Those who’ve focused on the shortcomings of the recent G-20 Summit have dismissed it as a “circus without a ringmaster,” “Hamlet without a prince”, and “a rather dull scrum“.

If anyone was expecting the one-day conference to become a “Bretton Woods II”, they were certainly over-optimistic. We didn’t witness a complete reinvention of international monetary management rules and no one walked away believing that a new framework for global cooperation had been set in place.

G-20 Summit Shortcomings

The limits of the summit’s significance are readily apparent. For instance, although those gathered pledged to do whatever might be necessary to stabilize the financial system, no one seemed willing to divulge any specific numbers with respect to individual nation members’ stimulus plans.

The G-20 was basically silent on the hot topic of re-examining and re-calibrating exchange rates, too. Sometimes silence is significant and the failure to address this topic in a meaningful way definitely cut against the significance of the session.

It’s no surprise that the group will need to gather again in April. Some analysts argue that this production of “Hamlet without a prince” was doomed to fall short of major change due to the absence of the next U.S. President, Barack Obama. Although globalization is slowly but surely rendering the U.S. a significant player instead of the player in the field, the presence of a lame duck certainly curtailed the drive for members to try to iron out future plans.

A recent BBC News story from Bridget Kendall wondered if a second version of Bretton Woods, the 1944 agreement between allied nations on the management of international financial and monetary affairs, might be on the way. The article noted the possibility of a major power shift on the immediate horizon and the potential to see substantial changes in the way the world approaches an increasingly globalized economy.

The G-20 Summit didn’t measure up to those lofty standards. However, a closer examination of the summit reveals that it’s limitations didn’t prevent it from planting seeds that could result in significant changes for the global economy.

A Departure from Old Models

The most important part about a G-20 gathering may be the simple fact that it is not another G-8 meeting. The expansion of participating voices represents a significant departure from a system dominated by the U.S. and Europe.

The G-20 may very well represent a crumbling of the “old guard” and it certainly creates previously non-existent opportunities for other nations to add their perspective to international economic questions. That recognition of increasing globalization could set the stage for even bigger changes in the nature of international agreements.

Although we may be a long way from the G-125 some advocate, there is no question that the days of trying to manage a world economy from a handful of western capitals are numbered. The meeting involved a great deal of discussion of how emerging economies should have an increased role in a variety of functions, particularly with respect to the International Monetary Fund.

Put simply, the very fact that a G-20 assembled is meaningful, regardless of the actual policy decisions that did or did not emerge.

That’s not to say that the sole value of the summit was symbolic, though. There actually were some interesting and potentially significant decisions to come out of the meeting.

G-20 Accomplishments

One of the most staggering things to come out of the meeting was the expression of the sentiment that global financial markets are not sufficiently self-regulating and that governmental interventions would be a necessity if the global economy is to be stabilized. Although it would be a stretch to argue that international policy since Bretton Woods has never been truly “laissez faire” in nature, this up-front support of active intervention represents a significant change in overall expression and may be evidence that those with a more market-oriented approach are losing influence.

The pledge of G-20 nations to stabilize international markets came with some specific policy proposals, too. There was a strong call to increase the regulation of hedge funds and advocacy for heightened oversight of credit rating agencies in recognition of stubborn credit problems.

Trade issues also made it to the table. Notably, the membership agreed to a 12-month prohibition on new protectionist measures. Calls for the re-initiation of the Doha trade talks were also well-received. Those who had wondered if recent global events would lead to more cooperation or increased isolation seemed to have received an answer in support of cooperative trade and engagement.

It would be premature to argue that we’re on the brink of a massive structural change in international monetary and trade policy. The G-20 conference clearly didn’t yield a sea change. However, despite its limitations, it does appear as if the foundation for a different approach to world economic issues may be in place.

Do you hear that whizzing and whirring sound? It’s coming from my brain. The cogs and gears are spinning like mad, trying to find a little common sense in a recent legislative proposal from two odd political bedfellows, Democrat Barbara Mikulski of Delaware and Republican Kit Bond of Missouri.

The not-so-dynamic Senatorial duo are backing a “pro-auto” plan so incredibly bass-ackwards that it seems to completely fly in the face of all things logical.

I heard about it while driving my used automobile the other day. A local station was interviewing Bond, who was expressing his belief in the need to protect the U.S. auto industry. After all of the usual and overused cliches (think: “Main Street, USA”, for instance) Bond talked about how we should provide new car buyers with a tax rebate to reduce the real cost of purchasing vehicles made in Detroit. This would increase sales, thus helping the car manufacturers and reducing the risk of whatever madness might ensue if the Big 3 might actually be held accountable for their own mismanagement.

This is perhaps the silliest plan in the recent history of silly plans.

