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We The People of the United StatesWe The People of the United States
in Order to form a more perfect Unionin Order to form a more perfect Union
Secure the Blessings of Liberty to ourselves and our PosteritySecure the Blessings of Liberty to ourselves and our Posterity
Estab
lishJusticeinsured
omesticTranquility
providefortheco
Estab
lishJusticeinsuredomesticTranquility
provideforthecommon
mmondefence
defence
Doorda
inandestablishthisCONSTITUTION
fortheUnitedSta
tes
Doorda
inandestablishthisCONSTITUTION
fortheUnitedStatesofAmerica
ofAmerica
The 21st Century and Common Sense:
A Path to A Second Constitutional Convention
Addressing The Looming Crises of the United States Economy and Party Politics
Through A Peoples Convention to Revise Its Most Sacred Document
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The 21st Century and Common Sense:
A Path to A Second Constitutional Convention
(Pictures: The Signing of The Constitution of The United States, National Geographic Society)
Addressing The Looming Crises of the United States Economy and
Party Politics Through A Peoples Convention to Revise Its Most
Sacred Document
Jason T. Powers
2011 Deep Center Field Press
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Table of Contents
PreamblePreamblePreamblePreamble
IIIIA Brief History of the U.S. Constitution and AmA Brief History of the U.S. Constitution and AmA Brief History of the U.S. Constitution and AmA Brief History of the U.S. Constitution and Amendmentsendmentsendmentsendments
2
IIIIIIII
The Urgent Problems in America TodayThe Urgent Problems in America TodayThe Urgent Problems in America TodayThe Urgent Problems in America Today
4
The Degradation of An American LifeThe Degradation of An American LifeThe Degradation of An American LifeThe Degradation of An American Life 4
A Once Healthy Life DeterioratingA Once Healthy Life DeterioratingA Once Healthy Life DeterioratingA Once Healthy Life Deteriorating 8
An Angry Sea of Debt and Unfair Trade WarsAn Angry Sea of Debt and Unfair Trade WarsAn Angry Sea of Debt and Unfair Trade WarsAn Angry Sea of Debt and Unfair Trade Wars 9
Not So Free TradeNot So Free TradeNot So Free TradeNot So Free Trade 15
Finance,Finance,Finance,Finance, Money, and The BanksMoney, and The BanksMoney, and The BanksMoney, and The Banks 17
Revisiting the PastRevisiting the PastRevisiting the PastRevisiting the Past 23
Rivals to Prosperity and FreedomRivals to Prosperity and FreedomRivals to Prosperity and FreedomRivals to Prosperity and Freedom 24
Natural Resources and Energy PolicyNatural Resources and Energy PolicyNatural Resources and Energy PolicyNatural Resources and Energy Policy 26
Wars AbroadWars AbroadWars AbroadWars Abroad 28
Internal Conflict and Course CorrectionInternal Conflict and Course CorrectionInternal Conflict and Course CorrectionInternal Conflict and Course Correction 30
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Table of Contents
IIIIIIIIIIIIThe Founding Fathers and The Framers Action PThe Founding Fathers and The Framers Action PThe Founding Fathers and The Framers Action PThe Founding Fathers and The Framers Action Planlanlanlan
30
VisionariesVisionariesVisionariesVisionaries 30
IVIVIVIVThe Proposed Solution: A Constitutional ConventionThe Proposed Solution: A Constitutional ConventionThe Proposed Solution: A Constitutional ConventionThe Proposed Solution: A Constitutional Convention
31
BaitBaitBaitBait nnnn Switch and The MediaSwitch and The MediaSwitch and The MediaSwitch and The Media 31
The Common Mans PlaceThe Common Mans PlaceThe Common Mans PlaceThe Common Mans Place 33
VVVVInitial Debate, Structure of Convention, Delegates, Support &Initial Debate, Structure of Convention, Delegates, Support &Initial Debate, Structure of Convention, Delegates, Support &Initial Debate, Structure of Convention, Delegates, Support &
Sample of Proposed ConstSample of Proposed ConstSample of Proposed ConstSample of Proposed Constitutional Amendmentsitutional Amendmentsitutional Amendmentsitutional Amendments
34
AmendmentsAmendmentsAmendmentsAmendments 34
DelegatesDelegatesDelegatesDelegates 37
Elder StatesmenElder StatesmenElder StatesmenElder Statesmen 39
CommitteesCommitteesCommitteesCommittees 40
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Support from Other Branches of GovernmentSupport from Other Branches of GovernmentSupport from Other Branches of GovernmentSupport from Other Branches of Government 40
Delegates Role, Responsibility and Venue for ConventionDelegates Role, Responsibility and Venue for ConventionDelegates Role, Responsibility and Venue for ConventionDelegates Role, Responsibility and Venue for Convention
A Sample of 21A Sample of 21A Sample of 21A Sample of 21stststst Century AmendmeCentury AmendmeCentury AmendmeCentury Amendments for Discussionnts for Discussionnts for Discussionnts for Discussion 41
A 4A 4A 4A 4thththth Branch to Constitution: The Councilor BranchBranch to Constitution: The Councilor BranchBranch to Constitution: The Councilor BranchBranch to Constitution: The Councilor Branch 41
VIVIVIVIConcluding Thought on Americas ProblemsConcluding Thought on Americas ProblemsConcluding Thought on Americas ProblemsConcluding Thought on Americas Problems
45
Bibliography & AppendixBibliography & AppendixBibliography & AppendixBibliography & Appendix
48 49
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PreamblePreamblePreamblePreamble
During the Course of human events, it has been necessary to reexamine
the foundations of Governance, and to measure the plights and ploys of
the powerful, and their lauded places, to those they rule via The Law.
This exists whether they be: democratic, monarchial, or theocratic in
design, or other purposes, less distinguished, and often, more
distressing. What they all have in common is: the People under their rule.
To see what ends work, and which ideas will endure, the People must
self-determine, at some fortuitous point, whether they will comply and
concede to the idea of any such rule, or whether a new path is to be
hewn from the rock of Freedom; and what necessary part will the People
play as its rock Shaper.
Even the oldest of Kingdoms and Democracies alike must relent to
reasoned looks at new ideas of law and reordering of economic plights.
To see when the faltering is near; even while their may be legitimate
efforts to stop the wheel of fate from crushing the hearts and minds of
the People, some efforts are better left to the auspices of an entire
Nation, than the Will of long entrenched rulers, whether they be King, or
Senator, in operation.
This task is not without risks or jeopardy to the way of those it will most
affect. Stability is a staple to be desired and preserved at a jealous
price. But such stable avenues mean little if they no longer exist;
corrupted by decay, decadence, and vice; handle ineffectively the
changing landscapes before them; and are futile to the majority that can
make better roads and realities for All when they listen to All via vibrant
Compacts and Constitutions.
Such is the present state of the United States of America once founded
on the principles of Equality, Liberty, and Prosperity. These ideals were
fired tested for two centuries and one score through war and strife and
pioneering treks. And while a Nation is not without its ebbs and natural
resurrection from dire affairs, the answers to such perils all came with
great change. Sometimes only to an issue that created a noxious divide
and others as they threatened the permanent schism for which a
rejoining shall be impossible to achieve.
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2
It is to ponder what can be achieved if the noble notions again of
Equality, Liberty, and Prosperity hold steadfast in the present tense.
And up to the People to put to task the forthright effort to achieve again
what The Founders fought vigorously for and designed adeptly to keep
safe and sacred: A Nation United against all Foes, Foreign and Domestic.
I. A Brief HisI. A Brief HisI. A Brief HisI. A Brief History of the U.S. Constitution and Amendmentstory of the U.S. Constitution and Amendmentstory of the U.S. Constitution and Amendmentstory of the U.S. Constitution and Amendments
In the summer of 1787, a prestigious group of men, whose fame and
foresight and fighting instincts brought forth a nation for and of the
Common Man, sat in Philadelphia to hammer out the Ten Commandments
of the United States of America, the U.S. Constitution. Theirs was a
seemingly insurmountable task; to draw upon the successes of previous
empires while avoiding the misdeeds of those same nation-states, given,
that many who fomented and espoused ideals of Equality and Freedom,
often could not live up to their own stated designs in their own personal
actions and deeds.
As is always the case, the men involved became heated on particular
subject matters, and the division of powers to be held by the fledgling
government. Compromises were made; and future questions of the State
were left to be Amended.
Meanwhile, after such a beautiful design, John Jay, James Madison, and
Alexander Hamilton carried further those discussions of what these
Framers had designed at the Constitutional Convention, via the
newspapers of America in The Federalist Papers as all States were
asked to adopt and ratify this Earth-shaking document.
