which is somewhat more optimistic:

In the end America will follow its own unique path. All Republics end, and so do all Empires. There is, in human history, a series of cycles of renewal, decay and renewal. Each one ends in a crisis period, and each crisis must be overcome. It is never inevitable that you’ll fail – but it’s never guaranteed you’ll succeed either. It is this generation’s task to renew the tree of liberty and keep the American experiment going – to remain true to the ideals that made America and have driven it since 1776. It is my profoundest wish, as we come up on the New Year and look both back and forward, that you are successful in doing so, and that America once again becomes the beacon of liberty and hope that its founders wanted it to be.

In any case, this is probably a suitable last blog entry for 2007.  Let’s hope that 2008 has some more encouraging news!

The Bush Effect: Economic Impacts

Several historians have referred to Dubya as one of the worst presidents in the history of the United States.  I have no doubt that this will be his legacy in the eyes of objective, rational people (the religious “Right” and conservatives need not apply to that group).  Vanity Fair has provided some statistics and projections in The Economic Consequences of Mr. Bush.  From the introduction:

When we look back someday at the catastrophe that was the Bush administration, we will think of many things: the tragedy of the Iraq war, the shame of Guantánamo and Abu Ghraib, the erosion of civil liberties. The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this page.

By the way, that’s just the “short list” of Bush’s disasters.  Regarding economics:

The world was a very different place, economically speaking, when George W. Bush took office, in January 2001. During the Roaring 90s, many had believed that the Internet would transform everything. Productivity gains, which had averaged about 1.5 percent a year from the early 1970s through the early 90s, now approached 3 percent. During Bill Clinton’s second term, gains in manufacturing productivity sometimes even surpassed 6 percent. The Federal Reserve chairman, Alan Greenspan, spoke of a New Economy marked by continued productivity gains as the Internet buried the old ways of doing business. Others went so far as to predict an end to the business cycle. Greenspan worried aloud about how he’d ever be able to manage monetary policy once the nation’s debt was fully paid off.

But the Bush administration had its own ideas. The first major economic initiative pursued by the president was a massive tax cut for the rich, enacted in June of 2001. Those with incomes over a million got a tax cut of $18,000—more than 30 times larger than the cut received by the average American. The inequities were compounded by a second tax cut, in 2003, this one skewed even more heavily toward the rich. Together these tax cuts, when fully implemented and if made permanent, mean that in 2012 the average reduction for an American in the bottom 20 percent will be a scant $45, while those with incomes of more than $1 million will see their tax bills reduced by an average of $162,000.

The American government now runs much like the American – we’re not even living paycheck-to-paycheck, and we barely think of budgets when we contribute billions of dollars to disasters such as the unprovoked attack on Iraq.

Perhaps the American people are to blame.  While we’re watching the latest antics of Britney Spears and Lindsay Lohan, parts of our nation our crumbling under the weight of inept leadership.  And, studies have shown that we’re getting significantly dumber.  I see a lot of opportunity here – for nations other than the United States.

Kiva: Loans for Entrepreneurs

I’ve often written about the tremendous gap in worldwide wealth and how it’s increasing.  Recently, a friend of mine recommended that I check out Kiva, a non-profit organization that allows people to make donations to support business people in other parts of the world.  I recently joined the service and made small donations to several of their businesses. 

While there are numerous services that help others financially, I like the fact that this one seems to promote responsibility for the borrower.  Since these are loans (and not donations), they should ideally favor people who have the will and determination to put it to good use.  Certainly, there will be diversion of some funds.  But, the site claims that nearly 100% of loans are repaid. 

Currently, there aren’t as many potential businesses to choose from, but I hope that this is a good sign.  While the site claims that more than $13 million dollars has been donated, that’s hardly the same amount as the U.S. spends on war in a morning.  Still, it is good to be helping out somewhat.

The Working Poor: 41 Million People

Hopefully a lot of people have seen the video clip where a woman tells George Bush that she works three separate jobs.  Dubya’s response: “Well, isn’t that uniquely American?”  In a way, I hope Dubya is right – I’d hate to see people in other countries having that problem.  If you missed it the first time around, it’s in Michael Moore’s movie Sicko (within the first few minutes).

