Friday, February 6, 2009

The Law of Faith

I have to believe that as we live and mature in Christ through the years, our mind, spirit, world view & philosophy become more in tune with GOD's as revealed by Scripture and the Holy Spirit. It's not that we become narrow-minded, au contrare! Our minds strain to expand & grasp the enormity of YHWH's love, grace, mercy, patience, & long-suffering with us. As we observe the world system, controlled by the lawless One over the ages, we begin to understand & comprehend exactly the why & wherefore things are as they are.
Secular law & governments are ordained by YHWH to keep the lost in check. To whatever extent; good, bad or indifferent, rulers & governments hold back the explosion of sin on the planet. Unchecked & unrestrained, we have seen and heard the rampant disarray and wickedness that abounds in civil war, mob rule & riots. But, even rulers & governments are not immune to the corruption of sin as history plainly shows. Wherever the rule of law wanes, the system begins to fail. Such as it is today across America...
"Knowing this, that law is not made for the righteous (those born again by the Spirit of Christ), but for the lawless and disobedient, for the wicked and for (lost) sinners, for unholy and profane, for murderers of fathers and murderers of mothers, for manslayers, for fornicators, for homosexuals, for slave-traders, for liars, for perjurers, and if any other thing opposes sound doctrine (the Word of GOD)," I Tim 1:9-10
"Do, we then nullify the law by faith? Far be it. On the contrary, we establish the law." Rom 3:31
" I will put my law in their inward parts, and write it in their hearts; and will be their God, and they shall be my people." Jer 31:33
As the Word of God and the Holy Spirit are squelched & grieved in these times, we see the effects of sin more predominately in every facet of our society. Infidelity & divorce in our families; crime, corruption, greed, selfishness & apathy permeate our businesses & governments at all levels; the lust for money, sex & power, pleasure-seeking, drugs, sensory titillation & false religious-spiritual experiences are the prime motivations & drives of our social structure. The rise & fall of entire civilizations can be tracked to the spreading cancer of these moral vacuums.
"Where there is no vision, the people perish." "There is no fear (respect, adoration, humbling, awesomeness) of YHWH before their eyes." Pr 29:18, Ps 36:1

Reed Hastings is a fool
(see below). No matter his title, position or state, he is foolish. GOD says he is so:
"He who trusts in his own heart is a fool." Pr 28:26
"As the partridge sits on eggs, and hatches them not; so is he that gets riches, and not by right, shall leave them in the midst of his days, and at his end shall be a fool." Jer 17:11
Using & upholding taxation as a method of social engineering & control is one of the major sins of America's present political & economic situation. Such was the impetus for the "Boston Tea Party". Yet, we swallow the lie readily today by reason of class envy.
At best, American government should be a benign silent partner, but it only works
for a moral & righteous people. Since we have foregone this premise, we can only look forward to more & more government intrusion, control & manipulation.

_______________NEWS__________________

Please Raise My Taxes

Los Gatos, Calif.

I’M the chief executive of a publicly traded company and, like my peers, I’m very highly paid. The difference between salaries like mine and those of average Americans creates a lot of tension, and I’d like to offer a suggestion. President Obama should celebrate our success, rather than trying to shame us or cap our pay. But he should also take half of our huge earnings in taxes, instead of the current one-third.

Then, the next time a chief executive earns an eye-popping amount of money, we can cheer that half of it is going to pay for our soldiers, schools and security. Higher taxes on huge pay days can finance opportunity for the next generation of Americans.

Clearly, the efforts over the past few decades to control executive compensation haven’t accomplished much. Improved public disclosure was supposed to shame companies into lowering salaries, and it obviously hasn’t worked. In 1993, President Bill Clinton changed the tax law to effectively cap executives’ salaries at $1 million a year, but that simply drove corporate boards to offer larger bonuses and stock options to attract and keep talent. More recently, “say on pay” proposals would have shareholders opine on their boards’ compensation decisions, but “say and pay” won’t change the fact that luring a top executive away from another company is never easy or cheap.