It will soon be 225 years since this monumental task was engaged in
to form a more perfect Union, establish Justice, insure domestic
Tranquility, provide for the common defence, promote the general
Welfare, and secure the Blessing of Liberty to ourselves and our
Posterity (Preamble to the United States Constitution.)
At many junctures in our nations history, we have corrected course via
internal and external threats to our nations Posterity. Seven-five years
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after New Hampshire was the ninth state to ratify the Law of the Land
(June 21, 1788), the Civil War raged on. The bloody battle at Gettysburg
set the stage for Abraham Lincoln to speak to the existence of our
Union: The world will little note, nor long remember what we say here,
but it can never forget what they did here. It is for us the living, rather, to
be dedicated here to the unfinished work [for] which they fought
(Gettysburg Address, November 19, 1863.)
With the outcome of the Civil War, the 13th, 14th, and 15th Amendments
were amended to the Constitution to firmly establish the Rights of
African-American citizens. Yet, this battle was hardly won: as our History
has proven in the years of racial turmoil that raged on thereafter.
Again, seven-five seasons of time would pass before we faced another
threat on the horizon: the inauspicious regime of Nazi Germany and its
satellites. The next turn of the calendar the Axis launched World War II
and the forces of Freedom were pitied against this powerful, unrelenting
drive of a deranged enemy to rule, unasked, all those not considered
Equal.
But the United States of America, again, had an Insurmountable Might;
and an Indomitable Will.
Late in the war, President Franklin Roosevelt said in 1944: True
individual Freedom cannot exist without economic security and
independence. People who are hungry and out of a job are the stuff of
which dictatorships are made. (Address to a Joint Session of Congress.)
After Roosevelts death in April 1945, the 22nd Amendment was ratified in
1951. This amendment limited the election to the office of President to
two elections and no more than 10 years total in office. It was felt by his
opponents that Roosevelts four elected terms had installed too much
permanency; and dangers lied in prolonged rule by one political party, or
leader.
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II. The Urgent Problems in America TodayII. The Urgent Problems in America TodayII. The Urgent Problems in America TodayII. The Urgent Problems in America Today
Now, as we move into the fourth act of our nations illustrious history,
we face threats across many fronts internal and external that must be
addressed immediately.
In the past quarter century, much of what America has become is being
done without a rudder, leadership, or the ruling spirit of a guiding hand.
The President of the United States, Barack Obama, spoke to this
dilemma during a 2009 White House news conference, saying that
America was similar to a gigantic ship that is not, easily course
corrected, and that it responds, slowly to the policies installed. U.S.
Court of Appeals judge Richard A. Posner inA Failure of Capitalism used
yet another ship analogy: that of a capsized ship being very difficult to
rock back from its Poseidon dwelling once upended by an economic tidal
wave. These sea and tsunami metaphors do not end there with regard to
this American Crisis. A Perfect Storm, A Financial Hurricane, A Tsunami
of Debt, A Frozen Sea of Credit, all flooded the front pages of the
newspapers at the outset of the Great Recession. Unfortunately, it took
such sea metaphors to awaken the sleeping captains of households and
companies alike to the dangers lurking in the deep global sea of
economics and finance.
Section ISection ISection ISection I. The Degradation of An American LifeThe Degradation of An American LifeThe Degradation of An American LifeThe Degradation of An American Life. The recent financial
collapses of 2007-2010 left Americans trillions of dollars poorer. Two of
the largest and most venerable manufacturing companies, GM and
Chrysler, were put in the process of bankruptcy; 1000s of small and
medium businesses saw their doors shut permanently; and any job suits
if one is looking for a place to make poverty line work count.
As Americans went into the ranks of the unemployed for prolonged
stays, the psychological toll was reminiscent of stories painted in Studs
Terkels Hard Times. Internal blaming phrases like: Im dying
offstaying up too late and sleeping too longstaring at the computer
screen, the window, your mirrored imagewith suicidal thoughts. I feel
so behindperhaps [you] are just not good enough. I feel worthless. I
feel like Im pulling my family into a hole with me.1
1 Zachary Roth. The Lookout. Yahoo! News Blog: July 14, 2011.
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The present day is about survival by nearly any means. And trying to see
positives where very little of them exist. But the story of a decaying
feeling and the eroding nation itself started long ago.
The sobering statistics of the past thirty years reflects most Americans
work longer hours; for a shrinking piece of the American Dream; while
consistently leveraging their futures on the consumption of present day
disposable, even if durable, consumer goods. Personal savings (if any
existed) were sunk into bigger homes and investment bubbles that
popped to only reinforce these economic stressors faced by Americans
from coast to coast. A strong middle class America existed only in the
far off memories of the past; and such looks remind us of the reasons we
often struggle today: income stagnation and Globalization.
From 1973 to 2006, the U.S. economy tripled in size in terms of its GDP.
1973 personal income (adjusted to 2007 dollars) of the bottom 90% was
$32,135. But by 2006, ones pay was cut to $31, 528. The top 10% saw
their paychecks double from $138,738 to $276,140 during the same
period.2 Meanwhile, the gap between the ber-rich and the middle class
is no longer just a zero or two, but a clutch of zeros in one hand, often
used to exploit an ever-hastening Global Game. To quote President
Obama again, In 1980 the average CEO made forty-two times what an
average hourly worker took home. By 2005, the ratio was 262 to 1.
Conservative outlets like TheWall Street Journaleditorial page try to
justify outlandish salaries and stock options as necessary to attract top
talent, and suggest that the economy actually performs better when
Americas corporate leaders are fat and happy. But the explosion in CEO
pay has little to do with improved performance.3 Yet, the case was
made happily for this global shift of wealth from lower to upper class and
from America to outside its borders.
The argument for Globalizations benefits depends entirely on where one
is; how old one is; what industry one inhabits; and the transformational
urges one can uniquely accomplish in a quickening and unstable world.
During the past sixty-five years, the United States has put together
several economic reclamation projects, some as massive as China,
2 Joshua Holland. The Fifteen Biggest Lies About the Economy.3 Barack Obama. The Audacity of Hope.
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others as small as the Israeli state. These projects pumped trillions into
the war torn, the nascent, and the communist realms with the hope
democratic ideals, open markets, and trading partners would come
about using this economic strategy. Industries rebounded in Japan and
Germany post war. Central and South America saw interventions by the
U.S. to stave off state disintegration. Europe was buttressed from an Iron
Curtain falling. Southeast Asia reflected the best and the worst of this
strategy. Often, the greater good was served as allies were remade and
reborn. However, at some point, the ideal of improving weaker states
lost sight of homeland realities, and the capitalist giver became the one
in restructuring need and necessity.
Tied to this march of globalization and forming trading partners via
exporting industries deem to labor costly and unworthy of reinvention at
home, a population grows mature in America. These older citizens must
hold on to hopes of rebounds in the stock market in the funds and
companies they invested in; the solvency of Social Security remains
Sacrosanct; and the Youth can create the next boom (read: growth) in
America and find employment and contribute forthwith to Social
Security. Such is the dice roll for millions of people over age 55: the
ultimate leveraged pyramid of money that must remain solvent for them
to partake.
Many of these Elderly have pushed off retirement, usually not by choice
thus putting additional strain on the employment market, geared
primarily to technology and the youth and consequently, the job hunt is
more competitive (and for less pay) than ever. Industries once trained
for are now: offshored, outsourced, redistributed, or outmoded. If one is
without savings or a solid nest egg, going back to school to quickly
acquire skills forthe possibility of a job and not an assured career for a
decade, or more, is a risky, debt-laden proposition. (Not to discount the
ageism too of hiring employers are not looking for near retirement
employees at a premium health and salary cost they may desire, or
require. Part-time or consulting work is a more likely option for persons
over 55.)
But this is not the American Dream sold to the sons and daughters of the
Greatest Generation. It is a nightmare; a physical and psychological
burden to work well beyond sixty-five, to seventy or seventy-two, hoping
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and praying a pink slip does not appear, or ones health, does not fall into
sudden and catastrophic disrepair. Not all are in crisis, but the fear is
indeed real enough.
These further workplace trends are indeed happening worldwide. As laid
out in the 2010 book, The 2020 Workplace: How Innovative Companies
Attract, Develop, and Keep Tomorrows Employees Today, five
generations (Traditional, Boomer, Gen X, Millennial, and Gen 2020) will
be in intense competition for a share of the knowledge economy, loosely
defined as tacit careers versus the 20th century transactional jobs. These
tacit jobs involve increasingly more mental diversification quantitative
analysis and judgment, social media skills, massive data collections and
transfers, collaborating long distance and a coherent worldview
understanding and ones place in it whereas, transactional holds to the
dominate 20th century model of assembly line interaction, passing the
widget, with minimal interaction and regulated collaboration held in just
the top tiers of the company.
