Canada Corner
This is a discussion group about Canadian issues, Canadian foreign policy issues as well as comparative Canadian and American policies and their impact on the economy and the middle class.
Wednesday, November 25, 2009
Dollar rises on news Russian central bank to invest foreign reserves in loonie
Wed Nov 25, 6:00 PM
By Sunny Freeman, The Canadian Press
TORONTO - The Canadian dollar edged closer to parity with the U.S. currency on Wednesday, following news that the Russian central bank will invest in the loonie and diversify away from the greenback in a move that could indicate a global trend.
http://ca.news.finance.yahoo.com/s/25112009/2/biz-finance-dollar-rises-news-russian-central-bank-invest-foreign.html
Friday, June 26, 2009
Follow up to my 2007 Predictions
You may recall that in my previous post from September 2007:
http://canadacorner.blogspot.com/2007/09/conversations-with-us-investment-banker.html
I predicted the following:
"SO, in my mind, the hit on the U.S. consumer is going to be the ultimate problem. BUT compounding the issue is the extent to which the housing industry contributes to U.S. GDP and employment:
My Research:
United States - 2005 Data
Total Contribution of the Housing Industry to the U.S. Economy:
26.3% of GDP
15,965,000 employees"
^^^^
In essence, I was trying to figure out how many workers potentially might be affected by this economic downturn.
I note that the U.S. Bureau of Labour Statistics - Employment Situation Summary from May 2009 (released June 5, 2009) http://www.bls.gov/news.release/empsit.nr0.htm reports:
"The number of unemployed persons increased by 787,000 to 14.5 million in May..."
So, perhaps we've almost reached the bottom in terms of worker layoffs. However, the full impact on GDP will be felt progressively over the next 12 - 18 months as people's unemployment insurance benefits begin to run out.
Eventually? Inflation. Get rid of debt as soon as possible! Get into fixed rate mortgages now!!!
http://canadacorner.blogspot.com/2007/09/conversations-with-us-investment-banker.html
I predicted the following:
"SO, in my mind, the hit on the U.S. consumer is going to be the ultimate problem. BUT compounding the issue is the extent to which the housing industry contributes to U.S. GDP and employment:
My Research:
United States - 2005 Data
Total Contribution of the Housing Industry to the U.S. Economy:
26.3% of GDP
15,965,000 employees"
^^^^
In essence, I was trying to figure out how many workers potentially might be affected by this economic downturn.
I note that the U.S. Bureau of Labour Statistics - Employment Situation Summary from May 2009 (released June 5, 2009) http://www.bls.gov/news.release/empsit.nr0.htm reports:
"The number of unemployed persons increased by 787,000 to 14.5 million in May..."
So, perhaps we've almost reached the bottom in terms of worker layoffs. However, the full impact on GDP will be felt progressively over the next 12 - 18 months as people's unemployment insurance benefits begin to run out.
Eventually? Inflation. Get rid of debt as soon as possible! Get into fixed rate mortgages now!!!
Tuesday, January 08, 2008
Credit Card Debt Spikes to Six-Month High
http://money.cnn.com/2008/01/08/news/economy/consumer_borrowing.ap/index.htm?postversion=2008010815
Total consumer borrowing shoots up to 7.4 percent in November as buyers rely on credit cards in the face of housing market collapse.
January 8 2008: 3:40 PM EST
WASHINGTON (AP) -- Consumer borrowing rebounded in November as credit card debt shot up by the largest amount in six months.
The Federal Reserve reported Tuesday that consumer borrowing rose at an annual rate of 7.4 percent in November, far higher than the 1 percent rise in October. The category that includes credit card debt surged at an annual rate of 11.3 percent, a six-month high, reflecting the fact that shoppers are continuing to rely heavily on their credit cards to finance purchases since home equity lines of credit have become harder to get. The category that includes auto loans also increased in November, rising at a rate of 5.1 percent after having fallen by 3.5 percent in October.
The 7.4 percent overall increase in credit pushed total credit up by $15.4 billion - much stronger than the $8.5 billion increase that analysts had been expecting. The 11.3 percent rise in credit card debt was the seventh straight month of strong gains in this area and was the biggest jump since a 12.8 percent rise in May.
Economists believe that consumers are being forced to rely more heavily on borrowing on their credit cards with the collapse of the housing market, which has depressed home prices and prompted banks to tighten up on lending standards for mortgages and home equity lines of credit.
The five-year housing boom had prompted a lot of homeowners to refinance their mortgages and take out home equity lines of credit to take advantage of the surging values of their homes - a boom that is being reversed in many parts of the country by the current housing slump. The overall increase left total consumer credit at a record $2.51 trillion. The Fed's credit report tracks all debt not secured by real estate meaning that mortgages, a big chunk of the debt load carried by most households, is not covered.
http://money.cnn.com/2008/01/08/news/economy/consumer_borrowing.ap/index.htm?postversion=2008010815
Total consumer borrowing shoots up to 7.4 percent in November as buyers rely on credit cards in the face of housing market collapse.
January 8 2008: 3:40 PM EST
WASHINGTON (AP) -- Consumer borrowing rebounded in November as credit card debt shot up by the largest amount in six months.
The Federal Reserve reported Tuesday that consumer borrowing rose at an annual rate of 7.4 percent in November, far higher than the 1 percent rise in October. The category that includes credit card debt surged at an annual rate of 11.3 percent, a six-month high, reflecting the fact that shoppers are continuing to rely heavily on their credit cards to finance purchases since home equity lines of credit have become harder to get. The category that includes auto loans also increased in November, rising at a rate of 5.1 percent after having fallen by 3.5 percent in October.
The 7.4 percent overall increase in credit pushed total credit up by $15.4 billion - much stronger than the $8.5 billion increase that analysts had been expecting. The 11.3 percent rise in credit card debt was the seventh straight month of strong gains in this area and was the biggest jump since a 12.8 percent rise in May.
Economists believe that consumers are being forced to rely more heavily on borrowing on their credit cards with the collapse of the housing market, which has depressed home prices and prompted banks to tighten up on lending standards for mortgages and home equity lines of credit.
The five-year housing boom had prompted a lot of homeowners to refinance their mortgages and take out home equity lines of credit to take advantage of the surging values of their homes - a boom that is being reversed in many parts of the country by the current housing slump. The overall increase left total consumer credit at a record $2.51 trillion. The Fed's credit report tracks all debt not secured by real estate meaning that mortgages, a big chunk of the debt load carried by most households, is not covered.
Wall Street's Terrible Tuesday
http://money.cnn.com/2008/01/08/markets/markets_0500/index.htm?postversion=2008010818
Stocks sink again extending rough start to 2008, as major gauges fall 10 percent off recent highs - the technical definition of a market "correction."
The market was also at the mercy of technical market factors, with all three major gauges now having fallen 10 percent off the highs hit in November, on a closing level, the technical definition of a market correction. In the next few days, this could spark a much bigger leg down, or bring in a wave of new money as investors seek to buy at lower levels.
"We've gotten very oversold, and we've seen this technical correction, so I wouldn't rule out a short-term rally," said Ryan Atkinson, market analyst at Balestra Capital. "But I don't think we've put in a bottom here," he said. "We may be at the start of a bear market, which would be typical of a recession."
Although others are less inclined to call the recent selloff the makings of a bear market, it has certainly been a brutal start to the year. Year-to-date, the S&P 500 has lost about 5.3 percent, the Dow industrials has fallen 5.1 percent and the Nasdaq composite has fallen 8 percent year-to-date.
"Although the year is very young, it's a discouraging start," said Art Hogan, chief market analyst at Jefferies & Co. He said that investors are being faced with a barrage of issues that makes the market environment extremely challenging right now, including oil price shocks, nervousness around the presidential election and the risk of stagflation - an environment of slow growth and rising inflation.
http://money.cnn.com/2008/01/08/markets/markets_0500/index.htm?postversion=2008010818
Stocks sink again extending rough start to 2008, as major gauges fall 10 percent off recent highs - the technical definition of a market "correction."
The market was also at the mercy of technical market factors, with all three major gauges now having fallen 10 percent off the highs hit in November, on a closing level, the technical definition of a market correction. In the next few days, this could spark a much bigger leg down, or bring in a wave of new money as investors seek to buy at lower levels.
"We've gotten very oversold, and we've seen this technical correction, so I wouldn't rule out a short-term rally," said Ryan Atkinson, market analyst at Balestra Capital. "But I don't think we've put in a bottom here," he said. "We may be at the start of a bear market, which would be typical of a recession."
Although others are less inclined to call the recent selloff the makings of a bear market, it has certainly been a brutal start to the year. Year-to-date, the S&P 500 has lost about 5.3 percent, the Dow industrials has fallen 5.1 percent and the Nasdaq composite has fallen 8 percent year-to-date.
"Although the year is very young, it's a discouraging start," said Art Hogan, chief market analyst at Jefferies & Co. He said that investors are being faced with a barrage of issues that makes the market environment extremely challenging right now, including oil price shocks, nervousness around the presidential election and the risk of stagflation - an environment of slow growth and rising inflation.
Friday, January 04, 2008
49000 Construction Jobs Lost in U.S. December 2007
CNN is reporting that the United States unemployment rate rose to 5% in December of 2007.
This up from 4.7% in the previous month. The hardest hit sectors were the construction industry,
which lost 49,000 jobs and manufacturing which lost 31,000 jobs.
In a previous posting, I did a little research to point to the potential impact on the greater economy that
a housing bubble might have. In particular I stated:
*****
SO, in my mind, the hit on the U.S. consumer is going to be the ultimate problem. BUT compounding the issue is the extent to which the housing industry contributes to U.S. GDP and employment:
My Research:
United States - 2005 Data
http://www.bea.gov/industry/gpotables/gpo_action.cfm?anon=52445&table_id=19052&format_type=0
Gross Domestic Product by Industry Accounts, Full-Time and Part Time Employees by Industry, release date April 24, 2007.
Construction employed 7,657,000 people in 2006.
Finance, Insurance, Real Estate, Rental and Leasing employed 8,308,000 people in 2006.
Gross Domestic Product by Industry Accounts, Value Added by Industry as A Percentage of Gross Domestic Product (Percent)
http://www.bea.gov/industry/gpotables/gpo_action.cfm?anon=52445&table_id=19019&format_type=0
Construction was 4.9 percent of GDP in 2006.
Also affects manufacturing (ie. furniture manufacturing was .6 % of GDP).
Finance, insurance, real estate, rental and leasing was 20.8 percent of GDP in 2006.
Total Contribution of the Housing Industry to the U.S. Economy:
26.3% of GDP
15,965,000 employees
*****
So in December alone, the construction industry lost .6% of its workforce.
The faller the housing industry falls, the more construction and related jobs
will be lost.
Keep watching.
On January 7, 2008 CNN Money is now reporting that early 90,000 mortgage jobs were eliminated in 2007 and more cuts are expected.
http://money.cnn.com/2008/01/07/news/economy/mortgage_jobs.ap/index.htm?postversion=2008010713
Saturday, October 13, 2007
U.S. Income Gap is Continues to Widen
Income-Inequality Gap Widens
By Greg Ip
The Wall Street Journal
Friday 12 October 2007
Boom in financial markets parallels rise in share for wealthiest Americans. The richest Americans' share of national income has hit a postwar record, surpassing the highs reached in the 1990s bull market, and underlining the divergence of economic fortunes blamed for fueling anxiety among American workers.
The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks.
The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000.
The IRS data, based on a large sample of tax returns, are for "adjusted gross income," which is income after some deductions, such as for alimony and contributions to individual retirement accounts. While dated, many scholars prefer it to timelier data from other agencies because it provides details of the very richest - for example, the top 0.1% and the top 1%, not just the top 10% - and includes capital gains, an important, though volatile, source of income for the affluent.
The IRS data go back only to 1986, but academic research suggests the rich last had this high a share of total income in the 1920s.
Scholars attribute rising inequality to several factors, including technological change that favors those with more skills, and globalization and advances in communications that enlarge the rewards available to "superstar" performers whether in business, sports or entertainment.
In an interview yesterday with The Wall Street Journal, President Bush said, "First of all, our society has had income inequality for a long time. Secondly, skills gaps yield income gaps. And what needs to be done about the inequality of income is to make sure people have got good education, starting with young kids. That's why No Child Left Behind is such an important component of making sure that America is competitive in the 21st century."
Jason Furman, a scholar at the Brookings Institution and an adviser to Democratic politicians, said: "We've had a 30-year trend of increasing inequality. There was an artificial reduction in that trend following the bursting of the stock-market bubble in 2000."
The IRS data don't identify the source of increased income for the affluent, but the boom on Wall Street has likely played a part, just as the last stock boom fueled the late-1990s surge. Until this summer, soaring stock prices and buoyant credit markets had produced spectacular payouts for private-equity and hedge-fund managers, and investment bankers.
One study by University of Chicago academics Steven Kaplan and Joshua Rauh concludes that in 2004 there were more than twice as many such Wall Street professionals in the top 0.5% of all earners as there are executives from nonfinancial companies.
Mr. Rauh said "it's hard to escape the notion" that the rising share of income going to the very richest is, in part, "a Wall Street, financial industry-based story." The study shows that the highest-earning hedge-fund manager earned double in 2005 what the top earner made in 2003, and top 25 hedge-fund managers earned more in 2004 than the chief executives of all the companies in the Standard & Poor's 500-stock index, combined. It also shows profits per equity partner at the top 100 law firms doubling between 1994 and 2004, to over $1 million in 2004 dollars.
The data highlight the political challenge facing Mr. Bush and the Republican contenders for president. They have sought to play up the strength of the economy since 2003 and low unemployment, and the role of Mr. Bush's tax cuts in both. But many Americans think the economy is in or near a recession. The IRS data show that the median tax filer's income - half earn less than the median, half earn more - fell 2% between 2000 and 2005 when adjusted for inflation, to $30,881. At the same time, the income level for the tax filer just inside the top 1% grew 3%, to $364,657.
Democrats, on the other hand, have sought to exploit angst about stagnant middle-class wages and eroding benefits in showdowns with Mr. Bush over issues such as health insurance and trade.
By Greg Ip
The Wall Street Journal
Friday 12 October 2007
Boom in financial markets parallels rise in share for wealthiest Americans. The richest Americans' share of national income has hit a postwar record, surpassing the highs reached in the 1990s bull market, and underlining the divergence of economic fortunes blamed for fueling anxiety among American workers.
The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks.
The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000.
The IRS data, based on a large sample of tax returns, are for "adjusted gross income," which is income after some deductions, such as for alimony and contributions to individual retirement accounts. While dated, many scholars prefer it to timelier data from other agencies because it provides details of the very richest - for example, the top 0.1% and the top 1%, not just the top 10% - and includes capital gains, an important, though volatile, source of income for the affluent.
The IRS data go back only to 1986, but academic research suggests the rich last had this high a share of total income in the 1920s.
Scholars attribute rising inequality to several factors, including technological change that favors those with more skills, and globalization and advances in communications that enlarge the rewards available to "superstar" performers whether in business, sports or entertainment.
In an interview yesterday with The Wall Street Journal, President Bush said, "First of all, our society has had income inequality for a long time. Secondly, skills gaps yield income gaps. And what needs to be done about the inequality of income is to make sure people have got good education, starting with young kids. That's why No Child Left Behind is such an important component of making sure that America is competitive in the 21st century."
Jason Furman, a scholar at the Brookings Institution and an adviser to Democratic politicians, said: "We've had a 30-year trend of increasing inequality. There was an artificial reduction in that trend following the bursting of the stock-market bubble in 2000."
The IRS data don't identify the source of increased income for the affluent, but the boom on Wall Street has likely played a part, just as the last stock boom fueled the late-1990s surge. Until this summer, soaring stock prices and buoyant credit markets had produced spectacular payouts for private-equity and hedge-fund managers, and investment bankers.
