THE ENTERPRISE-- MY "DEPRESSION"--U.S.A.- A COUNTRY IN CRISIS
QUICK HITS--SOME BIG, SOME SMALLER
---BACK TO SCHOOL SALES WILL SUFFER--RETAIL WILL CONTINUE TO LANGUISH
Parents will make do with less, spend less and shop harder. Pricing on everything will be depressed by retailers competing for business. BTS used to be a big lift for retailers falling between the summer vacation doldrums and the fall holiday season (Halloween, Thanksgiving, Christmas). Not any more.
---DON'T BE MISLED BY THIS PAST WEEK'S UPTICK ON WALL STREET
It proves that if you get expectations low enough, and one time adjustments high enough, things will look like they are improving. They aren't! GE's industrial equipment units (a good surrogate for "industrial demand") saw its orders fall 42%, partly because it has a decent backlog--if that holds up. The big bank numbers posted by B of A and Citi were both positive only because of one-time adjustments. Both would have likely posted losses without those one-time items.
---TEA PARTIES CONTINUE--UNREPORTED BY THE MAINSTREAM MEDIA--THE REVOLUTION IS SIMMERING
20,000 strong turnouts in two Texas cities--Austin & Dallas-- get ZERO coverage. Did you know about them? People turned out in 102 degree heat to protest the government's actions. Nothing was reported in the mainstream media. They were busy tracking Michael Jackson's funeral procession.
---BUSINESS MAGAZINES ARE IN TROUBLE--LIKE NEWSPAPERS
Portfolio by Conde' Nast, was a good business publication. It folded recently after a year+ in operation. Business Week is now for sale. It is getting thinner and thinner as ad revenues continue to drop. It still had circulation of over 900,000 and still it cannot sell enough ads to be viable (I dropped it twice in the past 2 years because editorial quality had declined and its new format was almost unreadable) . Ad pages for Fortune and Forbes are down 37% and 39% respectively. I guess few people want to read about the greed, carnage and "bailouts" (gov't take overs), and even fewer want it in magazine format.
---CHINA IS RECOVERING FASTER THAN THE USA--SOMETIMES A DICTATORSHIP WORKS
The Chinese growth rate has jumped back to 8%, and its combination of government stimulus (that seems to have actually stimulated something other than political cronyism), and internal growth are gaining traction. Could it lead the world out of this recession? Not alone, and certainly not with the USA dragging its feet.
---EPA SUPPRESSES GLOBAL WARMING CONTRADICTORY STUDY--SCARY
The EPA Center Director Al McGartland, restricted the distribution of a 98-page study by researcher Alan Carlin, that refuted the premise of "global warming," the "politically correct illusion" that underlies the need for the wasteful and damaging "Cap & Trade" law currently passing through Congress. Carlin was ordered not to "have any direct communication..." because "...your comments to not help the legal or policy case for this decision." http://cei.org/news-release/2009/06/30/cei-files-epa%E2%80%99s-own-suppressed-report-demands-epa-global-warming-proceeding-
---CAP AND TRADE IS A HOAX TO ENRICH THE GOVERNMENT AND OTHERS--SCARIER
The so called experts now say that Global Warming may just be part of a "natural cycle." Problem: no media attention to these revelations, and government censorship of any contradictory finding paid for by our tax dollar. This program, in which China, India, Mexico, et. al. have declined to participate, will send US jobs out of existence at a record rate. The only thing that could make it worse is to rejuvenate the Employee Free Choice Act, to speed the job loss even further. Even liberals like my own Senator, Sherrod Brown has seen that Cap & Trade is a disaster cloaked in "environmental do-gooder" clothing.
---MORE NEW TAXES--FIX THE AGING WATER AND SEWER INFRASTRUCTURE
A new bill proposes taxes on beverages containing water--4 cents per container (except alcoholic); on soaps, detergents, toilet tissue, cooking oils--3%; pharmaceuticals--0.5%; and corporation profits of over $4 million 0.15%--just because they can.
