The Burning Platform (2024)

The breakup of REM this week reminded me of an article I wrote in April 2009, at the height of the economic meltdown. I used REM lyrics in the article to help describe the fact that the government and Federal Reserve were fraudulently covering up that fact that our biggest banks were insolvent and bankrupt. Isn’t it fitting that two and a half years later our banking system is unraveling. I like to go back and test whether my reasoning was sound. Judge for yourself. Of course, if I recall correctly, the comment thread on TBP 1 turned into a 9/11 flamefest due to my opening line. What a surprise.

Hey Andy, did you hear about this one? Tell me, are you locked in the punch?
Hey Andy, are you goofing on Elvis? Hey baby, are we losing touch?
If you believed they put a man on the moon, man on the moon
If you believe there’s nothing up my sleeve, then nothing is cool

Man on the Moon – REM

The conspiracy theorists of the world believe the U.S. government faked the landing of Apollo 11 on the moon. They also believe 9/11 was an inside job, ordered by operatives within the government. The rationale of these acts was to distract the masses from the disastrous Vietnam War and the plummeting stock market, while escalating their control over the American people. I believe I have uncovered the largest conspiracy in history. The government wants you to believe that banks are recovering, housing has bottomed, stimulus works, borrowing leads to prosperity and war leads to peace. President Obama and his cronies at Treasury and the Federal Reserve are trying to mislead the public regarding the health of our banking system. If you believe their spin on these issues, I have a structurally deficient bridge in Brooklyn I’d like to sell you.

The government has something up its sleeve this time. They are perpetrating the greatest fraud in the history of the world. The conspirators are Barack Obama, Timothy Geithner and the Treasury Department, Ben Bernanke and the Federal Reserve, Sheila Bair and the FDIC, and Barney Frank and the Democratic Congress. They have colluded to commit taxpayer funds to enrich bankers that brought down the financial system, without getting Congressional approval. They have delayed foreclosures and have tried to artificially prop up the housing market. They have poured billions of stimulus pork into the states praying for some of it not to be wasted. They have confiscated billions in taxpayer funds, bestowed them on reckless banks and forced them to lend it to anyone with a pulse, again. The outrage from the public during the TARP confiscation made it crystal clear to courageous Congressmen they didn’t want to vote on something requiring fortitude and bravery again. They have outsourced their obligation to safeguard their citizens’ tax dollars to unelected bureaucrats at Treasury and the Federal Reserve. They have already sacrificed their obligation to declare war to the Presidential branch. What is the point of having a Congress?

Nothing Up Their Sleeve

Hey Andy, did you hear about this one? Tell me, are you locked in the punch?
Hey Andy, are you goofing on Elvis? Hey baby, are we losing touch?
If you believed they put a man on the moon, man on the moon
If you believe there’s nothing up my sleeve, then nothing is cool

Man on the Moon – REM

Barack Obama and his henchmen in Treasury and the Federal Reserve have chosen to play for time, pretend the banking system is solvent, and hope that the average American doesn’t care. As long as the ATM still spits out $20 bills, everything is OK. The International Monetary Fund has estimated total credit write-downs of $4.1 trillion, with $2.7 trillion in U.S. institutions. McKinsey has concluded that there are still $2 trillion of toxic assets sitting on the books of U.S. banks. Nouriel Roubini, who has been correct from the beginning, estimates total losses on loans made by U.S. financial firms and the fall in the market value of the assets they are holding will reach $3.6 trillion ($1.6 trillion for loans and $2 trillion for securities). The U.S. banks and broker dealers are exposed to half of this figure, or $1.8 trillion; the rest is borne by other financial institutions in the US and abroad. With $2 trillion of write-offs to go, how could Treasury Secretary Timothy Geithner make the following statement to a Congressional panel last week, “Currently, the vast majority of banks have more capital than they need to be considered well capitalized by their regulators.”? Is he lying or shading the truth? Does it matter?

Roubini’s estimate of $1.8 trillion more losses for U.S. banks will cause a slight problem for the U.S. banking system. The entire U.S. banking system has only $1.4 trillion of capital. Therefore, the U.S. banking system is effectively insolvent. Mr. Geithner would contend that he was not lying. There are 8,500 banks in the United States. The top 19 banks control 45% of all the deposits in the country. These are the banks that are insolvent. Mom & Pop Bank in Louisville, Kentucky didn’t create toxic loan instruments that infected the worldwide economic system. The vast majority of the 8,500 banks in the country are in good shape. Citigroup (C), Bank of America (BAC), Wells Fargo (WFC) and the other “Too Big To Fail” banks destroyed the economic system. The Fed, Treasury, and FDIC are already backstopping or supplying 70% of the entire banking system balance sheet. It is time to allow the well run banks to take the deposits of the horribly run banks. The $1.8 billion of future losses do not include the commercial real estate losses, credit card losses and losses from the next wave of mortgage resets in 2010 that will wash over these banks.

Click to enlarge

Source: Tyler Durden – Zero Hedge

Of course we all know that the “Too Big To Fail” banks all reported profits better than expected in the last two weeks. CNBC said so. Let’s examine these tremendous profits.

Bank of America reported profits of $4.2 billion.

• $1.9 billion came from the gain on sale of CCB shares.
• $2.2 billion came from marking to market adjustments of Merrill Lynch notes.
• Non-performing assets were $25.7 billion compared to $7.8 billion one year ago, a 329% increase in one year.

Without these convenient accounting adjustments, Bank of America would have lost money. Andrew Ross Sorkin pointed out in a recent NYT article:

With Goldman Sachs, the disappearing month of December didn’t quite disappear (it changed its reporting calendar, effectively erasing the impact of a $1.5 billion loss that month); JP Morgan Chase (JPM) reported a dazzling profit partly because the price of its bonds dropped (theoretically, they could retire them and buy them back at a cheaper price; that’s sort of like saying you’re richer because the value of your home has dropped); Citigroup pulled the same trick.

The first quarter bank profits were faked. They were manufactured as a public relations effort to convince the country that the big banks are in fine shape. If the banks are in such good shape why has the government had to use taxpayer funds to rollout the two dozen rescue plans listed below. And now we breathlessly await the results of the stress tests.

Click to Enlarge

Source: Tyler Durden – Zero Hedge

The FSP (Financial Stability Plan for those not in the know) rolled out by Tim Geithner was supposed to save our banking system. The plan was described by Treasury as:

Increased Transparency and Disclosure: Increased transparency will facilitate a more effective use of market discipline in financial markets. The Treasury Department will work with bank supervisors and the Securities and Exchange Commission and accounting standard setters in their efforts to improve public disclosure by banks. This effort will include measures to improve the disclosure of the exposures on bank balance sheets. In conducting these exercises, supervisors recognize the need not to adopt an overly conservative posture or take steps that could inappropriately constrain lending.

Coordinated, Accurate, and Realistic Assessment: All relevant financial regulators — the Federal Reserve, FDIC, OCC, and OTS — will work together in a coordinated way to bring more consistent, realistic and forward looking assessment of exposures on the balance sheet of financial institutions.

Forward Looking Assessment – Stress Test: A key component of the Capital Assistance Program is a forward looking comprehensive “stress test” that requires an assessment of whether major financial institutions have the capital necessary to continue lending and to absorb the potential losses that could result from a more severe decline in the economy than projected.

It is fascinating that in the first paragraph they specifically state they don’t want to be overly conservative. Which of the top 19 banks in the country have run their businesses in an overly conservative manner in the last ten years? Has the Federal Reserve been overly conservative in the last ten years? Have the SEC and FDIC been overly conservative in the last ten years? Have consumers, homebuilders, credit card companies and retailers been overly conservative for the last ten years? If there was ever a time to be overly conservative, it is now. It is also nice to know Treasury wants accuracy and better disclosure, but then twists the arm of the FASB to relax mark to market rules, so banks can continue to lie about the value of “assets” on their books. They allow Goldman Sachs (GS) to bury the fact that it left December out of its financial results deep in its footnotes. Shockingly, Goldman lost $1.5 billion in December. They continue to allow banks to report one time gains as part of ongoing operations, but billions in losses that are recorded quarter after quarter are not from ongoing operations. The morons on CNBC report whatever the banks say, no questions asked.

Stress Test Sham

This brings us to the stress tests for the 19 biggest banks in the land. The most stressful conditions are supposed to be 10% unemployment and a 20% further fall in home prices. That doesn’t sound too stressful to me. Considering the government reported figures are a manipulated lie, we already have unemployment between 15% and 20% in the real world. A 20% further decline in home prices is a given. The Case Shiller futures index forecasts that the New York Metro area will fall by 31% by the end of 2010. The massive overhang of housing inventory, the coming onslaught of mortgage resets in 2010, and the millions of foreclosures in the pipeline guarantee at least 20% further downside in housing prices. I have a feeling these 19 banks are going to need to study a little harder for their test. Professor Geithner is giving them an open book take home exam and gave them the answers. They will still flunk.

William Black is a former senior bank regulator. He is currently an Associate Professor of Economics and Law at the University of Missouri. Mr. Black held a variety of senior regulatory positions during the S&L crisis. He managed investigations with teams of examiners reporting to him, redesigned how exams were conducted, and trained examiners. He calls the stress tests conducted on the 19 biggest banks in the country a complete sham. In his own words:

If you did a real stress test, as Geithner explained them, you wouldn’t just have a $2 trillion hole — you’d impose regulatory capital requirements of 50%. (FYI, the regulators have the power to set HIGHER individual capital requirements based on unusually large risks at a particular bank.)

