Come November, it is the intention to throw the bums out. All of them. Many Senate seat challengers, while running as Republicans, have risen to the top with backing from the “tea party.” Wisconsin’s Ron Johnson is just such a candidate. A fiscally conservative businessman, Johnson has never run for public office and is an inexperienced campaigner. But the way his rhetoric matches with fact, he already seems the pro. Ron Johnson can now distinguish the bum’s face. That bum is incumbent Senator Russ Feingold.
Now campaign finance filings found by The Awl show that despite his vigorous denouncement of the bank bailouts, Johnson’s campaign has received funding from many of the same banks who received bailouts. This means you and I have helped fund Ron Johnson’s anti-bailout campaign. So we should get to know him.
Johnson has gladly taken the tea party badge. Back in May, Washington Post columnist and conservative icon George Will said Johnson “is what the Tea Party looks like.” FreedomWorks, the Dick Armey-run conservative organization that organized the 9/12 rally in 2009 but is not at all behind many “grassroots” tea party events, called Johnson a “Champion of Freedom.”
His website’s rundown of his personal history (“Meet Ron“) begins, “Ron grew up in a family and in a place where one of the greatest compliments you could give a person was to say that he or she was a hard worker.” And it only gets more vague. Apparently, this is intentional. Johnson declined to meet Feingold in all six debates, agreeing to just three. That a long-time incumbent is challenging his newcomer to debates should immediately raise raise a red flag. Without detailed positions, what is there to specifically criticize? Johnson’s campaign has taken to dismissing all criticisms of the candidate as typical political attack ads, even as Johnson’s crew runs similar spots. This kind of electioneering doublethink infects Johnson’s campaign, a rhetoric capable of forgetting whatever it’s necessary to forget, only to draw it back into memory at the moment it is needed.
Johnson claims to be for freedom, his rallying cry being “First of all, freedom.” But then he believes marriage can only be between a man and a woman.
He is passionate believer in the values of Rand’s Atlas Shrugged. But not the book’s fundamental view of the “monstrous absurdity” of original sin, as he is a fervent and active Lutheran who says “freedom of religion doesn’t mean freedom from religion.”
Johnson has adopted an all-green design and logo, giving the impression that he is a friend of the environment. But he is fervent supporter of fossil fuels, defending BP against recent criticisms and calling climate change theories “lunacy” and “not proven by any stretch of the imagination.” (Johnson has suggested sunspots have caused recent weather changes, despite sunspots being at historic lows.)
Johnson demands a smaller, less-involved government, saying our current one is “robbing the bank accounts of future generations of Americans.” But even while Johnson calls government spending and subsidies a “threat to our freedom” and insists “government doesn’t create jobs,” he refuses to acknowledge that his company received millions of dollars in industrial revenue bonds. Johnson’s campaign maintains the money he received was not a government handout. Yet this exact form of government subsidized loan is what fiscal conservative temple The Cato Institute calls “corporate welfare.”
As everyone debates whether or not this constitutes a government subsidy, the blog Uppity Wisconsin reveals Johnson’s membership on the board of an industrial development corporation partly funded by the city and county that “has successfully helped area business apply for and secure over a million dollars in Customized Labor Training (CLT) grants… designed to assist companies that are investing in new technologies or manufacturing processes by providing a grant of up to 50% of the cost of training employees on the new technologies.” Yet, Johnson insists that subsidization “doesn’t work through the free market system very well.”
Johnson could not be more different than Feingold when it comes to creativity and a voice for Wisconsin. Johnson is a voice for money. He admits as much, saying of Wisconsin’s loss of manufacturing jobs to NAFTA “there are always winners and losers.” For a candidate who complains about a private sector tax base, those “losers” include the 177,000-odd manufacturing jobs Wisconsin has lost in the last decade; that’s 177,000 incomes that paid taxes.
From a GOP perspective, he is a midterm wet dream. Giving all the appearance of the throw-the-bums-out attitude of the zeitgeist, Johnson has nonetheless endorsed all the old bums’ ideas about how to fix things. For health care Johnson says “Mitch Daniels has the solution,” referring to the incumbent Indiana GOP Governor. On taxes, Johnson points to old-school GOP insider Ronald Reagan. Johnson has said that during Reagan’s era, the top income rate of 28 percent meant “we were 72 percent free,” which suggests Johnson may endorse a complete elimination of the income tax.
