Chevy Volt

The Chevy Volt is a game changer. If it can truly deliver on its promise of 230 mpg in the city and zero gas usage until 40 miles, it will change the world.

Obviously competitors will get to work on better and more cost effective cars now but no matter how you slice it, this will affect anything oil related.

Domestically, oil rich states will slowly lose that revenue stream and we may see some political fights as to who's fault it was that any one state was too tied to any one commodity.

Internationally, wow, this is huge. What will become of the nations that are largely wealthy because of black gold, oil? What will become of Russia, Norway and Canada in ten, twenty or thirty years? What about the political ramifications in the middle east and arab states now that the world is slowly weaning itself from dinosaur droppings?

Tough to predict but I am glad to be alive to see it unfold.


Citigroup Must Be Broken Up

$3 Citigroup Still Needs to Be Broken Up
by Joe Weisenthal

From The Business Insider, June 23, 2009:
It's amazing. For all the support the government has provided Citigroup, its shares still languish at $3.

On the bright side, that's about 3x its levels back in March. But it's still off about 85% from its year highs, which itself is well off the stock's all-time highs.

The bottom line is that investors don't think there's any future here. And yet the bank is still a huge source of systemic risk, and the government would again be required to bail it out if it got itself into trouble (or if the company burns through the current bailout).

Unfortunately, CEO Viram Pandit is not interested in slimming down. He's talking about growing internationally, beating more on emerging markets. Lovely. Oh, and he can look across the pond, where the CEO of almost-fully-nationalized RBS just got a 9.6 million GBP bonus. Yeah, nationalized banks can give huge bonuses too.

Basically, there's nothing right with this bank. It's got the wrong CEO, the wrong strategy, and it's got no appeal to investors, while still carrying monster risk for us the taxpayer. It's time to end this one.


Health Care

Health Care is the topic du jour so lets talk. Here is the scenario, you have a small software company based in Buffalo, NY. They are doing pretty well but certainly aren't big enough to get any kind of big company break from the insurance companies so they foot the bill. Where does that money come from? It comes from profits or it is passed on to customers. But wait. They cannot pass the cost on to customers because 15 miles away, there is a another small software company based in Ontario, Canada. That is the problem, so now they aren't competitive or they charge less meaning less profits and less tax revenue for the USA. Do you get it now?

Bottom line is that this scenario plays out everyday everywhere, that second software company could be in Bangalore or London, same results.

Its not preferable but in an ironic kinda way, the 'free' market of health care around the world is forcing us to do the same. We must have a government option for healthcare.


Great article by David Leonhardt.