You can’t conduct a meaningful stress test without reviewing (sampling) the underlying loan files and it seems likely that the purchasers of securitized instruments (not just mortgages) do not even have the loan file data. Moreover, loss ratios vary enormously depending on the issuer, so even a bank that originates (or has purchased a bank that originates) similar product cannot simply take its own loss rate and extrapolate it to the measure the risk on the value of securitized credit instruments.

It is vastly more difficult to examine a bank that is engaged in accounting control fraud. You can’t rely on the bank’s books and records. It doesn’t simply take more, far more, FTEs — it takes examiners with experience, care, courage, and investigative instincts and abilities. Very few folks earning $60K are willing to get in the face of the CEO and CFO making $25 million annually and tell them that they are running a fraudulent bank and they are liars. FYI, this is one of the reasons, why having “resident examiners” never works. The examiners don’t even get to marry the natives. They get to worship God’s anointed. Effective examination is good for you, but it is very unpleasant, ala a doctor’s finger up your rectum. It requires total independence. So, the examination force doesn’t have remotely the numbers or the relevant experience and mindset to examine the largest banks with the greatest problems.

Examiners certainly can’t do the stress testing that Geithner describes or evaluate the reliability of a large bank’s proprietary stress test. If they were serious about constructing reliable stress tests, which they aren’t, you’d require their analytics to be made public. You’d have the industry fund independent investigations by rocket scientists chosen by a committee selected by the regulators of the soundness of the analytics. You’d also have the industry fund competitions to rip them apart (a bit like we hire legit hackers to test security by trying to defeat it) and show where they produce absurd results. The geeks would have a field day (that would probably last a decade). There are probably zero examiners that have the modeling skills required to evaluate the most sophisticated stress test models. The concept that there are 100 examiners with these skills, suddenly freed up from all other duties, assigned to CONDUCT stress tests is a lie.

On Monday we will see how much transparency and disclosure the Treasury and Federal Reserve will provide regarding the not so stressful tests. Obama’s minions have been hinting that six banks have failed. Sheila Bair stated that the $110 billion left in the TARP kitty should be enough to cover the capital shortfalls. This is a lie. As we saw previously, the U.S. banking system will need close to $1 trillion more capital to stay viable. If the Federal Reserve was so keen on disclosure and transparency, why haven’t they released the names of the banks that have borrowed from them, and the collateral provided for the loans? Because the Fed has taken worthless toxic paper onto their books and loaned newly printed dollars against the worthless paper. The taxpayers are on the hook.

Fraudulent Fed

Ben Bernanke has a number of obligations as head of the Federal Reserve. Among his mandates are:

To strike a balance between private interests of banks and the centralized responsibility of government

• To supervise and regulate banking institutions
• To protect the credit rights of consumers

To manage the nation’s money supply through monetary policy to achieve:

• maximum employment
• stable prices, including prevention of either inflation or deflation

To maintain the stability of the financial system and contain systematic risk in financial markets

Let’s assess how Helicopter Ben Bernanke and Mad Dog Alan Greenspan have fulfilled their mandates. They were supposed to supervise and regulate banking institutions. They apparently slipped up slightly on this mandate. It appears that letting banks regulate themselves was a slight miscalculation on Mr. Greenspan’s part. The man who never saw a bubble in his life had this to say:

The presumption that you could incrementally defuse a bubble was a fantasy. Clearly, you cannot defuse these things, unless you hit them right on the head and break the economy. Essentially, break the potential profitability that is engendering that sort of stuff. We could have basically clamped down on the American economy, generated a 10 percent unemployment rate. And I will guarantee we would not have had a housing boom, stock market boom or indeed a particularly good economy either.

So, Greenspan stepped aside as banks sold adjustable rate negative amortization loans to subprime borrowers with no proof of income or assets required. The job of an independent responsible Central Banker is to take the punch bowl away before the party gets out of hand. The politically connected fawning Greenspan chose to spike the punch bowl with 1% interest rates and exhorting the party goers to take out adjustable rate mortgages. Free market capitalism with no rules was the path to prosperity in his mind. The Greenspan Put was in place. Party like it was 1999 and he’d clean up afterwards. Instead, the American taxpayer is stuck with the bill and Greenspan gets $100,000 per self serving speech.

Mr. Greenspan made his biggest mark with his hands off attitude regarding derivatives. His quote from May 2005 will get him into the Federal Reserve Hall of Fame:

The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions …. Derivatives have permitted the unbundling of financial risks.

Would you pay this dude $100,000 for his words of wisdom? Didn’t this man have hundreds of PhDs gathering wads of information about the practices of our biggest financial institutions? He was either the most incompetent Federal Reserve Chairman in history, or he was in the back pocket of the banking cartel. Take your choice. The major banks became gambling casinos run by multi-millionaire MBAs, tooling around in their private jets, using derivatives as the chips in their trillion dollar game of craps. When these Masters of the Universe MBAs rolled snake eyes, the world wide financial system collapsed. Mandate #1 was not a success story.

Mandate #2 was to protect the credit rights of consumers. Considering Americans have lost $10 trillion of net worth in the last 18 months due to the Federal Reserve mismanaging interest rates, failing to properly regulate banks, and allowing mortgage brokers to mislead millions of immigrants into mortgages they didn’t comprehend, it appears they may have failed on mandate #2. Now, Ben Bernanke has lowered interest rates to 0% in an attempt to enrich the major banks at the expense of senior citizens living on a fixed income. Investors who were receiving 5% on their money market deposits in 2007 are now receiving less than 0.5%. Ben would prefer that 85-year-old grandmothers invest in high yield bonds. He is systematically stealing from the poor to give to the rich.

Mandate #3 regarding maximum employment doesn’t seem to be working out too well either. The government massaged numbers show unemployment at 8.5%, the highest rate since 1983. Unemployment will easily reach 10% during 2009 and may reach the highest levels since the Great Depression. It appears the Federal Reserve misunderstood their mandate and is working towards minimizing employment as less than 60% of working age population is employed today. By reducing interest rates to generational lows, the Federal Reserve created the boom that led to the bust. Their interest rate manipulations have led to 13 million Americans being unemployed today, an increase of 6 million in less than two years.

Mandate #4 of stable prices with prevention of inflation and deflation has been somewhat of a challenge for geniuses at the Federal Reserve. Using the non-manipulated consumer price index, inflation has consistently run above 8% since the 1980s, peaking above 12% in 2008. By falsifying the calculations, Ben Bernanke is able to leave interest rates at 0%. The government reported figures show no inflation. By manipulating the CPI, the government is able to pay senior citizens 1%, while their costs for food and energy go up 6%. It is good to see the Federal Reserve is looking out for the most susceptible in society.

Lastly, the Federal Reserve was supposed to maintain stability in the financial markets. The last 18 months have been the most unstable period for financial markets in history. The Federal Reserve allowed at least a dozen financial institutions to become too big to fail. By coming to the rescue of the financial markets every time something bad happened starting with LTCM, the Federal Reserve encouraged excessive risk taking by financial firms. These institutions knew the Federal Reserve would clean up their messes. They were right.

With a perfect record in the mandates they were asked to fulfill, you can see why we would want to give the Federal Reserve more power and more mandates. Paul Volcker, the only decent Federal Reserve Chairman in history, thinks otherwise:

The Federal Reserve is going beyond the traditional role of central banks here or abroad. At some point it’s reasonable to ask should this particular institution, with its independence very well protected, be allocating so much of what is essentially government money. The inflation problem, which should be a real threat for the future, is not right on the doorstep. But two or three years from now that may be the critical problem, how that’s handled. Because, given what the Federal Reserve has been doing, it’s going to be harder to retrace their steps, so to speak, than it ordinarily would be.

Goofing on Elvis, Are We Losing Touch?

The stock market has been soaring as banks report fraudulent earnings. These banks are purposely underestimating future losses to make current earnings appear better than they really are. Hank Paulson and Ben Bernanke demanded that Ken Lewis commit fraud by not revealing material information to the public about Merrill Lynch. Why are they not being prosecuted? Bankers protect the members of their bankers club. Dr. John Hussman describes how it works in today’s world:

That’s what these bureaucrats want during their stint in government service, that’s how they advise our elected officials, and then their revolving door takes them right back to Wall Street. This thing is run by investment bankers and corporate bondholders for the benefit of investment bankers and corporate bondholders.

The government is desperately attempting to convince the world that the banking system is sound and recovery is under way. The actions they have taken have not and will not fix the system. The waves have washed away the foundations of sand propping up the U.S. financial system. Instead of learning from their mistakes, officials have decided to rebuild on a new foundation of sand. We are borrowing from foreigners to bailout bankers and handing the bill to future generations. With government dictating the future of our banking system we can count on massive fraud, waste and mismanagement. Dr. Hussman’s frustration is well founded:

It’s frustrating, but we are wasting trillions of dollars that could bring enormous relief of suffering, knowledge, productivity, and innovation in order to defend bondholders of mismanaged financials, and nobody cares because hey, at least the stock market is rallying. If one thing is clear from the last decade, it is that investors have noconcern about the ultimate cost of the wreckage as long as they can get a rally going over the short run.

This public relations effort will fail. There are hundreds of billions of losses left to be recorded by our big bad banks. If you believe this is almost over, you are not paying attention.

When I arrived at work today I left the parking garage and headed into the main building and proceeded to put Ron Paul position flyers next to every student computer and on every table in the building. I don’t know if they will be disregarded or tossed in the trash can. But maybe they will influence a few students to support Ron Paul and maybe they’ll influence a few other students, and so on. My article about Ron Paul has gotten pretty good circulation on the internet, with even Lew Rockwell picking it up this morning.