This little chunk of legislative insanity has somehow shifted the cosmic balance to the point where I, for the very first time ever, am actually agreeing with Michelle Malkin about something. You may not understand how bizarre that it unless you know me, but rest assured it’s downright freaky.

When you can get me and Malkin to concur that your plan is bad, it is most definitely Very Bad.

The portion of Malkin’s assessment with which I agree reads like this:

“Spending beyond our means is what got this country into trouble in this first place. This kind of temporary political gimmickry is going to exacerbate the problem. Encouraging people to take out $50,000 car loans before the end of the year when they should be saving their money instead?”

Bingo. We’re living through the aftermath of overspending and living too high on credit right now and Mikulski/Bond are pushing a plan that’s actually designed to persuade people like you and me to make horrible investment decisions.

New cars are probably the most notorious of all bad personal finance decisions. Your new car depreciates in value the second you turn the ignition key and its value continues to slide with every subsequent mile you drive. Cars even make Mint’s list of the “Eight Things You Should Not Buy New”.

Moneyweb sums up exactly why no one should buy a new car:

“Tony Twine, director and senior economist at Econometrix, describes the life cycle of a car: ‘During the first year, the value of the car decreases at a steep rate. For the next four years, the car depreciates at a more gentle, slower pace, with a further step down in value in the sixth year. Beyond this, the value of the rate of depreciation flattens out.’

Borrowing money to purchase a depreciating asset is the worst ‘investment’ you can make. Sages say: ‘Buy things that appreciate and pay for the use of the things that depreciate.’”

Yet Mikulski and Bond have somehow forged a bi-partisan love connection over the idea of encouraging their constituents to go out and make stupid purchases that will cause them eventual financial heartbreak in order to keep the Big 3 limping along. Making it even uglier is the fact that this “bad investment incentive” is targeted to working- and middle-class people (the proposed legislation doesn’t extend the rebate to those making in excess of $250,000 per year, the only people who might have enough cushion to justify new car buys).

Don’t get me wrong. I’m not happy that Detroit is in trouble and I certainly hope there’s some way for the automobile industry to stabilize in order to prevent the nasty repercussions that could come from any sort of collapse. However, I don’t like the idea of encouraging unnecessary and financially foolish purchases on the part of the same taxpayers who’ll probably end up footing the tax bill for an additional bailout package.

The whirring in my noggin continues.

Clearly, one of these things is true.  Tell me which one it is, please?

1.  The folks running the Big 3 automakers are completely tone deaf with respect to public relations.

2.  The folks running the Big 3 already know that Washington won’t bail them out no matter what happens.

3.  The folks running the Big 3 know that Washington will bail them out no matter what happens.

Based on what we’ve seen from Richard Wagoner, Alan Mulally and Robert Nardelli at Congressional hearings, there’s little doubt that one of those three options is the truth.  There’s no other logical explanation for their failure to generate one iota of compassion on the part of anyone for their fates.

Come Fly With Me…

You’ve probably seen the clips by now.  Detroit’s auto head honchos were quizzed about their travel arrangements for their DC visit.  In one of those cruel, shallow and absolutely hilarious acts of political show-offery, Rep. Brad Sherman took the CEOs to task:

“I’m going to ask the three executives here to raise their hand if they flew here commercial,” he said. All still at the witness table. “Second,” he continued, “I’m going ask you to raise your hand if you’re planning to sell your jet . . . and fly back commercial.” More stillness. “Let the record show no hands went up,” Sherman grandstanded.

Ouch.

Look, there are probably really good reasons why these guys don’t fly coach, right?  Okay, maybe not.  There are reasons, though.  Some are related to travel schedules and job demands.  Some are security related.  I’m not saying the Gang of Three needed to offer a spirited defense of travel by private Gulfstream, but their stone-faced silence certainly didn’t humanize them or help their cause.

Puttin’ on the Ritz…

The review of CEO travel itineraries was preceded by a memorable comment from Rep. Gary Ackerman who managed to superimpose a mental image of a fancy-pants dandy over the faces of Richard Wagoner, Alan Mulally and Robert Nardelli.  M. Ethan Ross recounts Ackerman’s dig and expresses the sentiments of those who undoubtedly nodded in agreement upon hearing it:

“This would be the same, as if someone appeared in a soup kitchen, wearing a tuxedo with a top hat.” This is a great quote, and so true, because it is another example of corporate greed while the name tag wearing employees have to suffer more.

The only way it could’ve been more effective is if he had mentioned a cane and a monocle.  The reaction from the CEOs?  It was a lot like an Iron Eyes Cody stare without the single tear.