The reality is that the boards of public companies hate overpaying for anything, including executives. But picking the wrong chief executive is an enormous disaster, so boards are willing to pay an arm and a leg for already proven talent. Putting limits on the salaries at public companies, or trying to shame them into coming down, won’t stop this costly competition for talent.

Of course, it’s galling when a chief executive fails and is still handsomely rewarded. But with the concept of “tax, not shame,” a shocking $20 million severance package would generate $10 million for the government. That’s a far better solution than what we have today, not least because it works with the market rather than against it.

Another advantage is that it would also cover the sometimes huge earnings of hedge fund managers, star athletes, stunning movie stars, venture capitalists and the chief executives of private companies. Surely there is no reason to focus only on executives at publicly traded companies.

This week, President Obama proposed imposing a $500,000 compensation cap on companies seeking a bailout. It’s a terrible idea. We all want the taxpayers’ money returned, and capping compensation at bailout recipients will just make it that much harder for those boards to hire and hold on to the executives who can lead their companies to compete and thrive.

Perhaps a starting place for “tax, not shame” would be creating a top federal marginal tax rate of 50 percent on all income above $1 million per year. Some will tell you that would reduce the incentive to earn but I don’t see that as likely. Besides, half of a giant compensation package is still pretty huge, and most of our motivation is the sheer challenge of the job anyway.

Instead of trying to shame companies and executives, the president should take advantage of our success by using our outsized earnings to pay for the needs of our nation.

__________BREAKING NEWS____________

Payrolls plunge by 598,000, the most since 1974

Unemployment rate jumps to 7.6% on widespread job losses

By Rex Nutting, MarketWatch
Last update: 8:53 a.m. EST Feb. 6, 2009
WASHINGTON (MarketWatch) -- The fury of the recession intensified in January, as the unemployment rate jumped to 7.6%, and nonfarm payrolls fell by the largest amount in 34 years, the Labor Department reported Friday.
Nonfarm payrolls fell by a seasonally adjusted 598,000 in January after a revised loss of 577,000 in December, the government said. It's the largest payroll loss since December 1974, according to a survey of workplaces. Payrolls fell by 597,000 in November.
"Job losses were large and widespread across the major industry sectors," said Keith Hall, head of the Bureau of Labor Statistics. Manufacturing saw its largest decline in 26 years.
About 3.6 million jobs have been lost since the recession began just over a year ago, representing about 2.6% of employment. About half of the jobs disappeared in the three months following the Sept. 14 collapse of Lehman Brothers Holding Inc.


Total hours worked in the economy fell by 0.7% in January and were down 4.6% from a year earlier. The average workweek was steady at a record-low 33.3 hours.
Meanwhile, a separate survey of households showed 11.6 million people were unemployed and looking for work, totaling 7.6% of the workforce, compared with 7.2% in December. It's the highest unemployment rate since September 1992.
After adding in those who are too discouraged to look for work and those who are forced to cut back their hours to part-time, the alternative unemployment rate rose to 13.9% from 13.5%.
The employment-population ratio fell to 60.5%, down from 62.7% at the beginning of the recession, and the lowest since 1986.
Job losses for all of 2008 were also larger than previously reported, at 3 million. In its annual benchmark revision, the government said employment at the end of the year was 138.2 million, 311,000 less than it reported a month ago. The revisions incorporate updated information from payroll tax returns from businesses.
Worse than expected
The payrolls report was worse than anticipated. Economists surveyed by MarketWatch were looking for job losses of 525,000 and an unemployment rate of 7.5%. See Economic Calendar.
Job losses were widespread across industries.
The goods-producing industries lost 319,000 jobs, the most since 1975. Manufacturing payrolls fell by 207,000, the most since 1982. Manufacturing employment has fallen by 1.1 million since the recession began in December 2007. Of 83 manufacturing industries, just 8% were hiring in January, the lowest percentage on record dating back to 1991.
Total hours worked in manufacturing fell 2.1% in January.
Construction employment fell by 111,000 in January and was down 781,000 since the recession began.
Services-producing industries cut employment by 279,000 in January, including 76,000 temporary jobs, 45,000 in retail, 44,000 in transportation, and 42,000 in financials.
However, health care added 19,000 jobs.
Of 271 industries across the economy, only 25% were hiring in January.
Average hourly earnings rose by 5 cents to $18.46, or 0.3%. In the past year, average earnings are up 3.9%, while prices fell down about 0.7%. End of Story

______________________

Japan’s Big-Works Stimulus Is Lesson

HAMADA, Japan — The Hamada Marine Bridge soars majestically over this small fishing harbor, so much larger than the squid boats anchored below that it seems out of place.