As Ronald Reagan said, "Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."
---OBAMA'S OWN COUNCIL OF ECONOMIC ADVISORS LEADER, CHRISTINE ROMER'S OWN STUDY PROVED IT--SCARIEST
In a study done by Ms. Romer and her hubby, they found that every dollar of government spending had a negative impact on jobs creation--by a ratio of $3 lost for every dollar spent. I wonder if she ever gave a copy to Barack?
---FORTUNE'S GEOFF COLVIN HITS THE NAIL ON THE HEAD
In his column entitled, ""Business Gets Taxed, Workers Get Hurt", Colvin reports how the "nonsensical" behavior of the Obama Administration harms employees in the name of political reform. Colvin states, "Research has shown that when business taxes are raised by a dollar, 70-92 cents of it comes out of employee pay."
http://money.cnn.com/2009/06/29/news/economy/obama_business_taxes.fortune/index.htm
THE DEPRESSION I'M REFERRING TO IS MINE--I'M DEPRESSED MORE THAN EVER BECAUSE OUR GOVERNMENT NO LONGER REPRESENTS US
By crisis, I don't just mean the recession. I mean a crisis of leadership, misguided governance, flawed policies, many of which have long-term consequences that will forever alter the America that many of us knew and loved. Economic cycles made worse by greed, stupidity and irresponsibility of government and private enterprise--those are manageable. There will be a recovery, of some sort, someday--if the government would quit hindering it. Any recovery will be slow and tortuous, with ups and downs, and slow growth. Why? Massive de-leveraging must still continue. So many wrong things were done, and so many things were done wrong. Americans are finally saving again. For how long, no one knows. Debt is at record levels--government debt is at insane levels, and personal consumer debt isn't far behind.
From boardrooms to conference rooms, few companies are truly engaged in deciding how to operate in a US economy that is approaching $100 TRILLION in unfunded debt. But we must consider that scenario. I refer you again to Will Kaydos book, THIN ICE & MELTING which explains this mess in far more detail.
http://www.amazon.com/Thin-Ice-Melting-Economy-Meltdown/dp/0615252826/ref=sr_1_1?ie=UTF8&s=books&qid=1247774263&sr=1-1
DO YOU LIKE WORKING FOR 30-40 CENTS ON THE DOLLAR?
As the current scenarios are unfolding, the Bush tax cuts will expire in 2011. That will raise the top tax rate back up to 39.6%. A handful of these other taxes (health care reform, etc.) will add to that rate, such that anyone fortunate to be successful and achieve the top rate will soon pay over 40% of their income in Federal Income Taxes. Capital Gains taxes are almost certain to go up from 15% to at least 20%, maybe to 25-28%. If you happen to be self-employed, on the first $90,000+ of that, you will get to pay both the employee and employer's FICA & Medicare, which together add up to almost 16%. If you live in a state that has an income tax, you'll pay another 5%+/-, and perhaps even a city or county tax, too. Given the enormous deficits mentioned above, taxes can only go up--and they will. Successful "wealth creators" earning over $250,000 (rich?) will get to keep (maybe) 40 cents of every dollar they earn until the reach the FICA/Medicare cap, which is likely to be raised before long-- to help fund those deficits. This is all before you pay any Capital Gains Taxes, Sales Taxes, Excise Taxes, Luxury Taxes, Gift Taxes, Property Taxes, Franchise Taxes, etc. etc.
Who do you work to support? GOVERNMENT, THAT'S WHO. And what does government do with all these taxes they collect from you? THEY SPEND THEM ON BUREAUCRACY, CREATE HIGH PAYING JOBS TO REGULATE WHAT YOU DO, OR REDISTRIBUTE THEM, (WASTING A FAIR PORTION IN THE PROCESS) TO ALL THOSE WHO WERE NEITHER AS FORTUNATE, DILIGENT, CLEVER OR COMPETENT AS YOU WERE. But wait, count your blessings: you could be among the unemployed, underemployed, or mis-employed.