We’re not Lee Iacocca…

Those with memories that predate cell phones and satellite dishes smaller than the side of an average house remember when a little company named Chrysler stared into the abyss in the 80s.  Chrysler went to Washington in search of a loan.  The incredibly popular boss at Chrysler, Lee Iacocca, cemented his image as a trustworthy fella and a good credit risk for Uncle Sam by agreeing to take a $1 salary as part of the deal.  He was all about saving jobs, not feathering his own nest.

Apparently, some of the legislators remember those days, too.  That led to a great little discussion with Wagoner, Mulally and Nardelli regarding their willingness to take a buck instead of the tens of millions they’re currently getting to sit at the helm of sinking ships.

The exchange was an awesome example of how to make yourself look like a responsibility-denying, self-interested, handout-demanding fraud.  Mr. Mullaly, for instance, told Rep. Roskam that he’s convinced that his salary is just fine where it is:

Roskam:  OK.  Are you willing to go down to the dollar?
MULALLY:  I think it’s — I understand your point about the symbol and, clearly, the intent of what you are asking.  But I think, not just for me, but we were trying to field a skilled and motivated team, also.  And it’s just so important that, as we do this plan, that we have the team that we need.
So I understand the intent, but I think where we are is OK.
Roskam:  OK.  And just so I’m clear.  I’m in the asking about the team.  I’m just asking about you.
MULALLY:  I understand.
Roskam:  And the answer is no?
MULALLY:  I think I’m OK where I am.

If these guys have business skills on par with their public relations skills, it’s no wonder they’re on their way to a mighty crash.

So, what’s really going on here.  Are these guys tone deaf or do they simply know that these hearings are a dog and pony show that won’t really influence any legislative action?

I may have lost faith in Wall St., but today I regained faith in Congress.  The House shot down the $700 billion bail out… and I could not be happier.  And you wanna know why… Ok, but first let me lay the groundwork just in case…

The gist of the bailout plan

HR 3997 would have allowed the Secretary of the Treasury to establish the Troubled Asset Relief Program.  This program would have been allowed “to purchase and to make and fund commitments to purchase, troubled assets (shaky mortgages and mortgage-backed securities) from any financial institution.”

My president, our president decided that it would be a good idea to use $700 billion of our tax dollars to save the finance industry.  He wanted to buy shaky mortgages and mortgaged-backed securities.  We all know what a mortgage is, but…

What is a mortgaged-based security?

It is sort of like a bond… an IOU.  Potential homeowners go to banks to apply for a home loan.  The bank issues the mortgages.  And then, the bank pools the loans into neat little packages and sell them on the market.  The people who buy these neat little packages receive interest and principle payments every month whenever the homeowners pay their mortgage.  In essence the investors are lending the money to homeowners and expected to receive payments every month.  The bank’s role in this is as the middleman.  For its services of connecting the buyer and lender, the bank receives a service commission.

Plain English…

Ok I got 10 friends who need a hundred dollars each.  They all ask me if I can loan them the money.  I shell out the $1,000 at 15% and get them to sign an IOU.  Then I turn to my friend Joe Blow and I say look Joe, buy these IOUs from me for $1,000. And when my 10 friends pay the bill, I’ll send you all the principal ($1,000) and interest ($150).  All I want is a small services fee of $2.

So I make $2 and Joe gets $148.  However, Joe now assumes all the risk.  If any of the friends don’t pay the bill, it is Joe who will be shafted, not me.

The problem with mortgage-backed securities

Generally, there is no problem.  Most times mortgage-backed securities are a safe bet.  Yeah, there is some risk involved, but usually not much.  The way it works is that the IOU is secured by an asset… the house.  The house is appraised by the bank, the applicant has adequate income to repay the loan, and the bank verified the homeowner’s financial credibility.

But… What happens if the house is over-valued, if the applicant overstates his ability to repay the loan, and if the banks did not adequately qualify the mortgages?

So here enters the problem…

Well what happens is… that those mortgage-backed securities are worthless and investors will lose a lot of money.

Lately, investors have been taking a lot of losses on these mortgage-backed loans because the mortgage pools are filled with subprime products, foreclosed properties, soon to be foreclosed properties… just a mess of worthless assets.  (I’m not really sure if “assets” is the right word to use here because asset implies value.)

Who are these investors?

Mortgage-backed securities are big business.  And because of the perceived low risk, many entities buy them…banks, hedge funds, pension funds, mutual funds.

Alright now back to why I am glad that this bailout was voted down.

The bailout would have rewarded corporations for bad behavior

The bailout would have alleviated the mortgage risk exposure of financial institutions (and only financial institutions).  Aren’t these the people started this mess in the first place?  Financial institutions were being careless and greedy.  They knowingly exposed themselves to subprime lenders in order to increase short term profits.  Not only did these financial institutions give money to those with questionable financial credibility, but they also engaged in other greedy and deceitful behaviors.  They overvalued houses so that they can issue first and second mortgages.  They came up with all these colorful ways to qualify borrowers… balloons, no interest mortgages, one year ARMs, etc. They made stupid choices in order to fatten their pockets, but it backfired.