MSN Money reports in Study: 41 million in U.S. can’t afford basics.  From the article:

About one in five working American families can’t afford basic needs, and many scrape to get by on insufficient income and government aid, policy researchers conclude in a report (.pdf file) released today.


Many of these workers earn too much to qualify for “work supports” such as Medicaid and food stamps, while their employer-provided health insurance doesn’t cover enough of their basic medical costs, according to the report by the Center for Economic and Policy Research and the Center for Social Policy at the University of Massachusetts.


“We no longer live in a world where having a job means you’re automatically able to make ends meet,” said Heather Boushey, co-author of the report. “Our work-support policies need to be updated to support the millions of families with earners in bad jobs.”

While providing government support for these workers might help in the short-run, that’s clearly a short-sighted solution.  In an era where companies (and the executives who run them) are making record salaries, surely there’s enough money to pay people a reasonable wage.  And wouldn’t it make more sense to make healthcare more affordable.

For once, I agree with Dubya: These problems seem to be uniquely American.  Now if only we didn’t have to wait until after the next election to start hoping for solutions.

Income Inequity in the U.S.

People that have been following the political, social, and cultural climate of the United States are unlikely to be surprised by the fact that there’s a dramatically increasing erosion of the middle class in this country.  Thanks in no small part to Republican “leadership”, the gap between rich and poor is starting to resemble that of Third World nations.

The Raw Story reports in Income inequality worst since 1920s, according to IRS data.  From the article:

The superrich are gobbling up an ever larger piece of the economic pie, and the poor are seeing their share of earnings shrink: new IRS data shows the top 1 percent of Americans are claiming a larger share of national income than at any time since before the Great Depression.

While a contributing factor is the increasing importance of skilled workers, that’s not really a good explanation for the whole situation.  If the United States believed that, wouldn’t we invest more money in education than in war? 

And to those that thing that this isn’t a big deal, inequality leads to rebellion.  While it might be humorous to heard Dubya’s version of “Let them eat cake!”, this isn’t a good situation for the rich or for the poor.

Surviving [Self-Paid] Healthcare in the U.S.

While I wouldn’t trade working for myself for almost any other type of job, dealing with self-insured healthcare has been painful.  Trying to get a policy can take hours of time, effort, and research.  The application process can take hours (even when done online).  A typical section requires you to list all of the doctor’s you’ve seen in the last 10 years.  If you leave something out (and just about everyone will), you leave yourself open to having the insurance company claiming you falsified your application.  Add in too much detail, and you’ll enjoy overly broad waivers that will prevent you from getting any reasonable amount of coverage (my
“crime” was having allergies).  Based on that, Blue Cross/Blue Shield (with whom I had my COBRA-based health plan) refused to offer me any coverage for any price.

You have to apply to a policy to figure out how much you’ll pay and what waivers you’ll have.  Generally, you’ll want to apply to multiple policies, each of which will bill you in advance.  Should you decide to cancel a policy, you’ll have to wait several months to get a refund.  That was exactly my experience.

MSN Money has an interesting article entitled How early retirees insure their health.  These people are generally in the same boat as the self-employed an anyone that doesn’t have employer-sponsored health insurance (a rapidly growing segment of our population).  Unfortunately, there just aren’t many good options (short of leaving the country).  Perhaps we can all be considered members of the “high-risk” pool, simply for choosing to live in the United States.

Avoid Adding Healthcare Insult to Injury

If you’ve recently had a minor injury or ailment, that could be the beginning of your problems.  I recently ended up paying nearly $600 for 10 minutes of a doctor’s time and two hearing tests.  The problem?  An ear infection.  That’s pretty costly, but fear of serious hearing loss motivated me to bite the bullet and do it.  Even worse than the costs, if I ever apply for another health insurance plan, I’ll need to add this doctor to the list.  That probably means that I’ll have a waiver on anything even remotely related to this problem for the rest of my life (yes, I’m self-insured).  All of this, by the way, was due to a cold I was having.  Earlier, I had gone to a clinic, and the cost was reasonable – well under $100.