UNEMPLOYMENT IS FAR WORSE THAN THE UNEMPLOYMENT RATE SHOWS
Under counted, the 1.4 million who have given up trying; 185,000 uncounted due to government estimates, 80% of the workers working only 33 hours, equal to 3.3 million workers vs. normal work weeks, raising the "restated" unemployment rate to closer to 12%.
"The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all jobs growth from the previous expansion." —Mort Zuckerman in the WSJ
WILL AMERICANS WAKE UP AND CHANGE WHO REPRESENTS THEM?
Perhaps the American people (enough of them) will come to their senses--because about 70% of them are already reporting that they see the excessive spending coming from Washington as doing long term damage. The crisis is worsened by the fact that so many of the youth of our nation are uniformed, deluded, misguided, clueless--AND--qualified to vote. And they are in Obama's "pocket" and he is, as expected, trying to solve real world problems with his distorted theoretical perspectives. Whatever he says, he will make fit what happens. His story changes more than the weather--and yet, few in the mainstream media will call him on these abuses. Obama has broken so many of his so called "campaign promises" by now, no one (at least in the mainstream media) is bothering to keep track any more. I hope many of those "independents" who supported him are keeping track. Even when he says one thing, his actions, or those of his "henchmen" in Congress, tell an entirely different story. He is living up to one part of his campaign--CHANGE. One of his few "misstatements" is ringing in my ears: "AMERICA IS THE GREATEST COUNTRY IN THE WORLD; AND WE ARE HERE TO CHANGE IT."
UNLESS NEW LEADERSHIP IS ELECTED, THE AMERICA YOU HAVE KNOWN FOR YOUR ADULT LIFE WILL CEASE TO EXIST--(in YOUR lifetime)
American business, about which I often write in THE ENTERPRISE, will decline to a mere shadow of its current strength--and to preserve itself--it will flee the USA to friendlier places. Earnings and wealth will be taxed at unprecedented levels, and still fall far short of covering legacy spending. Spending must be curtailed--and FAST! One good sign: Glenn Beck's book, Common Sense sits atop most bestseller lists. If you buy a copy, buy one for "someone else" who needs to read it. Is that a signal that people are reading it and agree. Watch the attached video (6.5 min.) to see "Common Sense" dramatized. http://www.youtube.com/watch?v=pKFKGrmsBDk&feature=related If you have a taste for more (30 min.), go see IOUSA on YouTube--made startlingly before Obama and this Congress started is spending/taxation binge. http://www.youtube.com/watch?v=O_TjBNjc9Bo
SCENARIO PLANNING--IT'S TIME TO REVISIT THAT TOOL--FAST
In boardrooms and conference rooms across the nation, summer time is when "strategic plans" get updated, revisited and prepared for the budgeting process that follows in the fall. This time, these plans need to reconsider their basic foundations. Will there be a recovery? How long, and how slow will it be? (Long and very slow) Will there be a double dip recession, when the consequences of the government spending, meddling with, and taxation of the free enterprise system in America are fully realized--global interest rates, inflation, trade wars, and new taxes--both hidden and obvious--will cripple U. S. business. First question many might ask: Do we want to remain an American company, paying the highest corporate tax rates, and enduring oppressive government intervention? Why stay in the USA? Where is a better HQ place? (Bermuda?) How much should we invest in our U. S. businesses vs. the foreign ones with greater growth potential?" Now, let the strategizing begin.
HEALTH INSURANCE WILL SPUR ANOTHER ROUND OF NEW TAXES
Small businesses will be crippled by onerous new taxes levied to require them to offer health insurance. The "Wealthy" will be hit again, for anywhere from 1% to 5.3%--and if the Congress has its way, the new taxes will also be levied on Capital Gains. See the lengthy article at the end of this edition for a rundown on how other countries health care systems work--and how well. You can hear it in Nancy Pelosi's proclamations. The undertone is: "We are going to raise taxes so we can do whatever we want. Just try to stop us."