I hate to get on the Harper story again, but just think about this… JP Morgan Chase loaned a family a half a million dollars.  The borrowers… a house wife and a home security alarm installer (not wealthy people).  The loan was secured with a house that cost almost a million dollars to build (the house was a free gift from Extreme Makeover: Home Edition).  At one point the family was trying to sell the house for $950,000.  It did not sell.  Why… because regardless of how much the house cost to build… a house (or anything else for that matter) is only worth as much as someone is willing to pay for it.

The house is in Lake City, GA.  The median income in Lake City $38,000, the median house value, $125,000… both less than the medians for the state of Georgia.

Now granted I don’t know much about the neighborhoods in Lakeland, GA… but the Harper’s old house was ummm… a dump (I’m not trying to be ugly, but it was).  The dump was torn down and replace with a mansion.  Great!

But if the Harper’s old house was a dump… then chances are that the houses around it are dumps too.  What sane person with a million dollars or even a half a million dollars would buy a mansion that was surrounded by dumps? I know if I had that kind of money to spend on a house, I would not be looking to buy a mansion that sits in the middle of dumps.  I would want a mansion that is surrounded by other mansions.

No matter now much it costs to build, nobody is going to buy that house for so much money.  The house is not worth a half a million, it is only worth what someone is willing to pay. 

Location, Location, Location - that is what the realtor says.  I am no realtor and I understand that.  So why would JP Morgan Chase value that house at a half a million dollars plus.

Anyway, the family could not repay the loan and it went into foreclosure.  The house went up for auction.  I am not sure what it sold for, or if it even sold at all… but either way, that was a horrible business decision on JP Morgan Chase’s part.

Taxpayers should not have to foot the bill for the bad decisions of borrowers and lenders.

The federal government has never come to my rescue when I did something stupid.  So why should they help stupid… (greedy) banks? And anyway a bailout out does not solve the problem.  It is just a band aid.  Bailing out banks just frees them to go out and make more bad decisions.  So way to go House!  I think you all really voted for the people on this one.

On July 24^th, the federally required minimum wage increased to $6.55.  This is the second hike of a 3 tier increase.  The third hike will occur on July 24^th of 2009 and the minimum wage will go up to $7.25.

There has not always been a minimum wage.  Minimum wage laws were first established by the Fair Labor Standards Act in 1938.  The law was brought about to protect unskilled workers. 

In the thirties, there was a high supply of workers, yet a limited number of job opportunities.  Often unskilled workers were cornered into accepting extremely low paying and hazardous jobs.  Enactment of the wage law required employees to be compensated a minimum wage, at that time… 25 cents per hour. 

Since then, there have been several changes to the act.  It has been amended to extend coverage to more employees and, of course, to adjust the minimum wage as to keep up with inflation and the changing economy. 

More often than not, the issue of minimum wage makes its ways into political platforms.  Some candidates focus their campaign agendas on increasing the minimum wage.  Senator Obama proposes to index the minimum wage to inflation so that the wage increases with inflation.  Senator McCain has no strong stance one way or the other on the issue.

Though many people support an increase in the minimum wage, often the economic implications of forcing a minimum wage is overlooked.  In the short term, increasing the minimum wage has negative economic effects.  And in the long run, the impact is nullified as markets adjust to accommodate for the changes.

Let’s look at this a little closer…

In the short term

There is a limited supply of jobs and a certain amount of demand for those jobs.  Generally, the demand is greater than the supply.  This is what creates unemployment.  As the minimum wage increases, the labor force tends to grow as well.  This is because there are more people willing to work more jobs or longer hours at the higher wage rate. At the same time, the supply of jobs decreases because the jolt in labor costs causes employers to scale back jobs or hours.

So you have… more demand for jobs and a lower supply of jobs … or… more supply of labor and a lower demand for labor… either way you look at it, the end result is more unemployment.

Increasing minimum wage may benefit the few who are fortunate enough to have or find minimum wage jobs.  They get to bring home a bigger paycheck.  But that bigger pay check for one person may mean a smaller or no paycheck for another person. So, for the economy as a whole, changing the minimum wage is not a good thing.  It just means more people are looking for jobs, but there are fewer jobs to go around.

In the long run

In a free economy, over time the supply and demand markets will automatically adjust to new equilibrium.  In order to accommodate for the forced wage increase, other markets change.  The higher labor costs are eventually distributed to everyone in the form of higher prices for goods and services.  These higher prices affect the Consumer Price Index (CPI), which contributes to inflation rates. 

