Well Said...

"Affirmation without discipline is the beginning of delusion." ~ Jim Rohn

E James Rohn (1930-2009)

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California Municipal Salaries for Executives

Check out this chart of executive salaries for local, city, and county executives in California. Note too that most government workers in California receive 80% of their last year's salary as an annual pension for life upon retirement (even when retirement is early in life). Who said a career in public service meant not getting rich...

[Click to Expand]

Source: Fletcher, E (2010, July 30), Roseville City Manager's Pay Tops Among Sacramento-Area Local Officials, Sacramento Bee.

Well Said...

"There is no favorable wind for he who knows not where he is heading." ~ Seneca

Reubens' The Death of Seneca (1615)

Public Corruption in America

I just read a shocking report in the Sacramento Bee describing public salary corruption in the city of Bell, Los Angeles County, California:

Bell is one of Los Angeles County's poorest towns. Ten days ago, its residents woke up to learn that its City Council was paying its city manager, Robert Rizzo, nearly $800,000 a year, its police chief $457,000 and its assistant city manager $376,000.... These disclosures came on top of reports that four of the city's five part-time City Council members were making roughly $100,000 a year. All this in a city with a budget of about $15 million annually.... It's a disaster for taxpayers. Because California pensions are based on an employee's single-highest salary, the CalPERS system may have to pay Rizzo, 56, $600,000 annually over his lifetime.

I served my country for over 15 years on active duty in the military, but my service was never intended to defend this kind of public corruption right here on US soil. Reports like this are very discouraging for citizens trying to make their way through this challenging economy. Frankly, I am starting to wonder where the lines of corruption begin and end in America.

Robert Rizzo, former city manager, Bell, California

Source: Leavenworth, S (2010, July 25), For Whom Does the Bell Toll? All State Taxpayers, Sacramento Bee.

Managing Aggregate Economic Demand

Aggregate demand management in macroeconomics means adjusting the level of demand to try to ensure that the economy arrives at full employment equilibrium. If there is a shortfall in demand, such as in a recession (a deflationary gap), then the government will need to reflate the economy. If there is an excess of demand, such as in a boom, then the government will need to deflate the economy.

The problem with the US economy today is weak aggregate demand. When aggregate demand is weak or declining, economists generally advise that both monetary and fiscal policy-makers consider reflationary policies. Reflationary policies to boost the level of economic activity might include:

• Increasing the level of government expenditure
• Cutting taxation (either direct or indirect) to encourage spending
• Cutting interest rates to discourage saving and encourage spending
• Allowing some money supply growth

The first two policies would be considered expansionary fiscal policies, while the second two are expansionary monetary policies. The objective of all the above policies should be to increase aggregate demand and therefore the level of output. The diagram below depicts how aggregate demand results in declining prices and production output:

I maintain that the US should be engaged in monetary expansion and fiscal spending at this crucial time for the economy. The austerity hawks are arrogantly wrong in asserting that less spending will somehow restore aggregate demand and ultimately prosperity for America.

The Good Life Comes in Moments...

Lola the Yorkie-Poo enjoys the view and snoofs [click to enlarge]

Austerity Hawks Are Getting What They Asked For

The risk of inflation continues to haunt monetary policy in the US despite the fact that a bit of inflation could very well be the best medicine for the ailing economy. Keep in mind that inflation (via monetary expansion) tends to erode the value of debt and reduce the real cost of entitlements given that cost of living increases generally lag rising prices. However, the Federal Reserve would be wise to reconsider its priorities given that inflation appears to be collapsing into deflation. For now, the specter of inflation belongs on the "back burner" while the nation contends with the very real convergence of structural unemployment across the country, military commitments overseas, ecological catastrophe in the Gulf of Mexico, immigration concerns along the US-Mexican border, a rising trade deficit caused by the artificially low value of the Chinese Yuan, and the Washington policy-making failures that lead to these crises to begin with. The austerity hawks are getting what they asked for...

John R Talbott: The Real Reason Geithner Is Afraid of Elizabeth Warren

John Talbott's recent editorial expose (2010, The Real Reason Geithner Is Afraid of Elizabeth Warren) regarding his views on the underlying strategy driving current fiscal and monetary policies in the US is instructive for those seeking to better understand what is happening with the economy. Clearly, Federal Reserve chief Ben Bernanke and Treasury Secretary Tim Geithner are being less than transparent in their motives and intentions. In particular, their alleged strategy of rebuilding Wall Street at the expense of Main Street account holders is deflating America.