ONLY A NUCLEAR ATTACK WOULD BE SCARIER THAN OUR CURRENT MIS-GOVERNMENT CRISIS
The USA is on its way to a self-induced financial catastrophe, and the American public is sitting by apathetically letting President Obama and the Democratically controlled Congress make the problems inherited from Bush's 8 years far worse. Witch-hunting about Cheney and the CIA are simply distractions. Will President Obama attempt to negotiate with Islamic terrorists threatening the USA with Pakistani or Iranian NUKES? Who else might trigger such an attack? Pakistan? Russia? Who & HOW? Obama will make America into one of the world's second rate nuclear powers during his first term. Our enemies will seem to love us--until they control or obliterate us.
---FACE IT: NORTH KOREA HATES THE USA. IRAN HATES THE USA. THE TALIBAN HATES THE USA. RUSSIA HATES THE USA. SO DOES HEZBOLLAH... AND A RAFT OF OTHER EXTREMIST GROUPS.
And who do we have for "Allies?" France--are you kidding me? Great Britain--not any more. Germany--no way; they're looking out for their own problems. Turkey--its still deciding which side makes the most sense to ally with. Maybe some Eastern European countries--who see us as their ally to keep Russia from reconstituting the USSR. The real question is WHEN will Israel thumb its nose at Obama and Nuke Iran's most evident nuclear development facilities? As North Korea and Russia sell Iran the missile technology with the range to hit Israel, can Israel afford to wait? And what will that do to the price of oil? What will it do to the global economy tottering out of its recession?
VOTERS REJECTED THE BEST PRESIDENTIAL CANDIDATE AVAILABLE IN THE 2008 GOP PRIMARIES
One candidate, and only one was competent to address these problems, and had the intellect, the background, the integrity and the experience to grapple with them. He failed to win enough primary states to win the Republican nomination, and even if he had, the Obama media driven steamroller would have rolled over him. Now we need "an adult"-- someone to lead us out of this mess, but not until 2012--IF he even wants to. His name is MITT ROMNEY--always has been -- and still is -- the most qualified Presidential candidate.
UNTIL THEN, WE MUST REPLACE AS MANY WRONG-HEADED MEMBERS OF CONGRESS AS POSSIBLE IN 2010
Incumbents normally win reelection to the House of Representatives over 90% of the time. Replacing a large piece of the House--and a few Senators--will be a huge task--and an expensive proposition in today's Liberal controlled media. We must all pull together to make this happen.
CONCLUSION
All I can say is "where is John Galt?"
More appropriately, how will we turn this mess around?
Who will be our leader?
And if we fail, and during the intervening period, what other" scary scenarios" should we be planning for?
Your depressed writer & editor, still trying to find "the light at the end of the tunnel" (and hoping it's not the headlight of a train),
JOHN
PS: Obama has neatly taken Hillary Clinton out of play, enlisting her to be Secretary of State, surrounding her with strong, competent assistants who don't need her--just her title--and taking her out of the Senate where she could be a leading voice against his liberal-socialist lunacy. But we should never count HIllary out. If Obama continues is slow slide into failure, his greatest worry in 2012 might not be anyone the GOP has to offer. It might be Hillary Clinton, who he barely edged out in the 2008 primaries. She hates to lose and is TOUGH and resilient. Just ask Bill.
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FOR THE VORACIOUS READERS--A GOOD RECAP OF HEALTH CARE SYSTEMS AROUND THE WORLD
World of Remedies
No nation has found an ideal health-care plan
Sunday, July 12, 2009 3:31 AM
By Scott Canon
McClatchy Newspapers
KANSAS CITY, Mo. -- In Britain, famously, they wait.
