THE PRICE OF SELF-VICTIMIZATION

On the front pag?e of the USA Today section of the Monday Reno Gazette Journal, there appeared a column written by George Will that described certain statistical facts that are shocking and are having critical impact upon the present and future well being of the Black community here in America.

Various figures denote vexing social problems. They include 10,000 (the number of new baby boomers eligible for Social Security and Medicare every day), 10.2 percent (what the unemployment rate would be if 1.2 million discouraged workers had not recently stopped looking for jobs), $9.9 trillion (the Government Accountability Office calculation of the gap between the expected revenue and outlays for state and local governments during the next 50 years), $76.4 trillion (the GAO’s similar estimate of the federal government’s 75-year fiscal shortfall).

Remedies for these problems can at least be imagined. But America’s tragic number — tragic because it is difficult to conceive remedial policies — is 70 percent. This is the portion of African American children born to unmarried women. It may explain what puzzles Nathan Glazer.

Writing in the American Interest, Glazer, a sociology professor emeritus at Harvard, considers it a “paradox” that the election of Barack Obama coincided with the almost complete disappearance from Public life of the discussion of the black condition and what public policy might do to improve it.” This, says Glazer is the Black condition:

Employment prospects for young black men worsened even when the economy was robust. By the early 2000s, more than one third of all young black non-college men were under the supervision of the corrections system. More than 60 percent of black high school dropouts born since the mid-1960s go to prison. Mass incarceration blights the prospects of black women seeking husbands. So does another trend noted by sociologist William Julius Wilson: “In 2003-2004, for every 100 bachelor’s degrees conferred on black men, 200 were conferred on black women.”

Because changes in laws and mores have lowered barriers, the black middle class has been able to leave inner cities, which have become, Glazer says, “concentrations of the poor, the poorly educated, the unemployed and unemployable.” High out-of-wedlock birthrates mean a constantly renewed cohort of adolescent males without male parenting, which means disorderly neighborhoods and schools. Glazer thinks it is possible that for some young black men, “acting white” — trying to excel in school — is considered “a betrayal of their group culture.” This severely limits opportunities in an increasingly service-based economy where working with people matters more than working with things in manufacturing.

Now, from the Educational Testing Service, comes a report about “the Black-White Ahievement Gap: When Progress Stopped,” written by Paul E. Barton and Richard J. Coley. It examines the “startling” fact that most of the progress in closing the gap in reading and mathematics occurred in the 1970s and ’80s. This means “progress generally halted for those born around the mid-1960s, a time when landmark legislative victories heralded an end to racial discrimination.”

Only 35 percent of black children live with two parents, which partly explains why, while only 24 percent of white eighth-graders watch four or more hours of television on an average day, 59 percent of their black peers do. (Privileged children waste their time on new social media and other very mixed blessings of computers and fancy phones.) Black children also are disproportionately handicapped by this class-based disparity: By age 4, the average child in a professional family hears about 20 million more words than the average child in a working-class family and about 35 million more than the average child in a welfare family — a child often alone with a mother who is a high school dropout.

After surveying much research concerning many possible explanations of why progress stopped, particularly in neighborhoods characterized by a “concentration of deprivation,” the ETS report says:” It is very hard to imagine progress resuming in reducing the education attainment and achievement gap without turning these family trends around — i.e., increasing marriage rates, and getting fathers back into the business of nurturing children.” And: “It is similarly difficult to envision direct policy levers” to effect that.

So, two final numbers: Two decades, five factors. Two decades have passed since Barton wrote “America’s Smallest School: The Family.” He has estimated that about 90 percent of the difference in schools’ proficiencies can be explained by five factors: the number of days students are absent from school, the number of hours students spend watching television, the number of pages read for homework, the quantity and quality of reading material in the students’ homes — and, much the most important, the presence of two parents in the home. Public policies can have little purchase on these five, and least of all on the fifth.

The Jessie Jacksons and Al Sharptons in this country need to redirect their critical efforts inward toward correcting the problems highlighted above rather than complaining about the effects that these problems are having upon American society-increasing attitudes of racism.

One Man’s Opinion- Bud Brewer

Are We Facing Inflation or Deflation?

August 4,2010: Some of the smartest and most successful investment brains are on opposite sides of that question. The right answer matters a whole lot. A simple definition of inflation is too much money chasing too few goods. That’s easy to understand. If lots of people want the same thing and they all have money to buy it, then the seller is in the catbird seat. Looking at the action of the Fed, there is ample evidence that they are keeping monetary policy easy and flooding the system with money. Their hope is that all that cheap money will encourage people to go out and buy things. But it is simply not happening.

