Observations on the Tax Return Controversy

This issue is one of those no brainers which one would think a guy running for president might have thought of sometime back, like years ago. This particular situation points out issues within a candidates psyche which many of us regular folks have a hard time understanding. The issue has nothing much to do with politics. It is profoundly a business problem, and perhaps the core of why business guys don’t make the greatest politicians. Of course, some guys who are not very good at business, don’t make great politicians either. That was another administration some years back, so we will move on. The business psyche is incessantly goal driven. Arrange things, make deals, move on. Repeat until wealthy, rich, super wealthy. Guys who are good at business have this thing they call business accumen. I have never successfully pinned anyone down on what they exactly mean by the term, but as close as I can get it is a term which could be defined equally well by IWKIWISI: (I will know it when I see it). It seems to have to do with the ability to manage information in a way that results in a profit, generally disregarding many of the issues which might give others reason for pause.

For instance lets say you are a dealer in used pig pens. Used pig pens are smelly affairs. Lets say everyone knows a used pig pen should be soaked in clorox for four hours before being passed on to the next would be pig farmer, and lets say dealers provide this service, at least sort of. The dealer with business accumen cuts the clorox concentration in half, reduces the soak time by two hours, all of which reduces his cost by seventy five percent. He markets his new renamed cleaning process as new and improved, with a flashy new clean sounding word, and sells his used pig pens at a fifteen percent premium. As best I can tell that is a realitivly fair description of business accumen, at it’s worst or best, depending on your point of view. Most of the time it has more to do with the agent who lets a customer believe something which is not necessarily true in order to make the sale. In any case, as a businessman gains accumen, he becomes increasingly willing and able to make money off the things his clients and customers do not know.

The more accumen a business guy has the more money he can make. The primary role is managing information and expectations so as to extract maximum profit for self and company. You cant make billions of dollars without a lot of business accumen. Lots of accumen often involves playing fast and loose with truth. One might say that accumen is also management of the perception of truth. Business guys with great accumen often attempt to manage truth itself, leaving the real truth shattered on the floor. Whenever business accumen mixes it up with politics bad things tend to happen, so an organization is sometimes needed to manage the candidate and his perceptions of truth, in order to prevent his premature self-destruction.

A few observations on the politics of the tax return debacle:

1) If their reasons are personal the Romney’s will come around when it threatens the election.

2) If nothing of consequence is in the Romney returns:

a) Team Obama will push for, but not force an early release.

b) The returns will eventually be released hoping for a poll bounce sort of like a reverse October surprise.

c) Team Obama might be expected to quietly drop the issue to prevent the poll bounce.

d) Team Romney may attempt to limit any further political damage by setting a date.

3) Team Press will have taken note of the potential for a big story and begin serious independant research.

4) If there are serious political reasons for not releasing:

a) Team Romney will continue to refuse until after the convention, perhaps longer.

b) Team Obama may be fully aware of the Romney problem but mostly interested in keeping the issue alive.

c) Team Obama will drive the issue through the GOP convention and as long as it generates traction.

d) The issue may survive until the story is eventually broken by the press.

4) There is little probablility of legal issues with the returns themselves, because extensive audits are probable.

5) Perhaps the highest probablity is that audits have uncovered significant lapses, omissions, and corrections.

a) In this case there is some, but not a high probablility, that returns will be released post convention.

b) Team Romney may secure the nomination first, then roll humpty dumpty during the party in Charlotte.

c) Team Obama will ride any issues uncovered when humpty dumpty falls, through election day.

6) If there are legal issues which the returns might highlight or otherwise make apparent:

a) Romney will never release any returns which might point out where to look, for any reason.

b) Team Obama may know if this is the real story already, and almost certainly before their convention.

c) Team Obama has used the term illegal which may indicate they are aware of something they consider big.

d) Team Press will redouble efforts because the resistance indicates a huge story lurks within the legal mists.

e) Team Romney will be in serious trouble and should expect an October surprise if their poll numbers are good.

f) Team Obama might wait to break any story until it is too close to the election for a replacement candidate.

g) With good polls Team Obama rides the issue through the election and lets DOJ settle scores later.