To replace a hip, for example, means months before surgery. Spaniards and Italians have single-payer health-care systems, but they leave it to the cities and villages, not the capitals, to run things. The Greeks demand that all medical bills be covered by universal insurance, but let doctors hit up patients for more. The Swiss have to buy health insurance, and virtually all do.
Health-care systems around the world vary like cuisine, reflecting customs and history. Some ingredients travel better than others. "The same thing doesn't work for everybody," said Michael Tanner, who has analyzed the world's varying systems for the Cato Institute, a group that largely figures the less government the better. "Even here, it's not just one way," he said. "What works in Minnesota is not necessarily what works in inner-city Kansas City or Texas."
As a nation, we pay more per capita -- through government programs and out-of-pocket -- for health care than almost any other country, but without achieving better health. We aren't the only ones looking for a better way. Foreign health plans also struggle to make ends meet, to improve care and to tame bureaucracies. "Ultimately, all health-care systems ration care. It's a finite commodity. There's not an infinite amount of doctors, hospitals or money," Tanner said. "I think those countries that have markets at work give consumers greater influence over making those rationing decisions."
Public health specialist Alyssa Schabloski says governments must step in when markets don't work, as in areas like health care, where consumers don't understand the choices. "We've got those markets here," she said. "Yet we spend more than anybody else, but our results are worse." Waits for care in places like Canada and the United Kingdom might seem maddening to us, said Schabloski, who wrote a report for the Insure the Uninsured Project, but that doesn't necessarily mean a worse ultimate outcome.
Both Schabloski and Tanner say no nation has yet landed on the ideal or easily transplanted plan, but possibilities exist abroad. Both have good things to say about France. "Whether it would be successful in the United States is another story," said Schabloski. "You still want to look."
Health care in other industrialized countries defies easy categorization. Experts note that all, in their way, leave many people unsatisfied, either because they cost too much, cover too little or are so gummed up with regulation that they leave the sick neglected. Canada's Medicare system may be the single-payer setup most familiar to Americans. The country's provinces plan and evaluate care. They pay doctors and hospitals on a fee-for-service system similar to U.S. Medicare and Medicaid. While provincial plans vary slightly, they are all primarily tax-funded. Everyone is covered. The country devotes far less of its gross domestic product to health care than the United States does (less than 10 percent, compared with 15 percent). There's virtually no consumer cost at the time of service, and essential care is widely available. But Canada has its bottlenecks. Virtually any care that can be delayed is put off for months. And as costs have risen, the private health-care providers paid by the government have begun to game the system by cherry-picking pricey, low-risk services, such as MRI scans and outpatient surgeries.
Boosters of the single-payer approach see the wait lists as just another form of rationing that exists in every system. "Bringing that here might require a change in people's expectations of getting something right away all the time," said Cathy Schoen at the nonpartisan Commonwealth Fund, which studies health care and other social issues. "It wasn't popular (in Canada) at first, but that changed," she said. "Cultural beliefs matter, but culture also changes."
Taiwan, Australia, Sweden, Spain, Italy, Norway, Portugal, Greece and New Zealand use similar approaches with the same results. Japan has a government-run, employer-based system with high co-pays to discourage overuse. Private insurance systems often form alongside the public system to reduce waits or give access to a broader range of elective care. Some Greeks skip care when they can't afford the gratuities doctors demand. More than one in 100 Portuguese are on waiting lists for surgery and risk losing insurance for going to the doctor too often. Swedes pay half what we do for health care, but need hard-to-find referrals to see a doctor outside the patient's own, tiny regions. In Norway, a fourth of patients wait more than three months to be admitted to the hospital.
Great Britain is as close to socialized medicine as anywhere today. The National Health Service relies on taxes that average about $3,000 per person a year. Administration eats up about 7 percent of spending -- compared with 30 percent here. Doctors work as private contractors to the government, and consumers can choose any physician they want within their regions and pay virtually nothing for a visit. About one in 10 Brits, the country's wealthiest, buy private supplemental insurance for better hospital beds and quicker access to specialists and non-emergency procedures. Only recently have the British begun paying about $14 for most prescription drugs. The greatest pressure inside the country is not to dump the system, but to find the money to reduce waiting lists.
