Where are those $@#% eggs?

This morning, I was all set to have a good breakfast of eggs, bacon, maybe some grits (yes, I eat grits. They’re pretty good.), or oats. I went to the fridge and couldn’t find any eggs. Luckily, we live near enough to a park, so remembering today was Easter, I found some. Unfortunately, they were all hard boiled. Oh well, maybe for lunch.

Happy Easter, everybody!

How we will thrive now that the worst is over.

I’ve been concerned for some time that President Obama wouldn’t be able to push through the resistance of several stupid people who don’t understand how bad things were, and how bad they could have been.  Luckily, most of that resistance is over, and we can start to build a better society.  Here are a few ideas that the government should look seriously at to help us thrive.

1.  Abolish private property and apply all rents of land to public purposes.

Too many people were forced or tricked into buying houses that they shouldn’t have been expected to pay for.  The only fair and equitable answer is for the government to take all private property, and make sure that there is an end to greed and homelessness.  Every family would be allowed to rent a suitable residence, and the money that they pay in rent would go to helping people who couldn’t afford the rent.

2.  A heavy progressive income tax.

It is unfair that some people make so much money.  They don’t need that much money, and they rarely contribute to the well being of their fellow man.  With a heavy tax, those who are best able to pay will help the rest of us.

3.  Abolition of all rights of inheritance.

It is shameful that some people are so greedy that they think they should control things from the grave.  When a person dies, their belongings should go to someone more deserving.  There are people with nothing, and dead people want to keep those people down.

4.  Confiscation of the property of all emigrants and rebels.

Those who rebel against the people prove that they don’t deserve to have property.  They speak out against their fellow man.  Those who want to leave don’t need their property where they are going.

5.  Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.

Who caused the trouble in the first place?  Private banks.  Get rid of all of them, and have just one bank who controls the money supply.  We will all get what we need, but not so much to make us seem greedy.

6.  Centralization of the means of communication and transportation in the hands of the state.

Who needs an i-phone?  Nobody does.  What about all those with phones that aren’t ‘smart’?  The blackberry is good enough for our leader, it should be good enough for us.  Similarly, if we all drove hybrid cars, the environment would be better.  Individuality leads to people believing that they are somehow better than others.

7.  Extension of factories and instruments of production owned by the state, the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.

When left to their own devices, individuals build Las Vegas, Disneyland, and soda factories.  We need our leaders to determine what is best for us so that we use the land in a way that helps all of us.

8.  Equal liability of all to labor.  Establishment of industrial armies, especially for agriculture.

Every able body should help to work the fields to provide food to those who are not able.  When some become greedy, or complain about the work they are doing for their fellow man, the workers army should step in and silence the revolt.  When a person becomes too old to work, everyone else should work that much harder to make up for the loss.

9.  Combination of agriculture with manufacturing industries, gradual abolition of the distinction between town and country, by a more equitable distribution of population over the country.

It is unfair that some people live in Beverly Hills, New York City, or any number of other cities where everybody isn’t allowed to live.  Our leaders should instead look at making one area not more prestigious or “posh” than others, and allow people to live closer to the fields they work.

10.  Free education for all children in public schools.  Abolition of children’s factory labor in its present form.  Combination of education with industrial protection.

This is the only one that the country has done right.  Because of this, enough adults who went through the generous public schools now understand that the only way is to follow these ten “planks”.  We need to continue to teach children that the way of the new world is:

From each, according to their ability, to each according to their need.

I hope our great leader has the force of will to make these changes, and that the great legislature does what is needed.  We are truly fortunate to have such leaders as the Honorable Nancy Pelosi, Harry Reid, Chris Dodd, Chuck Schummer, Barney Frank, and our financial leader Tim Geithner.

Mark to Market…, Market Savior or house of cards?

A lot has been made of the term mark-to-market.  Put simply, this is an accounting practice where owners of assets have to place a value on these assets based on the price they can get.  Sounds complicated.