One study by University of Chicago academics Steven Kaplan and Joshua Rauh concludes that in 2004 there were more than twice as many such Wall Street professionals in the top 0.5% of all earners as there are executives from nonfinancial companies.
Mr. Rauh said "it's hard to escape the notion" that the rising share of income going to the very richest is, in part, "a Wall Street, financial industry-based story." The study shows that the highest-earning hedge-fund manager earned double in 2005 what the top earner made in 2003, and top 25 hedge-fund managers earned more in 2004 than the chief executives of all the companies in the Standard & Poor's 500-stock index, combined. It also shows profits per equity partner at the top 100 law firms doubling between 1994 and 2004, to over $1 million in 2004 dollars.
The data highlight the political challenge facing Mr. Bush and the Republican contenders for president. They have sought to play up the strength of the economy since 2003 and low unemployment, and the role of Mr. Bush's tax cuts in both. But many Americans think the economy is in or near a recession. The IRS data show that the median tax filer's income - half earn less than the median, half earn more - fell 2% between 2000 and 2005 when adjusted for inflation, to $30,881. At the same time, the income level for the tax filer just inside the top 1% grew 3%, to $364,657.
Democrats, on the other hand, have sought to exploit angst about stagnant middle-class wages and eroding benefits in showdowns with Mr. Bush over issues such as health insurance and trade.
Sunday, September 16, 2007
2007 Predictions
In general, ever since I lived in MA, I took a hard look at the real estate prices and said to myself "this can't last - its unsustainable". At that time, I took great issue with one homebuilders group that had come out with its "affordibility indicators" (I can't find the report at this moment). What bothered me was that their calculations were made on the basis of the relationship between home prices in a particular area and the incomes of those who live there. I argued that this was a flawed formula, as affordibility should really be based on the relationship between home prices and the income of the people who WORK there. The people who live there have obviously moved ahead of the curve and have chosen to live there because they can afford to do so. However, If people have to commute for 2.5 hours to get to their place of work, then the city has significant affordibility issues.
Also, in 2005 I had a friend of mine that got married a couple of months before I did, immediately got pregnant and then bought a house in New Hampshire (she works in Cambridge MA). I warned her to hold off for a year or two - as she was buying at the very top of the market, but she didn't listen. I wonder how she'll fare if her home price falls below the level of the mortgage she took out.
There was actually an article in the Financial Times last week that had this quote: "Robert Shiller of Yale argued at the same conference that US house prices might ultimately fall by as much as 50 per cent, which would lower US household wealth by more than Dollars 10,000bn (Pounds 4,930bn). " Thats an awful lot of billions to be pulling out of the economy.
http://www.ft.com/cms/s/0/ecbc4326-60c7-11dc-8ec0-0000779fd2ac.html
Last weekend, Dad and I had a long conversation in which I asked the question: What were the economic factors that contributed to Black Tuesday and the lead up to the Great Depression? I know Wikipedia isn't necessarily the most authoritative place to look, but there were a few really interesting things there (I know that there is ongoing debate among economists about all of the contributing factors). In particular I noticed this paragraph:
"The crash followed a speculative boom that had taken hold in the late 1920s, which had led millions of Americans to invest heavily in the stock market, a significant number even borrowing money to buy more stock. By August 1929, brokers were routinely lending small investors more than 2/3 of the face value of the stocks they were buying. Over $8.5 billion was out on loan, more than the entire amount of currency circulating in the U.S.[7] The rising share prices encouraged more people to invest; people hoped the share prices would rise further. Speculation thus fueled further rises and created an economic bubble. The average P/E (price to earnings) ratio of S&P Composite stocks was 32.6 in September 1929 [8], clearly above historical norms."
For today's situation, insert the words "real estate" along side the word "stock" in the paragraph above, and we have a close parallel to today's economic environment. I would argue that, artificial inflation of stock is concern enough - however stock is an additional asset held by people of some means, and losses in the stock market will usually only dig into someone's savings (unless you are a current retiree living off the dividends). However, in the current crisis the artificial inflation is of real estate (this is of course an investment vehicle for some) but for most people (especially these days, and especially in the U.S.) it is their ONLY ASSET, and it is also essential to these consumers. If your stocks take a hit, as a consumer you can recover. If your HOME price takes a hit, as a consumer you might not.
Similarly I've noted this:
U.S. Currency currently in circulation: June 30, 2007 $812,760,455,370
http://fms.treas.gov/bulletin/index.html
U.S. Consumer debt: Sept. 10, 2007 $2,456.6 billion
http://132.200.33.130/releases/g19/Current/
Another interesting parallel, don't you think?
SO, in my mind, the hit on the U.S. consumer is going to be the ultimate problem. BUT compounding the issue is the extent to which the housing industry contributes to U.S. GDP and employment:
My Research:
United States - 2005 Data
http://www.bea.gov/industry/gpotables/gpo_action.cfm?anon=52445&table_id=19052&format_type=0
Gross Domestic Product by Industry Accounts, Full-Time and Part Time Employees by Industry, release date April 24, 2007.
Construction employed 7,657,000 people in 2006.
Finance, Insurance, Real Estate, Rental and Leasing employed 8,308,000 people in 2006.
Gross Domestic Product by Industry Accounts, Value Added by Industry as A Percentage of Gross Domestic Product (Percent)
http://www.bea.gov/industry/gpotables/gpo_action.cfm?anon=52445&table_id=19019&format_type=0
Construction was 4.9 percent of GDP in 2006.
Also affects manufacturing (ie. furniture manufacturing was .6 % of GDP).
Finance, insurance, real estate, rental and leasing was 20.8 percent of GDP in 2006.
Total Contribution of the Housing Industry to the U.S. Economy:
26.3% of GDP
15,965,000 employees
Ultimately, our current situation the result of an economic bubble in the United States. However, before today's economic concerns really came onto the radar, I had a discussion with a friend who had recently read a book in which it was argued ten years ago by an economist that the baby boom itself has created a bubble of sorts in the U.S. economy. He argued that the economy will continue to rise until 2010 or so while the baby boomers are battening down the hatches (buying new cars, new roof, new furnace, etc. - everything to get ready for retirement) and then these economic actors will be withdrawing from the economy in large groups as they enter the world of fixed income living. This in itself will have a huge impact, but he also noted that at the same time as this is happening, this same group will, in turn, become a heavy liability on U.S. government programs for seniors that are not adequately resourced, while the government itself is already in debt over its eyeballs. In this book it was argued that demographics alone would cause a significant economic downturn in the U.S.
For our generation the timing couldn't be worse - because it will bel happening as the younger generations of U.S. consumers are absolutely crunched by losing ground on the price of their houses, skyrocketing medical costs, stagnant or falling wages, higher tuition, higher unemployment, fewer benefits, etc. (And low Walmart prices for consumer goods will not save them. If China's inflation and manufacturing issues continue, and if the U.S. dollar continues to drop, then Walmart might not be able to keep its prices so low indefinitely anyhow.)
So, indeed there will be plenty of purchasing opportunities presented as U.S. markets "readjust" as Wall Street folk like to say, but if there is an absence of liquidity (ie. consumers can't get credit and have no savings and declining incomes) then this might not have the impact we are hoping for, regardless of the strength of corporate profits. There's no trickle down happening to the largest group of consumers who fuel the whole economy, and that's ultimately the problem. In my opinion, rising corporate profits primarily benefit bankers in the Cayman Islands. ;)
As a side note, I find it interesting that they've made a Great Depression scholar the Chairman of the Federal Reserve. Hopefully that will help!
SO I'm watching carefully - I'd like to know your thoughts, sorry for this extremely long email!
Also, in 2005 I had a friend of mine that got married a couple of months before I did, immediately got pregnant and then bought a house in New Hampshire (she works in Cambridge MA). I warned her to hold off for a year or two - as she was buying at the very top of the market, but she didn't listen. I wonder how she'll fare if her home price falls below the level of the mortgage she took out.
There was actually an article in the Financial Times last week that had this quote: "Robert Shiller of Yale argued at the same conference that US house prices might ultimately fall by as much as 50 per cent, which would lower US household wealth by more than Dollars 10,000bn (Pounds 4,930bn). " Thats an awful lot of billions to be pulling out of the economy.
http://www.ft.com/cms/s/0/
Last weekend, Dad and I had a long conversation in which I asked the question: What were the economic factors that contributed to Black Tuesday and the lead up to the Great Depression? I know Wikipedia isn't necessarily the most authoritative place to look, but there were a few really interesting things there (I know that there is ongoing debate among economists about all of the contributing factors). In particular I noticed this paragraph:
"The crash followed a speculative boom that had taken hold in the late 1920s, which had led millions of Americans to invest heavily in the stock market, a significant number even borrowing money to buy more stock. By August 1929, brokers were routinely lending small investors more than 2/3 of the face value of the stocks they were buying. Over $8.5 billion was out on loan, more than the entire amount of currency circulating in the U.S.[7] The rising share prices encouraged more people to invest; people hoped the share prices would rise further. Speculation thus fueled further rises and created an economic bubble. The average P/E (price to earnings) ratio of S&P Composite stocks was 32.6 in September 1929 [8], clearly above historical norms."
For today's situation, insert the words "real estate" along side the word "stock" in the paragraph above, and we have a close parallel to today's economic environment. I would argue that, artificial inflation of stock is concern enough - however stock is an additional asset held by people of some means, and losses in the stock market will usually only dig into someone's savings (unless you are a current retiree living off the dividends). However, in the current crisis the artificial inflation is of real estate (this is of course an investment vehicle for some) but for most people (especially these days, and especially in the U.S.) it is their ONLY ASSET, and it is also essential to these consumers. If your stocks take a hit, as a consumer you can recover. If your HOME price takes a hit, as a consumer you might not.
Similarly I've noted this:
U.S. Currency currently in circulation: June 30, 2007 $812,760,455,370
http://fms.treas.gov/bulle
U.S. Consumer debt: Sept. 10, 2007 $2,456.6 billion
http://132.200.33.130/rele
Another interesting parallel, don't you think?
SO, in my mind, the hit on the U.S. consumer is going to be the ultimate problem. BUT compounding the issue is the extent to which the housing industry contributes to U.S. GDP and employment:
My Research:
United States - 2005 Data
http://www.bea.gov/industr
Gross Domestic Product by Industry Accounts, Full-Time and Part Time Employees by Industry, release date April 24, 2007.
Construction employed 7,657,000 people in 2006.
Finance, Insurance, Real Estate, Rental and Leasing employed 8,308,000 people in 2006.
Gross Domestic Product by Industry Accounts, Value Added by Industry as A Percentage of Gross Domestic Product (Percent)
http://www.bea.gov/industr
Also affects manufacturing (ie. furniture manufacturing was .6 % of GDP).
Finance, insurance, real estate, rental and leasing was 20.8 percent of GDP in 2006.
Total Contribution of the Housing Industry to the U.S. Economy:
26.3% of GDP
15,965,000 employees
Ultimately, our current situation the result of an economic bubble in the United States. However, before today's economic concerns really came onto the radar, I had a discussion with a friend who had recently read a book in which it was argued ten years ago by an economist that the baby boom itself has created a bubble of sorts in the U.S. economy. He argued that the economy will continue to rise until 2010 or so while the baby boomers are battening down the hatches (buying new cars, new roof, new furnace, etc. - everything to get ready for retirement) and then these economic actors will be withdrawing from the economy in large groups as they enter the world of fixed income living. This in itself will have a huge impact, but he also noted that at the same time as this is happening, this same group will, in turn, become a heavy liability on U.S. government programs for seniors that are not adequately resourced, while the government itself is already in debt over its eyeballs. In this book it was argued that demographics alone would cause a significant economic downturn in the U.S.
For our generation the timing couldn't be worse - because it will bel happening as the younger generations of U.S. consumers are absolutely crunched by losing ground on the price of their houses, skyrocketing medical costs, stagnant or falling wages, higher tuition, higher unemployment, fewer benefits, etc. (And low Walmart prices for consumer goods will not save them. If China's inflation and manufacturing issues continue, and if the U.S. dollar continues to drop, then Walmart might not be able to keep its prices so low indefinitely anyhow.)
So, indeed there will be plenty of purchasing opportunities presented as U.S. markets "readjust" as Wall Street folk like to say, but if there is an absence of liquidity (ie. consumers can't get credit and have no savings and declining incomes) then this might not have the impact we are hoping for, regardless of the strength of corporate profits. There's no trickle down happening to the largest group of consumers who fuel the whole economy, and that's ultimately the problem. In my opinion, rising corporate profits primarily benefit bankers in the Cayman Islands. ;)
As a side note, I find it interesting that they've made a Great Depression scholar the Chairman of the Federal Reserve. Hopefully that will help!
SO I'm watching carefully - I'd like to know your thoughts, sorry for this extremely long email!
Tuesday, November 28, 2006
Ugly truth: no health insurance, no liver transplant
Ugly truth: no health insurance, no liver transplant
Couple can't afford costly transplant and finds system isn't set up to help middle-class people.
Sunday, November 12, 2006
Statesman
In May 2003, both single again and on the Internet, each wondered about the other.
They connected on Classmates.com. Ann, still in Arkansas, andDelbert, in Austin since 1979, bridged a chasm of three decades with soulful phone calls and flurries of e-mails.
They reunited at the Austin airport in October 2003. Delbert whisked Ann away to Houston to see a show of 19th century masters, celebrating a love of art they had discovered as teenagers. Then off they drove to Galveston for a romantic weekend of strolls on the Strand. Ann, recovering from the death of a husband three years earlier, recalled thinking, "I didn't know a person could be this happy."
In January 2004, she moved to Delbert's Lakeway duplex. They were planning a wedding. "We just decided it was fate," Ann said.
Her sister, Jane Thyfault, said, "It was like watching someone . . . falling in love for the first time. They were 50 years old, and they were acting like they were 16."
Then Delbert got sick.
Neither Delbert nor Ann had any idea he was about to join an untold number of Americans suddenly caught without insurance and dependent on a procedure they could never afford. Nor were they prepared to confront a medical system that could treat his symptoms but repeatedly turned him away from what he needed most: the chance to receive a new liver.
In three years, the struggle would take nearly everything they had.
Delbert had been working as a printer for two decades when he and Ann married on March 17, 2004. He was the business partner of a woman who then owned a Lakeway printing company, and Delbert had been her romantic partner for seven years. The business relationship soured and, after employeecutbacks, Delbert lost his job — along with his health insurance — later that year.
Ann didn't have coverage with her new job, either. She was an adjuncthistory instructor at Austin Community College and had to wait three years for insurance, she said.
The lapse could not have come at a worse time.
Delbert, who was president of the Lakeway Rotary Club that year, fell ill on a Rotary outing to Fredericksburg in December 2004. He vomited blood — so much blood he went to the hospital.
The diagnosis was grim.
His liver was seriously damaged. He had cirrhosis. Dr. Stephen Utts advised Delbert, who drank heavily when he was younger, to stop the occasional drink and start eating better. Delbert never drank again and followed a strict diet.
"We were told it was possible his liver could regenerate," Ann said. "We were told to wait and see."
As time wore on, Delbert had more gastrointestinal bleeding. Later, his belly stuck out from retaining fluid, as much as 16 liters at one point. Health insurance never seemed more urgent — or moreelusive.
Ann continued teaching, and Delbert eventually found a part-time job at Target, but he didn't work enough to get insurance. Still, they were newlyweds, reveling in their love.
"Every time I got around Delbert, he said, 'Do you know how much I love your sister?' " Thyfault recalled of visits from Mississippi.
They read to each other, loved music, laughed at all the same jokes. They cooked with herbs plucked from their garden. On a big chair at home, Ann knitted while Delbert, who loved the clackety-clack of Ann's needles, snuggled beside her, finishing a piece of cloth he had woven on a loom in the living room.