In an article on Yahoo! Finance entitled Clinical Approach, the author provides a similar story: 

The emergency room admitted him and naturally, without talking price, put eight stitches in his chin and fed him a late dinner.


The bills started coming shortly. First, $273 for the stitches from the attending physician. Then, $85 from the primary care physician for removing the stitches. And then, the heartbreaker — $848 from the hospital for the emergency room visit. If you’re keeping score, that’s a total of $1,206.


Shortly afterward the family checked out the local urgent-care clinic, open until 8 p.m. on weekdays, which would have worked fine. Cost: $222 — including the follow-up visit to remove the stitches.

So what’s the solution?  There really isn’t a good one in the U.S. (and fixing our system seems quite hopeless in an era of unbridled profiteering).  Clinics can be a good choice in most cases.  I have also found that you can call a doctor’s office and talk to a nurse for advice.  And, doing research on the web can sometimes be helpful (though it’s often difficult to find reliable, unbiased information).

Of course, it’s getting to the point where it might be cheaper to avoid the “middle-man” and just get a medical degree yourself.  I’m willing to bet that that approach will be quicker, cheaper, and less painful than dealing with our healthcare system directly.

Bush vs. Kids’ Healthcare reports in Bush to Veto Kids’ Health Care:

A bipartisan group of lawmakers announced a proposal Friday that would add $35 billion over five years to the program, adding 4 million people to the 6.6 million already participating. It would be financed by raising the federal cigarette tax by 61 cents to $1 per pack.


The idea is overwhelmingly supported by Congress’ majority Democrats, who scheduled it for a vote Tuesday in the House. It has substantial Republican support as well.


But Bush has promised a veto, saying the measure is too costly, unacceptably raises taxes, extends government-covered insurance to children in families who can afford private coverage, and smacks of a move toward completely federalized health care. He has asked Congress to pass a simple extension of the current program while debate continues, saying it’s children who will suffer if they do not.

This really shouldn’t come as a surprise to most of us.  After all, Bush and his Republican minions have opposed a minimum wage adjustment for years.  This clearly isn’t a party that’s concerned about the well-being of the common person.

Too costly?  The sad fact about this is that, compared to the price of attacking Iraq, it’s a drop in the bucket.  We’re spending billions of dollars every month on that disaster.  And, the bill provides a method of funding itself that I would hope no one would oppose.  Still, it’s a sign of the times, and it’s likely that this one will be swept under the rug along with all of the other atrocities we have come to expect from our government.

Update:  If you’d like to fight back, sign the Democratic Congressional Campaign Committee’s Children’s Health Care Petition.

Worldwide Account Balances

In the U.S., it seems that it’s almost taken for granted that everyone should be in debt.  Costs for Iraq will easily top a trillion dollars (even when you don’t consider “soft costs” and interest charges), while a large portion of the country doesn’t have healthcare.  A Wikipedia article helps shed some light on nations’ economies.  According to List of countries by current account balance, the United States has the highest amount of debt, by a tremendous margin (see #163 on the list).

This should be shocking.  The U.S. should be one of the richest countries in the world.  We have so many resources, a good (but declining) education system, and a fairly stable government.  And, we have a large middle class.  Yet, we also have one of the lowest per capita savings rates in the world.  And, at the risk of being repetitious, no one seems to care about the money we’re wasting on pointless “wars”.  Many empires have crumbled under the weight of what seems like “success”.  Corruption, greed, materialism, and their effects seem to be having quite an effect on the United States’ position in the world economy.

Another Bushism: Econ 101

We should be used to these by now, but ThinkProgress has an article and a video if yet another blunder: Bush: Don’t Ask Me About The Economy, I Got A ‘B In Econ 101′.  And the written transcript:

QUESTION: Do you think there’s a risk of a recession? How do you rate that?

BUSH: You know, you need to talk to economists. I think I got a B in Econ 101. I got an A, however, in keeping taxes low and being fiscally responsible with the people’s money.