So in the long run, the economy is basically right back where it began.  The increase in wages eventually results in market adjustments… which results in higher prices… which results in inflation.  So whether you are making a lower minimum wage a year ago and a higher minimum wage two years from now… it still buys the same thing because of the changes in prices and inflation. 

Bottom line, while it sounds nice when politicians say they will increase the minimum wage… changing wage laws does little to improve the economy overall.

Indy Mac Bank is the most recent on a long list of banks that did not make it. The FDIC has shut down 6 failed banks in the past seven months. That is the same number that they closed down in 2007 and 2006 combined.

Indy Mac was one of the power movers in the industry. If they could not mange to stay afloat during the mortgage bust, how can the regular ole’ banks survive?

When the big ball starts rolling… it is sure to knock down quite a few little balls along the way. Can the FDIC keep up at this pace? Will the insurance money run out?

This FDIC has been around since 1933. Its sole purpose is to encourage consumer faith in the banking system. When thousand of banks failed in the 20’s, many people lost their life’s savings. Consumer confidence in banks was shot. No one would dare put a penny in a bank for fear it would not be there tomorrow. So the FDIC was created to assure people that is was safe to bank. The government, by way of the FDIC, promised that even if the banks lost, consumers would not lose.

Eventually, people began to believe in the banking system again. Well some people… I still know many elderly Americans who do not trust banks, FDIC insured or not… they would rather stick their cash in a mattress where it’s safe. But for the most part the FDIC has served its purpose of building people’s comfort and trust in knowing that their money is A Ok.

Over the years the FDIC has had to come true on its promise many times over. As it now stands, the FDIC insurances bank deposit up to $100,000 for checking and savings accounts and $250,000 for retirement accounts. Although the FDIC is a federal agency, they are managed by a 5 person board and operate like a corporation. (The C in the name is for Corporation.) And unlike most other federal agencies, it operates solely on revenues it earns, i.e. our tax dollars does not support them.

So where does the money come from? Well, just like every other insurance company, they make their money off of insurance premiums. Nearly every bank in the US, which there’s more than 8,000 of them, pays a hefty price to put up that FDIC-insured sticker in their window.

At last count the FDIC had about 50 billion dollars set aside to insure more than 3 trillion in deposits. So that takes me back to my original question… with the increasing pace of bank failures, will the FDIC run out of money?

It has been estimated that this Indy Mac thing will cost the FDIC up to 8 billion dollars. In just one day… more than 15% of their insurance fund is gone. And rumor has it that there are more banks slated for closure. At this rate, I don’t see how $50 billion, now $42 billion, will carry them very far.

The FDIC is infamous for bragging about how in 75 years no one has every lost a dime that was FDIC insured. Well I say they oughta stop bragging. With only $42 billion left in their stash and banks collapsing all around us, the end of their winning streak may be near.

So what will happen if the FDIC has no money to back up its promises?

Luckily for me this is not something I have to worry about, I don’t have any money. But for those PFA’ers who are fortunate enough to have money in the bank… keep a eye out to make sure your bank ain’t next.

So I know a little about McCain’s health plan, now I mine through Obama’s…

What’s the plan?

The plan is to make affordable, quality health care accessible to everyone.

Why Sen. Obama chose this position?

The cost of both health insurance and health care has risen almost exponentially. Because of the rising cost many poor and working class Americans aren’t able to purchase health insurance. Making health care affordable will reduce the number of uninsured and underinsured.

How Sen. Obama proposed to carry out the plan?

The heart of Sen. Obama’s proposal revolves around the creation of a national health care plan. Under this national plan, every American will be eligible for health insurance, regardless of health or income. Premiums will be less expensive than present day rates. And for those who cannot afford the premiums, subsides will be given. Participation in this system will be required for children and optional for adults.

A system of electronic medical records will also be instituted. The database will make a patient’s medical history readily available to professionals, anywhere. This will reduce medical errors by allowing doctor’s to make better informed decisions regarding a patient’s condition and treatment.

The quality of care will be improved through the research, design and implementation of procedures to eliminate medical errors and resolve inconsistency in services.

Finally, the plan involves the formation of a patient advocacy group… or the National Health Insurance Exchange. The aim of this group will be to make sure that the Obama’s plan is coming together as envisioned. The group will battle private insurance and big drug companies to ensure fairness for the insured.

So… what does all this really mean?

The Democratic candidates have been strong proponents for national health care, which is sometimes referred to as universal health care. There are many countries that have a universal health care system. In traditional universal health care, participation is mandatory, everyone pays the same premium regardless of the health and there are mechanisms to help cover the cost of the premium for the poor (in most cases, this means a subsidy). Premiums are usually prepaid through payroll or some other kind of taxes.

In a perfect world, under a universal health care system everyone gets the same quality of treatment despite their financial means. Poor people have the same access as the wealthy. On the flipside, the wealthy are not able to buy their way to better health.