But many people still get their information from mainstream media newspapers. The only way to get an Op-Ed into a newspaper is emailing a Word version to an editor or publisher. I’ve found that anything over 1,000 words will not be published. My article was 4,300 words. I’ve hacked it down to 966 words. I think it is still powerful and makes a good case forsupportingRon Paul.

If you want to do your part to get RonPaul elected, copy and paste the article below into Word and send it to the editor of your local paper.You don’t have to attribute the Op-Ed to me. Put it under your own name if that is what it takes to get it printed. Send this link to other Ron Paul supporters and ask them to do the same thing. We can reach millions of people if everyone does their part and it won’t cost a penny to do so. If you want me to email you a Word version, just let me know.

It’s time to be counted. It’s how you live your life that matters.

THE OLD MAN AND THE SEA – 2011

The Old Man and the Sea is a novel written by Ernest Hemingway about Santiago, an old fisherman whose life is approaching its conclusion, and his final heroic struggle against a great marlin and the evil sharks that ultimately devour his prize. Sadness, resignation and the inevitability of death permeate the pages of this brilliant novel. But it is grace under pressure in the face of overwhelming odds that is the true message Hemingway leaves with the reader. There is no avoiding death, but the critical test of mankind is how you live your life and how you endure the suffering and pain that are inflicted upon you.

Life is a journey. At the end of every worldly journey, death awaits. That is a certainty. The ending will be the same for everyone who walks this earth. What matters is the course chosen on the voyage through life. The vast sea represents life’s journey, with its ebbs, flows, and storms that must be navigated. In Hemingway’s portrait of the world, death is inevitable, but the finest men will nonetheless refuse to give in to its power. In both the sea and in life, there are a number of possibilities that lie hidden from the common eye; some are gifts to be treasured and some are problems to be defeated. Neither will be found unless man embarks upon the journey. If man is lucky enough to discover a treasure he must fight until death to retain it; if man is unlucky enough to discover an evil lurking underneath the surface of the sea, he must fight it bravely and nobly until the end. In either case, it is the struggle that is all- important, and a man obtains the status of hero if he battles the sea (life) with grace under pressure. The only way to obtain the status of hero is to set sail on the uncertain sea of life.

Ron Paul’s years in Washington have been a never ending struggle against corruption, the military industrial complex, and Federal Reserve currency manipulators. He has been a lone fisherman fighting for truth and liberty for over three decades. Ron Paul has endured scorn and derision, much like Santiago endured from the other fishermen after going eighty four days without a catch. He has always stayed focused on the vital issues that have led to the relentless decline of the American Empire: liberty versus security, freedom versus government control, and sound money versus persistent Federal Reserve created inflation. He has fought forces within his own party and in the opposition party. Despite fighting this battle alone for decades and being bloodied and battered, he has never given up the fight.

Ron Paul has a clear vision of the America our forefathers imagined. It is a vision of a people free from government control of every aspect of their lives. It’s a vision where the people keep what they earn and don’t pay half to government to be redistributed based upon a politician’s re-election aspirations. It’s a vision where the people are free to make their own choices and free to succeed or fail based on their own merits. It’s a vision where a truly free market exists and private bankers do not control and manipulate the currency. It’s a vision that calls for a strong national defense, not being the policeman to the world. It’s a vision where we follow the U.S. Constitution and the rule of law. It’s a vision where a limited government ensures the liberties and freedoms of the population. It’s a vision that calls for balanced budgets, sound money, and citizens and corporations accepting the consequences of their actions.

Ron Paul’s goodness, patience and humility always shines through, along with his knowledge, diligence and charitable nature. The ideologues on the left wing and the right wing that dominate the dialogue in the mainstream media despise Dr. Paul and his message. They attempt to denigrate and humiliate him through their propaganda machines by twisting his words and misrepresenting his positions. They fear his message of individual responsibility and peaceful interaction with all nations. Those in power want to control our lives and force American values upon other nations. If Dr. Paul’s ideas were to take root with the American people, the era of corporate fascist big government would be over. The welfare – warfare state would begin to wither away.

All of the symbols employed by Hemingway add to premise that life is an endless struggle with illusory rewards. In order to achieve nobility in life, a person must exhibit bravery, poise, courage, patience, optimism, and intelligence during the struggle. Then, even if the prize is lost, the person has won the battle, proving himself capable of retaining grace under pressure, the ultimate test of mankind. Ron Paul’s life is a shining example of grace under pressure. He has single handedly battled his great fish (Big Government, Big Finance, Big Military) for four decades with no helpers and many detractors. His journey is nearing its end. But it isn’t how it ends that matters. The journey is what separates the noble lion (Ron Paul) from the hyenas (corrupt politicians) and jackals (media). Ron’s message will not die. His son will carry the torch. The young people who have been inspired by his words and example will carry the torch. All of our lives will end the same way. The lesson to be learned from Ron Paul is how we should live our lives.

The ideologically myopic pundits that pass for the intelligentsia in the mainstream media scornfully declare that Ron Paul has no chance of winning, when all critical thinking citizens recognize that he has already won. They can destroy him, but he will not be defeated.

There are a lot of strong emotions on either side of the Unemployment Benefits discussion. On one hand, there are the current unemployed who are pretty miserable right now. Many can’t find a job commensurate with their skill set and prior pay rate and they’re burning through their savings. They’re sick of hearing politicians, the media and bloggers bashing them for being on the public teet after losing a job by no fault of their own. And the checks they’re receiving don’t nearly cover their actual expenses. On the other hand, we all know people who are totally scamming the system. I know a few personally. By pushing the collection period from a reasonable 26 weeks to an absurdly long 99 weeks, many Americans are questioning where it ends. If 99 weeks isn’t sufficient, why stop there? I mean, at some point, it becomes evident that the job market has shifted, skills are no longer in demand or the jobs the applicants are seeking no longer exist. So, how do you assuage both camps and introduce some semblance of “fairness” into the equation?

I can see both sides to some degree but it’s evident our current system isn’t working. To date, the only solution has been to keep extending benefits over and over but not to address the underlying issue. Because there is economic evidence that extended unemployment insurance artificially increases the unemployment rate by deterring some from taking jobs (latest study), I was thinking about a middle-ground that might satisfy all parties involved…

Continue Reading What if unemployment benefits were treated like a loan

I was watching CNBC Thursday when an interesting guest presented what may be the “Big Short” incredible play of 2011-2012. Bill Ackman, the founder of the Pershing Square Hedge Fund presented his thesis on a currency play that will pay out at 100 to 1 if it occurs. It’s a binary trade where he’ll lose his investment completely if it fails to come to fruition, but a 10,000% return on even a small portion of his fund’s total capital could boost him into a 3-4 digit return for investors in the next year. Here’s the premise broken down methodically as he explained it:

• The Hong Kong Dollar has been pegged to the US dollar for decades. Hong Kong has altered their peg multiple times throughout their history and now is an optimal time for them to do so…..

Continue Reading This Investment Pays Off 100:1 – The Thesis is Sound, but is the Timing Right?

You think I’m exaggerating? Just read some of the case examples below.

In America we prosecute people who post fake Facebook pictures, and not those who loot billions.

God, I f*ckin’ hate this sh*t.

Oh … by the way … in case you didn’t know …. Muslims hate us because of our freedoms! bwahahahahahaha!!

Oh … by the way … Smokey is going to prison for bragging about his 11 1/2 inch schlong!!

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SHOULD FAKING A NAME ON FACEBOOK BE A FELONY?

Congress contemplates draconian punishment for Internet lies.

By ORIN S. KERR

Imagine that President Obama could order the arrest of anyone who broke a promise on the Internet. So you could be jailed for lying about your age or weight on an Internet dating site. Or you could be sent to federal prison if your boss told you to work but you used the company’s computer to check sports scores online. Imagine that Eric Holder’s Justice Department urged Congress to raise penalties for violations, making them felonies allowing three years in jail for each broken promise. Fanciful, right?

Think again. Congress is now poised to grant the Obama administration’s wishes in the name of “cybersecurity.”

The little-known law at issue is called the Computer Fraud and Abuse Act. It was enacted in 1986 to punish computer hacking. But Congress has broadened the law every few years, and today it extends far beyond hacking. The law now criminalizes computer use that “exceeds authorized access” to any computer. Today that violation is a misdemeanor, but the Senate Judiciary Committee is set to meet this morning to vote on making it a felony.

The problem is that a lot of routine computer use can exceed “authorized access.” Courts are still struggling to interpret this language. But the Justice Department believes that it applies incredibly broadly to include “terms of use” violations and breaches of workplace computer-use policies.

Breaching an agreement or ignoring your boss might be bad. But should it be a federal crime just because it involves a computer? If interpreted this way, the law gives computer owners the power to criminalize any computer use they don’t like. Imagine the Democratic Party setting up a public website and announcing that no Republicans can visit. Every Republican who checked out the site could be a criminal for exceeding authorized access.

IF THAT SOUNDS FAR-FETCHED, CONSIDER A FEW RECENT CASES.

In 2009, the Justice Department prosecuted a woman for violating the “terms of service” of the social networking site MySpace.com. The woman had been part of a group that set up a MySpace profile using a fake picture. The feds charged her with conspiracy to violate the Computer Fraud and Abuse Act. Prosecutors say the woman exceeded authorized access because MySpace required all profile information to be truthful. But people routinely misstate the truth in online profiles, about everything from their age to their name. What happens when each instance is a felony?