But this change of skill sets has reached a tipping point. Since the late
1990s, over two-thirds of jobs created in the United States have been the
tacit jobs. Which sounds encouraging until it is realized that the
replacement jobs are far, far less numerous4 than the total U.S.
employment pool and the remaining pool of job applicants lack the
necessary skills to take on this growing complexity of a tacit job. (As the
pace of technology follows Moores Law: half smaller and twice quick
technology is around the corner in a mere eighteen months. And the less
adaptable people are left further behind unless they resolve to keep up
ormake the quantum leap ahead.)
Additionally, the Globalization factor has turned the Fortune 500
companies over substantially in since 1980, as other countries are
indeed surpassing the United States in all avenues of talent creation,
company innovation, and attractive salaries or just importing in the
U.S. corporations willing to forego human rights concerns, on the hunt
for cheap labor, and lax (no) tax regimes. While there are obvious
benefits for the host country, and their economy, the United States loses
4 Paul Wiseman. A Boom in Corporate ProfitsAssociated Press; July 23, 2011. 2.4 million jobs transferred to foreignlands with 2.9 million lost in America according to U.S. Commerce Department. Wages stagnate during 2009-2011recovery, accounting for only 1% of economic gain as compared to 50% in the 1991-1992 recession.
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out. (Whitecollar jobs legal and financial sectors have migrated to
English-speaking India. Soon, the $3,000 tailor-made suit club will feel
the real pains of outsourcing and recession, and change their tunes on
this trend too. Or as Ben Stein, former Nixon speechwriter lately noted:
When recessions happened, they happened to people in Ohio or Illinois
or Michigan. Now, they have hit hard in California and in the law field
where so many of my friends work and in Washington5) Arguments
again to what caused this can be bantered around, but what to do about
it is the more salient question to be answered. Massive and decisive
change will be at the heart of the approach if this nation is to own its
problems and forge a solution.
21st century Globalization expert Thomas L. Friedman put it this way:
The crisis is already hereThe flattening of the world is moving ahead
apace, and barring war or some catastrophic terrorist event, nothing is
going to stop it. But what can happen is a decline in our standard of
living, if Americans are not empowered and educated to participate in a
world where all the knowledge centers are being connected.6
Such declines predated the Great Recession, only the mildly ignorant, or
naively political, refused to see the movements of capital outflow,
savings lost, deteriorating infrastructure, staples costing much more,
and Americans growing ire at all things, rationally and irrationally tied to
this failing reality. Our connectedness to a sinking ship was all too
apparent. And everyone is looking for an oar, or better yet: safe harbor.
Section IISection IISection IISection II. A Once Healthy Life DeterioratingA Once Healthy Life DeterioratingA Once Healthy Life DeterioratingA Once Healthy Life Deteriorating. Tied to this loss of the
American Dream is the American Health Care system continues to
escalate in cost, while nearly 20% cannot afford or lack adequate
coverage. By 2017, nearly one in five dollars in GDP (Gross Domestic
Product) will be spent on the systems maintenance as the Boomer
Generation (1946-1964) expands costs via their health conditions
deteriorating. (SourceSourceSourceSource: NPR, 2008.) Add to that, the conditions of people
under 35: obesity rates are climbing; type II diabetes is a national
epidemic; and the uninsured weighing the system down, often with no
5 Ben Stein.The End of Wishful Thinking. The American Spectator. July 19,2010.6 Thomas L. Friedman. The World is Flat.
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financial ability to purchase complex insurance plans or fall under the
pre-existing conditions category that makes it a nearly hopeless fight.
A measure was passed into law in 2010 to provide universal health care,
termed ObamaCare, yet no one seems to have an adequate handle on
the costs, the application, or the allowances to be made to and from
many parties involved (doctors, insurers, patients, hospitals,
pharmaceuticals, etc). The Law currently faces legal challenges around
the country, (state by state), adding to the confusion and costs to be
shouldered going forward. Repeal of ObamaCare will only add chaos to
the economic malaise yet to be righted from its Neptunian depths.
Yet getting persons who ideological gulfs are wider that the Pacific
Ocean to agree on health care that of who is responsible (individualism
vs. collectivism), what government role is applicable (private hospitals
or a public system), why such insurance gaps (the worst off are the least
likely to get covered), or how to prescribe the medicines (preventative,
maintenance, natural, outsourced, foreign) assures any compromise is
seen as utter defeat. A scorch earth mentality is employed often on this
topic. With trillions at stake, no side is ever going to agree. And an
election looms large in 2012 to repeal or reinforce ObamaCare.
Section IIISection IIISection IIISection III. An Angry SAn Angry SAn Angry SAn Angry Sea of Debt and Unfair Trade Warsea of Debt and Unfair Trade Warsea of Debt and Unfair Trade Warsea of Debt and Unfair Trade Wars. Our National
Debt has surpassed $14.3 Trillion dollars. For a sobering example, if our
Government would save $1 Billion per day, every day, it would take 38
years and 330 days to eliminate the balance. However, if interest
accrues at the same rate dailyon that $14 Trillion, the net effort would
be a zero change to our Debt. (This interest payment will be the usual
case by 2012: $383 Billion in interest outlays are projected inA New Era
of Responsibility: Renewing Americas Promise, 2009, Office of
Management and Budget, www.budget.gov, pg. 125.)
Table 1. U.S. Government Debt
U.S. Government Debt In Billions
National Debt (April 2011) 14,200
Projected ND Interest (2.5%) 355
2011 Deficit Estimate 1,100
De Projected Interest (2.5%) 27.5
National Debt (April 2012) 15,682.5
Interest Payments 382.5
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Additionally, at least $55 Trillion in Debt chokes America from
households to the states to private debts of corporations. These debts
will continue to exist for a lifetime, or more. As it will take much more
responsibility than seen in many a budgetary programs currently devised
and executed across the spectrum of politics or policy. By 2014, this
egregious total could well eclipse $87 Trillion. (Kevin Phillips, Bad
Money.)
Much of the yearly federal deficit can be tied to taxation shortfalls.
Where in the 1950s one in fourtax dollars came from corporations, the
present sees only one in ten federal receipts coming directly from the
business sector. Corporate profits have risen dramatically and have
federal subsidies piggybacked into the mix specifically in the energy7,
food, and utility sectors; capital gains taxes are low; inheritance taxes
(as most wealthy people know) are easily avoided via trusts and
foundations; individual tax cuts from 2001 forward for the toptier
earners (and coinciding war machinates) has left the federal budget
groaning perpetually from debt and interest payments. It would be
tolerable if only one or two of these situation existed capital gains and
inheritance, for example but to have all of these in operation while the
United States spirals into insolvency, leaves one to wonder why policy
has not altered much in the last decade.
This Long-Term Debt Crisis was only acerbated by the prolonged Great
Recession, which required even more deficit spending to spur growth, as
$787 Billion in outlays were approved in February 2009 on top of $700
Billion doled out to Wall Street in the fall of 2008 to keep the Capitalistic
System functioning, albeit in tatters. The Federal Reserve too made
numerous credit facilities available to spur lending on buying collateral
from these ailing banks which ballooned its balance sheet from $900
7
In May 2011, this issue of subsidizing came to an oil head as the century-old sisters of the Standard Oil trust (1907)came before a congressional committee to argue for keeping $21 billion in subsidies over a decade while they areracking up the largest profits of any company in America today. Subsidies for nascent industries are not an unusualcourse for most countries in the world. Most governments attempt to support any new innovation where possible.However, oil has long been a mature industry and has pocketed these billions for the most part, reinvesting little.Shifting these subsidies to the termed green economy would at least be a defensible course of action and just mightcreate competition the oil companies fear is inevitably coming. (The subsidies were left in place in spite of loudarguments made about debt ceilings and defaulting on debt. Meanwhile, billion dollar ethanol subsidies for defendingcorn ethanol, a substantially weaker product compared to Brazilian sugar cane ethanol, was to be scrapped. Othermethods, involving cellulose-based or garbage-infused ethanol are still in their infancy, and are being ignored (lacksufficient subsidies) as alternatives. Again reflecting a total disregarding of a major concern: energy independency.)
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Billion in 2007 to $2.4 Trillion by summer 2009.8 All this was meant to
replace a multi-trillion dollar hole blown into the 21st century quicksand
foundation of the American Economy: homebuilding and consumerism.
The revitalization and recovery of jobs lost has been slow, if
meaningfully positive, since losing 750,000 in January 2009 alone, and
eight million over the course of the last days of Bush administration and
the first 100 days of Obamas term. Yet, as we averted that spiraling
crisis (for the present) a rationale is needed to maintain Fiscal
Responsibility in the decades to come. (Debts do matter contrary to
economists drinking too liberally the free market punch of the 1980s.)