"He made me laugh," said Ann, who had been heartbroken after her first husband of 12 yearslost a 10-year cancer fight. "He made me young again."
But Delbert's failing liver was like a shadow over them. Stable periods were spliced with scary hospitalizations. With no insurance, the money Ann brought to the marriage, about $10,000, evaporated, she said.
By October 2005, the couple was drowning in "upwards of $200,000" in bills, Ann said. They declared bankruptcy, falling into a familiar pattern: More than half of all Americans who file for bankruptcy do so because of health-related financial woes.
"It's a place I never thought I would see myself ever in a million years," Ann said. "I've always paid my bills, and I've always had adequate protection for life and health. . . . It was a very shameful moment for both of us."
The bankruptcy didn't wipe the slate clean for Delbert and Ann. For five years, $1,875 a month will go to a long list of creditors, including doctors, hospitals, pathology labs and lawyers.Payments start next month, Ann said.
Meanwhile, Delbert was accumulating more bills, Ann said. She recently pulled the first one from a pile: $38,544.68 for a hospitalization in Aprilthat included blood transfusions and intensive care.
Utts said then, more than a year after Delbert got sick, that his liver wasn't regenerating. In fact, it had quit working. Delbert had to have a transplant.
Without one, Utts said, he would be dead in a year.
Delbert, Ann and their loved ones were shaken. But they reasoned, if Delbert needed a liver, he should get on the transplantlist. To their shock, they learned the system doesn't work that way.
"It was, 'Show me the money . . . and we'll get you on the list,' " Ann said.
No hospitals do liver transplants in Austin, so patients typically go to San Antonio or Dallas, where the cost can vary from $120,000 to $500,000 depending on the patient's condition, said Leni Kirkman, a spokeswoman at University Hospital in San Antonio, a liver transplant center.
Right now, 1,380 Texans and 17,115 Americans are waiting for a liver, according to Annie Moore, a spokeswoman for the United Network for Organ Sharing, the Richmond, Va., nonprofit that oversees organ procurement and transplantation in the United States. Last year, 507 Texans received livers. Another 143 who were on the listdied because organs are so scarce.
That doesn't include people like Delbert. He couldn't get that far.
He called two of the three liver transplant centers in San Antonio — the public University Hospital and the private Methodist Healthcare System. Both said he needed health insurance or government coverage—either Medicare, a program for the disabled or elderly, or Medicaid, which mainly covers poor women and children in Texas, Ann said. Because Delbert had none of those coverages, neither hospital would put him on the transplant list, Ann said.
"We can't. Safety net hospitals are forced to make very tough decisions," Kirkman said. "We wish we could provide every medical service, but it would be fiscally disastrous for us to do that."
For-profit hospitals are more ableto provide free care, Kirkman said. But a procedure that costly is difficult, Methodist system representativessaid.
"Unfortunately," said Marissa Alicea, a financial adviser at Methodist's Texas Transplant Institute, "if they don't have any coverage, the burden is too great" for the hospital.
MethodistSystem spokeswoman Palmira Arellano said the institute actually has "a very good charity policy," and she didn't know why Delbert wasn't informed of it. She did not provide information about how many free liver transplants, if any, the hospital performed last year.
By the time Delbert knew he needed a transplant, Ann was teaching for ACC and St. Edward's University. In August, she took a third jobat a bookstore. Delbert's full-time job was getting a liver. He focused on finding health coverage. But even that seemed impossible.
His doctor had seen it all before.
"What insurance company is going to insure someone staring down a half-million-dollar bill?" Utts said.
"There's a disdain for universal coverage, and it's tragic," he added. "In 20 years of practice, I've probably seen hundreds of patients" who died because they lacked coverage and couldn't get on the transplant list.
"This could happen to anyone," said Ann Kitchen, a former state representative and executive director of the Indigent Care Collaboration, a group ofCentral Texas safety net providers.
With one-fourth of Texans lacking health insurance and fewer businesses covering workers, "that's the kind of Catch-22 our chopped-up system results in," Kitchen said. "People don't realize that really happens . . . to average, working people . . . following the American dream."
Delbert's family and friends said they'd try to raise the money. Delbert mentioned that on his Web site, www.delbertspage.com, and wrote about what it was like to be told he had a year left. He said he was "too busy to wallow in self-pity."
LynPierce, his ex-wife and a good friend, said, "I realize now it was a pipe dream to raise that much money. I went through a lot of anger at the system."
Delbert, who had a degree in social work from the University of Arkansas and volunteered with literacy and animal rescue groups, not to mention the Rotary, wasn't angry. He believed help was out there; he just had to find it.
But time was running out.
Delbert's trip to the Medical Assistance Program for needy people in Travis County left him in tears. He was turned down on the spot; he wasn't poor enough, Ann said.
So he asked about the state'sHealth Insurance Risk Pool. His premium would be $850 a month, and a transplant could not be covered for a year.
Delbert and Ann couldn't afford the premium. And Delbert didn't have a year.
He applied for Social Security disability so he could qualify for Medicare but was rejected because he owned a residence and Ann had income from working.
Delbert asked his congressman, Rep. Lamar Smith, to intercede. An aide in Austin, Sheila Brown, jumped on the case, andSocial Security quickly approved disability payments: $1,200 a month. His first check camein September.
With that, he could qualify for Medicare. But not for two years.
Delbert couldn't wait two years.
The hurdles to get coverage seemed ridiculous to him, said his 22-year-old son, Daniel, who shared Delbert's passion for playing guitar, flying kites and fixing bicycles.
"He never appreciated the fact the government was going to let him die," he said. "Medicare makes you wait two years to get coverage hoping you'll die. Much to his credit, he avoided blaming anyone."
Medicare spokesman Don McLeod said, "Our hands are tied. It's in the statute."
Congress made exceptions to the 1972 law for people with Lou Gehrig's disease and for people with end-stage kidney disease, McLeod said. But not for people who need livers.
"My husband and I have worked hard all of our lives," Ann said. "We had insurance up to a very brief window of time: three months that we didn't have coverage, and this happened. Just that little lapse of time . . . and we were trapped in a spiral that we couldn't get out of.
"Had he been a homeless person on the street, he probably would immediately have been accepted for Medicaid, and he probably would have gotten on the list. That's the irony of the whole situation."
Delbert finally found hope at a support group for liver patients.
He met Kindell Badgley, who was diagnosed with end-stage liver disease in 2003. He was a former night club manager and lost coverage when he got a job at a small business.
"I went to work every day, and I struggled like every other middle-class American," Badgley said. "I paid my bills every month. . . . I got sick, and my government said, 'You need to pack it in, put your affairs in order, suck it up.' It probably angered me enough I stayed alive to fight them."
Badgley, now 50, went to University Hospital with his close friend, Diana Soliz, a financial planner in Austin. While talking with a transplant counselor, Soliz said Badgley was trying to get Medicaid. The counselor's face fell when she told them that she couldn't help if Badgley didn't have health coverage, Soliz recalled.
"We kind of panicked, like, 'Oh, no.' We knew Kindell was dying."
Soliz said she went home and "hit the Internet with a vengeance."
Badgley was on Social Security, and Soliz discovered a program on the agency's Web site that might qualify him for Medicaid. Called the PASS program, or Plan to Achieve Self-Support, it requires making a plan for returning to work after a transplant.
Badgley would create an education account after his transplant and would have to set aside more than half of his disability check, puttinghim below the poverty level and qualifying him for Medicaid. His friends helped pay his living expenses so he wouldn't be homeless.
MostSocial Security workers Soliz encountered had never heard of PASS, she said.
"It's a shame people on their last legs, they have to go on this hunt-and-seek to get help to stay alive," she said.
Badgley was approved and moved to the top of the transplant list on March 26, 2004, when he was close to death. He was called to University Hospital for surgery April 1, and Soliz recalled a scary two hours when his coverage didn't show up in the computer and she scrambled to prove he was covered.
Badgley told Delbert about the PASS program, and Delbert called Soliz on Aug. 28 for help.
Ann couldn't understand why no one with any of the programs they had contacted had ever mentioned it.
"We had an almost childlike faith that there would be people there to help us, and these people are so overwhelmed that they don't even know what programs they have to offer," Ann said. "It's like a cattle call. You go to an office like this and there are haunted-eyed looking people sitting there, and the people who are processing them are just herding them through, and you just become a number."
Delbert went to work on the application in September. His plan was to be a public speaker, sharing the obstacles he faced in getting a transplant so he could help others.
August and September were rare months without any hospitalizations. "We almost fooled ourselves into thinking he was going to be OK," Ann said.
October would be the third anniversary of that blissful beach weekend, plus their 54th birthdays: Delbert's on Oct. 5, Ann's on Oct. 25. Delbert asked Ann what giftshe wanted.
"I said, 'I want you to get a liver. I want you to get your life back.' If somebody had told me we were going to be able to get him into surgery and get a liver for him, I could have cheerfully given up every birthday, every Christmas, every happy occasion for the rest my life."
At that point, divorce seemed more likely.
With Ann's income added to his disability payments, Delbert wouldn't qualify for PASS.
"We were talking about seeing a lawyer" to discuss a divorce, Ann said. It was something neither wanted. But it never came to that.
Ann couldn't awaken Delbert on his birthday. His liver couldn't detoxify the ammonia in his blood, and he fell into a coma for 53 hours. When he regained consciousnessat South Austin Hospital, he begged to come home Oct. 10 to celebrate his birthday. Friends came to the house that Saturday.
"That was the most amazing little party," Ann said. "He had the best time. He had cake."
The next day, they went to Central Market for apple cider, and he insisted on picking up Halloween candy for the neighborhood children. On Oct. 17, he felt so sick he asked Ann to take him back to the hospital.
That week, Ann was exhausted from driving between her threejobs and the hospital. On Delbert's third day there, she told him over the phone that she'd see him Friday when she wasn't afraid of driving off the road.
The phone rang at 6 a.m. Friday. It was the hospital; Delbert was unconscious.
Ann hurried to his side, but Delbert never knew it. He slipped away that afternoon.
"I didn't get to say goodbye," said Ann, breaking down. "It haunts me."
Chip Kidd, who called Delbert "the brother I never had," had a memorial service Oct. 28 in his family's backyard that drew 85 friends and family members. They recalled Delbert's humor, creativity and dignity facing death.
"All he wanted was to get to the list, and we couldn't get him there," Ann said.
She said they would have done some things differently, such as written a will and started looking for a transplant sooner.
Shefears losing the house. After the bankruptcy payments and a mortgage of $1,100, she will have about $660 left each month to cover the rest of her bills.
But she is determined not to be bitter, she said, because Delbert wasn't.
She wants to warn others: Get health insurance. Know the signs of liver disease. Be your own advocate.
She has a lot of unfinished business, especially her grief. Her love of teaching keeps her going, and she keeps reminding herself: "Do what Delbert would do, and you're going to be OK."
After losing her second husband in six years, the future is "like a black hole," she said. But she doesn't regret reconnecting with her high school sweetheart, her soul mate.
"He was my lover, he was husband, and, most of all, he was my friend. My best friend," she said.
"We had three years of amazing happiness. If I had known this was going to happen, I still would have married him."
The truth is, she said, she was lucky. Not everyone finds a love like that. She found him twice.
maroser@statesman.com; 445-3619
Find this article at:
http://www.statesman.com/search/content/news/stories/local/11/12/12annsloss.html
Friday, October 13, 2006
How will history remember you?
Dear Member Oda,
I am writing on behalf of my family and all of
the families that I
know.
As a female member of Parliament - you in particular
have the unique
opportunity to make a real difference - to continue
the fight for equality
in Canadian society. To continue the fight for a
just society where the
government steps up and helps the poorer members of
our society to make
this world a better place. The Canadian government
is doing just fine
financially - I don't understand why Stephen Harper
is attacking our
social programs and programs that aim to level the
playing field in our
society. There is no good financial reason for
doing it - but I wouldn't
be surprised if there is an ideological one. I
lived in the United States
and I know what a corrosive influence conservative
ideology can be -
there, conservatives would rather see people starve
and CEO's bask than
have the government get involved in a principled
manner. In the U.S. the
conservative ideology has run amuck, and now as a
result the government
is practically on its knees financially and so is
the middle class.
Is this where Stephen Harper and you, Ms. Oda,
intend to steer Canada? Why
are you attacking and rolling back programs that
have only helped our
society - such as the Court Challenges Program which
helps fund ground
breaking Charter of Rights cases? Why have you put
Status of Women Canada
in jeopardy by this 40% budget cut and changes to
its mandate? Why are
you trying to silence women's groups by drastically
altering the rules of
the Women's Program, the funding body at Status of
Women Canada? Why has
your government extinguished the first real steps in
Canadian history to
truly establish a proper national daycare system?
There is no good financial reason for doing it - so
why are you turning
back history? Is this how you hope to be remembered
as one of Canada's
few female members of parliament and Canadian
women's primary voice in
government?
It's NOT RIGHT what you are doing and you are not
speaking for us by
taking these actions. Please prove that your
government is capable of
listening.
It's your turn, Ms. Oda.
Wednesday, August 23, 2006
The No- Money Down Disaster
The No- Money Down Disaster
Other Voices: Views from Beyond the Barron's Staff
The No-Money-Down Disaster
By Lon Witter
1364 words
21 August 2006
Barron's
W33
English
(c) 2006 Dow Jones & Company, Inc.
A housing crisis approaches: According to the Commerce Department's estimates, the national median price of new homes has dropped almost 3% since January. New-home inventories hit a record in April and are only slightly off those all-time highs. Existing-home inventories are 39% higher than they were just one year ago. Meanwhile, sales are down more than 10%.
Although the stocks of new-home builders are down substantially, the stock market and many analysts are ignoring other implications of the housing news. In the latest Barron's Big Money Poll of institutional investors, not a single money manager ranked problems in the housing market among the factors likely to lead to a sharp selloff in stocks in the next 12 months (see "Headed for Dow 12,000," May 1, 2006). Most experts still predict a 2%-6% rise in housing prices for the year.
These experts and analysts are basing their predictions on a possible increase in wages, inflation and GDP growth. They are overlooking the fact that by any rational valuation there has been no support for the run-up in housing prices since 2001, when the wealth of the middle class was battered by a bear market. Since then, inflation has been low, and wages practically stagnant. Housing prices, on the other hand, are through the roof.
Extrapolating housing prices from their current level based on wages and inflation is like saying a $100 Internet stock with no cash flow and negative earnings will rise as long as it is able to narrow the loss. The analysis ignores the fact that the stock never should have been trading at $100 in the first place.
By any traditional valuation, housing prices at the end of 2005 were 30% to 50% too high. Others have pointed this out, but few have had the nerve to state the obvious: Even if wages and GDP grow, the national median price of housing will probably fall by close to 30% in the next three years. That's simple reversion to the mean.
A careful look at the reasons for the rise in housing will give a good indication of the impact this drop will have on the stock market. They include, in chronological order: The collapse of the Internet bubble, which chased hot money out of the stock market; rock-bottom interest rates; 50 years of economic history that suggested housing never goes down, and creative financing.
The first three factors might not be enough to cause a crash, except that together they led to the fourth factor. Irresponsible financing causes bubbles. It causes individuals to buy houses they can't afford. It causes speculation to run wild by lowering the bar to entry. Finally, it leads individuals who bought houses years ago at reasonable prices into the speculative borrowing trap. The home-equity credit line has supported American consumer spending, but at a steep price: Families that tapped into their home equity with creative loans are now in the same trap as those who bought homes they couldn't afford at the top of the market.
The cost and risk of adjustable-rate financing can be devastating. Consider a typical $250,000 three-year adjustable-rate mortgage with a 2% rate-hike cap. If the monthly payment now is $1,123, after the first adjustment, the monthly payment is $1,419. After the second adjustment, the monthly payment is $1,748, a $625-per-month increase. That's $7,500 more per year just to maintain the same mortgage. If you think high gas prices are biting the consumer, consider the cost of mortgage adjustments.