In 2010, the Justice Department charged a defendant with unauthorized access for using a computer to buy tickets from Ticketmaster. Ticketmaster’s website lets anyone visit. But its “terms of use” only permitted non-automated purchases, and the defendant used a computer script to make the purchases.

In another case, Justice has charged a defendant with violating workplace policies that limited use to legitimate company business. Prosecutors claimed that using the company’s computers for other reasons exceeded authorized access. The Ninth Circuit Court of Appeals recently agreed.

The law even goes beyond criminal law. It allows civil suits filed by private parties. As a result, federal courts have been flooded with silly disputes. In one recent case, an employer sued a former employee for excessive Internet usage from work. The alleged offense: visiting Facebook and sending personal emails. In another case, a company posted “terms of use” on its website declaring that no competitors could visit—and then promptly sued a competitor that did.

Remarkably, the law doesn’t even require devices to be connected to the Internet. Since 2008, it applies to pretty much everything with a microchip. So if you’re visiting a friend and you use his coffeemaker without permission, watch out: You may have committed a federal crime.

Until now, the critical limit on the government’s power has been that federal prosecutors rarely charge misdemeanors. They prefer to bring more serious felony charges. That’s why the administration’s proposal is so dangerous. If exceeding authorized access becomes a felony, prosecutors will become eager to charge it. Abuses are inevitable.

Real threats to cybersecurity must be prosecuted. Penalties should be stiff. But Congress must narrow the Computer Fraud and Abuse Act before enhancing its penalties. There’s no reason to make breaching a promise a federal case, and certainly not a felony crime.

Mr. Kerr, a former federal prosecutor, is professor of law at George Washington University School of Law.

http://online.wsj.com/article/SB10001424053111903285704576562294116160896.html

I was driving home on the Schuykill Expresway last night and I may have cut off this vehicle while merging at City Line Ave.

He pulled in closely behind me and I’m sure he was thrilled to see this bumper magnet on the back of my car.

As a DHS drone I’m sure he dutifully noted that anyone supporting Ron Paul was clearly an enemy of the state and should be considered a likely domestic terrorist. I was picturing him running my tags and having flashing red lights going off with a Most Wanted poster with my picture showing up on his screen.

Then I noticed that the white Silverado in front of me had a different color license plate. I pulled up closer and it said it was a U.S. government vehicle. I was surrounded. These two government vehicles could pull the old squish a hybrid move and it would have been lights out for Administrator.

Then I started to get pissed off. I was thinking WTF is a Federal government employee doing driving a $35,000 Silverado. Why am I paying for this guy’s truck? Why can’t he drive his own f*cking vehicle? Did you know there are 600,000 Federal government vehicles being driven by government drones, at your expense? Why should taxpayers pay for Federal government vehicles driven by bureaucrats and drones? This is just the Federal level. There are government drones at the local and state levels also driving vehicles at your expense. Imagine how much money we could free up for education, debt reduction, or turtle crossings if we made every government drone in the country drive their own f*cking car. My guess is $25 billion to $50 billion.

Eventually, I gave the DHS vehicle the slip and thought I was home free. Then out of the blue, there he was pulling up beside me on the Northeast Extension. I glanced over and I could have sworn he gave me one of these.

I’m not paranoid, but someone is following me.

I think Farrell is a little too believing in this piece. Anyone can extrapolate today’s numbers 30 years into the future and arrive at an answer that looks like China will dominate the world. Anyone who extrapolated the Japanese “miracle” economy in 1988 twenty three years into the future would have come up with a far different result than the economic disaster that is Japan today. Extrapolation is for fools. Farrell completely ignores Peak Oil and China’s demographic nightmare caused by their one child policy.

If the European and American economies continue on a downward trajectory, who does Farrell think China is going to sell their sh*t to? This is really a thoughtless cheerleading piece devoid of the harsh realities facing the world. Rick Perry may be a dumbass, but he is a dangerous dumbass. He will likely lead the US into a Fourth Turning war. If the war is against China, don’t expect a positive result for either country. If China really wants Perry to win, they may be sorry for what they wish for.

Why China would love ‘President Rick Perry’

Commentary: China wins economically with an ‘inconsequential’ America

SAN LUIS OBISPO, Calif. (MarketWatch) — China must be secretly rooting for a guy like Rick Perry as the next U.S. president. They’d love competing against an America led by another Texas governor who talks from a big hat, loves war spending and tea parties, thinks the Fed chairman is acting “treasonous,” believes Social Security is a “Ponzi scheme” and admits he’s an antiscience, antievolution, anti-intellectual who will turn back the clock to the 19th century frontier Wild West.

Yes, China’s rooting for a guy who will not only make Washington “inconsequential” for all Americans, he’ll make America “inconsequential” in a world where China knows that its competitive edge and economic growth all hinge on investing in science, innovation and intellectuals with a vision of the future.

You can bet China’s leaders are cheering for a president who’ll stall the American economy even further while China races ahead of us in the global economic war. China would probably settle for the other leading GOP candidate, that ex-governor whose values shift with the latest polls and Tea Party questions … whatever happened to the GOP’s Bill Buckley soul?

China’s commie-capitalism beating GOP’s Reaganomics since 2000

Adam Smith’s original 1776 capitalism made America the world’s greatest superpower. We’ve lost that too. So America’s now in a handicap race with China, and losing. Why?

In just the past decade China’s state-run hybrid commie-capitalism has beaten the American economy, going from a “poor country” to racing ahead to global economic dominance. Unfortunately, our politicians just don’t get it. They’re like high school teens fighting a turf war who can’t see the building’s burning down.

In his “Triumph of Politics Over Economics,” Reagan’s budget director David Stockman warns: “America’s at a crossroads struggling to redefine ourselves, at a time when even Reagan couldn’t win the GOP nomination. Why? Because myopic politicians have hijacked the economy. Politicians are the new economists. Politicians now run the economy, puppets of the Super Rich and special-interest lobbyists.”

Stockman calls this corrupt system Crony Capitalism. We call it Reaganomics and Doomsday Capitalism, a sellf-destructive ideology that works to China’s advantage.

Here are 11 reasons China’s leaders would love an inconsequential president making America inconsequential in China’s march to economic world domination:

1. China’s economy: $123 trillion, 3 times America’s by 2040

In an eye-opening Foreign Policy cover story last year titled “$123,000,000,000,000: Why China’s economy will grow to $123 trillion by 2040,” Nobel economist Robert W. Fogel of the University of Chicago writes about China’s unbelievable leap forward. Back in 2000, just one decade ago, China was a “poor country” when the GOP and its “war president” took over control of America, announcing that “debt doesn’t matter.”

Yes, by 2040 “the Chinese economy will reach $123 trillion, or nearly three times the economic output of the entire globe in 2000. China’s per capita income will hit $85,000, more than double the forecast for the European Union … much higher than that of India and Japan … the average Chinese megacity dweller will be living twice as well as the average Frenchman … Although it will not have overtaken the United States in per capita wealth … China’s share of global GDP— 40% — will dwarf that of the United States (14%) and the EU (5%) 30 years from now,” one brief generation.

2. China’s political system is more capitalist than America’s

“The Chinese political system is likely not what you think,” says Fogel, “Most economic reforms, including the most successful ones, have been locally driven and overseen.” Today there’s “more criticism and debate in upper echelons of policymaking.”

Fogel attends meetings of the Chinese Economists Society. Many economists are openly “critical of the Chinese government,” will even “point out that the latest decision by the finance ministry is flawed … even publish a critical letter in a Beijing newspaper.”

3. China is rapidly turning into a capitalist consumer economy

Yes, “China’s long-repressed consumerist tendencies” are exploding,” says Fogel: “In many ways, China is the most capitalist country in the world right now.”

Get it? While we borrow from China then waste money fighting wars, while Wall Street and the Super Rich are amassing wealth in the hands of the top 1%, “in the big Chinese cities, living standards and per capita income are at the level of countries the World Bank would deem ‘high middle-income,’ with a clear, growing affinity for acquiring clothes, electronics, fast food, automobiles.”

Why? Because China’s leaders “made the judgment that increasing domestic consumption will be critical to China’s economy, and a host of domestic policies now aim to increase Chinese consumers’ appetite for acquisitions.”

4. China’s massive investments in education, ahead of America

China’s making “enormous investments” in education, says Fogel. They know “educated workers are much more productive workers. … college-educated workers are three times as productive … a high school graduate is 1.8 times as productive as a worker with less than a ninth-grade education.”

In the next generation China’s high school enrollment rate could reach 100%, the college rate about 50%, adding “more than 6 percentage points to the country’s annual economic growth rate.” Meanwhile, America runs up massive debts wasting trillions on wars, shortchanging education.

5: China’s locking up global resources, using U.S. dollar reserves

The title of a Malcolm Knox feature in BusinessWeek says it all: “The deal is simple. Australia gets money. China gets Australia.” Wake up America: While our clueless myopic politicians are fighting self-destructive election turf wars, China is using its reserves (U.S. dollars!) to buy rights to Australia’s commodities and natural resources, giving China long-term access to natural gas, minerals, iron ore.

And that’s just one continent: China’s quietly buying up future rights to commodity-resources worldwide.

6. China’s rural economy of 700 million adding to growth rate

Go beyond the Shanghai high-rises and Guangdong factories,” says Fogel. You’ll see “changes afoot in the Chinese countryside … an under-appreciated economic engine.”

From 1978 to 2003 China’s labor productivity averaged about 6%. In the future, productivity will also increase in rural areas, for about 700 million or half of China. “That large rural sector is responsible for about a third of Chinese economic growth today” and will explode as a new generation adds another hundred million.