And it is not just the bridge. Two decades of generous public works spending have showered this city of 61,000 mostly graying residents with a highway, a two-lane bypass, a university, a prison, a children’s art museum, the Sun Village Hamada sports center, a bright red welcome center, a ski resort and an aquarium featuring three ring-blowing Beluga whales.

Nor is this remote port in western Japan unusual. Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.

Now, as the Obama administration embarks on a similar path, proposing to spend more than $820 billion to stimulate the sagging American economy, many economists are taking a fresh look at Japan’s troubled experience. While Japan is not exactly comparable to the United States — especially as a late developer with a history of heavy state investment in infrastructure — economists say it can still offer important lessons about the pitfalls, and chances for success, of a stimulus package in an advanced economy.

In a nutshell, Japan’s experience suggests that infrastructure spending, while a blunt instrument, can help revive a developed economy, say many economists and one very important American official: Treasury Secretary Timothy F. Geithner, who was a young financial attaché in Japan during the collapse and subsequent doldrums. One lesson Mr. Geithner has said he took away from that experience is that spending must come in quick, massive doses, and be continued until recovery takes firm root.

Moreover, it matters what gets built: Japan spent too much on increasingly wasteful roads and bridges, and not enough in areas like education and social services, which studies show deliver more bang for the buck than infrastructure spending.

“It is not enough just to hire workers to dig holes and then fill them in again,” said Toshihiro Ihori, an economics professor at the University of Tokyo. “One lesson from Japan is that public works get the best results when they create something useful for the future.”

In total, Japan spent $6.3 trillion on construction-related public investment between 1991 and September of last year, according to the Cabinet Office. The spending peaked in 1995 and remained high until the early 2000s, when it was cut amid growing concerns about ballooning budget deficits. More recently, the governing Liberal Democratic Party has increased spending again to revive the economy and the party’s own flagging popularity.

In the end, say economists, it was not public works but an expensive cleanup of the debt-ridden banking system, combined with growing exports to China and the United States, that brought a close to Japan’s Lost Decade. This has led many to conclude that spending did little more than sink Japan deeply into debt, leaving an enormous tax burden for future generations.

In the United States, it has also led to calls in Congress, particularly by Republicans, not to repeat the errors of Japan’s failed economic stimulus. They argue that it makes more sense to cut taxes, and let people decide how to spend their own money, than for the government to decide how to invest public funds. Japan put more emphasis on increased spending than tax cuts during its slump, but ultimately did reduce consumption taxes to encourage consumer spending as well.

Economists tend to divide into two camps on the question of Japan’s infrastructure spending: those, many of them Americans like Mr. Geithner, who think it did not go far enough; and those, many of them Japanese, who think it was a colossal waste.

Among ordinary Japanese, the spending is widely disparaged for having turned the nation into a public-works-based welfare state and making regional economies dependent on Tokyo for jobs. Much of the blame has fallen on the Liberal Democratic Party, which has long used government spending to grease rural vote-buying machines that help keep the party in power.

But some Western economists who have studied Japan’s experience say the stimulus accomplished more than it is now given credit for. At a minimum, they argue, it saved the economy from an outright, 1930s-style collapse.

Moreover, they say, any direct comparison of Japan and the United States is inevitably misleading, because Japan has spent so much more over the years on infrastructure. Having neglected its roads, bridges, water treatment plants and more over the years, the United States is bound to generate a greater payback for such spending than would Japan.

