In my mind, Summer officially begins with Memorial Day. Traditionally it is when I open my Summer home in Lead, South Dakota. As I write this, I am sitting in my office in the attic of the house that has been owned by Konolas since the late 1920’s. When I look out the window, I see the roof of the house next door, which was built by my great-grandfather at the turn of the century, and the entrance to the former gold mine that supported my family for generations.The mine is in the process of being converted to an underground laboratory for international experiments on sub-atomic particles. Neither my great-grandfather nor my grandfather would recognize a world filled with atomic science, internet connections, and cable news 24/7.Today I’ll remember my ancestors by visiting their graves. My paternal great-grandparents are buried here at South Lead Cemetery. My maternal great-grandparents and grandparents are buried in the small, rural cemetery near St. Onge, SD. That cemetery is divided into two sections—one for Catholics and one for Protestants, and I have family in both sections. My paternal grandparents are buried at the national cemetery in Sturgis. National is having two Memorial Day services today, one for people like my grandfather who served on a submarine in World War I, and a later one for the many local Native Americans who served their nation. I plan on heading back to Colorado as soon as the services are over. Homework:http://www.sanfordundergroundlaboratoryathomestake.org/http://www.cem.va.gov/cems/nchp/blackhills.asp
I remember when the Republican Party was all about law and order. The motto was always “Get Tough on Crime.” It seems that Douglas Bruce, hero of the anti-tax crowd, doesn’t think that the laws put in place to keep Colorado’s elections fair apply to him.Bruce is famous for two things: authoring TABOR and being the first legislator in about 100 years to be sanctioned for his behavior in the House when he kicked a Rocky Mountain News reporter on his first day as a Representative.And he’s about to become famous for contempt of court. The state has attempted to serve Mr. Bruce 29 times to testify about his involvement in getting three tax questions on the November ballot. Mr. Bruce has not acknowledged receipt of service. Even the Republican Attorney General has lost patience with the man. He’s moving to hold him in contempt of court.This controversy comes because Bruce apparently neglected to register as an issues committee when he was funding the activities of the petitioners who were trying to get Amendment 60, Amendment 61, and Proposition 101 on the ballot. Because of the drastic impact the three ballot initiatives could have on Colorado’s already fragile economy, they are being referred to as the Evil Three. It seems the only man who loves these amendments is Bruce, sometimes known as Dr. Evil. But he is trying to pretend that he had nothing to do with them. For the life of me I can’t see why anyone would consider Douglas Bruce to be a hero. He is a self-serving, arrogant, bad-tempered, poor excuse for a human being.Homework:http://www.denverpost.com/ci_15186272http://www.huffingtonpost.com/2010/05/24/doug-bruce-identified-by_n_588064.html
Nobody who has been watching the disaster in the Gulf of Mexico could possibly continue to think that an oil and gas industry without any regulation is benign. Colorado is rich in extractive minerals, and we should continue to produce and export them to other states. But we should not blindly support the industry, while failing to protect the natural beauty of our state. The local potential for disaster lies in fracking chemicals polluting our water-supplies, which are already scarce in our arid environment. Imagine if you turned on your water faucet for a drink of water, and what came out was diesel fuel. Okay, so I’m exaggerating quite a bit here. Most of us live where our water goes through a water treatment plant before it hits our faucets. But rural citizens don’t. There have been incidents of individuals becoming extremely ill after drinking the water from their wells. Unfortunately, it has been difficult to determine the cause of the water pollution because some of the chemicals found in their water occur naturally in local soil. In at least one case that I’m aware of, the cause of pollution was traced to oil and