If Romney has the capacity, and actually wants to be the president, he releases the returns unless there are serious legal or morals issues. Anything else only serves to further damage his challenged credibility. There are two outstanding cavits to all of this. First is a general assumption by all parties that whomever buys the most TV advertising, wins the election. The second cavit involves the accuracy, reliability, and security of software used in electronic voting systems. If Team Romney knows they have some overwhelming advantage, the tax returns will never be released, which in itself may be a primary indicator that something fishy is going on. Exit polls which are remarkably different than precinct results then become a primary indicator that things are not exactly right.

End of the World – Part One

At least since I was a small boy people have been predicting the end of the world.  The world of course usually does not end at the scheduled time or place. In more recent times that fact has perhaps discouraged those scheduling the end of days. The most recent group of end of days enthusiasts were fixated on May 21, 2011. Again the world did not obey the prediction. The date has now been revised to October, 21, 2011. Since world ending financial events seem to have a preference for October, we are not arguing with them. The next group of end of days enthusiasts are fixated on December 21, 2012 because that is what they believe the Mayan Calendar says is the last day.  The Mayans could of course be right, in this, but we won’t actually know until December 22, 2012.

Meanwhile we have a world in a really big mess. The big western capitalist economies are living on socialist Chinese labor. The Arabs and their associates have discovered democracy – Unfortunately they have not experienced the Renaissance first, thus you have millions of brainwashed young people out fixing to decide things for themselves. Can you imagine a more fitting end of the world scenario than that? Then we have the Chinese who are busy lending us the money they make selling stuff to us, so we can keep buying the stuff they sell us.  What do they get out of this bankrupt bargain? Knowledge of our technology. And some of the stuff they make.

The political discourse in America is being driven by the extremes of self interest. Looking to the 2012 election, it will likely be the most partisan in history, with one party bent on either owning America or saving it by destroying it. The other party has become so timid they dare not confront the mass hallucination of the one. One night a few months ago a partisan pretend news personality essentially called out the president of the United States on national TV, and those who freaked out when anyone questioned any action of the previous president stood up and cheered.

Recently there is an article in the Los Angeles Times detailing some of the funding of TEA party candidates. It seems the new GOP congress is now owned by the Koch brothers. That should actually not be a surprise, the GOP has always wanted to be owned by someone rich. I suppose you could say they are successful. Remember the supreme court ruling last year allowing corporations the same free speech as voting individuals? Didn’t take the GOP long to capitalise on that did it? It is a good time to wonder how many of the supremes are owned as well.

There is little doubt much of the angst involved in today’s politics involves the president. He has been vilified far beyond anything he has actually done or said. Even though many of the supposed TEA party could not themselves get a “long form birth certificate” if they had too, they have attempted to subvert the next election by demanding all candidates produce such a form. The long form is simply the application form doctors use to originate the real certificate which is incidentially held by a state vital records office in a vault somewhere. In many states all you can get is a certified copy of this state certification – no long form. The long form is only a source document, and as such is not a certificate of anything.

Today, the US stands between the socialist benefactor, China, and masses of the religious zealots of the Arab world who would destroy both of us purely for religious reasons if no other. One should not doubt they believe they have many other reasons, either.  We think we need oil from the Arabs and cash from the Chinese. The Peoples Republic needs that oil too. China is a very old society massively steeped in tradition. The western ideas of communism and capitalism may be relatively new to them, but the concepts of social order, economics, influence, and power are not. The Chinese invented paper money many centuries ago, so we should not be surprised they have a sophisticated understanding of how a currency can be used. The idea they have chosen to use currency stratigically should not be a huge surprise. We probably shouldn’t get all that upset if someday we figure out they also happen to think it is pretty much worthless. Currency is for trading, any other use diminishes it’s value.

In the year 1420 China was ruled by the last emperor of the Ming Dynasty. At that time they were the most powerful and the richest nation on earth. Some believe, and there is some evidence, the Ming emperors dispatched fleets to every continent on earth. The successors to the Ming chose to look inward, because the cost of exploration and looking outward was too high, much like our politicians would have us believe today. The looking inward set the tone for the next 500 years of Chinese history. China was all but destroyed. It was not until the Marxist revolution that China again made it’s presence felt on the world stage. While perhaps Chinese culture has little tolerance for the noisy competition of ideas and opinion we find so wonderful, we in the US can learn much from the Chinese.

