01 November 2009
Bottoms Up! Revisited
[Please note: This is a revision of an earlier posting in November 2009 due to comments I received from one of my cousins with years of family farm experience. Thanks, Mike.]
It is time for some solutions, practical ones that can help the majority of Americans now. First, we need a tax deduction for interest and fees charged by the banks for our credit purchases. Second, we need small business enterprise regions supporting the restoration of local merchants and services to boost local employment. Third, we need to create much smaller, fully funded, family farms to produce the food we eat locally, not as determined by an international agricultural conglomerate.
It is time for some solutions, practical ones that can help the majority of Americans now. First, we need a tax deduction for interest and fees charged by the banks for our credit purchases. Second, we need small business enterprise regions supporting the restoration of local merchants and services to boost local employment. Third, we need to create much smaller, fully funded, family farms to produce the food we eat locally, not as determined by an international agricultural conglomerate.
How do we do it?
- A Tax Cut. As a temporary boost to taxpayers' net income, Congress should approve an additional tax deduction on their tax returns, beginning with 2009 IRS rules, for 45 percent of money spent on credit card interest rates and fees. For me, that would be the minimum level for deduction. This approach would allow consumers to manage their retail debts within the stagnant income levels most have. Further, it would lessen the depletion of personal savings just to pay bills and income taxes. The loss in tax revenues should be funded by unallocated Stimulus Funds or from recovered TARP loans. Such a deduction would benefit the largest number of taxpayers this year. Congress might want to have a defined period for this deduction, but in the meantime there will be help for those not seeing any benefit from the trickle down approach of the Wall Street bailout.
- Small business enterprise regions, rather than zones. In the just recently passed legislation for small business administration, there was no requirement for applicants to provide business plans for assessment by the Administrator. Perhaps individual Administrators would require such documentation, but it should be a universal requirement following FASB accounting principles. The business plan should include all years for which federal funds are borrowed and repaid. Thus, a one-year business proposal will not suffice if the purpose is to rebuild the small business portion of our economy. There also were no provisions for standardized audits of borrowers under this plan. The GAO lacks the resources, just as do most federal audit agencies. Each region should have enough independent, financial and operations auditors to periodically assess the user of borrowed federal funds for the Administrators. Optimal use of SCORE volunteer consultants could help many small businesses to succeed.
- Rebuild the family farm infrastructure for domestic food needs. With the implementation of corporate agricultural combinations and NAFTA, the small family farmer industry has been decimated. Using Stimulus Funds, regional Administrators should establish requirements for lending federal funds to small farm applicants. As with the small business loans, each applicant should have to provide business plan covering the years that include federal funds. For the purpose of this federal action, a small farm cannot exceed two sections in size and with no restrictions on the number of farmers included in that limit. [Note: 1 section = 1 sq. mile = 640 acres] In the US, a township measures 36 sections. The intent for these small farms would be to provide local produce, meat and produce for local retail grocers, especially near major urban centers. The corporate agriculture companies can focus on exports and packaging. The funding process would extend for a year: upon receipt of an eligible application and business plan, a Regional Administrator would grant the applicant the prospective year's capital and operating expenses and family support income to establish a sustainable farm business. In Year Two, the Regional Administrator would evaluate the grantee's family farm business and offer recommendations for improvements or for additional grant funds if the initial grant could not succeed due to natural disasters, including storm damage, floods, infection of crops. If the recipient of a full grant for establishing and maintaining a family farm business fails, then the Regional Director will oversee the sale of grantee assets to another applicant.
Sherfdog
Opinions, Communicating, Television, Internet and Biases
The public can't manage the details.
In the past twenty years, we have seen the crippling of print newspapers and the emergence of news as entertainment for the television industry and "piece" news on the internet. A large factor, it seems, in the success of cable and network news programs is the ideological slant of the hosts. And, it is becoming more a matter of ideological bias that attracts viewers who tend to share the bias. The same goes for the internet blogs and topical sites. "Balanced reporting" has fallen out of favor with the public. Bias is how we feel and act, especially toward other, contrary opinions and those who spin them.
CNN began reporting 24 hours news of the country and the world during the investigation and prosecution of Richard Nixon for impeachment. The content of CNN focused on giving the viewer the background information for what was being reported by its newscasters. Ted Koppel did the same thing at ABC.
After the resignation of President Nixon, the media changed its focus on fueling the public's desire to get out of Viet Nam and to the Yom Kippur War and its effects on (our emotional and military ally) Israeli and Arab armed forces and control over Syrian, Lebanese, Jordanian/Occupied Palestian, and Egyptian lands. The ending of the Viet Nam War was presented to the American people as a fait accompli; no direct vote on this in Congress. President Carter negotiated a status quo cease fire in the Middle East and Congress went along with its written terms. Despite recurring conflict and attempts for negotiating a cease fire, the domestic and international politics among our elected representatives in Congress remain as volatile and disruptive as they were in 1974.