Else, We will see unimaginable debt loads, and harder economic choices,
than has befallen any generation(s) of Americans before.
Seemingly deaf to the magnitude of the problem, politicians on both
sides of the spectrum refuse any pragmatic and innovative ideas to solve
the debt crisis. Progressives (or Democrats) work often for research-
depleting military cuts, tax hikes on the wealthy, quasi health care
reform, and energy independency as a way to make reductions, with
scarcely a thought on certain waste in the government safety net and
social platforms. Not to be outdone, Conservatives (or Republicans) see
any FDR and LBJ entitlements as their bane to be axed away; the
wealthy person tax cut as the cure all to growth in the economy, and (by
extension via the Laffer curve), increased tax revenues; and free market
(lax regulations) as the hallmark of a countrys wealth and prosperity
engine, ignoring obvious social costs generated at a private beneficiarys
faux obliviousness. Libertarians (to match) would do away with all
governance (except local), keep a strong international military (in
theory) and put the country back on some form of a gold standard or
basket of trinkets to measure economic value. Other extremists have
their pet projects and one-bullet cure alls. These oft-deranged and
haughty moralistic battles leave the economy and government in a state
of a never-ending tennis match as the ball goes back and forth across
the net of public opinion. Endless love it is not.
This battle heated up to a broil in the summer of 2011 as the debt
ceiling was reached. For years on end, no mention of a debt ceiling was
8 Nouriel Roubini and Stephen Mihm. Crisis Economics.
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ever broached. And it was an automatic that it would be raised during
the authors two-score life. Now, it is tied to a range of talks that
included much of the prior analysis: no tax increases (Republicans), cuts
in social programs (Obama), and does not matter (Libertarians and
quacks.)
Even talk of a constitutional amendment (imagine) to balance the budget
has moved through the House of Representatives, but is assured to fail
in the Senate. The timing of these useful long-term talks is poisoned by
short-term necessities as the deadline looms as of this writing: August 2,
2011.
The inevitable result of such inaction or ignorance or haphazard
constitutional amendments: Interest rates will rise precipitously; Dollars
applied to Social Security, Medicare/Medicaid, Interest Payments and
Military Spending once assured to remain large, and quite permanent,
now could be at jeopardy. Meanwhile, the remaining Social Safety Net
will shrink accordingly, because: we will refuse to tackle those other big
dollar issues with any logic. The needed investments of Government will
be deferred, decimated, or completely ignored; Private Capital will seek
shelter elsewhere abroad in booming markets, like Brazil, Russia, India,
or China and Our National Assets will be sold (privatized) to the most
forceful owner of our Trillions in Debts; and the United States standard
of living will indeed become a shadow of a once great and proud nation.
Debt will consume us if we refuse to swallow our medicine, sacrifice
(at all levels of wealth), and make hard choices like all do in their lives.
Such shadows looming are all ready here. In late April 2011, the
International Monetary Fund (IMF) revised its projections on the sizes of
economies and their growth. It is foreseen that China, termed still an
emerging market, will surpass the United States in terms of GDP by as
early as 2016, given their nearly 10% yearly growth. (To measure just
how fast such a rise took place: In Power Rules, Leslie Gelb, posited:
For example, Chinas GDP was roughly half of Americas by 2008
estimates)
Chinas rapid ascent economically in the past thirty years is tied directly
to the widening trade deficit between its borders and the United States.
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Between 1978 and 2005, for example, the amount of goods traded grew
by a factor of over 400. (Chinas yearlyexports in 1978 were compressed
down to a dailyexport rate by the mid-2000s.)
Supporting Tables. Trade with China from 1985 to 2008
Source: U.S. Census: www.census.gov/foreign-trade/balance
Year Exports Imports Trade Deficit President
1985 3,855 3,861 -6 Reagan
1986 3,106 4,771 -1,665 Reagan
1987 3,497 6,293 -2,796 Reagan
1988 5,021 8,510 -3,489 Reagan
1989 5,755 11,989 -6,234 Bush I
1990 4,806 15,237 -10,431 Bush I
1991 6,278 18,969 -12,691 Bush I
1992 7,418 25,727 -18,309 Bush I
1993 8,762 31,539 -22,777 Clinton
1994 9,281 38,786 -29,505 Clinton1995 11,753 45,543 -33,790 Clinton
1996 11,992 51,512 -39,520 Clinton
1997 12,862 62,557 -49,695 Clinton
1998 14,241 71,168 -56,927 Clinton
1999 13,111 81,788 -68,677 Clinton
2000 16,185 100,018 -83,833 Clinton
2001 19,182 102,278 -83,096 Bush II
2002 22,127 125,192 -103,065 Bush II
2003 28,367 152,436 -124,069 Bush II
2004 34,744 196,682 -161,938 Bush II
2005 41,925 243,470 -201,545 Bush II2006 55,185 287,774 -232,589 Bush II
2007 65,236 321,442 -256,206 Bush II
2008 71,457 337,789 -266,332 Bush II
Total 476,146 2,345,331 -1,869,185
China
Overall TradeDeficit by
Pres.
President (Millions)
Reagan -7,956
Bush I -47,665
Clinton -384,724
Bush II -1,428,840
Even more telling is the power shift in the corporate headquarters of the
Financial Times Global 500 amongst the top economies of the world. In
2005, the United States held 219 corporate behemoths while China had
only 8 such corporate HQs. By just 2009, the decline to the U.S.
numbered 181, a 17% drop. Meanwhile, China quintupled its number to43, an enormous shift, and nearly, onetoone. Other countries on this
list made modest gains and losses, but this was the most distinct
change to the balance of power of the corporate world. (The 2020
Workplace, pg. 22.)
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Because of this persistent and growing trade deficit, China holds
considerably more than a $1 Trillion of our debt. Much of this problem
amassed just between 2005 and 2008, at the nexus of the financial
dooms day and the corporate reshuffle. While housing prices fell,
Americans borrowed more and more from China to maintain a stagnating
standard of living. Meanwhile, much closer allies, such as Canada,
Mexico, Japan, and Germany, also hold their fair share of Treasury Notes
in America. Luckily, the U.S. has diplomatic relationships with them on
much better terms, as none has made curious statements like China has.
Yet, Chinas remarkable economic activity has come without Democracy
or enhanced freedoms; rather, as United States Republicans or
Conservatives would compare it to the rise of Americas economic
primacy during the post-Civil War era withoutthe needof civil war. And
modern Democrats would liken it to laissez-faire polices run amok which
vigorously promoted outsourcing and transplantation of America
corporations to Chinas Eastern seaboard where inland Chinese migrated
happily to take a very low wage (2-10%) of any American worker.
That final statement includes the linchpin of the beginning of the end for
the U.S. economy: while we could get very lost cost goods electronics
for cheap, furnishings and clothes for little coin we did it while
printing money in hordes and exporting our now faltering manufacturing
and knowledge base, the backbone of the American Dream for decades,
away.
A Nation that makes tangible things and ideas controls its own destiny;
or as Benjamin Franklin once surmised: the riches of a country are to be
valued by the quantity of labor its inhabitants are able to purchase, and
not the quantity of silver and gold they possess. The United States has
squandered the advantage of the former labor and innovation at home
and monetized through masses of pulp and paper the latter. We allowed
the printing presses of Franklins trade to outstrip the labor we once had
in spades over the World while dispossessing our children of their
greatest Inheritance.
No greater example of this exists than the U.S. position at the climax of
World War II. The armada that laid in wait for a siege of Japan in the
closing moments of that war was made in the factories and shipyards
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and the Midwest stirrings of fields. It was unmatched in size, strength,
and mission. Yet, in an August month, named for a Roman Emperor, we
shook the Earth more than all the ships and planes at our disposal could
in a single bomb from a single plane. And Japan took note of that power
and spared millions the cruelty of further warring.
Their proud and industrious nation was not wrong in stopping the fight,
nor wrong in rebuilding with our help. It may have been the truest
measure of our nations strength: to put aside our rightful vengeance for
Pearl Harbor and to support the endeavors of the Rising Sun post-war.
Our own rise from the depths of the Great Depression to the benchmark
of a strong and vital Nation-Empire was in a mere blink of Human
History. Yet it happened. (See AppendixSee AppendixSee AppendixSee Appendix: 1945 U.S. Military Strength)
Japan, for its part, seeded in a fair amount of its auto industry in the
United States starting in the Reagan administration. Mainly as a
response to a then call for fair trade, and did so, without legacy costs
of union employee benefits that came to hamstring the Big Three
automotive. (Or more plausibly, the short sightedness with regards to
fuel efficiency and well-designed vehicles. An automotive argument for
another time.)