Some more numbers:
-- 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000
-- 43% of first-time home buyers in 2005 put no money down
-- 15.2% of 2005 buyers owe at least 10% more than their home is worth
-- 10% of all home owners with mortgages have no equity in their homes
-- $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007.
These numbers sound preposterous, but the reasoning behind them is worse. Lenders have encouraged people to use the appreciation in value of their houses as collateral for an unaffordable loan, an idea similar to the junk bonds being pushed in the late 1980s. The concept was to use the company you were taking over as collateral for the loan you needed to take over the company in the first place. The implosion of that idea caused the 1989 mini-crash.
Now the house is the bank's collateral for the questionable loan. But what happens if the value of the house starts to drop?
The answer, at least from banks, is already clear: Float the loans. The following figures are from Washington Mutual's annual report: At the end of 2003, 1% of WaMu's option ARMS were in negative amortization (payments were not covering interest charges, so the shortfall was added to principal). At the end of 2004, the percentage jumped to 21%. At the end of 2005, the percentage jumped again to 47%. By value of the loans, the percentage was 55%.
Every month, these borrowers' debt increases; most of them probably don't know it. There is no strict disclosure requirement for negative amortization.
This financial system cannot work; houses are not credit cards. But WaMu's situation is the norm, not the exception. The financial rules encourage lenders to play this aggressive game by allowing them to book negative amortization as earnings. In January-March 2005, WaMu booked $25 million of negative amortization as earnings; in the same period for 2006 the number was $203 million.
Negative amortization and other short-term loans on long-term assets don't work because eventually too many borrowers are unable to pay the loans down -- or unwilling to keep paying for an asset that has declined in value relative to their outstanding balance. Even a relatively brief period of rising mortgage payments, rising debt and falling home values will collapse the system. And when the housing-finance system goes, the rest of the economy will go with it.
By the release of the August housing numbers, it should become clear that the housing market is beginning a significant decline. When this realization hits home, investors will finally have to confront the fact that they are gambling on people who took out no-money-down, interest-only, adjustable-rate mortgages at the top of the market and the financial institutions that made those loans. The stock market should then begin a 25%-30% decline. If the market ignores the warning signs until fall, the decline could occur in a single week.
There are other possibilities: The housing market could strengthen; consumers could shrug off higher loan payments and declining housing values; the financial system may have anticipated a collateral disaster (though with banks holding a record 43% of total assets in direct mortgage loans that seems unlikely); the rest of the world could carry the United States for a change. But these are difficult bets to place. Anyone holding stocks, futures or stock-index funds in this environment is taking a tremendous risk.
What happens after the decline depends on our financial policies. When Japan went through a similar situation in the early 1990s, the right advice was clear: Bite the bullet and get the bad loans off the books. Eventually the Japanese acted, but it took them 15 years of trying everything else first.
If we have the courage to take the right medicine right away, the effect of a market collapse could be very sharp and painful, but relatively short-lived. If, like Japan, we fail to act, the coming decade could be very bleak indeed.
--- LON WITTER is a founding partner at Witter & Westlake Investments in Louisville, Ky. He can be reached at lon@witterwestlake.com. ---
Other Voices: Views from Beyond the Barron's Staff
The No-Money-Down Disaster
By Lon Witter
1364 words
21 August 2006
Barron's
W33
English
(c) 2006 Dow Jones & Company, Inc.
A housing crisis approaches: According to the Commerce Department's estimates, the national median price of new homes has dropped almost 3% since January. New-home inventories hit a record in April and are only slightly off those all-time highs. Existing-home inventories are 39% higher than they were just one year ago. Meanwhile, sales are down more than 10%.
Although the stocks of new-home builders are down substantially, the stock market and many analysts are ignoring other implications of the housing news. In the latest Barron's Big Money Poll of institutional investors, not a single money manager ranked problems in the housing market among the factors likely to lead to a sharp selloff in stocks in the next 12 months (see "Headed for Dow 12,000," May 1, 2006). Most experts still predict a 2%-6% rise in housing prices for the year.
These experts and analysts are basing their predictions on a possible increase in wages, inflation and GDP growth. They are overlooking the fact that by any rational valuation there has been no support for the run-up in housing prices since 2001, when the wealth of the middle class was battered by a bear market. Since then, inflation has been low, and wages practically stagnant. Housing prices, on the other hand, are through the roof.
Extrapolating housing prices from their current level based on wages and inflation is like saying a $100 Internet stock with no cash flow and negative earnings will rise as long as it is able to narrow the loss. The analysis ignores the fact that the stock never should have been trading at $100 in the first place.
By any traditional valuation, housing prices at the end of 2005 were 30% to 50% too high. Others have pointed this out, but few have had the nerve to state the obvious: Even if wages and GDP grow, the national median price of housing will probably fall by close to 30% in the next three years. That's simple reversion to the mean.
A careful look at the reasons for the rise in housing will give a good indication of the impact this drop will have on the stock market. They include, in chronological order: The collapse of the Internet bubble, which chased hot money out of the stock market; rock-bottom interest rates; 50 years of economic history that suggested housing never goes down, and creative financing.
The first three factors might not be enough to cause a crash, except that together they led to the fourth factor. Irresponsible financing causes bubbles. It causes individuals to buy houses they can't afford. It causes speculation to run wild by lowering the bar to entry. Finally, it leads individuals who bought houses years ago at reasonable prices into the speculative borrowing trap. The home-equity credit line has supported American consumer spending, but at a steep price: Families that tapped into their home equity with creative loans are now in the same trap as those who bought homes they couldn't afford at the top of the market.
The cost and risk of adjustable-rate financing can be devastating. Consider a typical $250,000 three-year adjustable-rate mortgage with a 2% rate-hike cap. If the monthly payment now is $1,123, after the first adjustment, the monthly payment is $1,419. After the second adjustment, the monthly payment is $1,748, a $625-per-month increase. That's $7,500 more per year just to maintain the same mortgage. If you think high gas prices are biting the consumer, consider the cost of mortgage adjustments.
Some more numbers:
-- 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000
-- 43% of first-time home buyers in 2005 put no money down
-- 15.2% of 2005 buyers owe at least 10% more than their home is worth
-- 10% of all home owners with mortgages have no equity in their homes
-- $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007.
These numbers sound preposterous, but the reasoning behind them is worse. Lenders have encouraged people to use the appreciation in value of their houses as collateral for an unaffordable loan, an idea similar to the junk bonds being pushed in the late 1980s. The concept was to use the company you were taking over as collateral for the loan you needed to take over the company in the first place. The implosion of that idea caused the 1989 mini-crash.
Now the house is the bank's collateral for the questionable loan. But what happens if the value of the house starts to drop?
The answer, at least from banks, is already clear: Float the loans. The following figures are from Washington Mutual's annual report: At the end of 2003, 1% of WaMu's option ARMS were in negative amortization (payments were not covering interest charges, so the shortfall was added to principal). At the end of 2004, the percentage jumped to 21%. At the end of 2005, the percentage jumped again to 47%. By value of the loans, the percentage was 55%.
Every month, these borrowers' debt increases; most of them probably don't know it. There is no strict disclosure requirement for negative amortization.
This financial system cannot work; houses are not credit cards. But WaMu's situation is the norm, not the exception. The financial rules encourage lenders to play this aggressive game by allowing them to book negative amortization as earnings. In January-March 2005, WaMu booked $25 million of negative amortization as earnings; in the same period for 2006 the number was $203 million.
Negative amortization and other short-term loans on long-term assets don't work because eventually too many borrowers are unable to pay the loans down -- or unwilling to keep paying for an asset that has declined in value relative to their outstanding balance. Even a relatively brief period of rising mortgage payments, rising debt and falling home values will collapse the system. And when the housing-finance system goes, the rest of the economy will go with it.
By the release of the August housing numbers, it should become clear that the housing market is beginning a significant decline. When this realization hits home, investors will finally have to confront the fact that they are gambling on people who took out no-money-down, interest-only, adjustable-rate mortgages at the top of the market and the financial institutions that made those loans. The stock market should then begin a 25%-30% decline. If the market ignores the warning signs until fall, the decline could occur in a single week.
There are other possibilities: The housing market could strengthen; consumers could shrug off higher loan payments and declining housing values; the financial system may have anticipated a collateral disaster (though with banks holding a record 43% of total assets in direct mortgage loans that seems unlikely); the rest of the world could carry the United States for a change. But these are difficult bets to place. Anyone holding stocks, futures or stock-index funds in this environment is taking a tremendous risk.
What happens after the decline depends on our financial policies. When Japan went through a similar situation in the early 1990s, the right advice was clear: Bite the bullet and get the bad loans off the books. Eventually the Japanese acted, but it took them 15 years of trying everything else first.
If we have the courage to take the right medicine right away, the effect of a market collapse could be very sharp and painful, but relatively short-lived. If, like Japan, we fail to act, the coming decade could be very bleak indeed.
--- LON WITTER is a founding partner at Witter & Westlake Investments in Louisville, Ky. He can be reached at lon@witterwestlake.com. ---
Wednesday, July 26, 2006
I've Said it Before - Cities Will Crumble When the People Who Work There Can't Afford to Live There
New York Times
July 23, 2006
Cities Shed Middle Class, and Are Richer and Poorer for It
By JANNY SCOTT
SOME big American cities are flourishing as at no time in recent memory. Places like New York and San Francisco appear to be richer and more dazzling than ever: crime remains low, new arrivals pour in, neighborhoods have risen from the dead. New York is in the throes of the biggest building boom in 30 years, its population at an all-time high and climbing. Mayor Michael R. Bloomberg proudly promotes his city as “a luxury product.”
But middle-class city dwellers across the country are being squeezed.
This time, they are being squeezed out by the rich as much, or more so, as by the poor — a casualty of high housing costs and the thinning out of the country’s once broad economic middle. The percentage of middle-income neighborhoods in metropolitan areas like Los Angeles, Chicago and Washington has dropped since 1970, according to a recent Brookings Institution report.
The percentage of higher-income neighborhoods in many places has gone up. In New York, the supply of apartments considered affordable to households with incomes like those earned by starting firefighters or police officers plunged by a whopping 205,000 in just three years, between 2002 and 2005.
Does it matter if there is less room for a middle class? In strictly economic terms, plenty of economists say, it may not. But they also say that in the long run, those cities may become places where they and other city lovers would prefer not to live.
Obviously, cities benefit economically from the presence of the rich. Tax revenues go up when the rich pour into what some economists now call “superstar cities,” places like New York, San Francisco, San Diego, Boston and Washington that attract highly skilled people but have limits on the ability to build housing. In New York, fewer than 13,000 of the 2.3 million households that pay income tax are expected to account for nearly 30 percent of city income tax paid in 2006.
In the San Francisco Bay Area, the percentage of households earning more than $100,000 a year rose to over 30 percent in 2000 from approximately 7 percent in 1970, said Joseph Gyourko, a professor of real estate and finance at the Wharton School of the University of Pennsylvania. “Is that area worse off?” he asked. “At least so far, there’s a lot of evidence that economically they’re better off. Land prices are really high, lots of people want to move there.”
Edward L. Glaeser, a Harvard economist who studied 300 large cities with a range of levels of income inequality in the 1960’s and 1970’s, says he found little evidence that those levels later affected the growth of housing prices, income or population there.
Of course, cities need police officers, firefighters, teachers. But as long as they can get the labor they need from somewhere nearby, some economists say, middle-class shrinkage may not hurt. In Southern California, developers import construction workers from Las Vegas and put them up in hotels; costs go up but rich clients can pay. Firefighters who want to live in high-priced cities can work two jobs, said W. Michael Cox, chief economist for the Federal Reserve Bank of Dallas. “I think it’s great,” he said. “It gives you portfolio diversification in your income.” Pay for essential workers like plumbers and cabdrivers will tend to go up, he said.
Professor Glaeser said: “There’s no obvious smoking gun saying cities will be substantially worse off. There’s a whole lot of America that does a very good job of taking care of the middle class. The great sprawling edge cities of the American hinterland provide remarkably cheap housing, fast commutes, decent public services and incredibly cheap products available in big box stores. As a New Yorker, I understand the view that exile from New York is consignment to hell; but that’s not accurate. The majority of middle-class people that have moved out have presumably found themselves better lives out there.”
But sociologists and many economists believe that there can be non-economic consequences for cities that lose a lot of middle-income residents. The disappearance of middle-income neighborhoods can limit opportunities for upward mobility, the authors of the Brookings study said. It becomes harder for lower-income homeowners to move up the property ladder, buy into safer neighborhoods, send their children to better schools and even make the kinds of personal contacts that can be a route to better jobs. The Brookings study, which defined moderate-income families as those with incomes between 80 and 120 percent of the median for each area, found that the percentage of middle-income neighborhoods in the 100 largest metropolitan areas had dropped to 41 percent from 58 percent between 1970 and 2000. Only 23 percent of central city neighborhoods in 12 large metropolitan areas were middle income, down from 45 percent in 1970.
Meanwhile, New York University researchers reported last month that the number of apartments affordable to households making 80 percent of the median household income in New York City dropped by a fifth between 2002 and 2005. Nationally, median household income ranges from just above $20,000 in Miami to around $40,000 in New York and Boston and about $60,000 in San Francisco.
With a dwindling middle class, rich and poor become more separate. Alan Berube, an author of the Brookings study, said a two-tiered marketplace can develop: Whole Foods for the upper classes, bodegas for the lower, with no competition from stores courting the middle. “If the two models are check cashers on the one hand and major national financial institutions on the other, who’s thinking about how to hold down costs for the basic consumer?” he asked.
School systems may suffer, too. While some upper-middle-class families rely on the public schools, many that can afford private-school education opt out. Urban school systems tend to be dominated by middle- and lower-income families. Middle-income parents have the ability and leverage to demand improvements. Similarly, studies show that lower-income students benefit by being in economically mixed schools.
Politics can become polarized without the moderating force of an engaged middle, sociologists and economists said. And while cities can import middle-level workers, there is a cost in productivity, family time and other intangibles.
“People have a stake in the place that they’re living in,” said Chris Mayer, a professor at Columbia Business School. “If you have a police and firefighting force saving their city as opposed to somebody else’s city, it makes a difference. In the same sense, local shopkeepers just seem to be better. What happened on 9/11 was really about ‘our city.’ ”
Mr. Mayer, who recently moved with his wife and three young children to New York, said he believed that it was important for children to grow up in a place that is racially, ethnically and economically diverse. He calls those places more vibrant. In most places, the upper middle class is less diverse than the middle, he said. New York would be less attractive to him without its still-expansive and lively middle.
“This trend toward living and interacting with people who are like you is intensifying a lot,” said Professor Gyourko, who lives in the affluent suburb of Swarthmore, Pa. “I do not meet the full range of incomes and social classes within my neighborhood. Well, think about what happens if metropolitan areas like New York, San Francisco and the like turn into my suburb. You’ll have even less interaction. The most interesting and potentially foreboding implication of this sorting is that it changes the way we view life.”
July 23, 2006
Cities Shed Middle Class, and Are Richer and Poorer for It
By JANNY SCOTT
SOME big American cities are flourishing as at no time in recent memory. Places like New York and San Francisco appear to be richer and more dazzling than ever: crime remains low, new arrivals pour in, neighborhoods have risen from the dead. New York is in the throes of the biggest building boom in 30 years, its population at an all-time high and climbing. Mayor Michael R. Bloomberg proudly promotes his city as “a luxury product.”
But middle-class city dwellers across the country are being squeezed.
This time, they are being squeezed out by the rich as much, or more so, as by the poor — a casualty of high housing costs and the thinning out of the country’s once broad economic middle. The percentage of middle-income neighborhoods in metropolitan areas like Los Angeles, Chicago and Washington has dropped since 1970, according to a recent Brookings Institution report.