June 10, 2009 Economic SceneAmerica’s Sea of Red Ink Was Years in the Making
There are two basic truths about the enormous deficits that the federal government will run in the coming years. The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.The New York Times analyzed Congressional Budget Office reports going back almost a decade, with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II. This debt will constrain the country’s choices for years and could end up doing serious economic damage if foreign lenders become unwilling to finance it.Mr. Obama — responding to recent signs of skittishness among those lenders — met with 40 members of Congress at the White House on Tuesday and called for the re-enactment of pay-as-you-go rules, requiring Congress to pay for any new programs it passes. The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama. The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt. Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas. If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.How can that be? Some of his proposals, like a plan to put a price on carbon emissions, don’t cost the government any money. Others would be partly offset by proposed tax increases on the affluent and spending cuts. Congressional and White House aides agree that no large new programs, like an expansion of health insurance, are likely to pass unless they are paid for.Alan Auerbach, an economist at the University of California, Berkeley, and an author of a widely cited study on the dangers of the current deficits, describes the situation like so: “Bush behaved incredibly irresponsibly for eight years. On the one hand, it might seem unfair for people to blame Obama for not fixing it. On the other hand, he’s not fixing it.”“And,” he added, “not fixing it is, in a sense, making it worse.”When challenged about the deficit, Mr. Obama and his advisers generally start talking about health care. “There is no way you can put the nation on a sound fiscal course without wringing inefficiencies out of health care,” Peter Orszag, the White House budget director, told me. Outside economists agree. The Medicare budget really is the linchpin of deficit reduction. But there are two problems with leaving the discussion there.First, even if a health overhaul does pass, it may not include the tough measures needed to bring down spending. Ultimately, the only way to do so is to take money from doctors, drug makers and insurers, and it isn’t clear whether Mr. Obama and Congress have the stomach for that fight. So far, they have focused on ideas like preventive care that would do little to cut costs. Second, even serious health care reform won’t be enough. Obama advisers acknowledge as much. They say that changes to the system would probably have a big effect on health spending starting in five or 10 years. The national debt, however, will grow dangerously large much sooner.Mr. Orszag says the president is committed to a deficit equal to no more than 3 percent of gross domestic product within five to 10 years. The Congressional Budget Office projects a deficit of at least 4 percent for most of the next decade. Even that may turn out to be optimistic, since the government usually ends up spending more than it says it will. So Mr. Obama isn’t on course to meet his target.But Congressional Republicans aren’t, either. Judd Gregg recently held up a chart on the Senate floor showing that Mr. Obama would increase the deficit — but failed to mention that much of the increase stemmed from extending Bush policies. In fact, unlike Mr. Obama, Republicans favor extending all the Bush tax cuts, which will send the deficit higher.Republican leaders in the House, meanwhile, announced a plan last week to cut spending by $75 billion a year. But they made specific suggestions adding up to meager $5 billion. The remaining $70 billion was left vague. “The G.O.P. is not serious about cutting down spending,” the conservative Cato Institute concluded. What, then, will happen? “Things will get worse gradually,” Mr. Auerbach predicts, “unless they get worse quickly.” Either a solution will be put off, or foreign lenders, spooked by the rising debt, will send interest rates higher and create a crisis.The solution, though, is no mystery. It will involve some combination of tax increases and spending cuts. And it won’t be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous.That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade.


GM Bankruptcy

Ok, now GM is filing bankruptcy or will very soon. Exactly what I and others thought months ago and certainly as my May 1 post said.

Bankruptcy will ultimately help the car companies focus on making better cars.

I do think that the government should 'help' the three car companies combine into two or even one so that the US might be able to compete with the other nations car companies on a fair playing field which it is not now.

And yes, the govt has the right and obligation to dictate mileage, just as it has the right and obligation to dictate safety minimums.

My 1986 Honda Civic got 30 mpg, I'll bet that same car today gets about the same and the US makers are far worse. Are you kidding me? 23 years and no improvement in mpg, surely the technology is there, just no one pushing and prodding the companies to do so. That is what the govt is for!


Great Article on Exec Pay

Pay Dirt: The Executive Pay System Is Broken
by Alistair Barr and Matt Andrejczak
Tuesday, May 12, 2009 provided by MarketWatch