7. China’s government statistics underreporting progress

Don’t be misled by reports that “Chinese data are flawed or deliberately inflated in key ways,” says Fogel. Just the opposite: Their “statisticians may well be underestimating economic progress … Small firms often don’t report their numbers to the government.”

And as in America, “official estimates of GDP badly underestimate national growth” because they don’t “take into account improvements in services such as education and health care.” In short, “the rapid growth of China’s service sector makes the underestimation more pronounced.”

8: Yes, China does have a long-range plan to conquer America

China is America’s worst nightmare, engaged in economic warfare against us on multiple fronts: Stealing millions of jobs, stealing U.S. state secrets, stealing proprietary patents, stealing technology, stealing our wealth. China has also forged strategic alliances with our enemies, Iran, Venezuela and North Korea. China is engaged in a not-so-secret cyber-war against America.

Ross Terrill, a China expert at Harvard, wrote in the Wilson Quarterly: “The Chinese Communists are very aware of this contest with the United States, though Americans (beyond the Pentagon) are not.” Terrill warns: “By being a shrinking violet, the United States would simply hand over the future to China.”

9: China’s aware of Pentagon strategies, is one-upping generals

You know China’s generals have copies of the Pentagon’s strategic war manual. New York Times columnist Paul Krugman warns of China’s long-range plans beyond waging “economic warfare” and tying up long-term natural resources.

Krugman says China’s actions tell us they’re planning long-term military strategies as well as economic war. He warns that in the near future, some seemly inconsequential incident may provoke “dangerously trigger-happy” Chinese leaders into escalating from defensive military strategies to a preemptive strike to advance China’s economic power.

10. The “Goldman Conspiracy” is helping China sabotage America

Li Delin’s “The Goldman Sachs Conspiracy” was a best seller in China. His Chinese readers love his vivid description: “Goldman Sachs knows when to go for your neck” like a “Manchurian tiger.”

Actually China’s playing a clever game: As author Matt Taibbi might say, China is now a “vampire squid wrapped around the face of Goldman, relentlessly jamming its blood funnel into Goldman’s capital, talent and connections.” Eventually China will suck the life out of Goldman.

11. By 2040 China will be the world’s biggest superpower (again)

“To the West, the notion of a world in which the center of global economic gravity lies in Asia may seem unimaginable,” says Fogel. “But it wouldn’t be the first time. … China was the world’s largest economy for 18 of the past 20 centuries. … While Europe was fumbling in the Dark Ages and fighting disastrous religious wars, China cultivated the highest standards of living in the world. Today, the notion of a rising China is, in Chinese eyes, merely a return to the status quo.”

And thanks to guys like Mitch McConnell, Paul Ryan, Rick Perry, Barack Obama, the Goldman Conspiracy and buddies, China is destined to once again become the world’s superpower by 2040, when China’s economy is three times bigger than America’s.

Fascinating report put out by the Census Bureau this morning. Here are some key points:

• The nation’s official poverty rate in 2010 was 15.1 percent, up from 14.3 percent in 2009, the third consecutive annual increase in the poverty rate.
• There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009, the fourth consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published
• The number of people without health insurance coverage rose from 49.0 million in 2009 to 49.9 million in 2010, while the percentage without coverage -16.3 percent – was not statistically different from the rate in 2009.
• Breaking it down by ethnicity, living in poverty were 27.4% of all blacks, and 26.6% of all Hispanics. White, non Hispanics and Asians were doing better at 9.9% and 12.1% respectively.

Looks like us white folks are doing better than those minorities. I find this data fascinating. The number of people in poverty rose for the fourth consecutive year to an all-time high. But how could that be? Our very own government reported that Real GDP grew 3.0% in 2010. How could more people go into poverty if the economy grew strongly? It’s because the economy did not grow. The GDP numbers are a lie. The government borrowed from the Chinese, transferred the money to the poor and called it income.

The only people who recovered in 2010 were Wall Street bankers and big corporation CEOs like Immelt. The average person’s life got worse – little or no pay increases, higher food costs, and higher energy costs. If the economy had actually recovered in 2010, why did 6 million MORE people go on food stamps since 2009?

Obama and his minions got everything they asked for in 2009. They had both houses of Congress and they passed their plan, lock, stock and barrel. But somehow their Keynesian solutions led to greater poverty, 23% unemployment, and declining household income. Are you shocked that blacks and hispanics have almost three times the poverty of whites? When more than half your population is born out of wedlock and 50% of your kids drop out of high school and you depend on the government to pay your way in the world, what do you expect. At least they still have their Direct TV, cell phones, and SNAP cards.

The most revolting figure in the report is the real median household income of $49,445. This means 50% of the households in the U.S. make less than $49,445 per year. Below is a chart showing the real median household income going back to 1975. It is now lower than it was in 1997 and 6% below the peak, reached in 1999. Imagine the result if we used the real rate of inflation, rather that the government manipulated piece of sh*t called the CPI. My educated guess would be that real median household income is lower than it was in 1986.

The average family in the US is making much less money than they were 12 years ago. This supports John Williams contention that the US has virtually been in a decade long recession, despite what the government and main stream media report.

The situation continues to deteriorate. These families made up for their decline in income, by increasing their credit card, auto loan and student loan debt from $1.4 trillion in 1999 to $2.5 trillion today. Without jobs, incomes can’t rise. The Obama solution will be to funnel more of your money to those classified as in poverty. The only solution that will work is to liquidate the banks, liquidate the debt, wipe out those who made bad decisions, and start over. No one wants to accept the reality of this solution. It is too painful. It is mean and brutish. Tough sh*t. It is the only way. We could soften the blow by withdrawing our troops from around the globe, protecting our own borders and freeing up hundreds of billions in war spending for domestic purposes. What a concept – building bridges in the U.S. rather than rebuilding bridges we blew up in Iraq.

Otherwise we will continue on a path of ever declining income and bankers enriching themselves at our expense. But, at least I’m white. I got that going for me.

Income, Poverty and Health Insurance Coverage in the United States: 2010

Once Janet Nepalatano, the Queen of DHS, announced a credible terrorist threat, I knew I had to jump into action. The threat level was clearly elevated. We had reached Elmo Red threat level.

And then when our resident TBP terrorist threat analyst declared unequivically that September 12th would be the day of a devastating terrorist attack on our country, I was sure I had to make a run for it. You had to take this guy seriously. He’s a Boomer and has never been wrong in his entire life.

I was sure there were hundreds of suitcase nukes planted all over the country. I envisioned mushroom clouds across the land. The horror!!!

So, I jumped in my car and high tailed it to my Wildwood condo last night after work.

I had thought this through. Muslims hate water. They also would be kept away by the chocolate covered bacon sold on the boardwalk. Plus, think of the bad publicity they would get if they blew up my Section 8 black neighbors. My plan was foolproof.

I didn’t really go down to my condo to clean it before my next tenant goes in. I wasn’t down on my hands and knees in the bathroom cleaning pubic hairs off the floor, I was cowering in fear from the Muslim menace that lurks behind every bush.

It was a fearful evening, as our TBP analyst was sure of the imminent attack. But, then the clock ticked 8:00 pm and all was well. The GOP Presidential Debate came on CNN and all my fear and worry dissipated. What a fine group of patriots. And the Tea Party crowd at the debate was wonderful. They must have all had Mensa level IQs. Our country is in great hands with these men and women at the helm.

I think a ticket of Gingrich/Santorum would do wonders for our country. Behind the mantle of Jesus Christ and American Exceptionalism, this tandem would put an end to this puss* footing around and take out Iran, North Korea, Syria and any other ragheads that act up. Newt rightfully pointed out that tripling war spending in the last ten years is disgraceful. We should have quintupled it. Think of the jobs. The deficits wouldn’t exist because we could have plundered the riches of all the countries we would have invaded. With Jesus on our side any torture or collateral damage caused by our drones and cruise missiles is justified.

I can’t understand how Santorum lost his PA Senate seat by 16%. Maybe it is the foaming at the mouth issue he has when he addresses Ron Paul.

It is shocking to me that if you add up Gingrich’s and Santorum’s support in the polls, you get a number lower than a snake’s ass. The Fox News Tea Party is out for blood. They are itching for a good old fashion Christian/Muslim Armageddon showdown. But don’t cut their Medicare or Social Security.

Rick Perry was under blistering attack during the debate. In my opinion, he deflected it pretty well. He has essentially stolen most of Ron Paul’s hot button issues. He has called Bernanke treasonous, declared he is for sound money, called Social Security a ponzi scheme, and actually said we need to bring the troops home from Afghanistan. His low taxes, more jobs Texas story is connecting with the Republican base. He has somehow been able to hide his religious fundamentalist extremism, just as GWB did in 2000.

Southerners will never get behind Romney. He is considered a smooth talking Yankee Mormon. Perry will win the Republican nomination.

There are only a few states actually in play in the general election. Nevada, Florida, and Ohio have some of the worst economic problems in the country. People vote their pocketbook. If two of these states go Perry’s way, he wins in 2012. I expect the economic situation to worsen across the board between now and November 2012. Perry may win in a landslide. The Grey Champion of the Fourth Turning has arrived on stage.

When I departed Wildwood this morning at 5:45 am for my almost two hour trek to work, I turned on the radio to listen to the reports of the terrorist attacks. I was SHOCKED to hear that none had taken place. I’m sure we owe it to the 50,000 noble warriors at DHS that foiled the Muslim terrorists. Remember, turn in anyone that doesn’t look like you. It’s the American way.