One night during a lightening storm, a grand Ming edifice, known as the Temple of Heaven, was set on fire by lightening and burned to the ground. The emotional and financial shock of this event is thought to have started the domino fall which terminated the Ming and their dynasty. The disastrous end came after years of expansion, great voyages, building, and much doing. The accountants became weary. The wealthy farmer wished to stash his savings safely away. The populace and those in power became more conservative.  Somehow in all of this, wealth became worthless. There were no more dreams of sailing to the ends of the earth, trading with every nation under heaven, naming every star in the night sky, or finding the pole star of the southern sky. Hope was gone. Incentive was quickly behind hope. Raison d’etre followed them both. Without raison d’etre all was lost. If it were not for the terracotta armies found in recent decades the idea of the Ming would largely be considered ancient mythology.

Over the years I have on occasion worked with people from China. Once, for whatever reason, I ask one of them how they managed to read the Chinese script. First, I was told there are thousands of characters, and no one knows all of them. You might call it picture writing. My friend happened to have a book, so he started explaining some of it. It wasn’t too long before more of his Chinese friends came over to help explain to the American about reading and writing in their language. The thing that intrigued me most about that conversation was the idea that a script, whether reading or writing was a community effort, and the meaning would be arrived at when the community came to a consensus concerning the symbols used to communicate the authors intent.

If somehow we as a nation we cannot find it within ourselves to become a community again, and work in that communities’ ongoing self interest, no mater how much it costs, we will suffer the same fate as the Ming. We of course have no terracotta armies – everything we know is recorded on paper and magnetic disks which have little chance of being read two decades hence, and absolutely no chance of being read in the year 2525.

Keeping fear/sanity Alive

For many of us who are political independent, the past ten years have been disastrous for our careers and finances.  We won’t be physically at the rally today, because among other issues we cannot afford to go. We are there in spirit.  Over the years we have watched friends march off in support of whatever GOP agenda was going to save the world at that particular minute.  Most of these were a ruse to get votes needed to elect some professional “non-professional” politician.  Many of these issues were successfully used for decades.  Most have since either been completely abandoned or repudiated by actions taken.  For instance the GOP lost the abortion issue when republican women locked the bedroom door and refused to go along with the good ole boy’s plans after they actually got control of the US house, senate, and presidency. The GOP and their partisans have all but destroyed the middle class, added trillions to the national debt, got the US into a catastrophically expensive war in the wrong country, eliminated significant financial regulation, stacked the supreme court with ideologues, opened US election processes to foreign influence, and encouraged the off-shoring of technical jobs to cut corporate costs.  This last activity started the domino fall which resulted in an economic disaster rivalling the Great Depression.  There is no way these political partisans can actually fix anything.  Now their candidates say they are going to “fix” all the problems they have caused the rest of us.  Yeah, Right.  On the other hand democrats have failed to take issue with much of the GOP nonsense, preferring to live in their own elitist world, where everyone drives a BMW, plays la cross, or polo, and things American are inferior. GO VOTE FOR SANITY ON TUESDAY!

Liberal vs Conservative

Liberals feel “called” for lack of a better term, to be inclusive. The Great Commission, as well as the Communist Manifesto are both visions of inclusive social, political, or religious movements. Communism can also be viewed as a “socialist” religious movement. Liberal movements practice conquest by inclusion. Liberal organizations loose their raison d’être when they have converted everyone. When reason to be is lost, more conservative elements take over and undertake purification to extend the life, as well as protect the lives and investment of those involved in the organization. Stalin was the conservative figure who seized control of the Soviet system and then purged his liberal rivals during the 1930’s. Likewise the bishop of Rome used the various councils to work out which of the common practices and beliefs of the early Christian Church would be included in Catholicism. Later popes used the inquisition to remove those who had divergent views. The Republican Party has made a similar transition. Liberal movements accomplish their purpose then either dissipate or become conservative.