Section IV. Not So Free Trade.Section IV. Not So Free Trade.Section IV. Not So Free Trade.Section IV. Not So Free Trade. The United States has made itself the
ardent supporter of most economies since the end of WWII. Enlivening
the innovative spirit and spiriting democracy around the world were dual
objectives. The capitalism pillar rebuilt (West) Germany and Japan into
post-atomic friends. Successes in South Korea place that nation among
the most connected places on Earth with a strong manufacturing base.
Taiwan, again, has emerged as a vigorous nation-state. However,
failures in Vietnam (military), Central America (political) and the Middle
East (historical) doggedly pursue us. (The Middle East got billions in
financing and arms and tacit support of anti-Communist dictatorships.)
It is usual that failures greatly outshine the successes in Americas
remembrance, as loss is unacceptable; political bungling unpalatable;
and ideals distorted unconscionable.
China, too, became our pet project. Just since the turn of the 20 th
century, the battle to influence (or exploit or takeover) China has been
waged by many nations. Great Britain, Japan, the USSR, and the United
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States, each took turns via military, political, or economic tactics to
bend the dragon to a tamable end. Britain carved out a niche in Hong
Kong interests, but agreeably let go as its power ebbed in the 20 th
Century wars. The USSR attempted to exploit internal politics in China
supporting Mao Tse Tung who defeated Chiang Kai-Shek (the nominal
U.S. ally in WWII) in 1948. Japan invaded, dominated, then surrendered
at the close of WWII and now, remains uncomfortable with a growing,
power-hungry Dragon.
But the United States broke through via the way all countries (initially)
like: money. Such a breakthrough comes with a price as the nation
grows stronger, it forgets the seed investments and sees its plight as
self-created, not externally driven. From the moment President Nixon
opened up a locked trade door ostensibly to put the once-mighty USSR
on notice that money has its benefits too the China boom was destined,
as too was the roiling up of Globalization.
Because of the great trade pairing with the United States, present day
finds China has over forty high-speed rail projects on the board and is
buying up natural resource companies from Brazil to Australia to the
African continent. It keeps its currency pegged to the U.S. dollar at a
ratio of roughly 6.5 Yuan to a Dollar. (www.x-rates.com: May 10, 2011)
When this Great Recession took hold, the Chinese government invested
over $600 Billion towards public projects to advert a recession in their
country. (Or more accurately, to keep GDP growth at or above 8% so as
to support the flood of workers from the poor inland farms.)
The Chinese utilize distinct advantages in size of population willing to
work for less, a huge trade (dollar) surplus that is unlikely to reset to a
an equilibrium, and a single party system, that while restrictive to
personal freedoms, is advantageous to a coherent and forceful economic
policy. China likely sees itself as a nation of engineers, whereas, the U.S.
became a nation of lawyers. Chinas internal engine growth model will be
continuously fueled by imported U.S. capital. And if they can maintain
such a spurt, China will surpass all expectations of this political-
economic model. In short, the China dragon is a flame-throwing
economic machine. And more ominously, it indeed knows its power and
is using it accordingly, if tepidly, to date.
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To reinforce this growth model, one could also argue that China has
embraced a happy medium between government private partnerships
as much of their success has come through a non-dogmatic, practical
and engineering way of operating an economy. Large private businesses
(from the United States, for example) bring know-how, a checkbook, and
eagerness to convert poor Chinese to capitalists, while the usual strict
government has a great tolerance for creating jobs with minimal
employee rights or environmental controls. Just jobs, baby, might be
the overriding credo for this nation of 1.4 billion plus souls.
As such, it has not seeded much in the way of its homegrown business
back to America. And likely wont as the United States created most of
them via Walmart and other big-box outlets; tech giant Apple employs a
million Chinese versus 50,000 in America9; and we have directly fueled
the homegrown that the Chinese government will not allow to move
back to a U.S. market. (Overtures made aside nothing substantive has
relocated to American shores to date.)
Economic analysts project that soon this flow of U.S. (and foreign
capital) will run dry because someone, somewhere else in the
Globalization spin-the-bottle game will refuse to kiss their homegrown
industries goodbye. Overt trade battles will then ensue. And the victors
are yet to be decided.
Straightforwardly, Our Eagle has flown too close to the stoking fire of
this Dragon, allowing its Communist leadership, inevitably, to dictate
how the United States operates in all trade markets, projects military
power, and crafts foreign policy. Such fierce competition came via the
one score and ten vampiric bleeding of our countrys assets, both
inherent in our People, and tangibly, in our Lands.
But it is time to remember why we are The Eagle and meant to soar.
Section VSection VSection VSection V. Finance,Finance,Finance,Finance, Money, and The BanksMoney, and The BanksMoney, and The BanksMoney, and The Banks. As stated, current
households are getting by on less; with no way to accurately predict the
designs of their companies, or if they will exist in the future global
economy. In 1950, manufacturing made up over 25% of Americas GDP.
9 Fareed Zachari. Restoring The American Dream: How to Innovate. CNN; June 11, 2011. 7PM CST.
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Now, this slice is less than 10%. And blue-collar workers have seen their
jobs disappear, not just once, but several times. The money chase for a
good salary or hourly position is increasing in complexity, and often,
tearing families apart in the hunt, with the ending being no betterthan
the beginning during this dollar trek.
Replacing this downward fall of industry, the financial sector has grown
to be over one-quarter of Americas economy in just the last half century.
Creating numerous instruments of finance far removed from the days of
Alexander Hamilton, J.P. Morgan, or the dandified financial titans of the
early 20th century.
Adjustable Rate Mortgages (ARMs), Collateralized Debt Obligations
(CDOs), Credit Default Swaps (CDS), NINJA (No Income, No Job, No
Assets) Loans and Structured Investment Vehicles (SIVs), alphabetically
came to represent the soup to the booming banking business of the early
21st century.
But within these here to fore unfathomable growth spurts and billions in
record profits percolating across Wall Street, came such complexity and
opaqueness that it took quantitative analysis and models to the razors
edge of their usefulness. Creatively determining what Main Street could
pay for their American Dream often meant playing a reverse game of
blink. The problem was that the Common Man blinked too quickly (and
much too often) for the cumbersome, eyes-wide-shut banks once the
unraveling began. Models had no downside predictor for when the
tsunami of credit issuance stalled or froze; their shaky mortgagers
stopped paying on 2/28 interest-only ARMS; or when ordinarily
conservative folks (now spending liberally their meager equity) were
abandoning their homes in the hundreds of thousands while the trillion
dollar banks had their too meager default departments suddenly doing a
booming business of work out plans for losing money as slowly as
possible via the paperwork reshuffle and re-reappearing act.
Innovative though these quants of The Street are, the self-reinforcing
rational exuberance and predictable turbulence of packaging up debts,
obfuscatingly hedging bets, removing credit lending standards, over
priming the cash pump, slicing and dicing now homogeneously toxic
assets for a public at-large, and a private buyer living in largesse was
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Ayn Randian; self-indulgent; overrating a libertarian ideology to a market
fatalistic conclusion.
These top-down approved policies might be tragic to a rich mans bets;
assuredly dooming to a $35,000 a year meat packer in a Chicago
warehouse tripping on down LSD from the inception of such monetarist
economic models. Our span of green pastures are now weeded with the
corporate death knells, thousands of homes abandoned, and a sense we
have little to own, but much to pay for in regard to quantified
qualifications of the octo-yearly Fed meetings.
Sub-prime was called the trigger; and the American Dream was the chalk
outline.
And no one could ever blink again. Or so it was thought. (Much akin to
1929.)
As the expanding financial derivatives market and the multi-trillion dollar
do-it-all financial firms lent easy credit to stagnant income earners
(without the preferred prerequisites to paying back the balances),
enormous entities such as AIG, Fannie Mae, Freddie Mac, Countrywide
Financial, Bear Stearns, Lehman Brothers, Washington Mutual, IndyMac,
Wachovia, GMAC, GE Capital, Merrill Lynch, Morgan Stanley, Citigroup,
Bank of America, Wells Fargo, Goldman Sachs, and JPMorganChase
came either prostrate to the beggars table of the United States
Government for immediate assistance and intervention, or were scared
to the point of bank runs, demanding collateral from weaker-positioned
financial players, or engaged in panicked selling of securities to stave off
angry investors or the closures of their doors permanently.
Some did succumb to the financial wheel of fate: Washington Mutual,
Bear Stearns, Merrill Lynch, and Lehman were forced to close or were
badly digested by larger interests; Countrywide merged shakily into Bank
of America while Wachovia married Wells Fargo after spurning
Citigroups shotgun overtures; AIG, Fannie Mae, and Freddie Mac were
taken over by the U.S. Government, diluting shareholders en masse.