I have nothing against old people. I adored my grandparents and I’ll be old some day and I may well be in the same position, but given the demographic shift America is facing and the economic realities we’re now dealing with, the elderly population in America is set to screw you three ways to Tuesday. Here’s how:

They Take Your Jobs – Americans who are approaching what used to be the “normal retirement age” aren’t retiring. They’ve lost all the equity in their homes, their 401(k)s have taken a haircut and they can no longer keep doing cash out refinancings on their homes like an ATM to support their lifestyle …

…Continue Reading 3 Ways Older Americans Are Going to Wreck Your Life

Recently, I read an article written by Joe Biden (I cannot explain why I would ever have done that, except the title was something to the effect that “China is not a threat to US manufacturing”). Additionally, I regularly see TBP members calling out CEOs of corporations for destroying American jobs by sending product (and, more and more, services) overseas. Biden implies that we can overcome difficulties simply by working smarter and getting smarter. Additionally, some TBP members believe, apparently, that the CEOs are simply evil and are eliminating jobs out of spite. In combination, these two things have prompted the following article.

I believe that Biden, and many Americans, simply do not understand the cost differential (not to mention the regulatory differential and costs thereof) between running a manufacturing company in the US versus running a similar company in China. Following are the comparative costs of employing a manufacturing employee in the US versus employing one in China.

I do not wish to make this too technically complex. I have made a lot of assumptions herein, but in general terms the figures are accurate. Some of the assumptions relative to a manufacturing employee in the US are as follows:

– Average salary of $20 per hour
– Family health insurance of $12,000 per year
– Pension of 5% of total pay
– Worker’s compensation and payroll tax of 7.5% each
– Minor other miscellaneous costs of approx.
– Indirect labor costs (ie. managers/engineers/planners/QA/etc.) calculated at $75,000 per year plus above costs, and at a ratio of 4:1
– Vacation of 3 weeks/year, 10 national holidays, 8 days sick leave
–
When you blow through all the USA numbers, you get a cost per hour of employing a manufacturing worker of $47.91. But this number is at 100% efficiency – and allows for no coffee breaks, going to the toilet, chatting with co-workers, coming back late from lunch, etc. When these items are factored in, the cost per one hour of actual work is approx. $59.89 per hour. Major corporations have costs far exceeding these.

Is anyone out there surprised? And please remember these costs do not include profit, materials, indirect expenses like rent/property tax/electricity/ etc. Some indirect compliance costs are included (ie. the costs of EPA compliance, etc. are largely captured in overhead personnel.).

Following are the costs associated with employing a Chinese manufacturing worker. Assumptions are as follows:

– Monthly wage of $600 per month (this is highly variable subject to location, etc. but seems to be a reasonable number) inclusive of overtime
– On-costs (pension is the largest percentage at approx.. 20%), et al of 40%
– Cost of indirect workers at $15,000 per year plus 40% on costs
– 2 weeks of vacation and 10 annual holidays per year (widely variable but considered the norm)
– Direct to indirect of 4:1. This assumption is overstated, as there is far less regulation to attend to (EPA, etc.), and thus should really be reduced, but I have left it the same for comparison purposes.

When these assumptions are entered, the standard rate for a manufacturing employee in China is $6.54 per hour, and $7.70 when allowing for inefficiency estimates.
So we get a per hour DIFFERENTIAL between the cost of labor in the US versus China of $41.37 gross and $52.19 net. Stunning, isn’t it? Generally, when I am asked to quote on a part, I consider the likelihood of the part being eventually offshored to China. For simplicity, I simply assume the labor component of the Chinese made part to be zero, so insignificant is it to the process of making a comparison.

Further, there are huge differentials in cost of rents, cost of purchased materials (sourcing materials locally in China is obviously cheaper than sourcing materials locally in the US), etc. Plus there are often incentives granted by the Chinese government, and company tax is lower in China.

So let’s take a look at what this means to a manufacturer. Let us assume we have two manufacturing plants, one in the US and one in China, each having 100 direct manufacturing employees. The labor cost differential between the two is approx. $9.2 million per year. That is $9.2 MILLION PER YEAR! Plus all other cost differentials. I estimate the total cost differential would be approximately $15 to $20 million when all other cost differentials are included. Again, I ask, is anyone astonished?

Stuck, in a recent post, made comment about a $15 dollar Chinese made toaster. Let us look at that particular case. I am not a toaster manufacturer, but I can make some estimates that should be close.
First, the retailer probably has a $5 mark-up on this item (50%). That leaves $10. I have calculated shipping costs to be approximately $2 per toaster, leaving $8 dollars. Of this, let us say $1 is profit (10%), leaving $7. Assuming a material rate 70% for this item (the most expensive item will almost certainly be the carton!), that leaves a labor cost of $2. Going back to our cost per hour of $6.54, we can calculate the toaster is assembled/handled in 18 minutes. That seems reasonable, perhaps even overstated, to me, in my experience.

So what would the toaster cost to make in the US? Eighteen minutes of labor would cost $14.50. Materials would be more expensive, so let us say $7 in materials. Profit of 10% would be $2.15. Retail mark-up would be $11.80. Therefore, the retail price of the US made toaster would be in the order of $35.45. So a toaster can be made in China, shipped to the US, and sold for $15 dollars, where an identical US made toaster would sell for $35. Who on earth is going to buy that US toaster? Not your average Walmart shopper, that is for sure.

So this is what US manufacturers are up against. American CEOs are not sending jobs overseas just because they are evil – they are sending jobs overseas because they cannot sell their $35 dollar toasters when the same toaster is available for $15 dollars. They simply have no choice but to compete – otherwise their companies will go broke.

It is this reality that proves when Joe Biden says China is not a threat he has no idea what he is talking about. Not only does China have a massive cost advantage with respect to labor, China does not have the headache of the massive regulatory requirements of the US (EPA/OSHA/NLRB/state and local regs/et al).

There was a time when US manufacturers could make a case that they offered far superior quality of product. While China still has some issues in this regard, they have dramatically closed the gap, and manufacturers can no longer assume American made is more desirable from a quality perspective.

Similarly, the US was once much, much more efficient in its manufacture of goods than was China. It was not unusual to find that it took five Chinese laborers to do the job of one American laborer. Again, those days are gone (largely), and China has tooled up and equipped itself to compete much more effectively on this front. As an example, next year China is scheduled to complete a heavy truck manufacturing facility capable of producing 4 million trucks per year. Let me say that again for effect – 4 MILLION trucks per year! This facility will be highly efficient – you simply cannot make that volume of trucks inefficiently. What will that do, in the long-term – to truck manufacturing in the US/world-wide?

So where does that leave US manufacturing? I think that only companies with the following characteristics will have any chance of survival in the long run: First, the product will need to be difficult or expensive to transport relative to the cost of manufacture, or highly susceptible to transport damage. Second, the product will need to be specialized and largely unique/special made (think custom painted/special ordered/etc.). Third, the product will also need to have very tight delivery time requirements (ie. the product is special and it is required now, not in six weeks).

Even these specialized products will gradually be squeezed out, as China finishes off “low-hanging fruit” (low hanging fruit is the fruit that is easiest to pick). Right now, China is going for the volume items, but will eventually turn its sights to the lower volume, and more specialized, manufacturing fields. In the end, most true manufacturing will disappear from the US, and any that remain will more likely be assembling of foreign made components rather than true manufacturing as such. The perfect illustration of this is US automotive manufacture – the US really does not manufacture automobiles any more, but rather assembles parts, a great many of which are imported, into the finished vehicle.

So in summation, this article was intended 1) to clarify the huge cost differential between the US and China cost of labor, 2) to refute the general argument that US CEOs are choosing to manufacture in China, and show that they have no viable alternative, and 3) to paint a realistic picture of what is the likely future of US manufacturing. The regulatory red tape that is drowning small manufacturers is a further obstacle and makes the prospects of overcoming the cost pressure being applied by China (and its ilk) even more unlikely.

Clearly, I am very pessimistic about the future of manufacturing in the US. Surely, the cost differentials will close over time. But it will be far too late for the vast majority of US manufacturers, as they will have long disappeared before this happens. The next thing that will come under attack will be service industry that can be done electronically. Right now, call centers are the perfect example. But soon it will include accounting, etc. The cost of labor in the US is simply uncompetitive internationally. The US is moving far too slowly to improve its skill base sufficiently to justify the current differential. China and similar countries are educating and training their citizens by the millions, while the American standard of education continues to fall. The coming collapse will be monumental. It is unlikely that even the most skilled and innovative Americans will be able to ride out this storm unscathed.

Osama bin Laden got a 660,000,000% return on his investment. SIX HUNDRED AND SIXTY MILLION PERCENT. He’s dead, but we’ve bankrupted ourselves. He would have died eventually. We didn’t have to bankrupt ourselves. But we did. He won.

http://www.nytimes.com/interactive/2011/09/08/us/sept-11-reckoning/cost-graphic.html

While there are numerous ways to short Treasuries, there are several different approaches investors choose to take, each suited to a particular strategy and risk tolerance. What I’m outlining today is both high-risk and highly likely to succeed – IF I can outlast the Fed. See, I entered into the ultimate risk short today that I’ll describe further below, but want to emphasize that this probably isn’t a prudent approach for most retail investors and requires the ability to short, a margin account, and intestinal fortitude.

Short Treasury Strategy

The approach I took was to combine the leverage that options offer, the poor performance of leveraged ETFs over time (see more on ETF Decay), and the time value decay of both options and leveraged ETFs.

• Sold TMF Calls (TMF was priced at 61 during Tuesday trading)
• Strike Price $75
• Expiry November
• Premium 3.40 each

TMF is the 3X leveraged 30-Year Treasury Bond ETF from Direxion.