In fact, the response to the monetary stimulus reminds me of Japan twenty years ago. The country was in a recession (something unknown in that country since the end of World War II) and the Government was literally giving money to people and asking them to spend it. But they wouldn’t. They put it under their mattresses (literally) and saved it. The Government’s plan to encourage the Japanese consumers to spend their way out of recession was a failure.

It was hard for us Americans to understand the response of the Japanese consumers. Not spend gift money? Unheard of! However, that response should not have been a surprise because the culture in Japan for generations was one of saving, not spending. The Japanese had a 20% savings rate at that time and the insecurity associated with the recession only encouraged them to save more, even when it was free money.

“We owe too much money from the good old days when we borrowed and overspent and nobody told us we had to save. Now we have to mend our ways by simultaneously paying off our debts and increasing our saving.”

So let’s turn to the U.S. today.

We have been a population of spenders, not savers. Heading into the recession from which we are only now emerging, we were spending more than we were saving, i.e. we had a negative savings rate. Then the recession came, with the highest unemployment rate in over a generation, and spending slowed sharply.

In response, Congress enacted an enormous stimulus program to flood the economy with money. In addition, the Federal Reserve logically opened the money spigot to accommodate spending and hopefully to stimulate demand. With our propensity to consume instead of save, that should have been an easy solution. But nothing happened – or at least very little happened.

What is wrong?

Why aren’t we, the greatest spending nation on earth, spending? Why is all that cheap money not chasing the goods and consuming them and forcing the prices up?

Because we, the biggest spending nation on earth, are broke. We owe too much money from the good old days when we borrowed and overspent and nobody told us we had to save. Now we have to mend our ways by simultaneously paying off our debts and increasing our saving. Those two priorities are overriding our want and instinct to spend, and that is good. Well it is good for our financial health in the long run, but it is dreadful in the near term because it acts as a drag on consumer spending which is what this economy needs to gain more momentum.

So despite all the cheap money around, Americans are not, or better said, cannot take advantage of it, which means that there is not too much money chasing too few goods. Instead, there are too many goods – all the things consumers are NOT buying – chasing the few dollars left in consumers’ hands after they have paid their debt and tried to save. That is the opposite of an inflationary environment.

That is deflation. And that is certainly what it appears we are experiencing now and will continue to face in the short run. Unfortunately, there is a positive correlation between paltry demand and high unemployment.

On the positive side, the American consumer appears to have accepted the necessity of restructuring his/her balance sheet and once the savings rate has increased and the debt has been reduced, there will be a significant amount of pent-up demand. Then, and only then will the spectre of inflation raise its ugly head. That may be years from now.

One Woman’s Opinion- Patricia Chadwick

Founder and President of Ravengate Partners LLC

HOW DID WE GET HERE

GOLD AS AN INVESTMENT

Is Gold a good investment? Over the 50 years of my investment experience, the potential for price appreciation of gold has always come into consideration by investors when the dollar is experiencing devaluation either through inflation or through excessive monetary policies of the Federal Reserve. From 1970 when President Nixon took us off the gold standard until 1980 when Ronald Reagan was elected and Federal Reserve Bank Chairman Volker (more…)

Real Estate Short Sales a “Minefield”

June 27,2010:

Homeowners in Washoe County, Nevada, are finding out just how different the Nevada real estate laws dealing with foreclosure are from most other states. When facing foreclosure, one of the methods being used by lenders to speed the foreclosure sale process is to use a method called the “short Sale”. By taking this route to settle their mortgage debt, homeowners expect to stave off the negative effect on their personal credit that would occur if they went through a lengthy foreclosure and trustee sale of their property. In 2009, almost a fifth of all private residences in the Reno-Sparks area received a notice of default, were in foreclosure or going through a trustee sale. (more…)

A Look Back to see Ahead

It is difficult to develop high conviction that the recovery of the U.S. Economy has now passed beyond a point where it could still be impacted by the “subprime mortgage” phenomena. Actually it is more than an impact. These securities had the financial sector of our economy by the throat and were squeezing with all the force imaginable. What Congress thought was a benevolent idea to make home ownership readily available to the “working poor”, (their term, not mine), cascaded into a (more…)

Actions have consequences

Thursday, May 19,2010: Highlighting the failures of this administration becomes more and more redundant given the rising tide of better understanding by the American voter for just how dangerous this Presidency and his Democrat Congress really is. Continuing to Point this out may seem like trying to close the barn (more…)

THE DIMIZE OF THE BICYCLE

In the pursuit of our Reno Youth Bridge program to teach middle school students how to play the game of bridge, it has become apparent that 12-14 year old students no longer walk or ride bicycles to school. As I arrive at our schools to help teach their after school bridge activity, I am struck by the fact that of the 900+ students attending each day less than a handful, if that many, use the bicycle to get to school and return home. It is typical to see ten or more school buses lined up to carry the kids home and along side the school bus are 50-60 suburban vehicles, or other automobiles with parents or assigned care takers at the wheel, waiting to pick up their charge. I got to thinking the other day when I noticed (more…)