Financial crisis raises questions: How did we get here and can we fix it?
Banks had failed, the economy had slumped and the country was waging a costly war abroad. Yet executives continued paying themselves princely sums, forcing the president of the United States to speak out:
"No American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year," he said, urging Congress to help him "keep personal and corporate profits at a reasonable rate, the word 'reasonable' being defined at a low level."
This wasn't Barack Obama. It was Franklin Delano Roosevelt in 1942, only a few months after the attack on Pearl Harbor.
Compensation -- especially for the highest paid -- has been controversial for almost a century.
But after a year in which Wall Street firms paid $18.4 billion in bonuses while accepting more than $50 billion in government bailouts, many experts say the system may have finally blown itself apart.
"The system is broken," said Warren Batts, former chief executive of Tupperware Corp., Premark International and Dart Industries who used to sit on the boards of Allstate Corp (ALL), Sears, Roebuck and Co. and Sprint (S). "It needs some guiding principles."
Without such guideposts, executive pay has run amok. CEOs made 344 times more the average worker in 2007, according to a survey from United for a Fair Economy, which targets economic inequality. That's up from less than 150-to-one in 1992.
In 1988, the value of "mega-grants" of equity for CEOs averaged $1.47 million. By 2003, the average equity grant was worth $3.3 million. But the mega-grants of the late 1980s were one-off awards. Fifteen years later, CEOs were getting 2.2 times as much every year, according to consulting firm The Delves Group.
Perks, such as country club memberships, corporate jets, palatial offices and rich retirement packages, have multiplied.
Despite the system's goal of encouraging stronger performance, some companies, such as Washington Mutual (WAMUQ), move the goalposts when targets may be missed to make sure their CEOs still get hefty rewards.
Crisis Culprit
In the wake of the failure of WaMu and Lehman Brothers (LEHCQ), some say the system may have spun so far out of control that it pushes executives to adopt strategies that damage the companies they run, rather than improve them.
Berkshire Hathaway (BRK-A) Chairman and Chief Executive Warren Buffett said this month that the main cause of the current financial crisis was excessive compensation, which encouraged executives at financial institutions to take on too much leverage.
"The crisis exposed flaws in exec compensation, showing the system encouraged risk-taking without an appreciation of the ramifications, which in some cases were entity threatening," said Bob McCormick, chief policy officer at corporate governance advisory firm Glass Lewis. "In good times, executives get paid extremely well and in bad times they get paid just very well."
Buffett blamed large institutional shareholders for not speaking out enough against lavish CEO pay. He also fingered directors for rubber-stamping compensation plans and consultants for helping companies exceed the excesses of rivals, year after year.
Image Hurt
And yet some of these players already know there are problems.
An April 2008 survey of 162 company directors and 72 institutional investment firms by consulting firm Watson Wyatt (WW) found that three-quarters of respondents thought the current system had hurt the image of American corporations.
Eight-six percent of investors said the system had led to excessive executive pay and 61% of directors agreed.
Less than two-thirds of the directors said the system improved corporate performance, while less than 40% of the investors thought that.
So if directors, investors and consultants know things need to change, why haven't they?
Executive compensation expert Jesse Brill says the main problem is that directors find it very difficult to tell CEOs they're paid too much -- even if they believe it.
CEOs often pick board members and some spend more time picking members of the compensation committee than other directors, Buffett said.
"The comp committee doesn't want to offend the CEO," Brill explained. "They don't want to say 'we love everything you're doing, but in hindsight we did stuff with your comp that needs to be changed.'"
"Directors I've spoken with are very apprehensive about having these types of talks with CEOs," he added. "It's very awkward."
Outside consulting firms survey what rival companies pay and this information is used to make sure CEOs get more than average. When this is repeated over and over, executive compensation rises inexorably.
These consulting firms are usually hired by the company, not the compensation committee. That often means they try to keep the CEO happy so that they don't lose a valuable client, Brill said.
Then there's the small army of internal and external lawyers telling CEOs that their pay packages are legal, Brill explained.
"All these different advisers cannot afford to say things directly in terms of what needs to be changed because they're saying this to the person paying their paychecks," Brill said. "That's very powerful."
Doing the Right Thing
What upsets Brill most is that the system preys on the vulnerabilities of human nature. Most CEOs aren't greedy and care a lot about the health of the companies they run, he explained.
"But when consultants and lawyers are telling them they're fine and in line with competitors, and the board is telling them 'we want you to take this money,' it makes it very hard for CEOs to say they don't want the money," Brill added.
Still, some CEOs are turning down parts of their big pay packages.
Best Buy (BBY) Chief Executive Brad Anderson asked the board of the electronics retailer not to give him any long-term incentive award in 2008. In recent years, he's also requested that his stock options go into a pool for other employees.
At Costco Wholesale (COST), the annual salary of Chief Executive James Sinegal has been set at $350,000 since 1999 and cash bonuses have been generally capped at $200,000 since 1997. Sinegal also tries to link his bonus to those of other employees who are eligible for bonuses at the big-box retailer.
Walt Disney Co. (DIS) Chief Executive Robert Iger turned down an extra $2.4 million that he was supposed to get because of the entertainment company's fiscal 2008 performance. He asked the compensation committee not to give him the extra cash, although he still ended up with a $13.9 million bonus.
The fact that some CEOs have to turn away compensation that's due to them in their contracts shows even more how the system is broken.
How We Got Here
It wasn't always like this.
From the Great Depression until the late 1980s, CEO pay levels stayed fairly constant. Adjusted for inflation, a CEO in 1988 earned as much as one did in 1934, according to research published in 1990 by Michael Jensen and Kevin Murphy.
The two compensation experts re-visited the issue in 2004 in the wake of the Enron scandal and concluded that things had changed "dramatically" for the worse.