The percentage of higher-income neighborhoods in many places has gone up. In New York, the supply of apartments considered affordable to households with incomes like those earned by starting firefighters or police officers plunged by a whopping 205,000 in just three years, between 2002 and 2005.
Does it matter if there is less room for a middle class? In strictly economic terms, plenty of economists say, it may not. But they also say that in the long run, those cities may become places where they and other city lovers would prefer not to live.
Obviously, cities benefit economically from the presence of the rich. Tax revenues go up when the rich pour into what some economists now call “superstar cities,” places like New York, San Francisco, San Diego, Boston and Washington that attract highly skilled people but have limits on the ability to build housing. In New York, fewer than 13,000 of the 2.3 million households that pay income tax are expected to account for nearly 30 percent of city income tax paid in 2006.
In the San Francisco Bay Area, the percentage of households earning more than $100,000 a year rose to over 30 percent in 2000 from approximately 7 percent in 1970, said Joseph Gyourko, a professor of real estate and finance at the Wharton School of the University of Pennsylvania. “Is that area worse off?” he asked. “At least so far, there’s a lot of evidence that economically they’re better off. Land prices are really high, lots of people want to move there.”
Edward L. Glaeser, a Harvard economist who studied 300 large cities with a range of levels of income inequality in the 1960’s and 1970’s, says he found little evidence that those levels later affected the growth of housing prices, income or population there.
Of course, cities need police officers, firefighters, teachers. But as long as they can get the labor they need from somewhere nearby, some economists say, middle-class shrinkage may not hurt. In Southern California, developers import construction workers from Las Vegas and put them up in hotels; costs go up but rich clients can pay. Firefighters who want to live in high-priced cities can work two jobs, said W. Michael Cox, chief economist for the Federal Reserve Bank of Dallas. “I think it’s great,” he said. “It gives you portfolio diversification in your income.” Pay for essential workers like plumbers and cabdrivers will tend to go up, he said.
Professor Glaeser said: “There’s no obvious smoking gun saying cities will be substantially worse off. There’s a whole lot of America that does a very good job of taking care of the middle class. The great sprawling edge cities of the American hinterland provide remarkably cheap housing, fast commutes, decent public services and incredibly cheap products available in big box stores. As a New Yorker, I understand the view that exile from New York is consignment to hell; but that’s not accurate. The majority of middle-class people that have moved out have presumably found themselves better lives out there.”
But sociologists and many economists believe that there can be non-economic consequences for cities that lose a lot of middle-income residents. The disappearance of middle-income neighborhoods can limit opportunities for upward mobility, the authors of the Brookings study said. It becomes harder for lower-income homeowners to move up the property ladder, buy into safer neighborhoods, send their children to better schools and even make the kinds of personal contacts that can be a route to better jobs. The Brookings study, which defined moderate-income families as those with incomes between 80 and 120 percent of the median for each area, found that the percentage of middle-income neighborhoods in the 100 largest metropolitan areas had dropped to 41 percent from 58 percent between 1970 and 2000. Only 23 percent of central city neighborhoods in 12 large metropolitan areas were middle income, down from 45 percent in 1970.
Meanwhile, New York University researchers reported last month that the number of apartments affordable to households making 80 percent of the median household income in New York City dropped by a fifth between 2002 and 2005. Nationally, median household income ranges from just above $20,000 in Miami to around $40,000 in New York and Boston and about $60,000 in San Francisco.
With a dwindling middle class, rich and poor become more separate. Alan Berube, an author of the Brookings study, said a two-tiered marketplace can develop: Whole Foods for the upper classes, bodegas for the lower, with no competition from stores courting the middle. “If the two models are check cashers on the one hand and major national financial institutions on the other, who’s thinking about how to hold down costs for the basic consumer?” he asked.
School systems may suffer, too. While some upper-middle-class families rely on the public schools, many that can afford private-school education opt out. Urban school systems tend to be dominated by middle- and lower-income families. Middle-income parents have the ability and leverage to demand improvements. Similarly, studies show that lower-income students benefit by being in economically mixed schools.
Politics can become polarized without the moderating force of an engaged middle, sociologists and economists said. And while cities can import middle-level workers, there is a cost in productivity, family time and other intangibles.
“People have a stake in the place that they’re living in,” said Chris Mayer, a professor at Columbia Business School. “If you have a police and firefighting force saving their city as opposed to somebody else’s city, it makes a difference. In the same sense, local shopkeepers just seem to be better. What happened on 9/11 was really about ‘our city.’ ”
Mr. Mayer, who recently moved with his wife and three young children to New York, said he believed that it was important for children to grow up in a place that is racially, ethnically and economically diverse. He calls those places more vibrant. In most places, the upper middle class is less diverse than the middle, he said. New York would be less attractive to him without its still-expansive and lively middle.
“This trend toward living and interacting with people who are like you is intensifying a lot,” said Professor Gyourko, who lives in the affluent suburb of Swarthmore, Pa. “I do not meet the full range of incomes and social classes within my neighborhood. Well, think about what happens if metropolitan areas like New York, San Francisco and the like turn into my suburb. You’ll have even less interaction. The most interesting and potentially foreboding implication of this sorting is that it changes the way we view life.”
Friday, July 21, 2006
Have you read the Declaration of Independence Lately?
Perhaps the internet could be used to remind citizens
of its history and continuing significance.
The Declaration of Independence of the Thirteen Colonies
In CONGRESS, July 4, 1776
The unanimous Declaration of the thirteen united States of America,
When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. --That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain [George III] is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.
He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the consent of our legislatures.
He has affected to render the Military independent of and superior to the Civil power.
He has combined with others to subject us to a jurisdiction foreign to our constitution and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For Quartering large bodies of armed troops among us:
For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:
For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us, in many cases, of the benefits of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences:
For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:
For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.
He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty and perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.
Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.
We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by the Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.
The signers of the Declaration represented the new states as follows:
New Hampshire Josiah Bartlett, William Whipple, Matthew Thornton
Massachusetts John Hancock, Samuel Adams, John Adams, Robert Treat Paine, Elbridge Gerry
Rhode Island Stephen Hopkins, William Ellery
Connecticut Roger Sherman, Samuel Huntington, William Williams, Oliver Wolcott
New York William Floyd, Philip Livingston, Francis Lewis, Lewis Morris
New Jersey Richard Stockton, John Witherspoon, Francis Hopkinson, John Hart, Abraham Clark
Pennsylvania Robert Morris, Benjamin Rush, Benjamin Franklin, John Morton, George Clymer, James Smith, George Taylor, James Wilson, George Ross
Delaware Caesar Rodney, George Read, Thomas McKean
Maryland Samuel Chase, William Paca, Thomas Stone, Charles Carroll of Carrollton
Virginia George Wythe, Richard Henry Lee, Thomas Jefferson, Benjamin Harrison, Thomas Nelson, Jr., Francis Lightfoot Lee, Carter Braxton
North Carolina William Hooper, Joseph Hewes, John Penn
South Carolina Edward Rutledge, Thomas Heyward, Jr., Thomas Lynch, Jr., Arthur Middleton
Georgia Button Gwinnett, Lyman Hall, George Walton
The Declaration of Independence of the Thirteen Colonies
In CONGRESS, July 4, 1776
The unanimous Declaration of the thirteen united States of America,
When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. --That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain [George III] is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.
He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the consent of our legislatures.
He has affected to render the Military independent of and superior to the Civil power.
He has combined with others to subject us to a jurisdiction foreign to our constitution and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For Quartering large bodies of armed troops among us:
For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:
For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us, in many cases, of the benefits of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences:
For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:
For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.
He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty and perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.
Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.
We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by the Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.
The signers of the Declaration represented the new states as follows:
New Hampshire Josiah Bartlett, William Whipple, Matthew Thornton
Massachusetts John Hancock, Samuel Adams, John Adams, Robert Treat Paine, Elbridge Gerry
Rhode Island Stephen Hopkins, William Ellery
Connecticut Roger Sherman, Samuel Huntington, William Williams, Oliver Wolcott
New York William Floyd, Philip Livingston, Francis Lewis, Lewis Morris
New Jersey Richard Stockton, John Witherspoon, Francis Hopkinson, John Hart, Abraham Clark
Pennsylvania Robert Morris, Benjamin Rush, Benjamin Franklin, John Morton, George Clymer, James Smith, George Taylor, James Wilson, George Ross
Delaware Caesar Rodney, George Read, Thomas McKean
Maryland Samuel Chase, William Paca, Thomas Stone, Charles Carroll of Carrollton
Virginia George Wythe, Richard Henry Lee, Thomas Jefferson, Benjamin Harrison, Thomas Nelson, Jr., Francis Lightfoot Lee, Carter Braxton
North Carolina William Hooper, Joseph Hewes, John Penn
South Carolina Edward Rutledge, Thomas Heyward, Jr., Thomas Lynch, Jr., Arthur Middleton
Georgia Button Gwinnett, Lyman Hall, George Walton
Wednesday, May 03, 2006
Harper - Not So Accountable After All
From CTV:
Info Czar Slams Harper for About-Face on Access
Canadian Press
Updated: Fri. Apr. 28 2006 2:10 PM ET
OTTAWA — Prime Minister Stephen Harper has done a complete about-face, introducing plans that would increase government secrecy after campaigning on openness, says Canada's information czar.
The proposed Accountability Act, now being debated in the House of Commons, will actually make government less accountable when it comes to making information available to Canadians, Information Commissioner John Reid said Friday.
In a special report to Parliament, Reid said no government has ever put forward "a more retrograde and dangerous" set of proposals to change the Access to Information Act since the legislation first came into effect in 1983.
The Accountability Act, and other reforms being proposed, will "increase the government's ability to cover up wrongdoing, shield itself from embarrassment and control the flow of information to Canadians," says the scathing report.
Earlier this month, the Harper government released proposals to reform the Access to Information Act by including more government entities under its umbrella, and by turning over to a Commons committee another set of suggested reforms.
But the Accountability Act, which would add another 19 entities to be covered by Access to Information, also creates 10 new loopholes that would allow civil servants to deny requests for information, says the report.
The proposed legislation, for example, would prevent draft audits or audit papers from being released for 15 years. Currently, there is no such wholesale exemption. And the proposed reforms to be examined by a Commons committee also fail to deal with fundamental problems, Reid said, such as requiring civil servants to create records, and giving the information commissioner more investigative powers.
Reid noted that while in opposition, Harper railed against the Liberals for failing to reform a system that encouraged civil servants to withhold information and allowed abuses such as the sponsorship scandal to flourish undetected.
But the Tories are now guilty of the same abusive behaviour as they try to make government less transparent, he said.
"The new government has done exactly the things for which its predecessor had been ridiculed," says the report.
For a $5 application fee, Canadian residents can request government information, but the system has been widely criticized for delays and excessive exemptions. More than 20,000 requests are filed each year.
© Copyright 2002-2006 Bell Globemedia Inc. original article
The Full-Text of the Report is available online at the Office of the Information Privacy Commissioner
Response to the Government’s Action Plan for Reform of the Access to Information Act (Including the reform elements contained in the proposed Federal Accountability Act and in the Discussion Paper of April 11, 2006:
"Strengthening the Access to Information Act"
A Special Report to Parliament.
Info Czar Slams Harper for About-Face on Access
Canadian Press
Updated: Fri. Apr. 28 2006 2:10 PM ET
OTTAWA — Prime Minister Stephen Harper has done a complete about-face, introducing plans that would increase government secrecy after campaigning on openness, says Canada's information czar.
The proposed Accountability Act, now being debated in the House of Commons, will actually make government less accountable when it comes to making information available to Canadians, Information Commissioner John Reid said Friday.
In a special report to Parliament, Reid said no government has ever put forward "a more retrograde and dangerous" set of proposals to change the Access to Information Act since the legislation first came into effect in 1983.
The Accountability Act, and other reforms being proposed, will "increase the government's ability to cover up wrongdoing, shield itself from embarrassment and control the flow of information to Canadians," says the scathing report.
Earlier this month, the Harper government released proposals to reform the Access to Information Act by including more government entities under its umbrella, and by turning over to a Commons committee another set of suggested reforms.
But the Accountability Act, which would add another 19 entities to be covered by Access to Information, also creates 10 new loopholes that would allow civil servants to deny requests for information, says the report.
The proposed legislation, for example, would prevent draft audits or audit papers from being released for 15 years. Currently, there is no such wholesale exemption. And the proposed reforms to be examined by a Commons committee also fail to deal with fundamental problems, Reid said, such as requiring civil servants to create records, and giving the information commissioner more investigative powers.
Reid noted that while in opposition, Harper railed against the Liberals for failing to reform a system that encouraged civil servants to withhold information and allowed abuses such as the sponsorship scandal to flourish undetected.
But the Tories are now guilty of the same abusive behaviour as they try to make government less transparent, he said.
"The new government has done exactly the things for which its predecessor had been ridiculed," says the report.
For a $5 application fee, Canadian residents can request government information, but the system has been widely criticized for delays and excessive exemptions. More than 20,000 requests are filed each year.
© Copyright 2002-2006 Bell Globemedia Inc. original article
The Full-Text of the Report is available online at the Office of the Information Privacy Commissioner
Response to the Government’s Action Plan for Reform of the Access to Information Act (Including the reform elements contained in the proposed Federal Accountability Act and in the Discussion Paper of April 11, 2006:
"Strengthening the Access to Information Act"
A Special Report to Parliament.
Thursday, April 13, 2006
We Must be Doing Something Right!
Hi Everyone!
This just goes to prove that sound economic policies plus a decent working social safety net has made Canada a great economical place to live.
Mercer Human Resource Consulting has just published two surveys of world cities that every Canadian should read, and reading them together - be proud of!
The first survey is the annual QUALITY OF LIFE survey. On it Canada has some impressive showings:
Vancouver ranked third for a second year in a row.
Toronto ranked 15th this year and 16th last year.
Ottawa ranked 18th this year and 21st last year.
Montreal ranked 22nd for a second year in a row.
Calgary ranked 25th for a second year in a row.
In all, only 51 countries made it to the list and Canada's top cities had 5 showings on the list. This is so terrific!
The total index is based on the following categories:
Consumer goods
Economic environment
Housing
Medical and health considerations
Natural environment
Political and social environment
Public services and transport
Recreation
Schools and education
Socio-cultural environment
Now read this survey together with the other survey that Mercer released. This is the world COST OF LIVING survey. What are the most expensive cities to live in the world? Guess what? There are no Canadian cities on this list!
I think we really need to pat ourselves on the back and realize what a unique and special situation we have created for ourselves in this country. Not only do we have a strong economy with a good social and natural environment - but it is also reasonably affordable to live here! I hope our politicians who are oh so interested in privatizing the hell out of us will realize what we have and continue to forge the different path that we as Canadians have chosen!
Happy Easter, Passover, Nowruz, Mawlid al-Nabi and Beltane!
This just goes to prove that sound economic policies plus a decent working social safety net has made Canada a great economical place to live.
Mercer Human Resource Consulting has just published two surveys of world cities that every Canadian should read, and reading them together - be proud of!
The first survey is the annual QUALITY OF LIFE survey. On it Canada has some impressive showings:
Vancouver ranked third for a second year in a row.
Toronto ranked 15th this year and 16th last year.
Ottawa ranked 18th this year and 21st last year.
Montreal ranked 22nd for a second year in a row.
Calgary ranked 25th for a second year in a row.
In all, only 51 countries made it to the list and Canada's top cities had 5 showings on the list. This is so terrific!
The total index is based on the following categories:
Consumer goods
Economic environment
Housing
Medical and health considerations
Natural environment
Political and social environment
Public services and transport
Recreation
Schools and education
Socio-cultural environment
Now read this survey together with the other survey that Mercer released. This is the world COST OF LIVING survey. What are the most expensive cities to live in the world? Guess what? There are no Canadian cities on this list!