Conservative movements, on the other hand, exist to conserve some vision of purity. This is accomplished by inviting imperfect individuals to make themselves absent. If such invitations are not accepted, troublesome individuals are forcibly removed. The methods which have been employed to accomplish removals range from shell games with meetings to the taking of life. History is filled with examples of conservative movements. Ancient Israel. The Roman Empire was the conservator of Greek civilization. The Papacy of the early middle ages served as the conservator of Ancient Rome. The Holy Roman Empire was the conservator of the Papacy of the early middle ages. The American Revolution was a conserving event used to maintain gains associated with the liberal era known as the enlightenment. Napoleon’s empire can be viewed as an effort to conserve the national status of France from before the liberal French Revolution. The American Civil War can be viewed as an attempt to conserve the rights of individual states to limit the freedom and status of certain of their citizens. The Third Reich was an attempt to conserve the German Empire which existed prior to World War One. The problem with conservative movements is they don’t go away easily or peacefully. War seems to often be required to resolve their issues.

Contract on America

If you know any of the tea party crowd you know they are a bunch of modern day confederates who would love nothing more than to re-fight the civil war. No one should ever forget the whole confederate thing was about the supposed constitutional rights of states to allow certain citizens of privilege to enslave certain other citizens of less privilege. The tea party solution is to eliminate all supreme court decisions, case law, amendments, and go back to 1789 where anyone could pretty much do whatever they wanted unless they were caught in the act. Where upon they would be lynched and hanged on the spot. If the tea party gets control of the USA it could easily become more cruel and evil then Nazi Germany.

2010 State of the Union Response

As an independent and moderate with perhaps a more liberal view of politics and finance, I thought the president did pretty well. The president’s message has always involved reducing the gridlock and self serving negativity so real problems that actually mater can be addressed and fixed.

As a voter I want a financial oversight board which has the power to stop all of the nonsense in the financial industry. Lets face it Wall street might as well be a casino. If we are going to insist on regulating gambling, Wall street should be regulated as a gambling institution. As a voter I want the banks regulated enough to at least assure their stability.

As a voter I want the jobs problem fixed once and for all. That includes removing all tax credits for any company which primarily sells their products in the United States but does not maintain a US workforce which adds significant real value to said products. Marketing and management do not add value to anything. I would not be opposed to the government being an employer of last resort. As a voter I want the corruption in government to end, and the president’s ideas involving the dealings with lobbyist, seem immediately appropriate. If we need to pay public servants better so they don’t need to be part time lobbyist, then lets do it.

As a voter I expect the health care mess to get fixed without the special deals to get a vote here or there. I hold conservatives responsible for not contributing to a workable plan. As a whole, not one of the ideas republicans have proposed will significantly help solve this problem in any possible way. Each conservative proposal seems designed to fix things by making them eventually worse especially for the middle class. Remember the prescription drug plan which doubled the prices of prescriptions, and resulted in US Big Pharma being bought up by European firms who casually shifted production out of the US? Another legacy idea that got compromised into disaster by conservatives. We do not need any more of those. As for the idea of eliminating state control of insurance companies, the only beneficiaries of that scam would be investment bankers who are lucky enough to manage the consolidation frenzy. Any cost savings will be immediately destroyed by debt used by the winners of the bidding wars. Lets face it, people in the middle class and especially baby boomers are seen in the worst possible light by the conservatives. As large numbers of baby boomers approach retirement you can expect social security to become the target of a massive conservative assault if republicans regain control of the US government again. If the market bubbles since 1999 had not wrecked conservative plans, the current debate would be about eliminating all “new deal” financial controls and programs, including medicare and social security. If conservatives had their way, there would never be a debate about health care, as they are perhaps the primary beneficiaries of the current system.

As a voter I want something done about the student loan mess, as well as the cost of university. A first step in reducing future debt involves removing the tax on scholarships to cover housing while attending college. Current student loan debt will cripple any possibility of any housing recovery for at least the next fifteen, perhaps twenty five years, unless we have massive wage inflation, which is not possible in the current situation. The president’s proposals are a half step in dealing with this issue, which by the way is another one of those legacy issues, in that grants have been largely eliminated in favor of loans, and the tax on student housing grants has been around for a while.