For solutions to entitlement reform, Johnson points to fellow Wisconsinite and incumbent GOP Congressman Paul Ryan. (It’s noteworthy that while Johnson castigates opponent Feingold for being a career politician, he reveres Congressman Ryan, whose never held a job outside government since graduating college in 1992. Spectacular doublethink).
The greatest doublethink of all is the impression that Johnson is a self-made millionaire, that thanks to the opportunities provided by the American Dream, he pulled himself up by his bootstraps, an example of how America can reward hard-working citizens. On his website, the story goes that after moving to Wisconsin “Ron started a business called Pacur with his brother-in-law” and he has said he built his business from “from scratch,” from “the ground up.” But what Johnson’s campaign doesn’t often mention is that the candidate was set up with the business by his billionaire father-in-law. Uppity Wisconsin has unearthed evidence that Johnson’s firm Pacur is the beneficiary of less-than-market-driven business from its main client, Daddy Inc.
Reading a candidate’s website for his position papers is for suckers. To really understand how a candidate will vote, one needs to be in on the fund-raising calls he or she spends the majority of the day performing. Since that’s impossible, the next best thing is to look at which of those calls were successful. Where each candidate stands is directly defined by the money trail.
Russ Feingold’s Federal Election Commission report reads like a who’s who of labor. American Maritime Officers Voluntary PAC. American Dental Association PAC. Alliant Energy Corporation Employees PAC. Air Conditioning Contractors of America PAC. Committee on Letter Carriers PAC (yes, this exists). Association of Postmasters. Amalgamated Transit Union. Writers Guild. Sheet Metal Workers. Air Traffic Controllers. United Brotherhood of Carpenters. American Nurses. Optometric Association. Assisted Living Federation. Associated Milk Producers. Boilermakers. Longshoremen. Walt Disney Productions Employees PAC. Bricklayers. Even the PAC from Awl friends the Human Rights Committee supports Feingold (since 1997).
Meanwhile, Ron Johnson has largely self-funded his campaign, running three TV ads for each one of Feingold’s. When asked how much of his fortune he will spend to defeat Feingold, Johnson has said, “All of it.” He’s off to a good start, spending $4.4 million in the run-up to the primary, or about $9 per vote. That’s a lot more than the many thousands of dollars both he and his wife gave in 2004 to Feingold’s GOP challenger, Tim Michels.
Johnson doesn’t really need the $5,000-odd donations brought in by his committee, Ron Johnson for Senate Inc. That’s why looking at his list of donors is even more telling. A newcomer, Johnson’s list of financial supporters is short; but it includes the American Bankers PAC, American Express Company PAC, American Insurance Association PAC, Deloitte & Touche PAC, Financial Services Roundtable PAC, National Venture Capital Association PAC, and the Exxon Mobil PAC. The last of those donors recently got Mr. Johnson in some trouble when it was revealed that all his defense of oil exploration in the Gulf, and his criticism of the Obama Administration’s treatment of BP, might be because he personally holds hundreds of thousands of dollars in BP and Exxon stock.
Much like many of this year’s tea party-associated GOP candidates, one of Johnson’s core campaign points is criticism of the financial bailout. Funny then that Johnson’s campaign has been the beneficiary of the largess of the very corporations he believes should not have received bailout money.
For example, the cash Johnson received from the Financial Services Roundtable PAC on August 27 and the American Bankers Association PAC on July 8 and July 30 came from, amongst others, hardcore Treasury bailout beneficiaries such as JP Morgan Chase, SunTrust, Bank of America, Regions Financial, Zions and First Horizon. The money Ron Johnson received from the Bluegrass and Senate Majority Fund PACs came, in part, from one of the greatest bailout beneficiaries of them all, Goldman Sachs. Despite statements about staying out of politics this cycle, Goldman donated to both PACs on March 31 of this year. On June 24, Ron Johnson’s campaign received two $5,000 donations from the Bluegrass PAC, a day later the campaign received two donations from the Senate Majority PAC in the same amounts.
To be clear, while it may not be the backbone of his funding, some of the very bailout money that Ron Johnson has criticized is now funding his campaign.
Tea Party members might also be interested to know that some of the $2,700 PAC donation he received on August 27 came from Sallie Mae.
Johnson’s campaign ignored repeated requests from The Awl for comment.
Johnson has, and will continue to, paint Feingold as a Washington D.C. insider. But would a Democratic insider have voted against dismissing President Clinton’s impeachment proceedings? Feingold did.