gas activity only because the rancher had done water testing on the well pre and post oil and gas activity in the area.A contributing factor in the inability of ranchers to prove that their wells have been polluted by the oil and gas industry is the insistence by the industry that the chemicals they use in fracking are proprietary information. Here’s where the story gets all mixed-up with back-room deals between the federal government and major oil companies. The EPA is currently conducting a two-year study of fracking chemicals and their environmental impacts. Dianna DeGette (D-Denver) has been working on a bill to regulate fracking fluids. Yesterday she withdrew the bill because she was close to a deal with the industry. The Sentinel opines that the slow-down is good. And it IS good for the industry. But it isn’t all that good for those of us who get our water from rivers running through natural gas production zones.Homework:http://www.gjsentinel.com/opinion/articles/dont_back_off_on_fracking_dischttp://www.hydraulicfracturing.com/Pages/information.aspx?utm_source=OPM&utm_medium=CPC&utm_campaign=Paid_Search&gclid=CISNsv_q9KECFRMNDQodBR7uEQ/Pages/information.aspxhttp://www.nytimes.com/gwire/2010/05/26/26
The Colorado bill changing how teachers are evaluated, signed into law by Governor Ritter, is making waves nationally. Yesterday the Los Angeles Times wrote about the bill, and the impact it is having in California, where a similar bill is being considered.As I’ve written before, evaluating teachers on the tests taken by their students may not produce the results we are seeking. If what we want are kids who are developing into the skilled workers that businesses need, we need the brightest and best in the teaching profession. What we are getting is the bottom quartile of high school graduates. To put this into perspective, we have C students trying to create Einsteins. A students have discovered that they can make lots more money working in other professions.When I was a kid, women had essentially three “career” paths: Mommy, Nurse, Teacher. Bright women chose to go into teaching or nursing. Today women are in corporate board rooms. Women, thanks to the women’s movement, gained the ability to work in a myriad of professions. I’m not saying that there aren’t really good, dedicated teachers in our education system. There are. I met many of them when I visited their schools recently. What I’m saying is that the industry, as a whole, no longer attracts the top students. Without access to that labor pool, we cannot expect huge improvement in the education our kids are getting.As a society we have put more value in jobs like trash hauler and bartender. Their annual salaries often exceed the salaries of teachers. Yet teachers have to invest in constantly updating their teaching credentials. Unfortunately those updates tend to focus on technique, not course content. The system is designed for mediocrity, and no amount of teacher evaluation reform is going to make a dent in the problem.Homework:http://www.latimes.com/news/nationworld/nation/la-na-colorado-20100523,0,5945475.storyhttp://www.huffingtonpost.com/joel-judd/prematurely-tying-perform_b_580226.html
While I’ve been away from internet links, Congress passed the Restoring American Financial Stability Act. It does no such thing.
Thanks to 2,000 lobbyists for the financial industry, derivatives will still be unregulated; consumers will still be scammed by used car dealers and credit card companies; and too big to fail still means a government bail-out of gamblers.
The part that irritates me the most is that “too big to fail” amendments failed. Reality is that banks that are “too big to fail” really are a danger to our national security. By taking risks with our economy, they are still rewarded with huge fees and bonuses, and have the backstop of the federal government’s ability to tax. It’s a get-out-of-jail-free card for investment bankers. It privatizes profits and socializes losses. The rich get richer and the rest of us get screwed.
Read the linked story to see how laws like this get passed. Warning, you may lose your lunch.
Readers, your candidate is in Denver for the rest of this week. Because my only internet access is from internet cafes, I won't try blogging until Sunday--when I'll be at my vacation home in Lead, SD. Come Back!