Since most student loans are owned by the US government, I think people holding them should be given at least a tax credit for the amount paid straight off of their taxes. Those who paid for their education out right, or have paid off their student loans, should have the option of anonymously paying down student loan balances of at least one third party each year in return for a similar deduction or credit, with limits on the total amount of any such deduction or tax credit.

the offshore financial tsunami

In other news it is time to revisit February 12, 2004. That day Gregory Mankiw from the Bush White House economic department said something to the effect that outsourcing US jobs offshore was a good long term economic idea. I suppose five years later is getting on to long term, and It matter of fact does not look like such a fine idea. A wsj.com article on that date states that 2,000,000 jobs were lost to that point during the Bush presidency. Many of these were good paying middle class positions. You may remember trickle down economics from the Reagen – Bush era. You can’t remove 150,000,000,000 from the middle tier of any economy without some serious trickle down effects. In the communities where these positions were lost the impact was fairly immediate. The all night grocery store became the 8:00AM to 9:00 PM grocery. The classy car rental agency became rent-a-wreck. Restaurants closed. People lost their homes, cars, whatever. Some lost their families. Others moved in with relatives. In other places no one noticed. The market was up because companies could now pay bigger dividends. No one particularly noticed they were selling less stuff. Investors cashed out of the dot.com bubble and cashed in on the homes of displaced technical workers who once made $75,000 or better per year. Many of those displaced workers from 2001 either retired or worked part time for maybe 15,000 per year. Flippers flipped bargain basement foreclosure real estate for obscene profits to people with hidden balloon payment mortgages. Everyone was happy, except for those who had already lost everything. Bushie, Inc. was re- elected and all was good. Or so they thought. The free market crowd declared all the agencies which helped move the country out of the great depression could be disbanded, and all of that would have happened had Democrats been less successful in the 2006 election. No one but the affected voters had notice the brewing catastrophe. Voters had to some degree however, noticed, and a few of them were not particularly happy. But all was generally thought to be well, until those balloon payments on adjustable rate mortgages came due. By this time however the investor class had flipped out of the housing market into commodities, particularly oil. Bankers and their collateralizing friends were left to collect the profits in the wake of the flippers. All was thought to be well in the financial world. A couple hurricanes caused temporary shortages of gasoline and oil in the south eastern United States. This translated into a historic profit opportunity for the investor class, and they did not fail to take huge speculative positions in oil. The price of ramped up. For many months the retail price of gasoline would touch $3.00 per gallon in the United States. Demand would tank, and the price would fall back. This toying with disaster continued. Credit cards were maxed out buying gasoline for the big SUV. In the spring of 2008 retail gasoline prices again crossed the $3.00 threshold. A number of factors natural and otherwise kept the retail price of gasoline climbing this time however. The gas guzzling SUV was parked, sold, or traded for anything more fuel efficient. Demand trended down, but the price of oil kept climbing. All was well with the investor class, because everyone had to have oil. Everyone had to go to work to keep those ballooning ARM’s paid. Speculation pushed the price of oil toward $150 per barrel. The retail price of gasoline crossed $4.00 per gallon. Auto sales crashed, along with sales of most everything else. As sales collapsed, profits collapsed, and with profits, payrolls, which completed the feedback loop. Home foreclosures, already bad, hit record levels. Home prices most recently supported by the buyout cost of attached mortgages went underwater, shutting off US consumers home equity loan funds, and lots of credit cards. Adjustable rate mortgages went into foreclosure as their balloon payments came due. As ARM’s failed the underlying securities known as derivatives also failed. Investment banks in particular were forced into precarious positions, and many failed.

It is true there were many reasons for this chain of events. Mainly it was the final product of unbridled greed within the investment community, but it started with the movement of good US jobs offshore, and became a tsunami which wiped out main street and much of Wall Street.