The surprising part is that Bush could have earned a ‘B’ in such a class (unless, of course, he’s just confusing his last initial with the grade).  The most annoying thing, of course, is that Americans knew that Bush was quite the idiot well before he was elected for his first term.  I doubt Bush understands the economy at all.  He does understand how to make himself and his friends rich.  In that respect, this latest Bushism is right on target.

Constructive Complaining

Everyone has had issues dealing with poor customer service.  I often find that I spend a lot of time trying to resolve issues (and even more worrying about them).  From dealing with untrained support staff to long hold times, it’s difficult to get what you want.  most of use often give up out of frustration.  And, some companies (the short-sighted ones) are perfectly happy with that.

MSN Money published an article entitle 6 Strategies for Successful Complaints.  Most of these are good things to keep in mind.  I could add my own techniques to the list (most of these can be very effective):

  • Seek sympathy: Ask the other person, “What would you do if you were me?”  This one works wonders.  It makes even some of the most jaded customer service representatives start feeling like a human being.  How can they respond?  “I’d be happy that I received poor service and was over-charged.”  Unlikely. 
  • Align: Make it you and the other person against the problem (rather than you vs. customer service).  You have issues with the service/product that must be resolved.  The other person has rules, regulations, policies, etc. to deal with.  However, that’s the problem – it’s not the representative, it’s their training and limitations.
  • Escalate: Don’t waste time with people who can’t resolve the problem.  When you’re told, “I’m sorry, I can’t give you a refund”, you can politely ask for someone who can.
  • Be firm but polite: Yelling, screaming, and using derogatory remarks are generally the result when emotions get the best of you.  Simple statements like, “That’s unacceptable to me” can be just as effective as a long tirade that repeats your entire story and how you feel about it.
  • Stay focused: It’s all too easy for a conversation to turn to an argument and then escalate into a battle.  Stay focused on the problem and your intended resolution.  And, don’t dilute the message or provide Customer Service with an “easy out” by making idle threats or accusations.

Overall, I think the most important thing is to try to remain objective.  We all have a tendency to feel personally attacked when we’re wronged.  That frustration, however, won’t necessary help in resolving the problem.  Persistence has its hidden benefits, as well.  Time you spend talking to Customer Service staff is costly to call centers.  Even the bills for long distance calls and call routing can be huge.  Generally, if you’re persistent, you’ll get some type of resolution.  In a future posting, I’ll talk about some last forms of resource for when nothing seems to be working.

War for Dollars

It’s no secret that one of the primary motivating factors for attacking Iraq was to make Cheney and his cronies even richer.  From no-bid contracts even before we started to destroy the country to gouging and failure to deliver services, this is probably political corruption at its absolute finest.  MSN Money reports some details in War means a windfall for CEOs.  Here’s an excerpt:

President Bush’s military buildup has caused defense-contractor revenue to double, triple and even more during the past five years, and their executives have reaped huge bonuses and stock windfalls as the companies’ share prices have jumped.

Take a look:

  • CEOs at top defense contractors have reaped annual pay gains of 200% to 688% in the years since the Sept. 11, 2001, terror attacks.
  • The chief executives at the seven defense contractors whose bosses made the most pocketed nearly a half-billion dollars from 2002 through last year.
  • The CEOs made an average of $12.4 million a year, easily more than the average corporate chief. Since the start of the war, CEOs at defense contractors such General Dynamics (GD, news, msgs), Halliburton (HAL, news, msgs) and Oshkosh Truck (OSK, news, msgs) have made, on average, more in four days than what a top general makes in a whole year, or $187,390.
  • Defense contractor CEOs are enjoying these big rewards partly because much of the war effort is being outsourced by an administration that believes private companies do things better than the public sector, say researchers at the Institute for Policy Studies and United for a Fair Economy.

    “In the most privatized war in history, lucrative opportunities abound for chief executives of defense contractors,” says Sarah Anderson of the Institute for Policy Studies.

An associated story (also from MSN Money) is Who’s profiting from the Iraq War?.  It’s the usual list of suspects, most with ties to Washington.