Its Nice to be Squeezed Except if you’re Short

March 9, 2010: Today we celebrate the bottoming of the market crash of 2008-2009. With Dow Jones Industrials Average index up 60% from that low, the experienced observer of market price appreciation in a recession is becoming wary that the underlying forces working in our economy like: The Government Stimulus($780 Billion most of which is questionable and is yet unspent), Open Market Strategy(buy all the mortgges any generator offers pumping money into economy) by the Federal Reserve, potential consequences of Federal and State fiscal (more…)

MARKET ECONOMICS VERSUS GOVERNMENT CONTROLS

This short attempt at humor infuriated those who think Tiger Woods’ “Mea Culpa” press conference last week closed the issue and future references to an action he or his wife actually or allegedly took that night in November should be off limits. Meet the Press Host, David Gregory; asked him “Do you expect people to take you seriously after making such a remark?” Adding “it was a comment thought by many to be in bad taste.” Other bloggers and certainly all those who are opposed to the Governor’s being a candidate for President in the 2012 election apparently agreed with him. The governor said that he thought the ” American people still enjoy a sense of humor” I thought the reference to a nine iron smashing the window of big and out of control government remark was pretty much on the mark. I also find it strange that these same critics had no comment regarding a Fox TV channel show that featured a cartoon character with “Downs Syndrome” commenting that “her mother was the former Governor of Alaska”. Personally I think both comments were perhaps insensitive but they did convey a humorous element and didn’t seem to be so outrageous as to cause such an uproar given the history of political verbiage.

Unfortunately, what was lost in the Meet The Press interview on Sunday February 21st was the solid logic of Gov. Pawlenty’s description of why the exploding budget deficits and unbridled increases in actual or proposed government spending are not sustainable. He said “its simple math.” Here he was on target yet there was no follow up by Gregory except to ask “Do you think the Stimulus program worked?” Pawlenty replied “based upon the goals of the Administration, I’d say no.” Gregory asked, “What about the 12,000 jobs created in your state?” Pawlenty said “Those were government jobs and you do not grow the economy by increasing the number of jobs paid for by collecting more taxes.” Actually there may be some multiplier benefit but whatever that amount would be will unlikely create any real or even nominal growth in the economy.

It is sad to see that when a person expresses a different perspective on what the role of government should be in America and how it may vary from how government programs currently operate, that the debate slides into questioning that simply seeks to confirm the status quo or to grant more entitlements to constituents and to give more authority to government to administer greater control over the economy. Pawlenty was the only one at the Governor’s Conference I heard say, “we are trying to solve a problem that exists because of a series of negotiations that took place between managements and labor over the period of the last forty or fifty years without a basis for sustaining them even in a growing economy.” Unrealistic entitlements are the problem and until the American people are ready to accept the reality that we must bring them in line with the economic ability to pay for them by constructive tax laws, contractual amendment, or God forbid, State bankruptcy, we face the potential for monetary and economic disaster of immeasurable proportion.

During the Governors Conference this week, the subject of health care was also discussed with far ranging views and opinions. One thing that demonstrated the differences in attitude was the Democrat Governors saying over and over: “these are our problems: 1. Insurance rates are rising by amounts that preclude individuals from being able to afford their premiums, 2. Insurance companies’ earnings have been exploding on the upside in part because of ill founded increases in rates. 3. Insurance companies are excluding those with pre-existing conditions. 4. Those that lose their job are also losing their health insurance. 5. We have to provide affordable premiums for those 20 plus million who have no coverage at all.
The only solution is to adopt a single payer system like Medicare or raise taxes on the wealthy to pay for it.

If you accept these as the minimum conditions for obtaining a health care bill, there will be no bill this year. Pawlenty uttered the following truism: “Healthcare reform is a great issue for this country. The system we now have is broken and we have to fix it. There is a way to do it but we must have consumers and markets in charge.” Now what does “markets and consumers in charge” mean? Consumers must have enough “skin” in the game to make it worth while to refuse superfluous medical procedures if they are going to have to pay for them while that medical service is not providing cure or improvement results for his illness. Today 20% or more of the cost of medical procedures allegedly initiated on behalf of the consumer are actually for the benefit of the provider, not the patient. We must incentivize the consumer to determine whether there is enough (or any), benefit to him to make him want to have that specific procedure. And that will be determined if it results in better health. To achieve this goal, and yet continue to protect the consumer from malpractice and still prevent the medical provider from having to order unnecessary procedures really only designed to protect them from lecherous law suits, we must have tort reform.

I was impressed by the strategies and proposals made be governor Pawlenty. He may become a valid conservative candidate for the Presidency in 2012.

One Man’s Opinion- Bud Brewer