This is about as turbo-charged as you can get in looking to short bonds. In the past, I’ve already sold TMF short as an ETF holding, but now I’ve turbocharged the play even further.

Here’s the Rationale AND Risks:

…Continue Reading Shorting Treasuries For the Ultimate Risk-Takers

Make no mistake about it, without plentiful, cheap, and easy to access oil, the United States of America would descend into chaos and collapse. The fantasies painted by “green” energy dreamers only serve to divert the attention of the non critical thinking masses from the factour sprawling suburban hyper technological society would come to a grinding halt in a matter of days without the 18 to 19 million barrels per day needed to run this ridiculous reality show. Delusional Americans think thesteaks, hot dogs and pomegranates in their grocery stores magically appear on the shelves, the thirty electronic gadgets that rule their lives are createdout of thin air by elvesand the gasoline they pump into theirmammoth SUVs is their God given right. The situation was already critical in 2005 when theHirsch Reportconcluded:

“The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.”

In the six years since this report there has been unprecedented oil price volatility as the world has reached the undulatingplateau of peak cheap oil. The viable mitigation options on the demand and supply side were not pursued. The head in the sandhope for the best option was chosen. The governmentmandated options, ethanol and solar, have beenabsolute and utter disasters as billions of taxpayer dollars have been squandered and company after company goes bankrupt. Theadded benefit has been sky high corn prices, dwindling supplies and revolutions around the world due to soaring food prices. The last time the country went into recession in 2008, the price of oil plunged from $140 a barrel to $30 a barrel in the space of six months. I’d classify that as volatility. We’ve clearly entered a second recession in the last six months. So we should be getting the benefit of collapsing oil prices.

But, a funny thing happened on the way toanother oil price collapse. It didn’t happen. WTI Crude is trading for $87 a barrel, up 23% since January 1. Unleaded gas prices are up 54% in the last year and 43% since January 1. Worldwide oil pricing is not based on WTI crude but Brent crude, selling for $113 per barrel, only down 10% from its April high of $125. The U.S. and Europe consume 40% of all the oil in the world on a daily basis. Multiple European countries have been in recession for the last nine months. The U.S. economyhas been in free fall for six months.

Some short term factors will continue to support higher oil prices. The Chinese continue to fill their strategic petroleum reserve, Japan is still relying on diesel generators for electricity post-tsunami, and the Middle East is developing a love affair with the air conditioner. But, it’s the long term factors that will lead to much higher oil prices for myopicoblivious Americans.

John Hussman describes the situation on the ground today based uponsixeconomic conditions presently in effect:

There are certainly a great number of opinions about the prospect of recession, but the evidence we observe at present has 100% sensitivity (these conditions have always been observed during or just prior to each U.S. recession) and 100% specificity (the only time we observe the full set of these conditions is during or just prior to U.S. recessions).

With 40% of the world in or near recession, how comeoil prices are still so high and much higher than last year, when the economies in Europe and the U.S. were expanding? The number of vehicle miles driven in the U.S. is still below the level reached 43 months ago and at the same level as early 2005. The price of a barrel of oil in early 2005 was $42. The U.S. is using the same amount of oil, but the price is up 112%. It seems the U.S. isn’t calling the shots when it comes to the worldwide supply/demand equation.

It would probably be a surprise to most people that U.S. oil consumption today is at the samelevel it was in 1997 and is 10% lower than the peak reached in 2005. This is not a reflection of increased efficiency or Americans gravitating towards smaller vehicles with better mileage. Americans are still addicted to their SUVs and gas guzzling luxury automobiles. It’s a reflection of a U.S. economy that has been in a downward spiral since 2005.

If the U.S. isn’t driving oil demand in the world, then why are prices going up? There are three main factors:

1. Dramatic increase in demand from China and other developing countries.
2. A plunging U.S. Dollar
3. Peak oil has arrived

Surging Developing World Demand

The Energy Information Administration issued their latest forecast and it does not bode well for lower prices:

Despite continued concerns over the pace of the global economic recovery, particularly in developed countries, the US Energy Information Administration expects worldwide oil consumption to increase this year and next spurred by demand in developing countries. US oil consumption, however, is forecast to contract from a year ago. Worldwide oil demand, led by China, will increase by 1.4 million b/d in 2011 to average 88.19 million b/d and by 1.6 million b/d in 2012, outpacing average global demand growth of 1.3 million b/d from 1998-2007, before the onset of the global economic downturn.

China is now consuming over 9 million barrels per day. This is up from an average of 7 million barrels per day in 2006. Platts, a global energy analyst,put China’s 2010 figures at 8.5 million barrels per day, up 11.43% from the previous year. Theforecastfor China’s crude throughput in 2011 is an average of 9.24 millionbarrels per dayup 8.5% from 2010. In the first seven months of this year, total crude throughput stood at average of 8.95 million barrels per day.

Standard Chartered Bankpredicts that, by the year 2020, China will overtake all of Europe as the second largest consumer of oil in the world, and should catch up to the U.S. by the year 2030 as China’s demand continues to rise while U.S. demand is expected to be flat.Chinese crude imports grew 17.5% in 2010 to 4.79 million barrels per day. China is importing 55% of its oil today versus 40% in 2004.

China’s oil consumption per capita has increased over 350% since the early 1980s to an estimated 2.7barrels per yearin 2011.Consumption per capita has risen nearly 100% in just the past decade.Oil consumption per capita in the U.S. currently ranks among the top industrialized nations in the world at 25 barrels per year. However, today’s consumption levels are approximately 20% lower than they were in 1979. The chart below paints a picture of woe for the United States and the world. China overtook the United States in auto sales in 2009. They now sellapproximately15 million new vehicles per year. India sells approximately 2 million new vehicles per year. The U.S. sells just over 12 million newvehicles per year. In China and India there are approximately 6 car owners per 100 people. In the U.S. there are 85 car owners per 100 people.

They call China, India and the rest of the developing world –Developing – because they will be rapidly expanding their consumption of goods, services and food. There will certainly be bumps along the way, as China is experiencing now, but the consumption of oil by the developing world will plow relentlessly higher. China isn’t the only emerging country to show big increases in per capita consumption. The growth in consumption for several other countries far outpaces China. Consumption per capita in Malaysia has nearly quadrupled since the mid-1960s. Consumption in Thailand and Brazil has more than doubled to roughly 5.7 barrels and 4.8 barrels per year, respectively.

Developed countries, especially those in Western Europe, have experienced substantial declines in oil consumption. Today’s per capita consumption in Sweden is roughly 12 barrels per year, down from 25 barrels per year in the mid-1970s. France, Japan, Norway and U.K. all use less oil on a per capita basis than they did in the 1970s. These countries have been able to drive down the consumption of oil by taxing gasoline at an excessive level.

Americans pay 43 cents in taxes out of the $3.70 they pay at the pump for a gallon of gasoline. A driver in the UK is paying $4 per gallon in taxes out of the $9 per gallon cost. Gasoline costs between $8 and $9 per gallon across Europe today. The extreme level of gas taxes certainly reduces car sizes, consumption and traffic. Too bad the mad socialists across Europe spent the taxes on expanding their welfare states and promising even more to their populations. Maybe a $6 per gallon tax will do the trick. Forcing Americans to drive less by doubling the gas tax is a quaint idea, but it is too late in the game. Europe is still made up of small towns and cities with the populations still fairly consolidated. Biking, walking and small rail travelis easy and feasible. The sprawling suburban enclaves that proliferate across the American countryside,dotted by thousands of malls and McMansion communities, accessible only byautomobiles, make it impossible to implement a rational energy efficient model for moving forward. We cannot reverse 60 years of irrationality. Even without higher gas taxes, the price of gasoline will move relentlessly higher due to the stealth tax of currency debasem*nt.

A Plunging US Dollar

The US dollar has fallen 15% versus a basket of worldwide currencies (DXY) since February 2009. This is amazing considering that 57% of the index weighting is the Euro. If you haven’t noticed, Europe is a basket case on the verge of economic disintegration. The US importsa net 9.4million barrels of oil per day, or 49% of our daily consumption. Our largest suppliers are:

1. Canada – 2.6 million barrels per day
2. Mexico – 1.3 million barrels per day
3. Saudi Arabia – 1.1 million barrels per day
4. Nigeria – 1.0 million barrels per day
5. Venezuela – 1.0 million barrels per day
6. Russia – 600,000 barrels per day
7. Algeria – 500,000 barrels per day
8. Iraq – 400,000 barrels per day

These eight countries account for over 70% of our daily oil imports. You hear the “experts” on CNBC declare that our oil supply situation is secure because close to 60% of our daily usage is sourced from North America. The presumption is that Canada and Mexico are somehow under our control. There is one problem with this storyline. US oil production peaked in 1971 and relentlessly declines as M. King Hubbert predicted it would. Mexico will cease to be a supplier to the U.S. by 2015 as their Cantarell oil field is in collapse. Most of the oil supplied from Canada is from their tar sands. Expansion of these fields is difficult as it takes tremendous amounts of natural gas and water to extract the oil.

The rest of the countries on the listdislike us, hate us, or are in constant danger of implosion. When the Neo-Cons on Fox News try to convince you that Iraq has been a huge success and certainly worth the $3 trillion of national wealth expended, along with 4,500 dead and 32,000 wounded soldiers, you might want to keep in mind that Iraq was exporting 795,000 barrels of oil per day to the U.S. in 2001 when the evil dictator was in charge. Today, we are getting 415,000 barrels per day. Dick Cheney was never good at long term strategic planning.