The interesting thing to me is that no one really seems to care about this.  We can attack a country based on falsified “evidence”, murder hundreds of thousands of people, and a few lucky Americans can get rich from it.  Apparently, all of this is OK.  At least I rarely hear the claim that we’re somehow trying to help or liberate the poor people of Iraq.  In almost every way, their lives are worse.  And what exactly are these CEOs going to do with the additional money?  Buy another George Bush, Inc.?  It’s really pretty silly, overall, but it does seem to be compatible with American “ideals”.

Terrible Credit Card Terms

In the United States, you can be sure of one thing: When you fall upon hard financial times, there’s always some company or organization that’s ready to take advantage of it.  From sub-prime loans to typical credit card offers targeted at people who can barely manage a bank account, it seems that anything goes here. reports about The World’s Worst Credit Card.  I doubt that this is really as bad as credit card terms can get, but the details do seem rather excessive:

Account setup fee: $99

Program participation fee: $89

Annual fee: $49

Account maintenance fee: $120 (charged @ $10/month)

Purchase APR: 19.92%

Authorized user fee: $30 (great! seems like $53 credit is a bit too much for a single person to handle)

Credit limit increase fee: $25 (and you don’t even have to ask for it!)

Internet payment fee: $4 for each authorized internet payment.

All of this for the generous credit limit of $53.  You can find the official terms page at Continental Finance MasterCard.  With all of these fees, it’s almost impossible to calculate where your money is going.  Of course, with only $53 of credit, it won’t go very far.

Insurance Coverage Surprises (the Upside)

It seems that most stories related to insurance coverage are ones in which the policy holder is unpleasantly surprised about what’s not covered.  This generally applies to health insurance (pre-existing conditions and insane deductibles), homeowner’s insurance (remember the huge mold scares?), and auto insurance.  I always thought it was an interesting benefit when credit card issuers covered damage to items you have recently bought.  In theory, at least, if you drop an expensive lamp a few days after you purchased it, the credit card company will reimburse you for the price.  Why?  Perhaps it’s such an infrequent occurrence that a better question would be, Why not?  And, it gets people like me to write about it.

In Insurance your didn’t know you had, MSN Money provides examples of some types of events and damage that might be covered.  The introduction:

Your home, auto and medical coverage could be better than you think. Here are 11 scenarios for which you might be pleasantly surprised to learn you can file a claim.

Examples range from damaging your kitchen floor while trying to kill a snake to damage caused by drunken guests and stupid kids. (It’s hard for me not to picture all of this happening in a typical household in a single day).  Other important types of coverage include dorm theft for students that are considered dependents of their parents.

Still, the more important question to me is whether people actually should file these claims.  Even if having one claim might not dramatically increase your insurance rates, what happens with the second one?  Will you end up paying more in the long run for making these claims?  Insurance, at least in the United States, is a profit-driven industry.  Personally, I view most types of insurance as a guaranteed high-interest loan that’s mandated by the government.  Hopefully, I won’t have a need to file a claim anytime soon, and I won’t have to try to guess the repercussions.

Update: A few days ago, I had to cancel a vacation due to health reasons.  I found out that my credit card company will cover the $100 rebooking fee for the flight.  The documentation process is unnecessarily arduous, but it’s still a good deal.  I haven’t received the money yet, but hopefully the check will soon be in the mail.

The Rich Get Richer

In recent decades, many studies have shown that the gap between rich and poor has increase dramatically.  Corporations, for example, have gained numerous tax breaks while ordinary households are responsible for paying a larger-than-even portion of the overall tax burden.  A case in point is a recent Mother Jones article: Half of America’s Gain in Income Goes to Richest 0.25 Percent

Another article in Yahoo! Finance: CEO pay and benefits on the rise: Report.  From the article:

Top executives at major businesses last year made as much money in one day of work on the job as the average worker made over the entire year, according to a report released on Wednesday.

At the same time, workers at the bottom rung of the U.S. economy received the first federal minimum wage increase in a decade. But the new wage of $5.85 an hour, after being adjusted for inflation, stands 7 percent below where the minimum wage stood a decade ago.