The times of elites like J P Morgan ruling over the US economy are behind us, and the American people are unlikely to tolerate these kinds of fiscal and monetary tactics and strategies over the long-term. We the people need better transparency from the Federal Reserve and Treasury Secretary in order to understand what is happening to our nation's economy.

Source: Talbott, J R (2010, July 18), The Real Reason Geithner is Afraid of Elizabeth Warren, Huffington Post.

More than 50 Languages

I am pleased to announce that you can now read The Vantage Point in more than 50 languages. Use the Google Translate feature found to the right to choose your language. As always, welcome to my international readers from around the world!

Main Street Depression Imploding America

At this point, I see nothing coming from Washington, Wall Street, or overseas that can avert what is now a Main Street Depression in America. The reality of persistently high unemployment, the unprecedented and expanding number of foreclosures, the rising tide of regional and local bank failures, the dearth of investment capital for small business expansion, and the devastating deflation in home prices across the nation is indisputable. The Main Street Depression of the early 21st century is imploding America at its heart...

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Depressions Past and Present

Unemployed Should Consider Emigration

Main Street USA in Economic Depression

Depressions Past and Present

My previous post entitled Unemployed Should Consider Emigration featured a photograph of today's signage warning the unemployed to keep out and move on. The similarities between the current Main Street depression and the Great Depression are striking...

Related Posts:

Unemployed Should Consider Emigration

Main Street USA in Economic Depression

Main Street USA in Economic Depression

I posit that Main Street USA is now in economic depression. My evidence thereof includes the record pace of regional and local bank failures, the current state of job losses and unemployment, the rising rate of personal bankruptcies, the record number of home foreclosures, and the deflation in home prices across the country. I weep for America...

Related Posts:

Unemployed Should Consider Emigration

Depressions Past and Present

Unemployed Should Consider Emigration

Let's face it, as far as the Federal government is concerned, jobs for Main Street is no different than jobs for Eskimoes. Our nation has been turning its back on significant segments of the population since its founding, and the newest career casualties will come from those who are seeking to make a living on Main Street instead of off Wall Street or Washington. Up to 35 million people across the US will experience personal unemployment during 2010. Yet, neither the Democrats nor Republicans have any real intentions of creating jobs directly, because both parties know they have no means of doing so.

The unemployment situation in Amercia will no doubt persist through the end of the decade and perhaps longer. Those unemployed who have exhausted their 99 weeks of unemployment checks should probably begin to evaluate emigration to other countries with their families in search of work. The irony is that as more and more unemployed leave the US, the unemployment burden will subside and prosperity for the remaining population with jobs will be accelerated. In the mean time, it's time for the unemployed to face the facts and reality that the nation cannot help them, but does nevertheless wish them the best...

Related Posts:

Depressions Past and Present

Main Street USA in Economic Depression

Financial Reform Grounded in Details

Note that the final version of the Dodd-Frank Act that is now on the President's desk contains more pages of text than all previous legislation in the history of banking reform. By comparison, the Federal Reserve Act of 1913 contained 31 pages, while the Dodd-Frank legislation contains 848 pages. See for yourself...

Federal Reserve Act (1913) - 31 pages.

Glass-Steagall Act (1933) – 37 pages.

Gramm-Leach-Bliley Act (1999) – 145 pages.

Sarbanes-Oxley Act (2002) – 66 pages.

Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) - 848 pages.

Austerity Affects Butter and Guns

Given that austerity planning has come into vogue in the US Congress, new issues are certain to emerge that will influence how austerity measures might be implemented nationally. Of course, imposing austerity upon a nation implies cuts in government spending and increases in taxes. However, if the American people are to endure deep cuts in public spending, then certain long-held budgeting assumptions may require adjustments. Said another way, if the US economy is so bad that the government must impose austerity measures upon its citizens, then the time has also come to discuss bringing our troops home and cutting the defense budget as well.

Austerity affects butter and guns…

Global Military Spending 2009 [click to enlarge]