"We are confident that the causes are systemic," they wrote. Without "the creation of a new regime in compensation practice" more companies could get into trouble because of skewed incentives, they added.
So why has CEO pay surged so dramatically since the late 1980s? Many experts blame the following: Golden parachutes, annual stock-option grants, peer-group comparison surveys and reaction to new government regulations.
Golden parachutes first unfurled when CEOs faced high-stakes showdowns with corporate raiders during the 1980s leveraged buyout boom. Average parachute-values weren't that outrageous at the time. But a provision in the 1984 Deficit Reduction Act put a special excise tax on parachute payments exceeding three times pay.
Boards took notice. They saw the new law as justification for golden parachutes and raised them to the maximum level. The agreements flourished to the point where even CEOs fired for incompetence were paid.
By 2000, 70% of the largest U.S. public companies had change-in-control agreements, up from 41% in 1988, and 57% in 1996, according to Jensen and Murphy.
Stock Options
Stock options thrived throughout the 1990s.
While boards saw options as a reasonable incentive for the CEO to grow the stock price and become a bigger owner of the business, options also fell outside an IRS rule from the 1994 Omnibus Reconciliation Act. The law said corporations couldn't deduct non-performance pay of over $1 million from their taxes reported to the IRS.
Any company that didn't pay its CEO $1 million a year in base salary quickly raised it to this level. The law also made options a bigger part of compensation as companies looked for ways to pay executives that complied with the tax rule.
By 2002, the dot-com bubble had burst and accounting scandals at Enron and WorldCom tarred stock options. Regulators told corporations they had to expense options. This made them more costly to carry on the books, eating into reported profits.
Restricted Stock
Enter restricted stock: Those grants grew in number to CEOs. Restricted stock usually vests over a three-year period. However, unlike stock options, restricted shares still have value even if a company's stock price falls.
"It further weakened the link between pay and performance," said executive pay consultant Jack Donnell-McConnell.
CEO pay surveys have ratcheted up total compensation and other goodies, according to corporate governance experts and those who have sat in boardrooms.
"CEO perks at one company are quickly copied elsewhere. 'All the other kids have one' may seem a thought too juvenile to use as a rationale in the boardroom. But consultants employ precisely this argument," Buffett wrote in Berkshire's 2006 annual report.
The combination of consultant surveys and huge stock-option grants was a particularly potent fuel for the executive compensation fire.
So-called mega-grants that became popular during the late 1980s were one-off awards. However, consulting firms began including them in their annual surveys, which formed the basis for companies setting up new compensation plans. In this way, large option grants became an annual affair, significantly boosting overall CEO pay.
So How Does It Get Fixed?
The current financial crisis has been so severe and has exposed so many flaws in the executive compensation system, that many experts in the field are optimistic real changes may take hold.
"It's not completely broken but its shaky foundations have been exposed more than ever before," Glass Lewis's McCormick said. "Shareholders not scared to shake them further."
One important shift McCormick has sensed in recent months is that fewer investors are willing to give directors the benefit of the doubt when judging how well they've set executive compensation.
Buffett said excessive CEO pay could be limited if only a few of the largest institutional investors speak out publicly against egregious cases and "demand a fresh look at the whole system."
Brill suggests three changes that he says would help restore public trust in the system by expunging several of the most offensive aspects of CEO compensation.
Eliminate CEO Severance
He recommends that companies eliminate severance for CEOs. When a new CEO is brought in -- and has given up a lot of future compensation from their previous employer -- a severance package lasting roughly three years is acceptable. However, such agreements should "sunset" after that.
"Once the CEO has accumulated a sufficient nest egg, there's no need for a severance pension plan or change of control payouts," Brill explained. "This type of post-retirement provision is a huge issue that needs to be addressed."
No Annual Equity Awards
Stock options and restricted stock should not be granted annually, Brill said. Such awards should be set up for CEOs once and left, like "a pot of gold at the end," he explained.
Currently, many companies give large stock option grants to CEOs every year, even though the executives may already have huge awards from previous years.
"The CEO is likely to be already so motivated by stock price performance that new grants add no incremental motivational value. They only add cost," long-time compensation consultant Fred Cook said during a 2005 speech to corporate directors.
Hold Through Retirement
CEOs have already been given so much equity -- through stock options and restricted stock -- that it may be difficult to limit excessive pay without trying to get executives to give up some of their awards.
Brill said it's probably impossible to persuade CEOs to do this. Instead, companies should require that executives hold all the equity they've received for two years after they retire, he explained.
This will encourage CEOs to focus on longer-term strategies to boost the performance of the companies they run, rather than potentially riskier short-term tactics, Brill added.
Even some major compensation consultants agree that changes are needed.
Ira Kay, director of Watson Wyatt's compensation practice, said companies need to be extremely flexible about executive severance packages, which can sometimes amount to "pay for failure."
"Irritants" such as supplemental CEO pensions and perks should also be reconsidered, he added.
However, Kay stressed that the "core" of the current executive compensation system isn't broken and needs to be protected.
"Our research indicates that the core stock and cash incentives are working. There is in fact pay for performance," he said. "If a company thinks its main incentives are working, they need to defend them against all critics."
'Out on a Limb'
Brill says several companies and boards have told him that they're willing to make drastic changes in the way they pay CEOs and other executives. However, no one wants to be the first, he added.
"Companies are loath to go out on a limb and be too different from their competitors," said Donnell-McConnell.
Such reticence prevents Brill from getting too carried away about the future.
"I am hopeful," he said. "CEOs and board members are good people who care very much about their legacies and doing the right thing. If one can truly reach them I am optimistic that things can change."
"But right now things have not changed much," he added.