I think we really need to pat ourselves on the back and realize what a unique and special situation we have created for ourselves in this country. Not only do we have a strong economy with a good social and natural environment - but it is also reasonably affordable to live here! I hope our politicians who are oh so interested in privatizing the hell out of us will realize what we have and continue to forge the different path that we as Canadians have chosen!
Happy Easter, Passover, Nowruz, Mawlid al-Nabi and Beltane!
Thursday, March 16, 2006
Canada's Health Care System Cheaper for Business!
Two articles today came across my desk (Detroit News March 15th and LA Times March 16) which talked about Chrysler and Ford's move to ask their salaried employees to pay a health care premium for their spouses who are already covered by health coverage elsewhere. A creative and politically sound approach to cost cutting, from what I can see. The numbers that caught my eye, however were these:
Chrylser's health care spending grew 12 percent to $2.2 billion from $1.96 billion in 2004. Chrysler expects to dole out 14 percent more this year or $2.6 billion.
At Ford, the spousal surcharge is one of many changes being implemented as the company works to cut a health care tab that last year topped $3.5 billion.
No wonder these companies a few years ago weighed in on the debate about the future of Canada's public health care system. Their joint letter to Canada's Ministry of Health came out in full favor of our public system as it operates today.
And no wonder! What could these American companies be doing with 2 - 3 billion dollars that they now pay to shoulder the social burdens that the U.S. government refuses to take on? Research and development, perhaps more consumer cost cutting to bolster sales, perhaps more benefits for workers. The possibilities are endless.
Instead they are pouring their cash into the throats of the terribly inefficient and inequal health care insurance and HMO industry in the U.S. whose unregulated fee and billing structure has created an unwieldly administrative beast with huge overhead and very few obvious benefits for the greater society.
Please Canadians - don't let our media convince you that privatization of our health care system is a good thing!! Unless you really study the statistics and learn about how much of a state of decay the U.S. health system is - you will never realize how good you have it. As an individual, in the US it costs an average of $10,000 per year for health insurance premiums, health costs and co-pays. Do you as an individual have an extra $10,000 to pay for your health care?!?!?!
Similarly, as a business, do you have 2 - 3 BILLION lying around to pay for your worker's health care? Of course not! Keep Canada's system public!!!
Chrylser's health care spending grew 12 percent to $2.2 billion from $1.96 billion in 2004. Chrysler expects to dole out 14 percent more this year or $2.6 billion.
At Ford, the spousal surcharge is one of many changes being implemented as the company works to cut a health care tab that last year topped $3.5 billion.
No wonder these companies a few years ago weighed in on the debate about the future of Canada's public health care system. Their joint letter to Canada's Ministry of Health came out in full favor of our public system as it operates today.
And no wonder! What could these American companies be doing with 2 - 3 billion dollars that they now pay to shoulder the social burdens that the U.S. government refuses to take on? Research and development, perhaps more consumer cost cutting to bolster sales, perhaps more benefits for workers. The possibilities are endless.
Instead they are pouring their cash into the throats of the terribly inefficient and inequal health care insurance and HMO industry in the U.S. whose unregulated fee and billing structure has created an unwieldly administrative beast with huge overhead and very few obvious benefits for the greater society.
Please Canadians - don't let our media convince you that privatization of our health care system is a good thing!! Unless you really study the statistics and learn about how much of a state of decay the U.S. health system is - you will never realize how good you have it. As an individual, in the US it costs an average of $10,000 per year for health insurance premiums, health costs and co-pays. Do you as an individual have an extra $10,000 to pay for your health care?!?!?!
Similarly, as a business, do you have 2 - 3 BILLION lying around to pay for your worker's health care? Of course not! Keep Canada's system public!!!
Wednesday, February 15, 2006
Harper's New Government - Out With Transparency
This is really interesting. During Paul Martin and the Liberal's tenure, the Government of Canada website provided a direct link on each Minister's website so that citizens could email the Minister. Even the Prime Minister had a link on his website. I found this particularly handy because, from time to time, as I hear news in a particular area, it did not take me 2 minutes to send off an email to the Minister to make sure my voice got heard.
Today, in looking at both the Minister of Environment and the Minister of Foreign Affairs websites, guess what - there is no link to email the Minister.
Their snail mail address is provided - just to help make sure that not too many people get inspired to share their views.
Democracy in action under the Harper government!
Today, in looking at both the Minister of Environment and the Minister of Foreign Affairs websites, guess what - there is no link to email the Minister.
Their snail mail address is provided - just to help make sure that not too many people get inspired to share their views.
Democracy in action under the Harper government!
Friday, February 10, 2006
U.S. Trade Deficit Hits All Time High
Here is the current state of the U.S. economy for all of you Canadians who want to avoid such a train wreck on this side of the border.
Today, Moneysense.ca reported that the U.S. trade deficit has hit an all time high of 725.8 billion dollars for 2005. Let's gather up some other stats to help mount this argument.
The amount of household debt in the United States is at an all time high. The amount of household savings in the U.S. is at an all time low. Real wages have not increased in the U.S. for the past 15 years.
What does this really say about the state of the U.S. economy?
U.S. companies, in an effort to make big cash, are pulling jobs out of the U.S. and moving them to China. (companies are also rapidly reducing their responsibilities for such benefits as pensions and health care). The number of good (and unionized) full time jobs available to Americans are rapidly decreasing. The American consumer has less money to spend on goods and services. The deregulation of the credit industry has made it easier and easier for consumers to get credit cards. U.S. consumers, with less purchasing power as a result of lower wages, benefits and a lack of good paying jobs, are getting into too much debt and spending all their savings on increased expenses - and also, goods made in China.
Let me repeat: The U.S. consumer is going into debt buying goods made in China - goods that were once made in America and which created jobs that kept people out of debt.
Who benefits? Multinational corporations who profit off of the labourers in China and the American consumers financial future.
Who is to blame? Government policies that have deregulated corporations while pouring money into their coffers while backstabbing the middle and poor classes.
The deregulation of the credit industry, the new bankruptcy act, the changes made to the overtime rules in 2003, the changes made to employment standards in 2005, and the IRS moving 30% of its budget from corporate audits to personal audits, are all perfect examples of government middle class backstabbing on behalf of corporations.
Your children pay.
Canada MUST BE CAREFUL NOT TO GO DOWN THIS PATH!!
Today, Moneysense.ca reported that the U.S. trade deficit has hit an all time high of 725.8 billion dollars for 2005. Let's gather up some other stats to help mount this argument.
The amount of household debt in the United States is at an all time high. The amount of household savings in the U.S. is at an all time low. Real wages have not increased in the U.S. for the past 15 years.
What does this really say about the state of the U.S. economy?
U.S. companies, in an effort to make big cash, are pulling jobs out of the U.S. and moving them to China. (companies are also rapidly reducing their responsibilities for such benefits as pensions and health care). The number of good (and unionized) full time jobs available to Americans are rapidly decreasing. The American consumer has less money to spend on goods and services. The deregulation of the credit industry has made it easier and easier for consumers to get credit cards. U.S. consumers, with less purchasing power as a result of lower wages, benefits and a lack of good paying jobs, are getting into too much debt and spending all their savings on increased expenses - and also, goods made in China.
Let me repeat: The U.S. consumer is going into debt buying goods made in China - goods that were once made in America and which created jobs that kept people out of debt.
Who benefits? Multinational corporations who profit off of the labourers in China and the American consumers financial future.
Who is to blame? Government policies that have deregulated corporations while pouring money into their coffers while backstabbing the middle and poor classes.
The deregulation of the credit industry, the new bankruptcy act, the changes made to the overtime rules in 2003, the changes made to employment standards in 2005, and the IRS moving 30% of its budget from corporate audits to personal audits, are all perfect examples of government middle class backstabbing on behalf of corporations.
Your children pay.
Canada MUST BE CAREFUL NOT TO GO DOWN THIS PATH!!
Thursday, January 19, 2006
Harper's American Style Neo-Con Stance on Judicial Activism
My Letter to the Globe and Mail
Re: January 19, 2006 article:
"Harper Warns of Activist Judges"
I agree with Mr. Cotler who is quoted in this article as saying "it is irresponsible for a political leader to be impugning the independence and the integrity of the very institutions he should be protecting."
Up until now, the role of judges in Canadian society has not been an issue here. That is because most Canadians understand the concept of separation of powers and the essential role it plays in any democracy.
The one group who has conducted a strikingly similar, but much more ferocious barrage of attacks against judicial activism, are the conservatives in the United States. Their interest in the topic began at about the same time as the courts outlawed school segregation, against the better judgment of the legislature at the time. Thanks to the unrelenting concern of U.S. conservatives about judicial activism and other such issues, the Executive in the United States is enjoying greater power than ever before.
As they did in Brown v. Board of Education in the United States, the courts are often more forward-thinking than the politicians of the day who are mired in public opinion on matters that can affect the life, dignity and human rights of minority groups, but which are unpopular to the majority of voters. Sometimes judicial activism is necessary to prevent tyranny of the majority.
Any Canadians who have become concerned about the nominations process here, should take a look at the Ministry of Justice website which clearly sets out a new process instituted by Mr. Cotler in which all electoral parties are involved in choosing our Supreme Court judges on the basis of merit and length of service.
Above all, I find it interesting that Mr. Harper has decided that judicial activism suddenly has become an issue of utmost concern to Canadians. Let's leave public opinion wrangling where it belongs - in Texas.
If a politician hasn't shown his real cards until after the game is won, can he ever assert that he has any mandate whatsoever to make change?
Re: January 19, 2006 article:
"Harper Warns of Activist Judges"
I agree with Mr. Cotler who is quoted in this article as saying "it is irresponsible for a political leader to be impugning the independence and the integrity of the very institutions he should be protecting."
Up until now, the role of judges in Canadian society has not been an issue here. That is because most Canadians understand the concept of separation of powers and the essential role it plays in any democracy.
The one group who has conducted a strikingly similar, but much more ferocious barrage of attacks against judicial activism, are the conservatives in the United States. Their interest in the topic began at about the same time as the courts outlawed school segregation, against the better judgment of the legislature at the time. Thanks to the unrelenting concern of U.S. conservatives about judicial activism and other such issues, the Executive in the United States is enjoying greater power than ever before.
As they did in Brown v. Board of Education in the United States, the courts are often more forward-thinking than the politicians of the day who are mired in public opinion on matters that can affect the life, dignity and human rights of minority groups, but which are unpopular to the majority of voters. Sometimes judicial activism is necessary to prevent tyranny of the majority.
Any Canadians who have become concerned about the nominations process here, should take a look at the Ministry of Justice website which clearly sets out a new process instituted by Mr. Cotler in which all electoral parties are involved in choosing our Supreme Court judges on the basis of merit and length of service.
Above all, I find it interesting that Mr. Harper has decided that judicial activism suddenly has become an issue of utmost concern to Canadians. Let's leave public opinion wrangling where it belongs - in Texas.
If a politician hasn't shown his real cards until after the game is won, can he ever assert that he has any mandate whatsoever to make change?
Tuesday, January 17, 2006
Upcoming Elections
To those of you out there right now who are sorry that the Liberals have gotten themselves into such a quagmire and who are looking for a change, I would say - rather than voting Conservative - why not vote for the NDP who more closely represent the values of Canadian society?
Stephen Harper is pro-privatization and, as we have seen in the United States, privatization of health care and education are the two crosses upon which the middle class have been crucified over there.
In my previous posts I have strongly advocated that privatizing Canada's health care system is not the answer to any problems (real or concocted by the media) with our current health care system. What will happen is this: slowly more and more private clinics will start trickling in. At first, the wealthy will go to them and pay big bucks for their services, but the government will find itself footing more and more of the bill, and losing more and more control over costs and service provision. Eventually health care costs will skyrocket (precisely as they have in the U.S.) and the public coffers will be on the hook for those expenses. At that point, the right wing will argue that public health care is too costly and payment for services for everyone will start being capped. The excess expense that most people can't afford will open the door wide to private insurance plans (we are already seeing ads for them on TV).
Once there are private clinics and health plans, no government will be able to put their foot down and say ENOUGH. Not to mention that Canada's health care plan was specifically protected by NAFTA negotiators from U.S. corporate takeover - under only one condition - the whole system has to remain publicly funded, or else NAFTA will kick in, and any public benefits given to Canadian health service providers will be considered a restraint of trade.
This is why we need to say ENOUGH to Stephen Harper right now before he gets any public support. My big question is why have the media not followed up and forced Harper to reveal his underlying intentions which were clearly stated when he was involved with the National Citizen's Coalition? Why have the media not called him on his cozy relationship with the rightwing conservatives in the U.S. which have been propping up Bush all these years?
Even this whole busines of Paul Martin having to distance himself from Buzz Hargrove because he doesn't want to be seen as questioning Harper's patriotism - EXCUSE ME - THE GUY WAS INVOLVED WITH A SEPARATIST ORGANIZATION!!!! This is becoming dangerously like the United States where any critics who are TELLING THE TRUTH ABOUT A RIGHT WINGER'S INTENTIONS are forced to cower into the shadows as IF THEY'VE DONE SOMETHING WRONG in speaking up!!!
What ever happened to democratic debate!?
If Harper gets into office on the basis of a platform which does not clearly articulate his intentions, then he has absolutely no mandate from the Canadian public to make changes here.
Privatization of schools in the U.S. have resulted in a huge gap between the quality of education of the rich and poor. It has also resulted in unintended economic consequences which result in millions of Americans pouring all of their financial resources into houses they can't afford in order to be in the district of a good school. In the U.S. the number one determinant of real estate prices is proximity to schools.
Is this the kind of society we want to have in Canada? I want to SHOUT "NO" - it is not what we want here - and we need to wise up real quick if we think the Americans have found a better way of doing things.
We have to say "NO" to a backward slide towards conservative policies here in Canada!
Stephen Harper is pro-privatization and, as we have seen in the United States, privatization of health care and education are the two crosses upon which the middle class have been crucified over there.
In my previous posts I have strongly advocated that privatizing Canada's health care system is not the answer to any problems (real or concocted by the media) with our current health care system. What will happen is this: slowly more and more private clinics will start trickling in. At first, the wealthy will go to them and pay big bucks for their services, but the government will find itself footing more and more of the bill, and losing more and more control over costs and service provision. Eventually health care costs will skyrocket (precisely as they have in the U.S.) and the public coffers will be on the hook for those expenses. At that point, the right wing will argue that public health care is too costly and payment for services for everyone will start being capped. The excess expense that most people can't afford will open the door wide to private insurance plans (we are already seeing ads for them on TV).
Once there are private clinics and health plans, no government will be able to put their foot down and say ENOUGH. Not to mention that Canada's health care plan was specifically protected by NAFTA negotiators from U.S. corporate takeover - under only one condition - the whole system has to remain publicly funded, or else NAFTA will kick in, and any public benefits given to Canadian health service providers will be considered a restraint of trade.
This is why we need to say ENOUGH to Stephen Harper right now before he gets any public support. My big question is why have the media not followed up and forced Harper to reveal his underlying intentions which were clearly stated when he was involved with the National Citizen's Coalition? Why have the media not called him on his cozy relationship with the rightwing conservatives in the U.S. which have been propping up Bush all these years?
Even this whole busines of Paul Martin having to distance himself from Buzz Hargrove because he doesn't want to be seen as questioning Harper's patriotism - EXCUSE ME - THE GUY WAS INVOLVED WITH A SEPARATIST ORGANIZATION!!!! This is becoming dangerously like the United States where any critics who are TELLING THE TRUTH ABOUT A RIGHT WINGER'S INTENTIONS are forced to cower into the shadows as IF THEY'VE DONE SOMETHING WRONG in speaking up!!!
What ever happened to democratic debate!?
If Harper gets into office on the basis of a platform which does not clearly articulate his intentions, then he has absolutely no mandate from the Canadian public to make changes here.