As a financial wheel of fate escapee, Citigroups share price broke the
buck ($1) while it held over $2 Trillion in Assets. At one point, the FDIC
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head (guarantor of deposits up to $250,00010) suggested the umbrella
company should fail. The Treasury Secretary was beyond himself of this
suggested idea of Citigroup going through receivership.11 It would have
been the largest bankruptcy (by a wide margin) in U.S. history. And at
that moment, would have assuredly ruined the confidence and the plans
installed (via TARP) to deal with this financial domino effect. (That of
shaky confidence in banks once one massive entity fails, the others look
more suspect whether they are, or not.)
(Economic and HistoricalEconomic and HistoricalEconomic and HistoricalEconomic and Historical NoteNoteNoteNote: A few banks were used as conduits for
government intervention even though free market ideology states such
intervention is strictly taboo. Moral hazard is used as the key argument
against such abandonment of free market principles. Yet, the
consequences of the hands off approach were seen as catastrophically
worse than no intervention, even by the ardent free market adherents,
namely the Fed Reserve, Treasury Secretary, and The Banks themselves.
Adverting a Great Depression IIwas seen as the higher motivation.
Yet, historically, it has been noted that the Great Depression was
brought to life by too much easy credit (consumer debt) and borrowing
on margin (for the stock traders) during the run up to October 1929. The
nation-state responses to that crisis aggravated the problem as beggar-
thy-neighbor approaches took place around the world. And the Fed sat
on their hands doing very little to stimulate economic activity in the
early 1930s via monetary policy they could control. (Print money.)
In this case, the easy credit regime from risky mortgage applicants to
fragile industrially-employed workers and the leverage level of
investment banks (30 plus to 1 debt/asset ratios existed at Credit
Suisse, ING, Barclays, and Lehman12), insurance companies, and their
hedging ilk, certainly mirrored certain excesses of the 1920s run up to
the October 1929 crash.
Furthermore, such epic collapses were seen and warned against before.
19th century economist Alfred Marshall, who worshipped at the altar of
10 From the Great Depression Era until 2008, this guarantee was set much lower. $100,000 for each account was theamount prior to the Great Recession of 2007-2010.11 Roger Lowenstein. The End of Wall Street. New York: Penguin Press; 2010. p 278.12 Nouriel Roubini, Stephen Mihm. Crisis Economics. New York: Penguin Press; 2010. p 127.
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Adam Smith and mimicked John Stuart Mills ideas, felt reckless
inflations of credit were the chief cause of economic malaise and
championed monetary authorities to prevent them with a robust policy.13)
The Chain of Blame Model: U.S. Lending 2000-2007Sub Prime Ho me Bu yer: FICO avg. 590-620, redlined by lenders prior to 1990
Mo rtgage BrokersMortgage Brokers:
Incentives to p ush
products, gave self-
serving advice
Advice & D irect
Relationship
Mortgage LendersMo rtgage Lenders: Hugeprofits initially, growth m odel
2005-7, Countrywide: 97.2B
Ameriquest: 80.7BNew Century: 76B
First Franklin: 68BLong Beach M ort: 65.2B
Fees &
Bonuses
& Q uotas
Loan: High Interest, Bet Hom e
Value Appreciates Quickly
2/28 ARM, interest
only, Justified only
by Home Price
Rises, Speculators
and Average Bad
Credit Risks alikeJoined Market
W.S. Investment Banks & OldW.S. Investment Banks & O ld
Depositor BanksDepositor Banks: Used Ranieri/Salomon Bro. Mortgage Model of 80s
Countrywide Bank of America
First Franklin Merrill Lynch
Long Beach Mort WaMu
Mortgages:
Bundled up by the
1000s($1.3 Trillion)to be securitized for
income streams
Loans: Money plentifulin low interest
(1%) environment
Rating Agency
S&P
Fitch
Moodys Bought
or shoppedfor AAA
RatingsFrom 2nd
Rate MB A-educatedinvestment bank w annabes
Assigned AAATo BBB Subprimetranches
RMBS
CDO
Warehouse/Conduits
CDS
CDS
CDS
Mortgages
To Package
Investors
Interest via home owners
Cash flow to supply some
Funding for more loans
SIVShadow Banks
Cash forABCP
Insurers:
AIG
MBIA
Sliced
Tranches:
Combined
Insured
Pyramid
Of Risk
USEconomy
(Tranch pays in proportion
to risk: junk, mezz, senior)
Bet Market
Insure Bonds
13 John Cassidy. How Markets Fail. New York: Farrar, Straus and Giroux; 2009. 36.
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The above model is hardly self-explanatory.
Homebuyers FICO scores were glossed over due to a necessity to keep
the line moving, to build houses and the boom, and to provide The Street
with product to slice and dice and pass on to investors, insurers, and
other entities around the world. Barriers once too strict redlining whole
neighborhoods were now, too liberal, assuring some very bad risks
received loans. Speculators too were all too willing to join the fray. Yet,
no one seem to mind the store. Bankers just rolled eyes; and passed
the bucks literally to their borrowers.
Mortgage Lenders/Brokers were poised to jump into the sub-prime
lending model because: money was available to lend at record low rates
(2002-2005); financial modernization act (Gramm-Leach Bliley Act of
1999) removed barriers to cross-pollinating banking activities; newly
innovative markets for securitizing debts were unregulated and ill-
modeled based on only 20 years of historical data; rating agencies had
extreme conflicts of interests as fees for rates were shopped to best
rater for the best fees.
Blue chip firms, as discussed, molded and manipulated lenders to their
most useful end. They pressured S&P and Moodys for quick ratings of
subprime tranches taking the best slices of the worst loan pies,
recombining them into a smells-different-because-I-say-so pizza ate by a
gluttonous and ravenous market only to sometimes swallow their own
slices, thus getting sick from their own home cooking. (Credit Default
Swaps (squared and cubed) and SIVs were a broiling haven for this little
dilemma.)
Investors swallowed the punch of the boom early on. Then, as
doomsday struck, credit froze, tranches triggered insurers like AIG
(London) to pony up for the casino bets made with Goldman Sachs, the
chain snapped, the pizza was poisoned, and no one knew who held what.
Authors SubAuthors SubAuthors SubAuthors Sub----21212121stststst Century Blackjack AnalogyCentury Blackjack AnalogyCentury Blackjack AnalogyCentury Blackjack Analogy: For years, the mortgage
bond market played the house where they held 20 on the deal and
investors rarely beat the house (via betting defaults) for more than a
marginal win. It was boring for both sides as they knew the outcome,
pre-deal. Enter a new deck of cards where the aces and faces are
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doubled, tripled in number, but the mortgage bond market holds only a
19 on the deal out. Suddenly, payouts are regular and enormous under
the blackjacks double down rules. The casino could (and did) go bust.
Instead of caution, they make more special decks, open more casinos
with money from the government, investors, and homebuyers in this
ponzi-styled finance. The financial system teetered on a flip on these
cards.
Blackjack! was yelled across the world and the chips have yet to fall
neatly in place.
Section VISection VISection VISection VI. Revisiting the PastRevisiting the PastRevisiting the PastRevisiting the Past. As this Mortgage Market declined
drastically in 2007-2010, the number of households upside-down on their
homes (and debts) increased to levels not seen since the Great
Depression. The Credit Markets tighten to the point where even credit
worthy Americans were hard-pressed to receive access to their credit, or
were made to pay unusual high fees after years of loyalty. Inter-bank
lending (LIBOR) and other lending ceased to function properly in late
September/early October 2008. And the World expected dire
consequences and responded via their Stock Markets.
Trillions of dollars were pledged to buttress this Financial System in flux,
and often, in frail circumstances, around the world. Developed countries
such as England, Iceland, Ireland, Italy, Greece, Portugal, and Spain
were hit with austerity measures; riots and demonstrations, election
swings to the fringe, and xenophobic attitudes pervaded many of these
locales as a frustration response to losing prosperity, real or imagined.
This populist trend found roots in the United States during the 2010
elections, and thereafter. The Tea Party gained a sizeable foothold in
governance; Wisconsin, Ohio, Indiana, and other states engaged in labor
union bashing and austerity-by-threat tactics; and protests came from in
the minority legislatures, teachers, police, and other governmental
servants. Islamic worshipers mosque nearground zero (9-11) was made
into a hot button issue shortly before the 2010 mid-term elections. Even
the President found persistent attacks on his legitimacy to be the
president due to his Hawaiian birth certificate or certificate of live
birth.
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In April 2011, the United States Government was brought to the brink of
a possible shutdown over amounts that a single investment bank of the
genre outlined above routinely traded in a day. (And one French trader
lost $7 Billion back at the height of the doomsday machine.) This
financial pittance came after six months of stalling to make the
necessary cuts, and six different deadlines for the completion of this
less-than-onerous task: that of creating a fiscal year budget.
