Editor’s Note: From Solomon’s Proverbs to Pascal’s Pensées, the short, pithy observation has been a valuable form of commentary on culture and the human condition. This is a second article taken from Thomas Loarie’s Thoughts While…series. You can find the first here.
The Podesta Connection
Thoughts while reading about “pay to play” in DC…I worked briefly, through our medical technology trade association, with lobbyist Tony Podesta in the 1996-97 effort to pass the “1997 FDA Modernization Act.” John Podesta, his brother, worked at that time for President Bill Clinton (eventually became Clinton’s Chief of Staff); he serves today as Hillary Clinton’s campaign director. Tony offered me and another CEO an opportunity to “have tea” with the then First Lady Hillary Clinton in the White House…for a price. I guess old ways die hard (or never die).
Is Recession in Our Future?
Thoughts while watching the stock market dip 200 points…there are many who believe that the global bond market is verging on a bubble because investors seeking better returns are gravitating to lower-quality and longer-term bonds with higher risks. Will whomever becomes President be saddled with recession rooted in the past 8 years of economic mismanagement?
The DC Federal Appeals Court reduced Senator Elizabeth Warren’s Consumer Financial Protection Bureau’s independence by calling its broad discretion without oversight a “gross departure” from the checks and balances normally imposed on regulatory agencies and ordering oversight. Are US citizens aware of how power is being centralized in DC by regulatory agencies? Is this not a concern for our freedom? Have we become immune to or just unaware of what is going on in Washington?
Thoughts while hearing about the winners of the Nobel Prize in economics…will anyone pay attention to the comments of Holmstrom who has stated (in a 2003 study of corporate governance which was published before the Dodd Frank legislation) that “the greatest risk now facing the U.S. corporate governance is the possibility of over regulation”?
Thoughts while reading about the potential collapse of Deutsche Bank…The world economy is fragile with on-going problems in Europe and Japan, and the economic slowdown in China. How many Americans are truly aware of the potential for another global economic collapse? The Dodd-Frank legislation has created unprecedented connectedness between global banks that are deemed too big to fail. If anything causes a panic, capital can disappear in a heartbeat. Why then would the US Justice Department now seek a bank-breaking $14 billion (reduced to $4 billion this week) in a lawsuit stemming from the last recession and defective mortgages sold to investors, particularly Fannie Mae and Freddie Mac who were instrumental in enabling the recession?
The Congressional Budget Office in its latest fiscal and economic forecast now forecasts:
• The federal deficit will rise from $438 billion to $590 billion for fiscal 2016 which ends Sept 30.
• This will be the largest deficit in the last 4 years.
• Debt which, is owned by us, will increase to 76.6% as a share of the GDP
• This will be the highest debt ratio since 1950.
• The debt ratio was at 52.3% in 2008 and will reach 85.5% in 2026
The redistribution of income, slower economic growth, and an expanding fiscal burden by government leaves little room for fiscal expansion…and jobs. What does this mean for you, your children, grandchildren?
Are U.S. taxpayers aware of the financial risks they are on the hook for? Risks created by expansive government programs? – stimulus programs have more than doubled the national debt; student loans now exceed $1.3 trillion; government backed mortgages that have an exposure between $300 to $600 billion; and bank ownership of government securities has doubled to 14% over the past five years. Neither of our presidential candidates are talking about entitlements that are real threats to our economic and strategic health. Why not? Is it that we are not informed or we do not understand the traps that have been set…or we do not care (let the next generation deal with it)?
Global Warming and the Incalculable
Thoughts while watching Hurricane Matthew slide up the east coast of the US…Have you noticed that the graphics projecting the path of a hurricane gets wider with the time horizon (3-5 days out)? Did you notice It is impossible to predict the path with any certainty unless you are dealing in hours not days? Did you know that these result from averaging computer simulations (mathematical models)? Does it cause you to wonder about computer simulations used to predict climate change 25, 50, 100 years from now? Does it cause you to be concerned with those who predict the effects (temperature, water levels, storms, etc) of climate change with certainty?
Bailing Out Those Who Then Bail Out of America
GM announced the first deliveries of its China-made Buick Envision this week. And analysts told us earlier this year that all but two Buick models will be made outside the US after 2016. Didn’t we, the US taxpayer, pay $50 billion to bailout GM to protect US jobs?
As I was riding in a friend’s Tesla, I remember that green venture capitalist Vinod Khosla likes to point out, “electric cars are coal-powered cars.” The electricity powering an “all-electric” car is most often produced with coal, which means that the “clean car” is responsible for heavy air pollution. When are the taxpayers going to wise up and stop providing heavy subsidies to encourage their purchase?