Chrysler Bankruptcy

Chrysler is bankrupt! No kidding. Finally.

This is the best thing to happen to the autos in a long time and will start the road to recovery.

Now that Chrysler will be leaner and meaner, it should force GM and Ford to do the same, cut all that legacy debt and obligations and start over.

This will slowly but eventually lead to the autos becoming more competitive globally and who knows, the taxpayers may come out ahead.


90% tax on execs a good thing

I never thought I'd say that a 90% tax was a good thing, until now. Everyone has heard that while AIG was propped up by billions of taxpayers money, that the execs were actually meeting to decide who amongst them would receive bonuses and how much. Wow. Absolutely stunning and congress is also to blame for not putting something about bonuses in the bailout bill.

But I think some good came out of congress's incompetence and AIG's greed, a 90% tax.

We've heard for years that you can't tax this company and not that one because the execs will follow the path of more money or in this case less taxation but with a 90% tax across the board (for any company taking TARP money), they will have few places to go. Heck maybe, they will actually decide to build these companies for the long term rather than a short term pop just to cash in some stock options!


Social Security

I have resisted blogging about Madoff. Its about time that crook started doing time. Dont get me started on his wife, how in the world does she believe that she is entitled to $70 million dollars? She was his assistant, a bookeeper. Bottom line is that that money is ill-gotten gains and ought to be taken away, period.

But thats not why I am blogging. With the market off 50% and Madoff and Stanford proving that anyone can indeed turn out to be a scoundrel, we are very fortunate that the Social Security trust fund was not allowed to be put into the stock market!

Can you imagine what our economic situation would be like, how decimated the dollar would be? Social Security is underfunded as it is, imagine, it would 50% less today. Imagine how politized every appointment to the fed and treasury would become (they are already a little).

Bottom line, there is absolutely no reason to put our Social Security in the stock market which is proving to be more like a casino everyday. We will make the necessary adjustments to taxes and benefits and get by and the baby boomer bubble (pig in the snake) will exhaust itself in time and we will be back to more of a normal distribution of workers to retirees which will take care of the problem naturally.


Two Party System

We face some pretty big challenges. Have you heard anyone say we should vote our leaders out of office? Of course you have BUT in a two party system, that would likely mean voting for the party you dont care for - and no one is about to do that.