This Fine Mess

The night the supreme court made Bushy, Inc president I told my in-laws our family would be unemployed, foreclosed, bankrupt, and homeless by the time he was out of office. This economic mess actually started much earlier – when the neo-conservative republicans took over the congress in 1994. Their win was a response to the liberal extremes on the democratic side attempting to force a more liberal vision of “morality” on a mostly moderate America. The middle class in our country has suffered through 15 years of oscillation between extreme political opinions on how to manage the economy, govern the country, and influence the world. The conservatives who claim to have all the answers have run up the US national debt in what can only be rationally described from their perspective as an effort to bankrupt the country. The only logical reason for this seems to be so that no future government could afford to pay for any social programs, particularly social security for neo-conservative’s most hated of all generations in history – the WW2 baby boomers. This has a lot to do with boomers social security being the largest government cost item in world history. Conservatives simply cannot get by giving up that much of a limited pile of wealth to support anyone in their old age. Up until now, these conservatives have been constrained in how to be rid of old boomers, by their supposed morality. Watch carefully, those nice woolly sheep are growing teeth, bushy tails, and pointy ears. The conservatives and their supporters in business systematically destroyed the fabric of the American economy in a desperate effort to maximize shareholder value, cut costs, save money, and eliminate taxes. At one point they even had a vision of going back and eliminating all the social programs that were put in place during the great depression. They have their depression. It will take more than a few months to move beyond this mess. Two years is a minimum.The republicans and their supporters did this thing over at least fifteen years. Their theory is basically there should be a limited amount of wealth in the world, they want it all, and no one else, including the American middle class should have any. This mentality pervades American business, and is the engine which is busy driving everything but retail, finance, and marketing out of the United States economy. Ok, so they haven’t eliminated your profession yet? You can bet they are busy figuring out how to eliminate you – because your salary is a cost on someone’s balance sheet. Eliminating you enables higher executive salaries and higher shareholder profits. If this train does not get turned about, your turn comes. If it can be moved off shore it will be. Ask those people who lost their jobs with the big hotel conglomerate a few weeks ago – they were outsourced to India. That particular outfit charges above one hundred bucks a night at their facilities across small town America which is almost double what it was only a few years ago. Their market is primary in the United States of America. Why are they further injuring the US economy by laying off people and running up the price of their service. Which makes fewer Americans able to afford to stay in their hotels? There is only one answer. They are greedy, beady eyed, and stupid. If they must move into these emerging markets, then they should build hotels there.

Sarah Palin and the Republicans

Wow. Things sure get cold in republicanville after a lost election. Especially, the vice presidential canidate is a relatively good looking woman. But wait – that is what they hated so much about Hillary in 1994 – wasn’t it? She was just too good looking to be a successful lawyer in her own right. Too pretty to fix health care. Sarah Palin has resigned from her governorship, probably for personal financial reasons, as well as the other big secret of state government – the job is incredibly boring. If it is not then why do the more interesting of the political types have these oh so secret lives, chasing interns, teleporting themselves from the hiking trail to Buenos Aires via the Atlanta airport, or cutting brush in 100 degree days in Texas. If being a governor is not so incredibly boring then why is it governors need these distractions? Lets face it being a governor IS incredibly boring. Sarah had a relatively simple choice. She could find trouble to get into. She could countinue the Obama bashing the republicans wanted which does not ring well one populist against another – party differences and looks aside. Otherwise, she could resign and go fishing. The republican pundits are of course having a field day, but one should look beyond the pundits. There has been a coordinated attempt by a handful of Republicans operatives in Alaska to destroy this Republican governor. Why? Because there is more to this than the fact she is a Republican. She is not the right kind of Republican. Republican women who make it to the big time are the daughters of wealth, power, pomp and circumstance. Not Sarah Palin.

Russian programmers manipulation of markets

If someone else could use this program to unfairly manipulate markets…  I presume that is exactly what “the bank” has been doing with said software. If this program was neting them millions and millions of bucks, I think you can bet they were using it to their own maximum advantage. Were other banks targeted by “the bank” using this program, or some similar technology, offensively? I think a US attorney should be looking into how “the bank” was using as well as mis-using this technology.

One other thing – as a software developer, we often insert clauses into contracts to protect our interests – particularly if our own prior art is involved. The defendant in this case is at least somewhat of an expert on image and neural processing. They would not be paying him 400K per year, if he were not. Any software expert would insert a clause into his employment contract, allowing himself a legal copy or “fork” of the code he developed. He would also insist on a clause maintaining his right to continue developing his “fork”. This would be particularly applicable if the developed system contained methods or algorithms he had previously designed, developed, or invented. This could be how the defense can say they have broken no law. It would also mean “the bank” is using the government, and the legal system, to break an otherwise legally binding employment or consulting contract.

Some other US attorney should also be asking what this software had to do with the price of oil one year ago…