And the debt ceiling fight supplanted this minor fiscal topic soon after.
Reflecting, at minimum, that concentration on important issues has
become too difficult for the people in charge; and we are replaying parts
of the 1930s in many ways giving a podium to fringe ideas while not
addressing the real and critical concerns of our country.
Historical precedence tells us this time is no different.
Section VIISection VIISection VIISection VII. Rivals to Prosperity and FreedomRivals to Prosperity and FreedomRivals to Prosperity and FreedomRivals to Prosperity and Freedom. The American competitive
advantage of Education, Infrastructure, and Manufacturing has
evaporated and exported as developing and developed regimes are
exploiting weaknesses and offering American multinational corporations
access to cheap, unencumbered, and pliant labor forces that can not or
will not stand up for better working conditions. Their enormous profits
are kept, often tax-free14; and America grows more complacent, and less
able to catch up when our dollars stay in the hands of never-friendly,
duplicitous regimes, who, reinvest by buying American assets (our debts)
with little regard for the American peoples way of life. Thus, we are
trapped in a cycle that has to be reversed.
These Rivals in this Global Marketplace were once the bane of our
Existence, not for their economy, education, infrastructure, or political
ideas, but because they held Freedom in prison, and ignored their people
forthwith. They still do; but forcefully supplant their peoples emerging
industriousness, and desires for a political voice, with the economic
strip mining of natural resources and pay lip service to improving their
peoples lots and the fact the resources are indeed, limited, makes it
14 Reports in 2011 suggested that GE and several banks listed above would not pay any U.S. Federal Income Tax.
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more beneficial to ignore the struggling population while amassing
wealth for the selected few.
As our once proud manufacturing economy needed an overhaul
replacing 20th century assembly lines with advanced systems and a
superior infrastructure lattice befitting of a world power we have spun
our wheels in the doldrums while our once economic inferiors have gone
ahead on many fronts, building massive dams, towers, and highway and
rail systems, often at the urging of the very American corporations the
U.S. fueled to prosperity in the past century. And these benefits came
primarily to an elite few; and the countries that do gain such victories
spared no gratitude towards the executives that have made their
presence uniquely felt in the Mumbais, Shanghais, and Dubais of the
planet.
A recent example of degradationA recent example of degradationA recent example of degradationA recent example of degradation: The Society of Civil Engineers graded
the nations Infrastructure at a D . Roads are spread far and wide while
urban planning systems are miserable failing. The spreading out of
society from cities to suburbs has resulted in too much highway, too far
from primary economic activity, and too few dollars to maintain them.
The efficiencies of cities (the stacking of services utility,
communication, logistics of food and transit) counters what logic is put
forth by those who like large lots in the far off areas that pay low taxes,
use enormous amounts of resources, but stress not just the local towns
but their neighbors as well.
Education is leaving behind our kids because it no longer is designed to
work towards a collective end. Even Adam Smith believed in universal
public education,15 by far, no Socialist. While we advocate towards all
measures of getting young people to know their ABCs, I23s, and Do-Re-
Mes, we have stalled progress by focusing on testing instead of learning.
Students in America can have all the access to tools (iPads, laptops,
etc.) but if the teachers are hamstrung by politics and procedural edicts
handed down from a school board biting their nails over budgets and
funding, the kids are likely just playing parlor games. (And, of course,
some students will come through just fine but the competition is
15 Mark Skousen. The Making of Modern Economics. 33.
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surpassing us. As China now turns out more patents and produces more
graduate level college students than the United States does.16)
Section VIIISection VIIISection VIIISection VIII. Natural Resources and Energy Policy.Natural Resources and Energy Policy.Natural Resources and Energy Policy.Natural Resources and Energy Policy. Energy, Environment,
Economics and Existence are intertwined with the ignoring of One, or
more, to come with the vicious Human price (at some point) in the
response of (and to) the Others. Such Human costs come today only with
daily, personal aggravations, and the slow, brutal destruction of the
Middle Class and Middle America. Such Dependence has become a way
of life for many, many millions.
In mid-2008, oil prices recorded an all-time record north of $140 per
barrel. By January 2009, the price shuddered in at $35 per Middle East
barrel. Oils rise by March 2011 to over $100 again, may indeed, stall an
economic recovery to a woefully gas-dependent America. Yet, as of this
writing, the killing of the number one terrorist in the world, has caused a
dramatic (if short-lived) fall in the price. (Reflecting intense volatility to
the world oil market based less often on the fundamentals of production
and consumption, more on rumor, events, and speculation.)
Since the 1970s, America has become more and more dependent on oil
imports reaching nearly 70% of our Nations usage as we stagnated at
6.5 million barrels produced per day, while using 20 million to maintain
our travel needs and desires. (SeeSeeSeeSee: U.S. Crude Oil Production, below)
This significantly addictive usage is hamstrung by our foes, and our
frienemies Venezuela, Russia, Saudi Arabia, Angola, et. al. who are
the controllers of Our Oil Tab. As stated, competition from our new
economic rival China is dawning, causing geo-political forces that we
react to, more than shape. (China has surpassed the U.S. in total energy
resource usage (2010) 20.3% to 19% leaving the remaining five billion
plus souls to fight for 60% of the energy pie.)
It is convenient to maintain the happy illusion that as long as we can pay
for the oil that is pumped, the relationships we maintain with Saudi
Arabia, Libya, or Sudan, for example, are not disconcerting. However, it
is a fools position to believe such oil dependence is a healthy gamut to
continue in volatile times. For it is highly unlikely that as China
16 Fareed Zachari. Restoring The American Dream: How to Innovate. CNN; June 11, 2011. 7PM CST.
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increases its consumption to far surpass the United States, that all
OPEC and non-OPEC nations can increase production in lock step. (And
many countries have sought an alternative way out of this energy
squeeze. Or befriended the nations most likely to produce and sell oil
directly in a tight market to come. Cutting deals offmarket is
becoming more and more prevalent and reflects self-interest that will
become more destabilizing.)
U.S. Crude Oil Production
-0.2%
-3.1%
-5.9%
-1.0%
-0.3%
-1.0%-1.1%
-4.6%-4.4%
-1.5%
0.0%0.8% 2.5%
-3
-2
-1
0
1
2
3
4
5
6
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Change
from
Prior
Year
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Million
barrels
per day
Lower 48 Production
Alaska Production
U.S. Annual Growth
Short-Term Energy Outlook, July 2008
Forecast
As such, alternative energy outlets are sought, ethanol, for example. We
(among other nations) began to trade food essentials for fuel security.
Prices for corn skyrocketed. World food markets were dangerouslydepleted. Either an alternative fuel has to be designed, or else, we pit
our nations need for fuels against other nations right to eat.
Even as an alternative hope, electric cars and plug-ins have not taken off
yet as most Americans were hard pressed to afford $30,000 plus debt
loads in a stingy credit market for a new car with a limited range (100
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miles) and the lack of charging stations nationwide. (And at least 50% of
Americans were considered to have bad or sub-optimal credit.17)
(WorldWorldWorldWorld Crisis 2011Crisis 2011Crisis 2011Crisis 2011: As this oil-ethanol-food triad took place, Egypt, Libya,
Tunisia, Yemen, Syria, and Iran, have all seen populist uprisings due to
lack of freedoms, stagnate economies, and scarce food stuffs that
pressure cook these largely 3rd world or petrodollar-dependent countries
to a revolutionary boil that will take years to sort out. This happens
against the backdrop of other world players taking sides, exploiting
neighbor countries, or these revolutions for political or economic ends.)
As more and more people plow to create fuel, drill for oil in offshore
deeps, and hunt for anyway to make their machinery go farther on less, it
should bring us to a foregone conclusion: the day of cheap natural
resource exploitation is coming to an end; and the remaining resources
must be harnessed efficiently and effectively. Regardless of belief in
climate change, the access to food, energy, and life staples must be
designed with the interconnection to our Earth seen and respected.
Else, We do our progeny a severe disservice, and possibly, an ultimate
demise, if we selfishly and callously use up what is now available,
without reasonable and adaptable alternatives to replace what God put
here for Humanity to use to Grow, to Adapt, and to Maintain Our
Existence until such time is deemed right for His call for an End.
(MotherMotherMotherMother Nature v. ManNature v. ManNature v. ManNature v. Man: The March 11, 2011 triple crisis in Japan reminds
us of this all too well. An enormous earthquake, an epic tsunami, and a
far-reaching nuclear accident resulted in thousands dead or missing
and unmistakable reminder that the Earth holds more cards than we do.)
Section IXSection IXSection IXSection IX. Wars AbroadWars AbroadWars AbroadWars Abroad. We are still engaged in war. While we attempt
to extricate ourselves completely from one country (Iraq), two close
neighbors are taxing our military resources (Afghanistan and Pakistan)
while Libya and Yemen have recently added to our military forays on the
unstable globe. The costs in lives and coin are greater than we seem
able to justify, or maintain, yet, we do it, nonetheless.