When it comes to true politician insiders, potential Johnson supporters should ask about his connections to Americans for Prosperity’s old Republican establishment strategist Mark Block. State political blog One Wisconsin Now even makes a good case for how Johnson worked with supporters to actually diminish true grassroots tea party involvement after former Governor Tommy Thompson dropped out of the race. Johnson’s dismissal of Wisconsin tea party groups and alignment with Americans for Prosperity’s tea party is a microcosm of how the entire movement has been clandestinely hijacked by the GOP. And those who genuinely are grassroots tea party patriots should be worried about Johnson’s connection to the retail version of their movement. As One Wisconsin Now also just uncovered, Americans for Prosperity, along with Republican party leaders, are dragging the tea party reputation into good old GOP voter suppression tactics.
The great irony of course is that the newly angry who long for fiscal reason and weep for the Constitution, those who have become the “party of no,” could not have a greater ally than Russ Feingold.
Feingold voted against the 2008 TARP bailout. In fact, he voted against the repeal of the Glass-Steagall Act, which in large part caused the need for the bailout. He voted against NAFTA. And just days after 9/11 and at the height of that event’s fervor, Feingold hauled his giant balls up to the voting machine and registered a nay vote against the “USA Patriot Act” on the grounds that “The Founders who wrote our Constitution and Bill of Rights exercised that vigilance even though they had recently fought and won the Revolutionary War. They did not live in comfortable and easy times of hypothetical enemies. They wrote a Constitution of limited powers and an explicit Bill of Rights to protect liberty in times of war, as well as in times of peace.” He was the only senator to vote no. By all means, read his full remarks in the wake of the vote and ask yourself why Russ Feingold isn’t getting speaking invites for tea party rallies.
The once-progressive Republican Wisconsin Idea may have suffered greatly of late, broken and ill, slouching toward yore. But the election of Ron Johnson over Russ Feingold would be the ultimate blade run across its throat.
George Will’s backseat make-out session with Johnson in May heavily leaned on Atlas Shrugged symbolism, noting it was Johnson’s favorite book. Will noted Johnson’s belief that we are already living in the “novel’s dystopian world.”
When newspeak replaces debate and the nation’s vocabulary gets smaller every election cycle, where doublethink goes unquestioned by voters, we are indeed sliding into a novel’s dystopian world, but it wasn’t written by Ayn Rand.
Abe Sauer is enjoying autumn in Wisconsin.
Photo by WiscPolitics.com via Flickr
Submitted by Jim Quinn of The Burning Platform
10% Savings Rate + Consumer Spending At 65% Of GDP = Retail Disaster
Now that the Wall Street Journal, New York Times, CNBC and every
other mainstream media outlet have figured out what some financial blogs
had figured out months ago http://theburningplatform.com/blog/2010/08/26/the-great-deleveraging-lie/,
everyone knows that the American consumers have not yet begun to
deleverage. Consumer credit outstanding peaked at $2.58 trillion in July
2008. It has plummeted all the way to $2.42 trillion today, a 6%
reduction over two years. The full $160 billion reduction can be
attributed to write-offs by the Wall Street, Ivy League MBA run, banks.
American consumers do not want the Age of Mammon to end. They will
need to be dragged kicking and screaming into the Age of Austerity.
Consumer expenditures peaked at $10.2 trillion in the 3rd Quarter of
2008. They reduced spending for two quarters, but when Big Daddy
Government handed them billions and told them to spend it on cars,
appliances, and homes, they dutifully obeyed. Today, consumer
expenditures stand at an all-time high of $10.3 trillion, still
accounting for 70.5% of GDP. There really has been no hint of austerity
by Americans. It is a false storyline. The major reductions in
consumption still loom in the future.
The myopic financial “experts” have no sense of history or the
concept of reversion to the mean. They didn’t get it with home prices
and they don’t get it with consumer expenditures. The country has been
on a 30 year drunken binge of debauchery, debt accumulation and
delusions of never ending 10% annual home price gains funding a glorious
30 years of retirement on an island in the Caribbean. These visions of a
sugar plumb life of leisure are slowly giving way to the nightmare
scenario of eating cat food in your very own cardboard box McMansion.
The bombastic Boomers are turning 50 years old at a rate of 10,000 per
day. A staggering 38% of workers between the ages of 45-54 have less
than $10,000 of retirement savings and a mind boggling 29% of workers
over 55 have less than ten grand in their retirement savings, according
to the Employee Benefit Research Institute. It is no longer a matter of
people deciding whether to save, it is a matter of saving or else living
in abject poverty in their old age.