Beyond that, proponents of Keynesian-style stimulus spending in the United States say that Japan’s approach failed to accomplish more not because of waste but because it was never tried wholeheartedly. They argue that instead of making one big push to pump up the economy with economic shock therapy, Japan spread its spending out over several years, diluting the effects.

After years of heavy spending in the first half of the 1990s, economists say, Japan’s leaders grew concerned about growing budget deficits and cut back too soon, snuffing out the recovery in its infancy, much as Roosevelt did to the American economy in 1936. Growth that, by 1996, had reached 3 percent was suffocated by premature spending cuts and tax increases, they say. While spending remained high in the late 1990s, Japan never gave the economy another full-fledged push, these economists say.

They also say that the size of Japan’s apparently successful stimulus in the early 1990s suggests that the United States will need to spend far more than the current $820 billion to get results. Between 1991 and 1995, Japan spent some $2.1 trillion on public works, in an economy roughly half as large as that of the United States, according to the Cabinet Office. “Stimulus worked in Japan when it was tried,” said David Weinstein, a professor of Japanese economics at Columbia University. “Japan’s lesson is that, if anything, the current U.S. stimulus will not be enough.”

Most Japanese economists have tended to take a bleaker view of their nation’s track record, saying that Japan spent more than enough money, but wasted too much of it on roads to nowhere and other unneeded projects.

Dr. Ihori of the University of Tokyo did a survey of public works in the 1990s, concluding that the spending created almost no additional economic growth. Instead of spreading beneficial ripple effects across the economy, he found that the spending actually led to declines in business investment by driving out private investors. He also said job creation was too narrowly focused in the construction industry in rural areas to give much benefit to the overall economy.

He agreed with other critics that the 1990s stimulus failed because too much of it went to roads and bridges, overbuilding this already heavily developed nation. Critics also said decisions on how to spend the money were made behind closed doors by bureaucrats, politicians and the construction industry, and often reflected political considerations more than economic. Dr. Ihori said the United States appeared to be striking a better balance by investing in new energy and information-technology infrastructure as well as replacing aging infrastructure.

Japan’s experience also seems to argue for spending heavily to promote social development. A 1998 report by the Japan Institute for Local Government, a nonprofit policy research group, found that every 1 trillion yen, or about $11.2 billion, spent on social services like care for the elderly and monthly pension payments added 1.64 trillion yen in growth. Financing for schools and education delivered an even bigger boost of 1.74 trillion yen, the report found.

But every 1 trillion yen spent on infrastructure projects in the 1990s increased Japan’s gross domestic product, a measure of its overall economic size, by only 1.37 trillion yen, mainly by creating jobs and other improvements like reducing travel times.

Economists said the finding suggested that while infrastructure spending may yield strong results for developing nations, creating jobs in higher-paying knowledge-based services like health care and education can bring larger benefits to advanced economies like Japan, with its aging population.

“In hindsight, Japan should have built public works that address the problems it faces today, like aging, energy and food sources,” said Takehiko Hobo, a professor emeritus of public finance at Shimane University in Matsue, the main city of Shimane. “This obsession with building roads is a holdover from an earlier era.”

The fruits of that obsession are apparent across Shimane, a rural prefecture about the size of Delaware where Hamada is located. Each town seems to have its own art museum, domed athletic center and government-built tourist attraction like the Nima Sand Museum, a giant hourglass in a glass pyramid. The prefecture, with 740,000 residents, even has three commercial airports able to handle jets, including the $250 million Hagi-Iwami Airport, which sits eerily empty with just two flights per day.

In Hamada, residents say the city’s most visible “hakomono,” the Japanese equivalent of “white elephant,” was its own bridge to nowhere, the $70 million Marine Bridge, whose 1,006-foot span sat almost completely devoid of traffic on a recent morning. Built in 1999, the bridge links the city to a small, sparsely populated island already connected by a shorter bridge.

“The bridge? It’s a dud,” said Masahiro Shimada, 70, a retired city official who was fishing near the port. “Maybe we could use it for bungee jumping,” he joked.