17 Author lacks source but read this in a credit repair and resource book release in the last two years.
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Others regimes are revisiting the Cold War with their nuclear ambitions
and not-so-veiled threats. Iran, for example, is getting old Russia advice
on the nuclear options, $50 Billion monetary support from China for
their oil, and has rarely spoken highly of freedom while also in pursuit of
Israels demise directly, or indirectly.
The Middle East roils as it has during the last Millennia the so-called
Arab Spring presenting more headaches and establishment choosing
for the U.S. administration at hand. Our friends and foes worry alike:
Which quasi-democratic model is to be installed? What will the religious
preferences mean to this model? What resources inputted and outputted
will determine the status of the new nations future? What dictators will
be left? How will they respond to the change in the chess game?
And while the tragic story of 9/11 got a near-term ending, with the killing
of Osama bin Laden, the war on terrorism is never going to be won out
simply by the death of a so-called leader. The problem will transmute
into a new threat. (The Cold War lasted nearly 50 years for a logical
comparison. And it took a decade to kill bin Laden. And now Pakistan
may be part and parcel to the terrorism pyramid. Keep your friends
close, your enemies closer, comes to mind.)
Our military spending contributes greatly to the Budget Deficit. It has
been a policy for nearly 60 years to grossly overpay for weapon systems
and deploy and maintain bases in far-flung lands. While it is Patriotic to
serve in the Armed Services, it is increasingly difficult to justify these
outlays given the track record since Vietnam and our crisis debt loads.
The scales of finance are tipping greater against a large and well-
maintained militia, at least under the current paradigms under which it
operates. The worlds policing power comes with a cost a very
definable outlay and it is appropriate that the United States either
recoup such costs, or do a better job of assessing which battles it will
fight, and with clearer ends to such engagements designed.
How this particular action is addressed will ultimately define us in the
annals of history.
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Section XSection XSection XSection X. Internal Conflict and CourseInternal Conflict and CourseInternal Conflict and CourseInternal Conflict and Course Correction.Correction.Correction.Correction. Our government has
been severely taxed to function properly; as the divide over social ills,
economic philosophies, foreign policy, and domestic design have been a
source of bitter feuding without a significant altering of the direction of
the country in a manner that speaks of the deeper understanding and the
absolute necessity to embark on a drastic course correction.
Instead, we list to port; then to starboard; and back, while seemingly
cast adrift by the efforts of this process.
And no one man is able to reset this course alone.
The Problems are vast; multi-trillion in nature, and currently are
addressed with only piece-meal and hen-pecked legislation. Meager
victories are attainable but never go to the root cause and so, the
time is ripe for amending what it is to be under Constitutional Rule.
III. The Founding Fathers and The Framers Action PlanIII. The Founding Fathers and The Framers Action PlanIII. The Founding Fathers and The Framers Action PlanIII. The Founding Fathers and The Framers Action Plan
Facts are stubborn things.~ John Adams
Section I.Section I.Section I.Section I. Visionaries.Visionaries.Visionaries.Visionaries. The Framers to Our Constitution and the Founding
Fathers were not idle people. No one accused Adams, Franklin,
Hamilton, Jay, Jefferson, Madison, Morris, Sherman, or Washington of
inaction or paralysis in an arena of battle. They did not just sit by and
wait for things to happen. They made things happen. They were builders;
doers; dreamers; entrepreneurs; inventors; leaders; opinion makers;
philosophers; revolutionaries, scholars, and visionaries.
After winning the Revolution, these visionaries continued to work under
the existingArticles of Confederation, which was a firm league of
friendship. (The Ground on Which We Stand, Kay, 1969.) However, the
Articles were limited by taxing powers, commerce regulation, and a
unicameral legislature that needed 9 states out of 13 to approve bills.
The Articles proved unfit to run a nation that was all ready the size of
France in territory, and could expand quickly to the size of Western
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Europe. And many European foes were willing to bet that our young
Nation would falter under that exact strain.
Action was needed.
The Framers went to work, in secret, and to that end, achieved a lasting
document that molded well into Americas Manifest Destiny. What has
transpired in the last 224 years is a testament to its beauty and
foresight, while its flaws are only all too human.
But We are responsible for continuation of the Founders Vision.
IV. The Proposed Solution: A Constitutional ConventionIV. The Proposed Solution: A Constitutional ConventionIV. The Proposed Solution: A Constitutional ConventionIV. The Proposed Solution: A Constitutional Convention
Section I. BaitSection I. BaitSection I. BaitSection I. Bait nnnn Switch and The Media.Switch and The Media.Switch and The Media.Switch and The Media. As we have seen in the past
century, the advancement of technology has given us a way of life that
many would never cede to any foe. With such a vast and inescapable
interdependence on the function of technology within the framework of
Society, it is discouraging that we cannot count as quickly amongst our
Strengths the ability to utilize this advantage immediately to improve
upon our current state of Affairs, as they stand, across the wide
spectrum of previously stated ills.
While our nation does have such immense problems, many fellow
Americans are, at the present moment, happy and content. They may
feel that they made superior choices, and therefore, are not at any
advantage to change or assist in the moving forward of this 225-year old
journey from the infant Democratic Republic to a teetering and faltering
American Empire as contended in the first part of this pamphlet.
They may not even see the problems (ora problem) as one of debt, or
trade, employment, natural resources, education, infrastructure,financial responsibility and regulation, or military foolhardiness abroad.
The eroding of the nation may be solely of a socially driven nature: the
laziness and mollycoddling of youth; the spendthrift thirty something; the
obscenity-laced society with a lack of God and morality be damned; the
migration of foreign people into the fold; or the lack of individual
responsibility from youth to old age; or the obsession with stuff.
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The resulting media wars and commentaries from the big screen to the
blogosphere makes the current technology no better than the old ones
pen, paper, newspapers, and books in having a reasonable discussion if
reasonable people are not in the fray, and also, a driving force in these
grown up discussions. Ideological and political platforms are just as
entrenched across the spectrum of technology as they have always
been. (Pulitzer v. Hearst would be a 20th century example.)
To take a most recent debate, and as discussed, the right to be
president is, under the U.S. Constitution, tied to being a natural-born
Citizen of the United States of America. That can be conferred by: being
born in a United States state or recognized U.S. territory, such as Guam,
for example. (Article II, Section I, Paragraph V.)
After two and a half years, Barack Obama produced again a certified
copy of his birth certification in Hawaii. The issue is not his birth; rather,
it is the fact we are still discussing his locality after more than half his
term in office is completed.
What ifhe was found to be not an American citizen? What would that say
of not just the Democratic Party but the Republican Party too? What
does it say about our politics or governance that such a simple task to
determine birthplace is brought around again and again via the media
wars some three years later?
But the more pressing and urgent Crises are dilemmas we face in our
economy daily. Americans potentially shelling out $5 to $6 or more per
gallon gasoline while driving miles from suburbia; the state of
emergencies in weather destructed places all over the Midwest and
South; the foreign wars we waged for a decade; the slow replacement of
millions of jobs, by often, lesser paying ones; the real competition from
abroad as those countries ramp up a 21st century infrastructure and
technology-laden burgeoning empire while we rest on our 20 th century
laurels in hopes we will be remembered as an entertaining lot to our
fellow citizens of the world. And a list could be generated to include:
overcrowded and costly prisons, endangered wildlife, homeless people,
domestic violence, civil discourse online, white collar crime, political
corruption, health care, food safety, and so on.
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As a result, we are indeed hamstrung by our inability to use such
technological wonders as a guiding and assisting force in directing our
country in the future: That of Constitutional Amendments to address the
Rights and Responsibilities and Privileges vested in our 21st Century
American Society and beyond. We have sputtered around tired and
media-driven issues that serve no purpose or pose a direction or solve
any great needs but ratings for the media mavens.
Instead, We dither, as America burns up its Capital and Credit worldwide.
Our Founders must spin in their graves from this detestable waste of
time and country. We, indeed, lack focus on the matters at hand.
TableTableTableTable. The TrillionThe TrillionThe TrillionThe Trillion----DollarDollarDollarDollar Club of Catastrophe Policies Oft IgnoredClub of Catastrophe Policies Oft IgnoredClub of Catastrophe Policies Oft IgnoredClub of Catastrophe Policies Oft Ignored
Bush Era Tax Breaks (2001-2011) $1.0 Trillion plus
China Trade Deficit (2005-2010) $1.46 Trillion
Wars Abroad (Iraq & Afghanistan) $1.5 Trillion plus
Sub-prime Loan Origination Debacle $