Though Obama’s plan is often likened to a universal health insurance, there remains one big distinction. Unlike tradition universal health insurance, participation is optional… (well, except for children) and private insurance will still be readily available.

This can be both a good and a bad thing.

Here’s how I see it…

The plan is open to anyone, rich, poor, terminally ill or perfectly healthy - Ok, this is can make for a serious issue. I cannot remember the exact term I learned in a public economics course, but basically this will cause selection bias. If participation is optional, people will only sign up when they need it… i.e. they are so sick that they can’t be insured anywhere else or so poor that they cannot afford private insurance. I see the program as being as a hybrid of a puffed out Medicaid program and government funded hospice.

The participation base will be largely comprised of people who are too sick to be insured anywhere else. Therefore the cost of this program will be enormous because there will be proportionally fewer healthy people to balance it out. I mean, really, why get it if you don’t need… and if you do need it, no need to fret… it will be there, open to you at anytime. What insurance company can keep afloat this way?

Also, people who are able to afford private insurance are likely to remain privately insured. One of the biggest complaints about universal health insurance is that the waiting list for treatments can be very long. But those with private insurance won’t have to worry about this. They can buy their way to the front of the line… to sorta speak.

I think his plan is too hopeful. It’s good for those who participate. But I do not see how making a program that is basically geared to the sick or poor will aid in reducing medical costs. I think it will only help to increase costs.

But I do give him props, the man is sexy!

For the past year, I have been bombarded with all kinds of presidential election issues… which candidate lied about what, whose pastor said this, which delegate voted how, whose wife dresses the snazziest. I voted in the primary election, but my vote was based on who sweet talked me the best that day. I hadn’t given much thought to either candidates’ political platform. So as November nears, I think it is time for me to understand where the candidates stand.

Today I’ll look at Senator McCain’s health policy.

What’s the plan?

The plan is to control escalating health care cost.

Why Sen. McCain chose this position?

Controlling cost would unburden the Medicare and Medicaid systems making the sustainability of the programs viable for future generations. At the current pace, the systems would be an insurmountable financial stress by 2019. Also by controlling costs, the health insurance becomes more affordable for families.

Individuals should be in control of their own fates. This plan will give people more options in their selection of health insurance and medical service providers.

Medical providers would be conscientious in the quality of care because more patient options will stir competition.

How will Sen. McCain carry out the plan?

Insurance portability - when individuals change jobs or move across state line, their insurance plan can follow them.

Restructuring tax credit - rids credit for employer sponsored plan and shifts credit to individual household. Provides refundable tax credit of $2500 for individuals and $5000 for families.

Reduce prescription drug cost - increase competition by promoting the use of generic drugs.

Insurance accessibility - insurance would be available for purchase through various civic and professional organizations

Less expensive and more accessible medical care - encourages the delivery of medical service through retail health care clinics which use nurse practitioners as the primary care provider.

Rosy eyed optimism or real solution?

Political and policy analysts often compare McCain’s plan to Senator Obama’s plan. At some point, I will need to compare to compare the two. But first I want to look at McCain’s plan on its own merit (independent of how it stands up to Obama’s plan).

Offering individual tax credits to buy health insurance sounds good in theory. However every family will receive this credit… whether they use it to buy insurance or not is ignored. I do not think this will help decrease the number of uninsured. Most people are uninsured because they can’t afford the insurance premium. If financially strapped families are given $5000, the money is more likely to be used to satisfy immediate needs (such are food, utilities, housing, transportation) and less likely to spent buying protection for the what-ifs. And besides, health insurance costs a lot more than $5000.

Also offering this credit to every family in essence gives a subsidy to people who don’t need it. Most upper middle class and wealthy families don’t need a tax credit to buy health insurance.

By eliminating tax credit for employer sponsor plan, there would be no incentive for employees to purchase health insurance through their employers. This will result in decreased participation and prompt employers to drop these benefits. If employers drop benefits individuals will not only lose the advantage of sharing the cost of insurance with their employers, but they’ll also be forced to find coverage on their own.

Offering medical services through retail health care clinics sounds good on the surface. But there are no MDs at most of these clinics and the level of care is less comprehensive than that given at a regular doctor’s office. Also, most of these clinics are nested inside retail locations that also house pharmacies. Patients will be urged to fill prescriptions at those pharmacies. Though this may be the most convenient decision, it may not necessarily be the most economical.

While the principle behind the plan seems honorable, I’ll have to give its implications more thought before I cast my vote in November.

Between Thursday and Friday of this past week the Dow Jones Industrial Average dropped 450 points, officially taking it into what stockbrokers call ‘Bear Territory’; that is, a drop of 20% or more in a single year.