Koichi Matsuoka, a retired professor of policy at the University of Shimane in Hamada, said useless projects like the Marine Bridge were the reason that years of huge spending had brought few long-term benefits here. While Shimane has had the highest per capita spending on public works in Japan for the last 18 years, thanks to powerful local politicians like the deceased former Prime Minister Noboru Takeshita, its per capita annual income of $26,000 ranked it 40th among Japan’s 47 prefectures, he said. He said the spending had left Shimane $11 billion in debt, twice the size of the prefectural government’s annual budget.

Still, local officials in Hamada warn that their city’s economy will collapse without public works, though they recognize the spending cannot continue forever. They offered their own lesson to American communities in the Obama era: when you choose public works projects, be sure to get ones with lasting economic impact.

Among Hamada’s many public works projects, the biggest benefits had come from the prison, the university and the Aquas aquarium, with its popular whales, they said. These had created hundreds of permanent jobs and attracted students and families with children to live in a city where nearly a third of residents were over 65.

“Roads and bridges are attractive, but they create jobs only during construction,” said Shunji Nakamura, chief of the city’s industrial policy section. “You need projects with good jobs that will last through a bad economy.”
__________________________

Fix the system, not the cause

Commentary: Ethics problems in markets call for wide-ranging overhaul

By Thomas Kostigen, MarketWatch
Feb. 6, 2009
SANTA MONICA, Calif. (MarketWatch) -- There are some who believe that it wasn't an apple that tempted Adam and Eve, it was actually a banana. Whatever fruit it was that cast them out of the garden doesn't matter, though; the system failed.
We are facing failed systems today in economics, politics and taxes, yet we aren't trying to fix them. We are simply rearranging temptations.
We'll never stomp out lying, or cheating. We'll never stomp out avarice. Try as President Obama might, a salary cap on chief executives' pay isn't going to send much of a message to people who work in the finance industry, an industry built around making money. You and I both know some crafty accountant is right now figuring a way around those caps.
When it comes to taxes, the system there, too, is flawed. When some of the most savvy and educated people in the country can't get their taxes straight, you know it's time to fix what the IRS acronym should really stand for: Internal Revenue System.
Pork-barrel politics need the same treatment. The barrel needs to be emptied and crushed. Those political days should be long gone.
In short, the Obama administration has misstepped. It's focusing on the causes of failures rather than the system of failures. Back up the truck, Barack, and start again.
It's appalling that "a little," maybe 1%, maybe 5% -- or maybe even 50% -- of the current fiscal stimulus package is admittedly wasteful spending by the administration and politicians on Capitol Hill. That's like saying, "I only cheated a little."
Rules made to be broken
We operate on a rules-based accounting system in the United States. The rest of the world pretty much operates on an "intent-based" system. Hence, our rules are, well, meant to be broken.
The term loophole wouldn't exist if we moved to an intent-based system -- and simplified it. There is no reason on earth that a tax filing should come to 24,000 pages, as General Electric Co.'s has.
Similarly, an intent-based system should be part of Wall Street's way of doing business. Transparency is something to avoid in finance. Darkness produces profit; when both sides of a trade know what the other holds, transparently, there go margins.
The hundreds of trillions of dollars in derivative instruments that Wall Street can only account for in "nominal value" terms -- because who knows what the real value is -- needs to be called in and accounted for.
To be sure, none of these things will be easy to do. But none of these things are even being addressed.
Good money after bad
Throwing more than a trillion dollars at a system that is broken is not going to fix the problems before us today. If the $350 billion we threw at the problem just a few months ago didn't fix things, and we didn't learn a lesson from that, well then fool us once again. And we should be ashamed.
The great infrastructure spending we heard about accounts for less than one-fifth of the new stimulus bill. Many of the most important issues, such as spending on water infrastructure, have been slashed. Meanwhile, more than one-third of the bill includes new tax cuts: the rationale that caused much of the mess we are in today.
We need a new operating system, not version 3.0. Otherwise, I'm afraid to say the system will just crash again. And that would be a sin given all the goodwill in the world right now.
Furthermore, it's just bananas.

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