Privatization of schools in the U.S. have resulted in a huge gap between the quality of education of the rich and poor. It has also resulted in unintended economic consequences which result in millions of Americans pouring all of their financial resources into houses they can't afford in order to be in the district of a good school. In the U.S. the number one determinant of real estate prices is proximity to schools.
Is this the kind of society we want to have in Canada? I want to SHOUT "NO" - it is not what we want here - and we need to wise up real quick if we think the Americans have found a better way of doing things.
We have to say "NO" to a backward slide towards conservative policies here in Canada!
Thursday, December 22, 2005
This makes me so angry! The U.S. is bringing the U.N. to its knees...
Is this the Bush's idea of promoting peace in the world? Just create so much tension within the U.N. that the rest of the nations just get fed up? Of course - ask yourselves what exactly is Bolton talking about when he suggests that the U.S. will have to solve its international problems by some other means? Of course just world domination by the U.S. I can see Bolton's next proposal: "How be we just dissolve the U.N. and from now on international problems will be solved directly from the Pentagon?"
That's pretty much way the Bush Administration acts right now anyways.
This is just appalling. I hope that reasoned thinkers in the U.S. realize what a mess their policy makers have been making out of international relations over the past few years.
I hope that the nations of the U.N. just boot the U.S. right out and make it go sit in the corner until it learns to behave properly.
UN Threatened with Budgetary Shutdown
By Thalif Deen
Inter Press Service
Thursday 22 December 2005
Less than two weeks before a Dec. 31 deadline, the United Nations is in danger of beginning the new year inauspiciously - without an approved budget and unable to pay staff salaries.
United Nations - "I am not sure if the light in this room can and will be on," U.N. Secretary-General Kofi Annan told reporters Wednesday.
Annan was hinting at an impending financial crisis which could shut down the world body, dimming the lights in the 39-story U.N. Secretariat, come January.
"I really, really hope that member states understand the implications of a budget crisis and will do everything to avoid it," the secretary-general said at his year-end press conference.
The potential crisis has been sparked by implicit threats by the United States that it will not support the U.N.'s biennial budget for 2006-2007 if member states refuse to back proposals for a radical overhaul of the world body, including management reforms.
Since the budget is traditionally approved by consensus by all 191 member states, a single country can withhold its support, thereby throwing the entire process into disarray.
John Bolton, the abrasive U.S. ambassador to the United Nations, has said the U.N.'s biennial budget for 2006-2007 should be shrunk into a three-month budget giving member states a deadline of Mar. 31 to agree to a set of U.S.-inspired reforms.
But the 132-member Group of 77, comprising developing countries, is refusing to conform to artificial deadlines or rush into a decision under threats.
Last month, Bolton warned U.N. member states, specifically the 132 developing nations, that if they don't play ball with the United States, Washington may look elsewhere to settle international problems.
Addressing a gathering at Wingate University in North Carolina, Bolton said: "Being practical, Americans say that either we need to fix the institution (the United Nations), or we'll turn to some other mechanism to solve international problems."
Last week, Bolton went further when he said that the reform of the United Nations is coming up against a "culture of inaction" among member states.
In an implicit reference to Bolton's aggressive stance, Annan told reporters that the atmosphere at the United Nations these days is a "bit tense". He said that "tempers are high, and there is quite a bit of mistrust."
"There is a sense that they are operating in an atmosphere of threats and intimidation, which some of them say they resent," he added.
"But quite frankly," Annan pointed out, "I think the only choice they have is to sit down and talk honestly and sincerely and frankly to each other, and try and come to an understanding. But they have to put the interest of the Organisation first, not narrow interests."
The Group of 77 (G77) says that U.N. reforms are primarily driven by right wing neo-conservatives in the United States who have made U.N.-bashing into a fine art.
The G77 has told Annan that it is strongly opposed to the neo-conservative view that the world body should be run like a U.S. corporation, with the secretary-general playing the role of a chief executive officer (CEO).
The proposal to give Annan more powers would correspondingly diminish the authority of the 191-member General Assembly, the highest policy making body in the Organisation.
Asked about the deadlock, Annan said: "I know there have been some differences between the G77 and other groups of countries. But I think they all want to see reform and they all want to see the United Nations move ahead. I am hopeful they will be able to come to an understanding and agree on a budget (before the end of December)."
Bolton is also making a strong push for a new Human Rights Council, which is expected to replace the existing U.N. Commission on Human Rights whose composition has come under fire because some of its traditional members include countries such as Sudan, Libya and Zimbabwe, themselves accused of human rights abuses.
The year-end press conference also turned into a war of words when Annan was pinned down with questions about his family - all relating to the now-defunct oil-for-food scandal which has triggered charges of fraud and corruption against some U.N. officials who administered the programme.
A question that has kept haunting Annan is how his son Kojo Annan acquired a Mercedes Benz vehicle in Ghana apparently for his own use but avoided paying customs duties by registering it under his father's name.
Asked about this, he said it was part of the report by the Paul Volcker Commission which probed the oil-for-food scandal. "I know you are all obsessed about the car. My son and his lawyers are dealing with it. If you want to know more about it, please direct the questions to his lawyer or to him. I am neither his spokesman nor his lawyer," he said pointedly.
Told that his own version of the story "doesn't really make sense", Annan addressed the reporter, James Bone, directly: "I think you are being very cheeky here."
"No, hold on. Hold on. Listen James Bone. You have been behaving like an overgrown schoolboy in this room for many, many months and years. You are an embarrassment to your colleagues and to your profession. Please stop misbehaving, and please let's move on to a more serious subject."
Annan's criticism brought a rejoinder from Jim Wurst, president of the U.N. Correspondents' Association (UNCA): "On behalf of UNCA, I have to tell you that James Bone is not an embarrassment. He's a member in good standing of UNCA. He has every right to ask the question."
But Annan decided to have the last word: "No, I agree with you. He has a right to ask questions, and I came here to answer questions. But I think we also have to understand that we have to treat each other with some respect."
"You have the right to ask all the questions you want to ask. I reserve the right to refuse to answer questions I don't want to answer. But there is a certain behaviour and a certain mutual respect we have to respect," he added.
That's pretty much way the Bush Administration acts right now anyways.
This is just appalling. I hope that reasoned thinkers in the U.S. realize what a mess their policy makers have been making out of international relations over the past few years.
I hope that the nations of the U.N. just boot the U.S. right out and make it go sit in the corner until it learns to behave properly.
UN Threatened with Budgetary Shutdown
By Thalif Deen
Inter Press Service
Thursday 22 December 2005
Less than two weeks before a Dec. 31 deadline, the United Nations is in danger of beginning the new year inauspiciously - without an approved budget and unable to pay staff salaries.
United Nations - "I am not sure if the light in this room can and will be on," U.N. Secretary-General Kofi Annan told reporters Wednesday.
Annan was hinting at an impending financial crisis which could shut down the world body, dimming the lights in the 39-story U.N. Secretariat, come January.
"I really, really hope that member states understand the implications of a budget crisis and will do everything to avoid it," the secretary-general said at his year-end press conference.
The potential crisis has been sparked by implicit threats by the United States that it will not support the U.N.'s biennial budget for 2006-2007 if member states refuse to back proposals for a radical overhaul of the world body, including management reforms.
Since the budget is traditionally approved by consensus by all 191 member states, a single country can withhold its support, thereby throwing the entire process into disarray.
John Bolton, the abrasive U.S. ambassador to the United Nations, has said the U.N.'s biennial budget for 2006-2007 should be shrunk into a three-month budget giving member states a deadline of Mar. 31 to agree to a set of U.S.-inspired reforms.
But the 132-member Group of 77, comprising developing countries, is refusing to conform to artificial deadlines or rush into a decision under threats.
Last month, Bolton warned U.N. member states, specifically the 132 developing nations, that if they don't play ball with the United States, Washington may look elsewhere to settle international problems.
Addressing a gathering at Wingate University in North Carolina, Bolton said: "Being practical, Americans say that either we need to fix the institution (the United Nations), or we'll turn to some other mechanism to solve international problems."
Last week, Bolton went further when he said that the reform of the United Nations is coming up against a "culture of inaction" among member states.
In an implicit reference to Bolton's aggressive stance, Annan told reporters that the atmosphere at the United Nations these days is a "bit tense". He said that "tempers are high, and there is quite a bit of mistrust."
"There is a sense that they are operating in an atmosphere of threats and intimidation, which some of them say they resent," he added.
"But quite frankly," Annan pointed out, "I think the only choice they have is to sit down and talk honestly and sincerely and frankly to each other, and try and come to an understanding. But they have to put the interest of the Organisation first, not narrow interests."
The Group of 77 (G77) says that U.N. reforms are primarily driven by right wing neo-conservatives in the United States who have made U.N.-bashing into a fine art.
The G77 has told Annan that it is strongly opposed to the neo-conservative view that the world body should be run like a U.S. corporation, with the secretary-general playing the role of a chief executive officer (CEO).
The proposal to give Annan more powers would correspondingly diminish the authority of the 191-member General Assembly, the highest policy making body in the Organisation.
Asked about the deadlock, Annan said: "I know there have been some differences between the G77 and other groups of countries. But I think they all want to see reform and they all want to see the United Nations move ahead. I am hopeful they will be able to come to an understanding and agree on a budget (before the end of December)."
Bolton is also making a strong push for a new Human Rights Council, which is expected to replace the existing U.N. Commission on Human Rights whose composition has come under fire because some of its traditional members include countries such as Sudan, Libya and Zimbabwe, themselves accused of human rights abuses.
The year-end press conference also turned into a war of words when Annan was pinned down with questions about his family - all relating to the now-defunct oil-for-food scandal which has triggered charges of fraud and corruption against some U.N. officials who administered the programme.
A question that has kept haunting Annan is how his son Kojo Annan acquired a Mercedes Benz vehicle in Ghana apparently for his own use but avoided paying customs duties by registering it under his father's name.
Asked about this, he said it was part of the report by the Paul Volcker Commission which probed the oil-for-food scandal. "I know you are all obsessed about the car. My son and his lawyers are dealing with it. If you want to know more about it, please direct the questions to his lawyer or to him. I am neither his spokesman nor his lawyer," he said pointedly.
Told that his own version of the story "doesn't really make sense", Annan addressed the reporter, James Bone, directly: "I think you are being very cheeky here."
"No, hold on. Hold on. Listen James Bone. You have been behaving like an overgrown schoolboy in this room for many, many months and years. You are an embarrassment to your colleagues and to your profession. Please stop misbehaving, and please let's move on to a more serious subject."
Annan's criticism brought a rejoinder from Jim Wurst, president of the U.N. Correspondents' Association (UNCA): "On behalf of UNCA, I have to tell you that James Bone is not an embarrassment. He's a member in good standing of UNCA. He has every right to ask the question."
But Annan decided to have the last word: "No, I agree with you. He has a right to ask questions, and I came here to answer questions. But I think we also have to understand that we have to treat each other with some respect."
"You have the right to ask all the questions you want to ask. I reserve the right to refuse to answer questions I don't want to answer. But there is a certain behaviour and a certain mutual respect we have to respect," he added.
Nearly one in 10 pension plans frozen in U.S.,
From Moneysense.ca
Nearly one in 10 pension plans frozen in U.S., U.S. federal study finds
December 21, 2005 - 18:23
By ANDREW BRIDGES
WASHINGTON (AP) - U.S. employers froze nearly one in 10 pension plans insured by the federal Pension Benefit Guaranty Corp. in 2003, according to a study released Wednesday.
The Pension Benefit Guaranty Corp., the federal agency that guarantees worker pension benefits, said 9.4 per cent of the 29,000 plans it insures and for which it had data were "hard-frozen" in 2003, the most recent year for which numbers were available. Hard-frozen means employees can no longer accrue benefits under a pension plan.
The study comes amid a steady stream of headlines about companies, including Sears Roebuck & Co., Motorola Inc. and IBM Corp., freezing pensions to cut costs. Among the latest was Verizon Communications Inc., which recently said it would freeze the pensions of 50,500 managers.
The study, however, found that as of 2003 the frozen plans covered just 2.5 per cent of all workers in insured plans. Most of the more than 2,700 plans hard-frozen in 2003 had fewer than 100 participants, it said.
That finding comes on the heels of other studies that have suggested in the last year a steep uptick in the number of firms that are freezing - either fully or partially - employee pension plans. They include one conducted by the consulting firm Watson Wyatt Worldwide that found that 71 of the 1,000 largest companies last year either froze or terminated their pension plans, up from 45 in 2003. Nearly all were freezes.
Pension Benefit Guaranty Corp. officials said the private sector studies, including the Watson Wyatt report, had "shortcomings."
"While anecdotal evidence suggests that the number of frozen pension plans has increased since 2003, reports of a mass exodus from the defined benefit pension system appear to be overstated," said Bradley Belt, the group's executive director.
However, the report acknowledged that it does not illustrate the "full extent of the decline in the defined benefit system" since it does not track cases where employers have either partially frozen their pension plans or closed them to new entrants. These "numbers have almost certainly increased in the past two years," the report concludes.
That and the age of the data mean the report fails to accurately portray recent and significant changes to pension plans, said Dallas Salisbury, president of the Washington-based Employee Benefit Research Institute.
"The PBGC report misses much of what has been happening among defined benefit plans," Salisbury said in a statement.
Fewer workers covered by insured pension plans could make it harder for the federal corporation to improve its own financial position. It recently reported a deficit of $22.8 billion US as it takes over payments of abandoned plans, particularly in the airline and steel industries. Defined-benefit plans are now underfunded by an estimated $450 billion.
The number of participants in insured pension plans grew to about 35 million in 2004, from 28 million in 1980. Most of the growth has come in the numbers of retired workers, as well as surviving spouses, covered by the plans and not in new workers, according to the study.
That, coupled with the freezing or terminating of plans, could mean the number of workers covered by insured plans could stagnate or shrink, the report said. If that occurred, it would cut into the Pension Benefit Guaranty Corp.'s premium income and make it even harder for the agency to improve its financial position, according to the report.
Nearly one in 10 pension plans frozen in U.S., U.S. federal study finds
December 21, 2005 - 18:23
By ANDREW BRIDGES
WASHINGTON (AP) - U.S. employers froze nearly one in 10 pension plans insured by the federal Pension Benefit Guaranty Corp. in 2003, according to a study released Wednesday.
The Pension Benefit Guaranty Corp., the federal agency that guarantees worker pension benefits, said 9.4 per cent of the 29,000 plans it insures and for which it had data were "hard-frozen" in 2003, the most recent year for which numbers were available. Hard-frozen means employees can no longer accrue benefits under a pension plan.
The study comes amid a steady stream of headlines about companies, including Sears Roebuck & Co., Motorola Inc. and IBM Corp., freezing pensions to cut costs. Among the latest was Verizon Communications Inc., which recently said it would freeze the pensions of 50,500 managers.
The study, however, found that as of 2003 the frozen plans covered just 2.5 per cent of all workers in insured plans. Most of the more than 2,700 plans hard-frozen in 2003 had fewer than 100 participants, it said.
That finding comes on the heels of other studies that have suggested in the last year a steep uptick in the number of firms that are freezing - either fully or partially - employee pension plans. They include one conducted by the consulting firm Watson Wyatt Worldwide that found that 71 of the 1,000 largest companies last year either froze or terminated their pension plans, up from 45 in 2003. Nearly all were freezes.
Pension Benefit Guaranty Corp. officials said the private sector studies, including the Watson Wyatt report, had "shortcomings."
"While anecdotal evidence suggests that the number of frozen pension plans has increased since 2003, reports of a mass exodus from the defined benefit pension system appear to be overstated," said Bradley Belt, the group's executive director.
However, the report acknowledged that it does not illustrate the "full extent of the decline in the defined benefit system" since it does not track cases where employers have either partially frozen their pension plans or closed them to new entrants. These "numbers have almost certainly increased in the past two years," the report concludes.