Do I care?

Not much. Even though the last time I looked, my 401K was losing about 8% annually, I’ve decided that a better way to spend my energy is to focus on things that cheer me up. I spent Friday afternoon making strawberry jam. In an apron. A 1940s collectible full bib apron, a la Ma Kettle.

Yes, it’s true. I am a Domestic Goddess.

So even though I could write a post about how Ford Motor Company stock is at its lowest point since 1955, or how Citigroup is in big trouble again, or how NY writer Tom Wolfe thinks we are witnessing “…the end of Capitalism as we know it,” (this from a guy who dresses like Colonel Sanders and wrote one of the awfullest books ever, made into one of the awfullest movies ever, The Bonfire of the Vanities), or how Chrysler is denying publicly that they are considering bankruptcy (meaning that they almost certainly are considering bankruptcy)–even though I could write that post, I’m not going to do it.

Instead, here are ten much more pleasant things you can do while the American Way of Life collapses around your ears. Then, once the dust settles, we can all talk.

1) Make Jam. I spent $25 on a flat of strawberries, $5 on four boxes of fruit pectin, and $2 on a five pound bag of sugar. I put up 13 two-cup containers of freezer jam, two quart bags of whole strawberries, and made shortcakes to eat with the leftover berries. We’re having them again tonight. I figure I saved between $10 and $15 doing this all myself, which isn’t all that impressive savings-wise, but you haven’t tasted that jam. Yum.

2) Read a Big Book. My partner, the world’s smartest truck driver, is currently reading Truman by David McCullough, a book that is as big as my head and twice as heavy. The book is about Harry Truman, former US President, not Truman Capote or The Truman Show. Harry Truman was so broke when he was a US senator that he had to hire his wife Bess to be his secretary just so they would make enough to cover their basic living expenses, then he spent the rest of his political career worrying that this necessary and pragmatic action would ruin his political integrity. Wow, have times changed or what? (Can anyone spell Oink?)

3) See Pixar’s Latest Flick Wall-E. Pixar is used to effusive praise, but the positive ratings on this one are off the chart. Wall-E is a sad-eyed trash-compacting computer left alone on earth after all human life has disappeared. His only friend is a cockroach. Don’t worry though, Al Gore isn’t in it, and at the end we find out that the human race has survived, just on another planet. The thing is, if you must see an apocalyptic movie this year, shouldn’t it be adorable?

4) Rent ‘Fight Club’. What, you say you were just laid off your cushy broker job at Citigroup and the only cute robot you want to see right now is one you pump so full of lead it ends up looking like an antique sieve run over by an SUV? Fine, I get it, put that now-totally-legal weapon away, will you please? Go directly to the closest video store and rent the film version of Chuck Pahlaniuk’s dark novel about the end of the world as we know it, courtesy of fed-up cubicle slaves. Trust me, it will cheer you up, especially the final scene. Girls: I have two additional recommendations for you regarding this film which make it worth watching all by themselves; Brad Pitt and Edward Norton.

5) Write a Cheap Food Cookbook. Mark my words, with the recent midwest floods destroying corn and soybean crops and a world food crisis already fully under way, in about eight months, somebody in the US is going to make a fortune off a clever book on how to make a tasty casserole for a family of four out of lint. Why shouldn’t that person be you? If you work in the auto or financial industries, you’re going to need the money, so get crackin’! Times a-wastin’.

6) Start Your Own University. College has become unaffordable for most kids and their parents, but there aren’t many jobs for graduates anyway. Instead of whining and crying about this, why not take the bull by the horns and start your own university? You must know how to do something. A degree from a state college currently costs about $50K, so charge 10K a head and then teach kids something useful, like how to covert SUVs into affordable housing. You’ll be doing a community service and you only need 10 students and you’re in six-figure income territory!

7) Help Build SUV-Henge. We know that with big cities strapped for tax income (due to all the foreclosures and all the industries pulling out and moving to China) public parks are hurting. Why not take the current glut of undrive-able SUVs and stack them on end to build a monument to the Sun that can be used at the Summer Solstice to appease whatever Gods are mad at us? (Probably all of them right now.) A majestic Public Works project is usually just the ticket to cheer people up during hard times, and the raw material and free labor is all around you.

8 ) Take a Stay-cation. ‘Staycation’ is a new buzzword for something wonderful I’ve always loved more than anything else in the world: Stay home and do nothing. Right now, I am so behind on doing nothing that even if I do nothing for the rest of my entire life I probably will never catch up. So if you are lucky enough to be too broke to do anything, count your blessings. Look at it this way: at least you don’t have to go to Disneyworld. Those folks are insane. The giant mouse, the dancing princesses, it’s a horror show.