I buy an asset.  Let’s say I buy a house.  This house costs me about $500,000.00.  A year goes by and the housing market goes up.  The house I bought is now worth $600,000.00.  I am worth $100,000.00 more.  This is what has been happening around the world for years and bankers, politicians, and investors were happy.

Now let’s say that after a year, the house is only worth $250,000.00.  Now I am worth a quarter of a million less.  Bankers aren’t happy because they lost value.  Politicians aren’t happy because they get large sums of money from bankers (who aren’t happy), and investors aren’t happy because the bankers (also not happy) have lost value in their retirement and investment accounts.  This is what has happened over the past year.

Now TV types who study what President Obama calls the daily gyrations of the markets have hypothesised that this rule of mark-to-market is part of the problem.  Politicians are considering changing the rules to a mark-to-model method.  Mark-to-model is essentially this:

The house I bought for $500,000.00 is now worth $250,000.00.  But, because historically house values have increased, and over the past five years have increased at a faster rate than in the past, my house should be worth $625,000.00.  If I don’t sell the house (because it will only get me $250,000.00), I can say that my value has increased by $125,000.00.  Bankers are happy, politicians are happy, and investors are happy.

The problem is, it isn’t real.

It artificially inflates values (and prices), and keeps assets from coming to their true levels.  This causes another bubble in prices, and the whole process that we’ve seen happening (and have seen happen historically), happens all over again.

Look at it this way.  If I have credit cards, with no balance owed, but $30,000. 00 in available credit, am I worth $30,000.00 more?  Some people would say yes.  They consider their credit to be part of their worth, on the asset side.  I personally say no way.  That money isn’t mine.  Not only that, but assuming I use it, I have to pay it back.  Where do I get this money from?  This is exactly what the banking community and the country have been doing for years.

Just today, I heard Larry Kudlow and some guest whose name I didn’t catch describe mark-to-market this way.

“Forcing sellers who don’t want to sell to set a price for buyers who don’t want to buy, in a market that isn’t working”

They want to get rid of this rule so that bankers don’t have to claim losses on the bad loans they have made.  They believe that this will help end the “crisis” that we have gotten ourselves into.  They believe, as did Kenneth Lay (former CEO of ENRON) that smoke and mirrors accounting would be better for the country.

Well, I have a bunch of Beanie Babies that I bought in the early ’90s.  I guess I can make up some value for them and consider myself richer.  The fact that nobody wants them, and won’t pay for them isn’t really important.  If you have an asset, the price you could actually get for it is what it is worth.  This is the secret to getting out of the depression.  Houses aren’t worth what people paid for them years ago.  That’s a good thing, because the prices were artificially inflated to the point that people like many young people who are starting out on their own right now, couldn’t afford.  When prices drop to the point where these people can afford them, people will start buying again, and the country will be on the way to financial progress, as long as you learn the lessons of the past.  And everybody wins.

Will there be any losers in this?  Yes.  People who bought houses they had no way of possibly affording will lose.  People who were looking for quick wealth in risky investments, who lost large chunks of their retirement will lose.  Bankers who were greedy and played along, writing the rules of the game as they went will lose.  Politicians who either turned a blind eye or deliberately facilitated the fraud and greed (I’m looking at you, Dodd, Frank, Schumer, Geitner, Bush, Clinton, Pelosi, Reid, and any others I might have missed) should lose, but probably won’t.

See, the government and banks have been a huge proof of the truth of the QUALITIES OF SUCCESS, especially honesty.  The road back needs to be led by individuals.  As more individuals live by the Qualities of Success, acting in ways that are right, then companies and hopefully politicians will do so as well.  This is what the election last year was all about.  People wanted Obama to be the honest leader he promised he would be.  Whether he is or not, it is too early to tell, although he hasn’t demonstrated it yet.  My fear is that instead of changing Washington, Washington changed him.  My hope is that in the future we make sure politicians understand that we hold them to a higher standard, even as we hold ourselves to an even higher standard.