We better plant more corn, as our supply situation is far from stable. Maybe we can install solar panels from Obama’s Solyndra factory on the roofs of the 65 Chevy Volts that were sold in the U.S. this year, to alleviate our oil supply problem. The reliability and stability of our oil supply takes second place to the price increases caused by Ben Bernanke and his printing press. The average American housewife drivingher 1.5 children in herenormous two and a half ton Chevy Tahoe or gigantic Toyota Sequoia two miles to baseball practice doesn’tcomprehend why it is costing her $100 to fillthe 26 gallon tank.If she listens to the brain dead mainstream media pundits, she’ll conclude that Big Oil is to blame. The real reason is Big Financein conspiracy with Big Government.

Ben Bernanke is responsible for Americans paying $4 a gallon for gasoline. Zero interest rates,printing money out of thin air to buy $2 trillion of mortgage and Treasury bonds, and propping up insolvent criminal banks across the globe have one purpose – to deflate the value of the U.S. dollar. The rulers of the American Empire realize they can never repay the debts they have accumulated. They have chosen to default through debasem*nt. It’s an insidious and immoral method of defaulting on your obligations. Let’s look at from the perspective of our two biggest oil suppliers.

A barrel of oil cost $40 a barrel in early 2009. The U.S. dollar has declined 30% versus the Canadian dollar since early 2009. The U.S. dollar has shockingly declined 20% versus the Mexican Peso since early 2009. How could the mighty USD decline 20% against the currency of a 3rd world country on the verge of being a failed state? Ask Ben Bernanke. Our lenders can’t do much about the continuing debasem*nt of our currency, but our oil suppliers can. They will raise the price of oil in proportion to our currency devaluation. Since Bernanke’s only solution is continuous debasem*nt, the price of oil will relentlessly rise.

Peak Oil Has Arrived

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD. At present, investment in oil production is only beginning to pick up, with the result that production could reach a prolonged plateau. By 2030, the world will require production of 118 MBD, but energy producers may only be producing 100 MBD unless there are major changes in current investment and drilling capacity.” – 2010 Joint Operating Environment Report

We’ve arrived at the point where demand has begun to outpace supply and even the onset of another worldwide recession will notassuage this fact. World oil supply has peaked just below 89 million barrels per day. Supply has since fallen to 87.5 million barrels per day, as Libyan supply was completely removed from world markets. The International Energy Agency is already forecasting worldwide demand to reach 90 million barrels per day in the second half of 2011 and reach 92 million barrels per day in 2012. The IEA warns that “just at the time when demand is expected to recover, physical limits on production capacity could lead to another wave of price increases, in a cyclical pattern that is not new to the world oil market.”

The world is trapped in an inescapable conundrum. As supply dwindles, prices increase, causing global economies to contract, and temporarily causing a drop in prices, exceptthe lows are higher each time. The drill, drill, drill ideologues do nothing but confuse and mislead the easily led masses. We have 2% of the world’s oil reserves and consume more than 20% of the daily output. We consume 7 billion barrels of oil per year.

Drilling for oil in the Arctic National Wildlife Refuge in Alaska and areas formerly off limits in the Outer Continental Shelf will not close the supply gap. The amount of recoverable oil in the Arctic coastal plain is estimated to be between 5.7 billion and 16 billion barrels. This could supply as little as a year’s worth of oil. And it will take 10 years to produce any oil from this supply. The OCS has only slightly more recoverable oil at an estimated 18 billion barrels and the BP Gulf Oil disaster showed how easy this oil is to access safely. The new over hyped energy savior is shale gas. The cheerleaders in the natural gas industry claim that we have four Saudi Arabias worth of natural gas in the U.S. This is nothing but PR talking points to convince the masses that we can easily adapt. The amount of shale gas that can be economically produced is far less than the amounts being touted by the industry. The wells deplete rapidly and the environmental damage has been well documented. And last but certainly not least, we have the abiotic oil believers that convince themselves the wells will refill despite the fact that there is not one instance of an oil well refilling once it is depleted.

I wrote an article calledPeak Denial About Peak Oilexactly one year ago when gas was selling for $2.60 a gallon. I railed at the short sightedness of politicians and citizens alike for ignoring acalamitous crisis thatwas directly before their eyes. Just like our accumulation of $4 billion per day in debt, peak oil is simply a matter of math. We cannot take on ever increasing amounts of debt in order to live above our means without collapsing our economic system. We cannot expect to run our energy intensive world with a depleting energy source. There is no amount of spin and PR that can change the math. Un-payable levels of debt and dwindling supplies of oil willmerge into a perfect storm over the next ten years to permanently changeour world. The change will be traumatic, horrible, bloody and a complete surprise to the non-critical thinking public.

“In the longer run, unless we take serious steps to prepare for the day that we can no longer increase production of conventional oil, we are faced with the possibility of a major economic shock—and the political unrest that would ensue.” – Dr. James Schlesinger – former US Energy Secretary, 16th November 2005

We were warned. We failed to heed the warnings. If we had begun making the dramatic changes to our society 5to 10 years ago, we may have been able to partially alleviate the pain and suffering ahead.Instead we spent our national treasure fighting Wars on Terror and bailing out criminal bankers. Converting truck and bus fleets to natural gas; expanding the use of safe nuclear power; utilizing wind, geothermal, and solar where economically feasible; buying more fuel efficient vehicles; andcreating more localized communities supported bylight rail with easy access to bike and walking options, would have allowed a more gradual shift to a less energy intensive society.

We’ve done nothing to prepare for the onset of peak oil.Until this foreseeable crisis hits with its full force like a Category 5 hurricane, Americans will continue to fill up their M1 tank sized, leased SUVs, tweet about Lady Gaga’s latest stunt, and tune in to this week’s episode of Jersey Shore. Meanwhile, economic stagnation, catastrophe and wars foroil are darkening the skies on our horizon.

“Dependence on imported oil, particularly from the Middle East, has become the elephant in the foreign policy living room, an overriding strategic consideration composed of a multitude of issues. …. Taken in whole, the National Energy Policy does not offer a compelling solution to the growing danger of foreign oil dependence. … Future military efforts to secure the oil supply pose tremendous challenges due to the number of potential crisis areas. ….. Economic stagnation or catastrophe lurk close at hand, to be triggered by another embargo, collapse of the Saudi monarchy, or civil disorder in any of a dozen nations.”– America’s Strategic Imperative A “Manhattan Project” for Energy

Well, of course he isn’t. But I never thought I’d see the day when Admin attacked one of the most successful businesses in America, Southwest Airlines. Why? All because Southwest had the effrontery to kick off Green Day band member Billie Joe Armstrong from a flight because this slug got on the flight with the waistband of his pants somewhere close to his knee caps while revealing a butt crack which would make a member of a plumber’s union blush. Oh, the horror. Southwest enforced some modicum of decorum from its passengers on its flights. What next? Saying “please” and “thank you”?

ACTUAL MUGSHOT, WITHOUT EYE LINER, OF BILLIE JOE ARMSTRONG AFTER A DUI ARREST

BILLIE JOE WITH EYE LINER. WHERE’S THE LIPSTICK?

Here’s how it went down between Admin and me on the thread of “Farewell WYSP.”

SSS posts article of Armstrong getting booted off of a Southwest flight from Oakland to Burbank.

ADMIN: “Southwest Airlines Eats sh*t. Are you actually condoning people getting thrown off airplanes because their pants are sagging? I guess that Federal Government mindset still breaths (sic) in you.”

SSS: “Are you against private businesses like Southwest Airlines which create thousands of jobs and SUCCEED? I could care less whether Southwest kicked this punk off their plane because of his low riders. It is THEIR AIRPLANE AND THEIR DECISION TO MAKE, not some government drone frisking little girls at a security checkpoint. If Southwest’s actions offend the public in general, then it’ll read about it on the bottom line of its annual report. This has absolutely nothing to do with a federal government mindset, but everything to do with letting a business alone and letting them run its show the way it sees fit.”

(edited) “Southwest Airlines commenced Customer Service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities-Houston, Dallas, and San Antonio. Today, Southwest operates 550 Boeing 737 aircraft among 72 cities. Yearend results for 2010 marked Southwest’s 38th consecutive year of profitability. Southwest is the United States’ most successful low fare, high frequency, point-to-point carrier. Southwest operates more than 3,400 flights a day coast-to-coast, making it the largest U.S. carrier based on domestic passengers carried as of December 31, 2010.

ADMIN: “Nice copy and paste about Southwest. It seems their reputation is doing better than their actual results. Their profits are on track to be down 30% this year and their stock has collapsed from $14 to $8.”

————————–end of thread————————–

You seem to be focused on profits and stock prices, Admin. Well, so what? Businesses have good years, and they have bad years. What else is new? Try and focus on the price of oil, please, since it is a harbinger of the profit margin of the airline industry. Anyway, you like people to bring facts and figures to the table when they show up on TBP. I did so with my “copy and paste” response above, which didn’t seem to meet your threshold of truth. So chew on these.

—-Southwest Airlines employs nearly 35,000 people. Those are PURE tax-paying jobs, in addition to Southwest’s corporate taxes.

—-Southwest Airlines has bought 550 Boeing 737 jet airliners. Tell me that hasn’t helped one of America’s most important manufacturers. Tell me that hasn’t helped Boeing’s growth. Southwest has been the LAUNCH CUSTOMER for the Boeing 737 300/500/700 series of jets. What that means is that these aircraft were first ordered and bought by Southwest. Let me put it more simply: Southwest Airlines has been critical to Boeing aircraft sales.

Want some more facts, Admin? Will a pie or bar chart help?