I hope this is shocking to at least some people.  A disparity in wages is unfair in any country that would like to consider itself progressive.

So what’s wrong with this?  Isn’t America the land of opportunity where greed is king?  If we look to other nations (something that’s increasingly rare for U.S. citizens), the lack of a middle class can lead to huge problems.  Inequity coupled with plain old greed often results in civil unrest.  And why do the rich need more money?  Society should look down upon these people.  Yet, having a fleet of 5,000-pound cars to drive to the grocery store is acceptable.  And, it’s taken for granted that the one thing that the rich want is more money. 

Personally, I don’t see this cycle stopping anytime soon.  American culture is rooted in materialism.  And changing a culture can take a very long time.  Still, this system appears to be unsustainable, and the gap can only get so wide before major changes start to occur.  I hope that will happen soon, for the benefit of everyone – the rich and the not-rich.

A Slice of the Big Apple: What People Make in NYC

Have you ever wondered how much money people in make in different professions?  I mean, how much could a Mom & Pop restaurant that sells pizza-by-the-slice make?  How could it be enough to pay the rent for commercial space in Manhattan?  New York Magazine attempts to answer that question in The Profit Calculator.

Included are analyses of businesses ranging from private investigator to drug dealers to Macy’s.  And, yes, “A Pizza Place” is included, as well.  Actual businesses are used, and the graphics help illustrate costs and revenue.  Be sure to check it out: It might make you think twice before you complain about the costs of living.

Two Wheels are Better than Four?

Recently, I mentioned to a friend of mine that another friend had purchased a bike that cost around $2,500 or so.  She was shocked by this and stated that she would never spend that much on a bike.  It seemed strange.  She was driving an almost new Acura TSX (with all of the options, no doubt), and she once stated that she didn’t want to ride a bike because she didn’t want to get killed by a crazy driver.  Ironically, she is such a driver.  On several occasions, she has failed to yield the right-of-way to cyclists and has even run right past stop lines into the middle of an intersection (once while we were “late” for a happy hour).  But, I digress?

Is $2,500 too much to pay for a bike?  Being a fairly avid cyclist, I feel that the $1,800 I paid for my bike almost 10 years ago has paid off.  I’ve probably clocked in over 10,000 miles on it and have few complaints.  And, it’s by no means once of the most expensive on the market (it’s closer to “low end”, when compared to most road models).  Regarding my incredulous friend, I wish I had thought of this at the time: She wouldn’t hesitate for one moment to spend $2,500 to repair a piece of fiberglass after a fender-bender.  She’ll easily pay many times that for insurance and other related costs.  And, the Acura isn’t doing much for her physical health.

MSN Money recently published an article, A $5,000 fender-bender, which quantifies some of the costs of standard automotive accidents.  From the article:

Bumpers are designed to absorb the energy of a low-speed collision and prevent greater vehicle damage. But the tests found that many of the vehicles would slide under the bumpers of the vehicles they struck, causing extensive damage.

In other cases, the institute found the bumpers were flimsy, weren’t large enough or did not extend out to the vehicles’ corners to protect them from damage.

Certainly, bike accidents aren’t cheap (except, in some cases, if you’re killed).  But, it’s helpful to keep in mind the true costs of cars, bikes, and other modes of transportation.

Insurance Claims: To File or Not to File?

I’ve always wondered this myself: Is it worth the risk of being blacklisted or having insurance premiums increased after a relatively minor car accident?  Thankfully, I’ve only been involved in a few such cases.  I always chose to pay for the damages in cash, instead of reporting them to my insurance company.  Apart from the potential for higher premiums, I was also worried about future accidents; Perhaps “two” accidents is the magic number after which I’d be thrown in the high-risk pool. 

MSN MoneyCentral’s article, 6 things to know before you file a claim, helps explain some of these concerns.  Some of the key points:

  1. Ask your insurer about the effects of claims on premium rates.
  2. A single minor accident accident won’t end up in in a policy cancellation, but it’s likely to increase your rates.
  3. After an accident, you can lose discounts on your insurance as you may no longer be considered as safe a driver.  The effect is equivalent to a rate increase.