9) Walk Around, Take Photos. Can’t afford to drive? Recently laid off? Take that digital camera and walk around chronicling the end of civilization. Someone really should be doing this, and I am so busy constantly grubbing for money I don’t have time right now. Plus, it’s good for you, all that walking. And dumpster diving is the the new chic way to go, so anything good you see lying by the side of the road, take it home and brag to your friends!

10) Hoard Rice. Come on, I know you want to do it. Sometimes, just being told you aren’t allowed to do something is enough to make that thing the only thing in the world you ever wanted to do. Buy your four 100 pound bag limit at one Sam’s Club, drive to another and buy four more, then back to the one you started at and buy four more, and don’t stop until your entire house is so full of burlap bags of rice you think you are on a Red Cross ship bound for Myanmar.

There. That ought to keep you busy for the next two hundred days or so until Barack Obama is finally President. I don’t know how much he’ll be able to fix by the time the inaugural ball is finally over, but at least the madmen will have gone back to Texas.

Anyone want some jam?

Dear Exxon,

Last year you made $40.6 billion in profit. I made $24,600. (Mine wasn’t all profit though.) Clearly, we move in different circles. Your ways are not my ways. Your kung fu is greater than my kung fu. Your gross receipts for 2007 alone topped out at over $404 billion, which is bigger than the gross domestic product of no fewer than 120 nations.

Wow.

My writing profits for 2007 totaled about $78, (which is what the US is currently shooting for in terms of gross domestic product. We’ll get there, I’ve no doubt.)

I have a question to ask you, if you have just a minute.

I am doing much better this year, and I see that so are you, with over $10 billion in profits in the first 2008 quarter alone, and the price of gasoline now pushing $4.50 or higher in lots of parts of the US, and diesel even higher, so high, truck drivers in Spain are acting up. Good for you. That’s what capitalism is all about, right? Profit, profit, profit. And you are leading the pack, holding the torch as it were (don’t hold it too close to all that oil though…you know what happened at that BP refinery). I commend you for your initiative and success.

Here’s my question:

Why did you find it necessary to fight the $2.5 billion in punitive damages for the 1989 Exxon Valdez spill, a spill that released 10.8 million gallons of crude oil into Alaska’s Prudhoe Bay and covered 11,000 square miles of ocean, a spill you admit was your fault and no one else’s. I mean, you have the money, right? We’re talking 1989 here. Since 1989, you’ve made so much profit that all the zeros won’t even fit into this blog, so let’s not even go there.

Perhaps you have forgotten that the Exxon Valdez oil spill instantly killed somewhere between 250 and 500 thousand sea birds, 250 bald eagles (an American icon which at that time I believe was actually an endangered species to boot), and 22 Orca whales, not to mention sea creatures of all kinds too numerous to list much less count.

Thousands of volunteers saved you most of the painful and hopeless work of trying to save these rare, suffering animals so you could instead take way too long finding a subcontractor to spray deadly chemical dispersants, surfactants, and solvents (which, damn the bad luck, didn’t work very well) all over the already poisoned Bay. So it’s not like you didn’t try at all, and to be perfectly fair, cleaning up oily messes is not really your thing. You are in the business of finding and selling oily messes.

Still, what did it cost you to fight this thing legally for 19 years running?

Corporate lawyers don’t work cheap. Even the ambulance chasers around here get $100 an hour, so I know you had to spend far more than the penalty just arguing the penalty in court after court after court.

What’s up with that?

Were you afraid that if you were held to some basic, minimal standard of corporate responsibility it would end up cutting into your impressive profits? If so, I wish you’d have called me first. You don’t have sic a squad of corporate attorneys on people and birds and fish already drenched in oil to preserve your right to be irresponsible. All you really have to do is get one of your pals elected President (oh, I forgot, you did that already), and then hire a big, glossy advertising firm to make beautiful commercials with lots of politically correct ‘green’ imagery and multinational persons wandering around on sand dunes and seashores and stuff like that, all to show how sensitive and environmental you are. That’s what BP and Dow Chemical do, and it works great.

People will believe anything if it’s on TV.

I know you won’t answer my letter. I know you are busy. It’s just that, for the life of me, I can’t understand why you would spend more than the original $2.5 billion, just to get it reduced to $500 million 19 years later. Maybe you aren’t aware of this, but right now, people in this country don’t like you very much. People think you are greedy and uncaring and tyrannical. People think you are gouging them and doing whatever you please and damn the consequences. When you don’t bother to even respond to those kinds of feelings, we start to feel like you don’t really care about us very much.

At the beginning of 2007 NOAA determined that you still have 26,000 gallons of crude oil poisoning the sandy soil of Pruhoe Bay Alaska. I just want to ask you this one favor:

Please don’t charge them for that oil.

Thanks for listening. Your little capitalist fan,

Pam, PFA