The U.N.'s World Health Organization in 2001 ranked France's health care the best in the world based on its universal coverage, the freedoms it grants to patients and caregivers, and its responsiveness to people's needs. How do they do it? For starters, they spend a lot of money. At 11 percent of GDP, their costs are greater than just about everywhere but the United States. The French system grew gradually out of insurance funds built first by trade groups, then copied by ever-larger classes of workers. Today, it's a combination of public and private doctors and hospitals paid by a mix of public and private insurance funds. French consumers draw from three large insurance funds: one for salaried workers, one for farm workers and one for independent professionals. Since 2000, the coverage has been universal. Nearly nine in 10 Frenchmen buy supplemental policies to help cover co-pays. That said, the system is stretched, and funding -- drawn from sin taxes, income taxes and employer contributions -- is a nagging problem made more acute by the country's aging population.
"The social-insurance model comes out of this concept of social solidarity that other countries feel stronger than we do," said Gregory Stevens, who studies health research at the University of Southern California Medical School. "We've got this long history (in the United States) of fighting for freedoms and being left alone. But at some point we agreed that education is important for everyone. We haven't gone there yet for health care."
Switzerland has adopted a model like the French, leaving insurance in private hands but imposing strict rules on getting everyone covered and on what services must be provided. Some experts compare the Swiss system to Massachusetts, where people must get health coverage but at prices that government has made affordable -- and with penalties for the minority (less than 1 percent in Switzerland and about 2 percent in Massachusetts) who attempt to skate by without insurance. Swiss consumers choose among roughly 70 HMO-style plans that compete on price. But government oversight takes place at the canton, or state, level. That makes reforms cumbersome and slow. And the out-of-pocket expenses paid by patients are second-highest in the world.
Israel uses a similar plan. It's paid for with payroll taxes and government subsidies that support four HMO-like plans. By law, there are no premiums. High co-pays means about half the population buys into supplemental plans to hedge against those costs. Berlin has tried to squeeze more competition into the model even as it broadened to universal coverage in 2007. Germans must buy into either state-run or private health plans, and about 85 percent take the public option. Those state plans are paid with income-based premiums, 7 percent from the worker and 7 percent from the employer. The country tries to control costs by limiting what's available. Prescriptions, for instance, are kept relatively cheap -- 10 percent of the cost capped at about $20 -- but there are limits to the number and types of drugs that can be prescribed under the plan. In return for paying heavily, Germans get quick and unfettered access to the doctors they want and never have to pay more than 2 percent of their income on co-pays. But costs are rising, partly because preventive care has been largely neglected.
In 2006, the Netherlands broke from the German model to adopt a sweeping overhaul aimed at putting more competition in the mix. Now, it pools insurance risk by mandating that everyone get coverage, but gives them a choice of 14 private insurers. As a share of GDP, the Dutch spend two-thirds as much as we do on health care and rank toward the middle, rather than the bottom, on the WHO ratings of health care performance among industrialized countries. The nation has a few who refuse to pay premiums, and is contemplating withholding the money from paychecks or welfare payments.
In the 47 U.S. states mandating auto insurance, notes Cato's Tanner, the number of drivers without it exceeds those who lack health insurance. We're simply not as compliant here, so mandating health insurance might not work. Yet others say some lessons overseas could work in the United States. The right penalties for failing to get insurance, such as extracting back premiums from people when they show up for care or garnisheeing wages, could make Americans as compliant as the Dutch or the Swiss. "If we made a genuine effort to make things happen," said Schoen of the Commonwealth Fund, "we could do it."
"Government is supposed to work for the people; not vice versa."
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John L. Mariotti, President & CEO, The Enterprise Group, Phone 614-840-0959 http://www.mariotti.net http://mariotti.blogs.com/my_weblog/
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