In the meantime, the colleges, universities and private corporations were creating the internet as a group or individual means of communication. Its conceptual ancestor was the teletype communications in industry. An airline's home dispatch control could communicate directly with its terminals all over the world. In the petroleum industry, teletype informed regional offices domestically and overseas with terse statements of policy changes, price changes and changes in pipeline, receiving terminals and ship traffic. The communication system developed among academic scientists became something more. DARPA and AARPA networks morphed into the internet.
As an academic system, all data were acceptable for transmission and sharing. E-mails became a major competitor to written notes. One reason was that the sender knew that the addressee would receive it quickly. (Today's "social media" Facebook and Twitter essentially broadcast in real time from smart phones, tablets, and computers.)
Communication via internet was not subject to a hierarchical management structure. In academia, a democracy among users was sacrosanct for the transmission of scientific information. In business, however, not all messages are equal. During the decades of the '80s, '90s, and '00s, where employees worked via computer became less important, but controlling the time employees spent doing their jobs on the computer, versus video games, gambling, eBay, or other personal interests, became a major management issue. Security of data forced controls on the access to or use of different types of data. Industrial security for using information technology regarding trademarks, business plans, R&D activities had to be established for corporate uses. The military's internet security, while not as sophisticated as industry's, had the need for its classification of written, visual and spoken information.
Educators, parents and ideologues have not been very effective in keeping some internet data, videos or essays inaccessible to children or procrastinating students, who can plagiarize their homework assignments from articles on the internet. No longer must a teacher or professor put a book on restricted loan shelves at the library because only one copy of the reference exists. Over the three decades, the pace of everyday life increased, employees are replaced by machines so productivity numbers sore, and quick communication of notes--not unlike a teletype message--became immediately known to the market..
A cultural change occurred, too. If you do not like a TV program, all you have to do is change the channel. In many ways that people now live or work seem to reflect an inability to remain focused over time. If the situation does not grab you emotionally or becomes boring, today's reasonable action is to "change the channel." In real life, however, one cannot "change the channel" to deal with ongoing personal problems or to isolate oneself from community and national issues such as the devastation caused by an earthquake, a hurricane or an oil spill. The longer a problem remains a topic for newspapers and broadcasters, the more impatient the general public becomes. Were the situation a television series or continuing program, such impatience would not occur because it would be within our own control to "change the channel" or not.
Disappointment with the pace at which our state and federal governments function, as compared to the speed and competitiveness among professional's and experts' daily lives, can be demonstrated by longitudinal records of popularity poles. Now, television viewers seem to want only headlines and brief interviews to find out what is going on in their state and federal government visibility during the deliberative, iterative, bargain-making process that is normal in politics. [We just could not observe it before television, so any item important or not can become fodder for broadcast news.]
There are few broadcasts created from investigative journalists that provide greater depth and contrary opinions on a given topic. Those that are broadcasting are exclusively on cable networks that normally require a viewer to subscribe for an additional monthly fee. Those cable networks that provide premium entertainment programming, such as HBO and Showtime, rarely offer commentary on subjects pursued by investigative reporters. With few exceptions, the broadcasters on cable with the most grist, the more raw news, often appear amateurish because they cannot afford slick attributes of the major cable-based news organizations such as CNN, HLN, Fox News, and the CNBC, MSNBC organizations funded by NBC or other commercial broadcasters.
The viewing public does not have, may not want to or cannot take the time to watch a program that provides additional details that investigative reporters used to provide in our newspapers.
The results of this reformation of communications in our culture are headline news about national items, personal interest in tragedy, and 15 second interviews with a politician, an expert or an empathetic observer. The elements of television news today depend on the viewers' opinion on the host's appearance, understandable manner and ideological compatibility. Blogs depend 1) on the public's awareness that they exist, 2) on the perceived expertise of information providers and 3) on the political, religious or ideological bias through which the writer presents a commentary.
Such is the knowledge base of the voters electing people to Congress, to the Presidency and to State offices. If action does not happen according to our personal time table or if changes are inadequate or contrary to our views, we want to "change the channel." On November 2, 2010, the voters "changed the channel" under the Republican theme of removing incumbents, i.e., Democratic Party incumbents. The result has been, in my view, one third of the House of Representatives are pigheaded, poorly prepared, ideologues who cannot understand the role of a member of Congress in federal matters and are, instead, focused on local, narrow-minded theories lacking the flexibility of using compromise and mutuality when creating legislation. The only way to correct this situation is to throw those bums out of office.
WHY do we need this? In the first instance, banks and other credit card issuers have had a field day since their hedge and derivative investments crashed along with Wall Street. When Congress voted to bail out the financial institutions, very little attention was paid to the people indebted to the banks for mortgages and revolving credit debt. We as individuals do not borrow and invest in Goldman Sachs or Morgan Stanley. We use VISA and MasterCard, Discover, and American Express for our credit needs and we invest in CDs, mutual funds, property and savings accounts. For the vast majority of us, our mutual funds have been scuttled by the investment strategies of the financial services companies and insurance companies to whom we entrusted our retirement savings. These mutual funds evaporated when Wall Street's game of cards fell in 2007-8. No one has bailed us out for the money we invested in mutual funds. No one has restored our capital savings that we have put away for our retirements, our college costs for our children or for catastrophic illness.