I’m all for riskier drivers paying more for car insurance, but a line must be drawn.  Overall, it seems that insurance in the United States is quite a scam.  While it does work well for people who can’t afford repairs, it’s at best a guaranteed high interest loan for most people.  As with health insurance, profitability for these companies is tied to raising rates or dropping coverage.  The statement seems to be, “If you dare to file a claim, we’ll get even with you.”  With mandatory coverage laws, some consumer protection would be helpful.  I’m not holding my breath, at least until we have a more progressive government in place.

Buying Happiness

The whole “money can’t buy happiness” idea does make sense in a lot of ways.  People often find themselves caught in unbridled consumerism.  While purchases can help provide temporary “happiness”, it’s not exactly a sustainable lifestyle.  So, you can’t directly use money to improve happiness.  But what about deciding to have less money in exchange for a better life?  Or, given additional money, what should you spend it on?  MSN Money published an article, “7 Days to Buy Happiness“.  My favorite:

Buy back your time: Spending, or surrendering, money to regain personal time is another popular investment.

The idea of actually reducing your income (in exchange for things that really can improve your life) makes a lot of sense.  Personally, deciding that climbing the corporate ladder wasn’t worth the exchange in quality of life was one of the best (and most lasting) decisions I ever made!

Money vs. Happiness

The people of the United States are clearly among the most materialistic in the world.  This is a country where people believe they need a 5,000 pound, $50,000 vehicle to go to the grocery store.  Wedding rings are supposed to cost the equivalent of two months’ salary (isn’t she worth it?).  In fact, the very idea of having money and not spending it seems offensive to a large portion of the population.  And, in one of the richest countries in the world, it has become almost fashionable to say, “I’m broke.”  That seems to be the case across the financial spectrum.

An MSN Money article, Proof that Money Doesn’t Mean Happiness, provides some evidence.  The article quotes Harvard psychology professor Daniel Gilbert:

“The basic idea that ‘If I could make more money I would be happier’ is true if you’re living in a cardboard box under a bridge; it’s probably not true if you’re making $190,000 a year,” he says. “Money does make a difference when it moves you from abject poverty into the middle class, but it stops making a large difference at about that point. In terms of happiness, the difference between making $5,000 a year and $50,000 a year is dramatic, but the difference between making $100,000 and $100 million is negligible, almost nonexistent.”

So why is that people who have large quantities of money seem to focus on getting even more?  After all, what is it that millionaires and billionaires really want?  One aspect that I can personally attest to is that financial rewards are tangible and measurable.  I’ve often asked for and received raises, knowing full well that the extra money would make no difference in my quality of life.  Still, I felt good about the recognition. 

If not money, what should people work towards?  Clearly, the answer will differ based on peoples’ experiences.  Personally, I think personal relationships and friendships can be quite rewarding.  In addition, working on projects that don’t necessarily increase your bank balance can be helpful.  I have several hobbies outside of work (most of which cost money), but I wouldn’t trade them for cash.  It’s harder to measure progress on these routes to happiness, but it will probably beat the “tried and true” path of accumulating wealth.

The Worldwide Wealth Gap

It’s often too easy to look at your immediate surroundings and to believe that the rest of the world lives like you.  When it comes to wealth, however, the numbers can be quite shocking.  MSN Money’s article, “Got $2,200?  In this world, you’re rich“, provides some useful statistics:

The research indicates that assets of just $2,200 per adult place a household in the top half of the world’s wealthiest. To be among the richest 10% of adults in the world, just $61,000 in assets is needed. If you have more than $500,000, you’re part of the richest 1%, the United Nations study says. Indeed, 37 million people now belong in that category.

Personally, it seems to me that the global disparity in wealth will be hard to maintain over time.  While people in the U.S. tend to focus on the impacts of offshore outsourcing, the real question is whether the wealth gap is justified.  Should American engineers make five times as much as others in the world?  In the past, it wasn’t much of an issue.  Technology either didn’t exist or was too costly.  Now, it’s increasingly common to have distributed workforce.  Can we consider the closing of the gap to be a “market correction”?