Think about it, I live in Texas and I hear it all the time, 'throw the bums out' but here that would mean voting democratic for the most part and thats as likely as people in Massachusetts voting republican, get it!

The point is that the two party system really gives you little real choice and that has to change. We need to allow a third or a fourth party to grow and with the amount of money needed to mount any kind of campaign, even at a local level, its going to be tough.

I suggest we do away with all campaign finance, period, allow all parties equal time on local and national television, say 5 minutes at the end of newscasts, this would allow for the possibility for real debate and a third party giving voters a real chance for change.



Is it a shock to anyone that GM needs more money? This is one of many outrages as of late but this unlike alot of other financial situations was/is easy to see.

I am on record saying that back in 2008 that the government should not be bailing out the carmakers. Instead, they should have assisted in an orderly bankruptcy, this would have allowed them to wipeout billions of crushing debt but the unions that run Detroit and their politicians would not let it happen. It was also an election year and republicans were hoping for the blue collar vote.

Instead we gave them billions (GM got 13 billion) and now they are back for more (GM wants 30 billion), continuing with a failed business model at our expense. Incidentally, GM's market capitalization is just over 1 billion. Now the democrats, house, senate and President Obama could show everyone that they are indeed willing to look at the BIG picture and do something very politically unpopular but I am not holding my breath.

The only problem with bankruptcy is that we the taxpayers will be on the hook for the pension for every past and present employee through the Pension Guarantee Trust Fund and what about the employees healthcare bills? Argh!!!

Looks like we are screwed either way.


Spend Spend Spend

I know I'm not the only one who thinks that the government might be spending a little too much money. Back in 2007, we all thought that the Bush Administrations stimulus bill was an attempt to stave off Dow 10000 and 10% unemployment, ouch. That didnt work so well. So what has the Obama Administration decided to do, spend more money.

In the end, this was just a housing bubble, no different than the tech bubble before it except one major difference, it involved many more people, the bubble was larger and thus the fall has to be larger. BTW, if you are looking for someone to blame, there is plenty to go around from all parties and ideologies, more on this on a later blog.

I totally understand that it takes money to run the government, a lot of money but this is getting out of control and is a large gamble. If it works, Obama and democrats will be able to point to the spending bill and will be in power for a long time. They will also be able to say and rightly so that its better to have a slightly smaller piece of a bigger pie. If the spending bill does not work well then republicans will be able to say and rightly so that government is not the answer and will point to market forces as the answer once again. Only time will tell!


Warren Buffett

So that all within blogging distance are clear on this point, this blog is unbiased. One day the blogs may lean left the next day they may lean right. Thats how I roll. I am one of the few I know who is truly down the middle, more on that in later blogs.

Warren Buffett (not Jimmy for those of you living under a rock for a decade or two) is one of the they most astute investors and businessmen on Earth. He has been a republican for the bulk of his life and not a rino (republican in name only) either, a Nebraska republican. In the last election Warren Buffett backed a democrat for the first time in his life!

Why do you think Warren Buffett backed now President Obama? It is likely because he saw that continuing the Bush administration policies just wasn't working. This isn't a slam on Bush, just some of the tired old policies of his party. Trickle down economics worked well for Reagan (but what wouldn't have worked after the disastrous Carter years?) and produced growth of 3.42% in the 80's. BTW, Clinton presided over growth of 3.76% in the 90's. The 00's under Bush saw just over 2% and obviously ended with a recession.

The point is that Paris Hilton can only buy so many pairs of shoes which is supposed to trickle down ultimately to the guy who parks her car at the mall. This works for a while, maybe a decade or two until it doesn't, like any cycle so here we are.

Median household income per the US census was $50557 in 2000 and $50223 in 2007 or growth of 0% (as opposed to income growth of 8% under Reagan and 14% under Clinton).

Point is that during the 00's, we had growth of 2%, not great but still growth nonetheless, but the incomes actually went down! That is a business model that just can't work long term and didn't. That is why Warren Buffett voted democratic for the first time in his life. It was time for a change!


Welcome to my blog

Hi Everyone,
Welcome to my weblog. I hope you will enjoy reading my blogs and blogging along with me on the subject of money, finance and politics.

See you tomorrow.