Even the government entitlement programs, such as veterans benefits, Medicaid, and food stamps have been unable to make a dent in the loss of tens of millions of Americans who never intended to seek welfare from the government in their lives. Certainly, as people become poor enough to qualify for temporary aid, it is there. Unfortunately, the need is for temporary assistance, not permanent dependence on these services funded by our tax dollars. The way many small and large businesses have been able to show on their balance sheets that they are viable concerns is not that their value has maintained or improved, but that their productivity has improved. How does a company improve its productivity? They lay people off. They don't fill jobs. They send their production operations to countries with much lower labor costs and use quality control measures to maintain their products' sellability. Why did they not use these controls in their American plants? "It costs too much" has been the traditional retort from marketing management to such suggestions. The lack of quality control is one reason that foreign competitors have been able to take over the auto industry and small appliance industries in our country. Quality controls overseas enabled their companies to produce superior products to our economy for less cost because operational mandates throughout their companies included close attention to detail and quality contributions were recognized in their economies.
American companies, by contrast, relied more on advertising, patriotism, and poor market planning about future customer product designs. Quality became a function of appearance rather than substance.
The meager credit card legislation passed by Congress, to become effective next year! and not now, did not constrain the credit issuers from increasing their interest charges and fees. The result has been a two-fold increase in those fees, broadly speaking, plus the banks have eliminated the available credit amounts previously given with ease to their customers. Mortgage lending requirements remained reliant on comparable sales of similar homes, with no changes in appraisal standards, while unemployment drove the number of short sales, foreclosures and bankruptcies to levels triple their normal levels. Without mortgage revenues remaining stable or a reliable source of operating cash, the housing market stopped for lack of funds.
The federal government has encouraged banks to reopen its mortgage lending business, but the maëlstrøm of a self-devouring housing market has not happened. One foreclosure or short sale for a comparable property in the neighborhood will drive down the asking prices for existing homes that come on the market. Rather than consider a foreclosure or a short sale as an anomaly, real estate agents decided that any house in that neighborhood would not sell at its previous market value. The pricing of a house on the market has become artificially depressed because comparable properties' value became influenced by one or two owners' inability to pay their bills. Appraisers for the mortgage lenders point to the recent sale from a foreclosure with their conclusion that the other values in the neighborhood are over-valued and could only be funded by a mortgagee to the extent that the foreclosed upon property was. Is that an appropriate way to appraise a property, based on an anomaly caused by other mortgagors' ability to pay a mortgage payment? The banks said "yes", it would be too risky to give a mortgage in an amount dictated by an inflated market price. Even if the same bank and the same appraiser had established a property value a year earlier, the fact that someone could not pay their mortgage and had to go bankrupt or the bank had foreclosed on a comparable home, this year's qualification standards were raised as if the entire neighborhood were going to stop paying their mortgages.
A major aspect of the banks' timidity in the mortgage lending market is the bank's selling of the mortgage as a commodity on an exchange to other players in the financial markets. Since the house of cards analogy for the reselling of mortgages is based on leveraging trust, a bank's ability to participate in these alternative financial markets can come into question with a subsequent devaluing of the banks' ability to fund their debts in the mortgage qua equity markets.
In the meantime, the individual homeowner finds that variable interest rates increase on their mortgages and their credit card debt has become too expensive to pay when its fees and interest rates are doubled or tripled. The elements were there analogous to those that cause a maëlstrøm in the seas, that create a churning sink hole like a tornado pulling the surface sea down to the bottom.
We watch and listen to national media continuously hammering at politicians and bureaucrats about the failure to fix this or that, or about the amount of money involved, with an increasing sense of impotence or ability to cope with any of the financial obligations or income affecting our way of life. The media described us as such, so commentators feed on an audience they want to convince and to worry about it as they do. Coupled with a hyperbolic reporting on domestic economics, the national media reports and critiques the War in Afghanistan and, lest we forget, our 130,000 troops in Iraq, with impatience. Those of us who voted in the 2008 election wanted to believe that our situation could improve. A majority of Democrats in both Houses of Congress and a new President were elected on that belief. The media is enabling us to forget what it had been like over the past seven years of the Bush/Cheney Administration and a Republican controlled Congress up to January 2006.
National Media commentators forgot that the Congress and new President had been in office for nine (9) months when its criticisms began. The Economist calls Afghanistan "Obama's War", CNN commentators and hosts speak with apocalyptic urgency. In those nine months, the national media became impatient with a perceived lack of commitment by the Obama Administration to correct the perversions of our Constitution and juris prudence put into place by George W. Bush and Dick Cheney over the prior seven years.
So, let's focus on the majority of citizens for a change. We need to rebuild our nation's economic strength from the bottom up. It will happen if we start now.