Immigration and Illegal Immigration
Thoughts while watching the leaves begin to turn…Have you wondered how “anti-illegal-immigration” has been transformed to “anti-immigration”? Former Mexican Ambassador Narciso Castanada said in a Fareed Zakaria interview Sunday that Mexicans have an anti-American feeling as a result of our (anti-illegal) immigration policy. Many Americans have traveled to other countries with tight immigration policies. Do they (we) feel these countries, trying to protect their borders, are anti-American?
United & Divided
Thoughts while watching NFL players act out….There are those who unite and there are those who divide. Cheering those who divide does nothing to bind us to one another. Our strength as a nation comes from within…”United we stand divided we fall.” (Alexandre Dumas, The Three Musketeers)
Thoughts while working out…I have just spoken to a policeman I know who serves a bay area city. I asked him how things were. He told me that it has become very dangerous…people yell at the police every chance they get, and many do not comply with orders. The officers have responded by avoiding dangerous situations for fear that their career and livelihood would go out the window just for doing their job. Lawlessness reigns. Are we now getting the policing we need? Or are we getting the policing we deserve?
Today’s headline: “Murders in U.S. Jump 10.8%”. The FBI report released yesterday noted that this double-digit increase dwarfed any of the past 20 years, in which the biggest one-year jump was 3.7 % in 2005. Violent crime also showed a correspondingly large increase. The increase is concentrated in large cities. Economic struggles and changing demographics have been ruled out as causes. The “Ferguson Effect”?
Millennials – The Doctor…No – Make that the IRS – Is Calling
Thoughts while watching the spin-meisters do their job after the first Presidential debate…The success of the Affordable Care Act (Obamacare) depends on Millennial participation because Millennials are healthy and cost next to nothing in the healthcare system. The government needs the premiums of the Millennials to offset the costs of older and higher cost participants.
They are not cooperating – only 28% of those under the age of 34 participating. You may have noticed that HHS held a Millennial Outreach and Engagement Summit at the White House yesterday with the explicit purpose of motivating this group to sign up.
There is, however, one big problem which was eloquently articulated by Millennial David Barnes in an op-ed piece Monday…it is not affordable. “Why pay so much for something we likely won’t use makes little sense…We are at the bottom of the income latter.” Many prefer to pay the penalty of $695. Barnes wants affordable care but this is not in the cards under the ACA. Will someone at a future debate delve into the failures of the ACA? We need to understand potential solutions or we will end up with a government run healthcare system by default (and maybe it is a planned default).
POTUS announced in June that HHS would use confidential taxpayer information to target young Americans who have not yet signed up for Obamacare. Doesn’t this cross an ethical line? Has the IRS become a political shill? Personal information we supply to the IRS is suppose to be private.
The Invisible Unemployed
Thoughts while working with those that are unemployed or underemployed…I have now read five books on the mortgage bubble and the resulting devastating economic downturn of 2007-2009. How many truly understand its root causes – government mandates and incentives to expand mortgages to those who could not service them (remember no verifiable income required for qualification?) followed by government pressure on underwriters to dramatically reduce their underwriting standards? Will the rot continue?
How many American’s understand the negative consequences of the 2300 page (too large to read and understand) 2010 Dodd-Frank Act to job creation? This has been characterized as ill-conceived regulation that perversely insures large multinational banks are “too big not to fail” and has choked off credit to small business borrowers, particularly to young growth companies which have historically been our job creation engine.
We have over 1300 unemployed or underemployed executives and professionals participating today in our transition ministry here in Danville, California. The unemployment stats are significantly understated. There is a disconnect between reality and our mainstream media.
One of my favorite all time books is W J Bernstein’s The Birth of Plenty which offers a history lesson on how the prosperity of the Western World was created. Variables that lead to prosperity for all include: strong rule of law and property rights, free trade, capital formation, minimal market constraints (regulation), infrastructure that promotes communication, fiscal discipline, reason, and strong defense of sovereignty. Have we been good stewards of our prosperity?
Thoughts while reading Allan Cox’s “Your Place at the Table”…If we define altruism as the sharing of self, time, and information, what organization can be without it and hope to survive?”
Peggy Noonan had a provocative op-ed last Saturday in the WSJ…”How do you make a hero?” She goes on to ask where fearlessness, honesty, and responsibility come from. “Courage comes from love…There’s an unseen current of love that hums through the world, and some plug into it more than others, more deeply and surely and they get more power from it. And it fills them with courage. It makes everything possible.” Dishonesty and self-absorption are hallmarks of today’s culture. Where are today’s examples of courage?
Saint Teresa of Kolkata
Mother Teresa was recently canonized today by Pope Francis. I have often marveled at St. Teresa of Kolkata’s presence on the world stage. Her life provides a stark contrast to the lives of those who come to Silicon Valley (where I live) in search of personal wealth, power and influence. This diminutive 4’9″, 140 lb woman who had nothing became the most influential person in the world before she died.
What was her secret to building an order that began with 12 followers in 1950 and now numbers over 5,600 running hospices, homeless shelters, homes for the mentally ill and many more services in 139 countries? Love.