The linked story demonstrates how the FDIC works. Small banks fail all the time, usually because of bad management. In this case, banks are probably failing because unemployed consumers and small businesses, which have seen revenues drop as the result of the recession, are unable to repay their loans. Some of the loans were good, however—that is what the story is talking about when it says that assets were purchased by another bank. Look at the size of the banks that failed on Friday: $242.9 million, $120.2 million, $335.8 million, and $32 million. These are not the multi-billion dollar banks that the government bailed out as “too big to fail.” Look at how these banks failures were treated—other banks purchased their deposits and assets. When another bank purchases deposits, the full amount of the deposit is purchased, even though FDIC only insures deposits up to a certain amount. In other words, no depositor lost any money as the result of these bank failures. Good loans and investments are the “assets” that were purchased by other banks. The FDIC keeps the bad loans, but doesn’t just write them off. They go after collateral and judgments against the borrower in order to recover as much money as possible for the FDIC fund. Stockholders and the FDIC took the loss, and the FDIC will try to recover some of its losses. The shareholder is out of luck. Look at how the FDIC is funded. The story says that as of 12/31/2009 they had a deficit of $20.9 billion, caused by bank failures. The reaction of FDIC was to force BANKS to pay premiums of $45 billion in order to replenish their fund. In other words, the banking industry is paying for the costs of these bank failures, not the U.S. Treasury. When a mechanism similar to FDIC was taken out of the banking reform legislation, I shook my head in disgust. That tells me that congress is not serious about fixing the “too big to fail” problem with big banks. Small banks pay into an insurance fund that protects depositors, but there is no such protection for small investors who invest their money with investment firms. And the only way to save the economy when a failing bank is “too big to fail” is to have the government bail out the bank. Homework:http://finance.yahoo.com/news/FDIC-shuts-banks-in-Fla-Minn-apf-2475780035.html?x=0&sec=topStories&pos=main&asset=&ccode
During the final week of the legislative session, Senate Bill 10-191, which changes how teachers are evaluated passed both houses and was sent to Ritter for his signature. When the bill was first introduced, the teacher’s union was adamantly against it. By the time the bill had gone through the sausage making machine, they were neutral. I guess that means they didn’t love it, but they didn’t hate it either.The bill was introduced in the first place because TABOR does horrible things to government in a recession. Colorado is facing a 50% cut in money allocated to education in 2011. This year’s legislature did two things to protect education: passed a bill that fixed a “weakness” identified by a failure to secure funding in the first round of Race to the Top (Senate Bill 10-191); and passed a bill that increased funding to colleges and universities by allowing them to increase tuition.I’m not sure that either bill will actually do much to improve the education our kids are getting. We still have 30% unable to read at grade level by the third grade in Mesa County. We still have 30% of our kids dropping out of school instead of graduating. That’s three out of every 10 kids who will be stuck in poverty, with no way out. That’s three out of every 10 kids who will vote in elections where the issues are too complex for them to understand, and without the skills to gain the information needed to make a responsible decision. Instead of offering a carrot to teachers, we’ve just offered them a stick. If they don’t get more kids reading and more kids graduating, they could lose their jobs. But if we continue to attract only the bottom fourth of any graduating class into the teaching profession, and continue to pay them only slightly more than the average employee at Waste Management, Inc. do we honestly expect them to turn out rocket scientists? Even bartenders earn more.Homeworkhttp://www.statebillnews.com/2010/05/sb10-191-tenure-bill-is-off-to-gov-ritter/http://www.payscale.com/research/US/All_K-12_Teachers/Salaryhttp://www.payscale.com/research/US/Employer=Waste_Management%2c_Inc./Hourly_Ratehttp://www.indeed.com/salary/Bartender.html
Finally, something to cheer about in financial reform! Small Businesses could be paying less for the privilege of accepting credit cards when consumers make purchases. One of the reasons I left the world of banking was that it was becoming increasingly mercenary. When I started my career, we were drilled on providing good service to our customers. When I ended that career the focus had moved to increasing fee income and a strategy of selling multiple products to a customer. The idea was that the more products a customer purchased, the more difficult it would be for that customer to move to a competitor. A revenue stream as secure as an annuity!I also watched banks go from offering small loans to consumers and small businesses to moving small transactions into credit cards. (At one point in my career, you couldn’t get in to see me unless you were attempting to borrow at least $1,000,000. Small business need not apply.) To the extent that small transactions could be automated, the bank could lower its cost of doing business. Credit cards were exempt from all usury laws, so they could be priced in the range of 18 to 24 percent, thereby increasing the bank’s revenue at the same time. And when a customer used a credit card, the bank received a percentage of the transaction as a fee from the merchant. This new legislation limits those fees. And it only came about because small business lobbied harder than the banks did on this one piece of legislation.Now if only consumers had a lobbyist. Maybe we could bring credit card interest rates back in line with the actual cost of funds plus a bump for the risk of an unsecured transaction.Homework:http://www.nytimes.com/2010/05/15/business/15credit.html?hp http://www.denverpost.com/business/ci_15090107