That and the age of the data mean the report fails to accurately portray recent and significant changes to pension plans, said Dallas Salisbury, president of the Washington-based Employee Benefit Research Institute.
"The PBGC report misses much of what has been happening among defined benefit plans," Salisbury said in a statement.
Fewer workers covered by insured pension plans could make it harder for the federal corporation to improve its own financial position. It recently reported a deficit of $22.8 billion US as it takes over payments of abandoned plans, particularly in the airline and steel industries. Defined-benefit plans are now underfunded by an estimated $450 billion.
The number of participants in insured pension plans grew to about 35 million in 2004, from 28 million in 1980. Most of the growth has come in the numbers of retired workers, as well as surviving spouses, covered by the plans and not in new workers, according to the study.
That, coupled with the freezing or terminating of plans, could mean the number of workers covered by insured plans could stagnate or shrink, the report said. If that occurred, it would cut into the Pension Benefit Guaranty Corp.'s premium income and make it even harder for the agency to improve its financial position, according to the report.
Wednesday, December 21, 2005
Watch What You Wish For...
I've been looking through some of the Alberta newspapers, commentary and blogs today to try to get a sense of what Western Canadians are thinking coming into this upcoming election.
First of all, there are alot of them who are VERY upset that Paul Martin was tossing "un-American" phrases around on last week's campaign trail. Second of all, there are a few out there who actually think that a two-tiered health system will be beneficial to Canada.
I have lived in Canada all of my life, but I also lived in the United States for the past three years. Those were tumultous times, let me tell you. In Canada's debate, I have learned that above all, we have to take a hard look at the state of the United States of America and RUN LIKE HELL in the opposite direction!
I lived in Massachusetts, thankfully as blue a state as you can find in the U.S. and probably one of the very few places in the U.S. where a rational Canadian can set up shop.
My first apartment was in downtown Boston. It was a bachelor apartment for $1200 per month not including utilities. The cheapest rent I ever paid was when I decided to move out of the city into Quincy (a 1.5 hour commute by train) to pay another girl $650 per month to have a room in her 2 bedroom apartment. In that environs, I would say that most middle class people had at least a 1 - 2 hour commute to get into work (everyone had moved way out into the surrounding cities and even as far as Maine and Rhode Island). The crappiest fixer-up house within a 75 mile radius of Boston was $350,000 dollars MINIMUM. The cheapest real estate investments were 75 year old remodeled apartment units selling for $250,000 minimum.
That's just housing.
How about maternity leave? At my workplace, we were entitled to 14 weeks of paid vacation (you also COULD NOT USE any other accumulated sick time or vacation time to get yourself more time with your newborn). That's it. Your kid pops out, they and at 3 months they are suddenly without parents and have to go to daycare. It was ridiculous - at that age the child has not even developed its personality or familial bonds yet! The child's main developmental stepping stones will inevitably be witnessed by complete strangers. That's what the U.S. political system calls "family values". By the way, the website and statistics that I mentioned in my last post specifically states that of all the OECD countries, the U.S., Australia and New Zealand are the only countries left that don't provide full maternal/paternal leave options.
On the subject of daycare, of course the U.S. government has no cash for such luxuries. Most couples I knew with newborn children were rushing around trying to get on the list for a nearby daycare center as soon as the child popped out. Some of these waiting lists had a three year wait period to boot! One colleague of mine indicated that for childcare, a couple has to be prepared to pay A MINIMUM Of $15 dollars per hour. While this is probably not a fair wage for the daycare workers themselves - how many working Americans do you think actually MAKE the $15 per hour to be able to pay for it?
What I have been actively watching is the state of the U.S. economy and the corresponding effects on the middle class. Anyone with any knowledge about economics knows that you cannot run a government on several trillions of dollars of debt and have a stable economic future. The future of the country's economy depends entirely on foreign investors who are holding the government's bonds. If they decide to jump ship, the U.S. dollar could go into a major tailspin.
One of the absolute major problems with the economy has been the U.S. ever-increasing de-emphasis on regulation (with a corresponding outpouring of financial and regulatory support for corporations.) Let's do the round up:
*in the past 15 years the U.S. economy has been growing by about 3% per year. *at the same time wages have not only remained the same, but in some sectors have been falling.
How do we account for an economy which can continue growing while its citizen's incomes have not? CREDIT CARDS. Statistics show that individuals in the U.S. have an historically high level of debt in comparison to their incomes, and that individual savings are at an all-time low. This flows through all members of the society - if you take a look at that report in my last posting and you'll see what I mean - a shockingly low number of adults have individual retirement plans and that's only one group.
If you read Elizabeth Warren's book "The Two Income Trap" you will see that the reason why so many people (who historically would not have been extended credit) have credit now - is because of U.S. deregulation of the credit industry. And you would be shocked to know what they're up to these days! Did you know that in the U.S. it is not illegal for one of your credit card companies to RAISE YOUR INTEREST RATE because you paid ANOTHER CREDIT CARD bill late? Did you know that they can charge any interest rate they like and the number and kinds of fees that they are charging has skyrocketed? Did you know that a person in the U.S. is more likely to get more credit card offers AFTER they claim bankruptcy? This is because (contrary to what used to be popular wisdom) the credit card companies know that they will be able to milk the cash out of these people the longest.
What has been the Bush Administration's response to this kind of blatant abuse of the middle class which has had a direct impact on their economic well-being? This year the Bush Administration passed an amendment to the Bankruptcy laws which would make it harder for most people to claim bankruptcy and which would require persons who claimed bankruptcy to continue paying certain bills (even though a corporation who claimed bankrupcty would have their slate wiped clean!)
Okay right-wingers who are wagging their finger at those bankruptcy claimants who are selfishly abusing the system to buy big screen TVs - WRONG again! READ Elizabeth Warren's book! The top three reasons why Americans are claiming bankruptcy?
1. Unexpected health problems that cost them a trip to the hospital and thousands of dollars on their credit cards.
2. Divorce or separation.
3. People buying houses they cannot afford to live in areas where good schools are available.
Did you know that the REPUTATION OF A PRIMARY SCHOOL is one of the primary determinants of real estate prices in any particular area in the United States?
Strike two against you right wingers who are all pro-privatization of schools. (The third strike on this matter comes from my knowledge of a girl from Southwestern Ontario who went to work for a private school in Michigan that was owned by the company that owns DOMINO'S PIZZA!!).
I've said it before and I'll say it again - CORPORATIONS' ONLY PRIORITY IS MAKING MONEY. SCHOOLS' PRIORITY SHOULD BE CHILDREN. HOSPITALS" PRIORITY SHOULD BE PATIENTS. THE TWO ARE INCOMPATIBLE. IF a corporation has to cut costs in order to increase profits - they are going to cut costs - even if it negatively impacts on their service to patients.
Which leads me to my next point. Canada's health system might not be great BUT IT IS BETTER THAN NOTHING AND/OR RELYING ON INSURANCE COMPANIES TO PROTECT YOUR HEALTH.
When was the last time you made a claim to your insurance company about ANYTHING? Truth is NONE OF US LIKE TO MAKE CLAIMS TO INSURANCE COMPANIES BECAUSE WE KNOW THEY WILL:
1. nickle and dime the items we are claiming for
2. stall in processing payment
2. raise our rates when all is said and done
How would you like to have to take these into consideration at a time when YOUR CHILD NEEDS TO GO TO THE HOSPITAL?
Well this is what it is like for most Americans on a daily basis. For 30 million of them without health insurance, they have to think about going to the hospital or the doctor or the dentist the same way you and I have to think about whether we are going to buy a new CD or pair of jeans... CAN I AFFORD THIS RIGHT NOW?
Hard to think of it that way when you are in an AMBULANCE BLEEDING TO DEATH FROM A CAR ACCIDENT!!!
READ THE BOOK "CRITICAL CONDITION" that I mentioned in a prior post. IT IS AN ABSOLUTE MUST READ FOR ANYONE WHO THINKS THAT PRIVATIZATION IS THE WAY FOR US TO GO. In Canada we complain about how much tax we pay but the truth is, in my experience the income tax level was pretty much the same between the two countries, but in the U.S. I had to pay $135 PER PAYCHEQUE for family health insurance converage. For most Americans, their health insurance costs are $10,000 per year on average. A friend of mine was off work for one summer and in order to keep her family's health insurance in place until September, she had to pay $500 per month. This was an insurance plan through the employer which the employer was not contributing to for this period. This rate is actually cheap compared to if an American has to purchase insurance on their own (and not with the purchasing power of their employer).
I have must more to say about de-regulation in America and its effects on the economy as well. More next time!
First of all, there are alot of them who are VERY upset that Paul Martin was tossing "un-American" phrases around on last week's campaign trail. Second of all, there are a few out there who actually think that a two-tiered health system will be beneficial to Canada.
I have lived in Canada all of my life, but I also lived in the United States for the past three years. Those were tumultous times, let me tell you. In Canada's debate, I have learned that above all, we have to take a hard look at the state of the United States of America and RUN LIKE HELL in the opposite direction!
I lived in Massachusetts, thankfully as blue a state as you can find in the U.S. and probably one of the very few places in the U.S. where a rational Canadian can set up shop.
My first apartment was in downtown Boston. It was a bachelor apartment for $1200 per month not including utilities. The cheapest rent I ever paid was when I decided to move out of the city into Quincy (a 1.5 hour commute by train) to pay another girl $650 per month to have a room in her 2 bedroom apartment. In that environs, I would say that most middle class people had at least a 1 - 2 hour commute to get into work (everyone had moved way out into the surrounding cities and even as far as Maine and Rhode Island). The crappiest fixer-up house within a 75 mile radius of Boston was $350,000 dollars MINIMUM. The cheapest real estate investments were 75 year old remodeled apartment units selling for $250,000 minimum.
That's just housing.
How about maternity leave? At my workplace, we were entitled to 14 weeks of paid vacation (you also COULD NOT USE any other accumulated sick time or vacation time to get yourself more time with your newborn). That's it. Your kid pops out, they and at 3 months they are suddenly without parents and have to go to daycare. It was ridiculous - at that age the child has not even developed its personality or familial bonds yet! The child's main developmental stepping stones will inevitably be witnessed by complete strangers. That's what the U.S. political system calls "family values". By the way, the website and statistics that I mentioned in my last post specifically states that of all the OECD countries, the U.S., Australia and New Zealand are the only countries left that don't provide full maternal/paternal leave options.
On the subject of daycare, of course the U.S. government has no cash for such luxuries. Most couples I knew with newborn children were rushing around trying to get on the list for a nearby daycare center as soon as the child popped out. Some of these waiting lists had a three year wait period to boot! One colleague of mine indicated that for childcare, a couple has to be prepared to pay A MINIMUM Of $15 dollars per hour. While this is probably not a fair wage for the daycare workers themselves - how many working Americans do you think actually MAKE the $15 per hour to be able to pay for it?
What I have been actively watching is the state of the U.S. economy and the corresponding effects on the middle class. Anyone with any knowledge about economics knows that you cannot run a government on several trillions of dollars of debt and have a stable economic future. The future of the country's economy depends entirely on foreign investors who are holding the government's bonds. If they decide to jump ship, the U.S. dollar could go into a major tailspin.
One of the absolute major problems with the economy has been the U.S. ever-increasing de-emphasis on regulation (with a corresponding outpouring of financial and regulatory support for corporations.) Let's do the round up:
*in the past 15 years the U.S. economy has been growing by about 3% per year. *at the same time wages have not only remained the same, but in some sectors have been falling.
How do we account for an economy which can continue growing while its citizen's incomes have not? CREDIT CARDS. Statistics show that individuals in the U.S. have an historically high level of debt in comparison to their incomes, and that individual savings are at an all-time low. This flows through all members of the society - if you take a look at that report in my last posting and you'll see what I mean - a shockingly low number of adults have individual retirement plans and that's only one group.
If you read Elizabeth Warren's book "The Two Income Trap" you will see that the reason why so many people (who historically would not have been extended credit) have credit now - is because of U.S. deregulation of the credit industry. And you would be shocked to know what they're up to these days! Did you know that in the U.S. it is not illegal for one of your credit card companies to RAISE YOUR INTEREST RATE because you paid ANOTHER CREDIT CARD bill late? Did you know that they can charge any interest rate they like and the number and kinds of fees that they are charging has skyrocketed? Did you know that a person in the U.S. is more likely to get more credit card offers AFTER they claim bankruptcy? This is because (contrary to what used to be popular wisdom) the credit card companies know that they will be able to milk the cash out of these people the longest.
What has been the Bush Administration's response to this kind of blatant abuse of the middle class which has had a direct impact on their economic well-being? This year the Bush Administration passed an amendment to the Bankruptcy laws which would make it harder for most people to claim bankruptcy and which would require persons who claimed bankruptcy to continue paying certain bills (even though a corporation who claimed bankrupcty would have their slate wiped clean!)
Okay right-wingers who are wagging their finger at those bankruptcy claimants who are selfishly abusing the system to buy big screen TVs - WRONG again! READ Elizabeth Warren's book! The top three reasons why Americans are claiming bankruptcy?
1. Unexpected health problems that cost them a trip to the hospital and thousands of dollars on their credit cards.
2. Divorce or separation.
3. People buying houses they cannot afford to live in areas where good schools are available.
Did you know that the REPUTATION OF A PRIMARY SCHOOL is one of the primary determinants of real estate prices in any particular area in the United States?
Strike two against you right wingers who are all pro-privatization of schools. (The third strike on this matter comes from my knowledge of a girl from Southwestern Ontario who went to work for a private school in Michigan that was owned by the company that owns DOMINO'S PIZZA!!).
I've said it before and I'll say it again - CORPORATIONS' ONLY PRIORITY IS MAKING MONEY. SCHOOLS' PRIORITY SHOULD BE CHILDREN. HOSPITALS" PRIORITY SHOULD BE PATIENTS. THE TWO ARE INCOMPATIBLE. IF a corporation has to cut costs in order to increase profits - they are going to cut costs - even if it negatively impacts on their service to patients.
Which leads me to my next point. Canada's health system might not be great BUT IT IS BETTER THAN NOTHING AND/OR RELYING ON INSURANCE COMPANIES TO PROTECT YOUR HEALTH.
When was the last time you made a claim to your insurance company about ANYTHING? Truth is NONE OF US LIKE TO MAKE CLAIMS TO INSURANCE COMPANIES BECAUSE WE KNOW THEY WILL:
1. nickle and dime the items we are claiming for
2. stall in processing payment
2. raise our rates when all is said and done
How would you like to have to take these into consideration at a time when YOUR CHILD NEEDS TO GO TO THE HOSPITAL?
Well this is what it is like for most Americans on a daily basis. For 30 million of them without health insurance, they have to think about going to the hospital or the doctor or the dentist the same way you and I have to think about whether we are going to buy a new CD or pair of jeans... CAN I AFFORD THIS RIGHT NOW?
Hard to think of it that way when you are in an AMBULANCE BLEEDING TO DEATH FROM A CAR ACCIDENT!!!
READ THE BOOK "CRITICAL CONDITION" that I mentioned in a prior post. IT IS AN ABSOLUTE MUST READ FOR ANYONE WHO THINKS THAT PRIVATIZATION IS THE WAY FOR US TO GO. In Canada we complain about how much tax we pay but the truth is, in my experience the income tax level was pretty much the same between the two countries, but in the U.S. I had to pay $135 PER PAYCHEQUE for family health insurance converage. For most Americans, their health insurance costs are $10,000 per year on average. A friend of mine was off work for one summer and in order to keep her family's health insurance in place until September, she had to pay $500 per month. This was an insurance plan through the employer which the employer was not contributing to for this period. This rate is actually cheap compared to if an American has to purchase insurance on their own (and not with the purchasing power of their employer).
I have must more to say about de-regulation in America and its effects on the economy as well. More next time!