In the good old days, before the advent of the credit card in 1969,
Americans saved up to buy a house, a car, or an appliance. Consumer
expenditures as a percentage of GDP stayed in a range of 61% to 64% from
1960 until 1980. This range was reflective of a balanced economy that
provided good paying wages to blue collar workers who produced products
that were sold in the US and in foreign countries. What a concept.
America ran a trade surplus. The financial industry did not drive the
economy, they provided financing for businesses that wanted to grow and
produce. Sounds quaint. As the Boomers entered their 30s in the early
1980s the easy credit delusion, promoted by Wall Street and
the mainstream marketing machine, convinced the spoiled materialistic
Boomers that wealth was measured in cool stuff rather than accumulated
savings invested over time. Consumer spending as a percentage of GDP
surged from 62% to 70% over the next two decades.
Real wages have been stagnant since the early 1970s. With moribund
wage growth there was only one way for Boomers to live the faux American
Dream – Borrow to the hilt. And borrow they did. The personal savings
rate fell from 12% in the early 1980s to below 2% in 2007. The concept
of deferred satisfaction was cast aside by the “no worries” Boomers.
Saving and frugality was for the Depression era old fogies. The old
timers didn’t understand modern finance. Why wait until tomorrow when
you can have it today by just whipping out a plastic card? The delusion
of debt based “wealth” grew for 25 years, encouraged and stimulated by
Alan Greenspan and his bubble blowing machine.
The debt party reached its apex between 2005 and 2007. Boomers
willfully ignored or chose to not comprehend the concept of reversion to
the mean. They believed with all their hearts that their homes would
appreciate at 10% per year for all eternity. To prove their faith in
this belief, they used their homes like an ATM and withdrew $1.9
trillion of “equity” between 2005 and 2007 and spent it on 2nd homes,
cars, boats, flatscreens, vacations, home theaters, and other assorted
must have doo dads. They borrowed against their homes at the absolute
peak in home prices. Prices have fallen 30% from the peak, with some
markets down 50%. This has left millions up to their eyeballs in debt.
The home ATM flashes “INSUFFICIENT FUNDS” when they attempt a withdrawal
today.
So here we stand, two years after the financial system collapsed.
Government stimulus has provided an artificial boost to GDP. They have
tried every trick in the book to convince Americans to keep consuming at
a rate higher than they are earning. It is failing because consumers
have been shaken from their materialistic stupor. They are slowly coming
to the realization that they must save or they will suffer greatly in
the next 30 years. The savings rate has been moving erratically higher
and is now in the range of 5% to 6%. Ideally, it would need to reach 14%
in order for Americans to save enough to cover their retirement. This
will never happen. Americans will cut back but they will not revert to
the frugal ways of their grandparents.
The GDP of the country is $14.5 trillion. Over the next decade
consumer expenditures as a percentage of GDP will fall from 70% to 65%
because it must. With stocks destined to return 5%, bonds yielding 2.5%
and no equity left in their houses, consumers have no choice. The annual
reduction in consumer expenditures will be north of $700 billion. The
annual disposable personal income of Americans is $11.3 trillion. The
savings rate is 6%. It will rise to 10% over the next few years. This
would be $450 billion more savings and $450 billion less spending. This
will not happen overnight. It will take at least a decade. Mass delusion
wears off slowly and one person at a time. Charles McKay summed up the
last 30 years in two quotes from his book Extraordinary Delusions and the Madness of Crowds, written in 1841.
“Money, again, has often been a cause of the delusion of the
multitudes. Sober nations have all at once become desperate gamblers,
and risked almost their existence upon the turn of a piece of paper.”
“Men, it has been well said, think in herds; it will be seen that
they go mad in herds, while they only recover their senses slowly, and
one by one.”
Does this paint a picture of an economy roaring ahead? We have at
least a decade of low or no growth ahead. Deleveraging after the biggest
debt party in history is really a bitch. The industry which is about to
be dealt a mortal blow is the retail industry.
Retail Death Knell
Our entire consumer society has been built upon a foundation of lies.
The biggest being you could get wealthy without saving. The other being
that you were wealthy if you owned stuff that made you look wealthy.
There are 1.5 million retailers in America. There will not be 1.5
million retailers in 2020. The winnowing of the chaff from the wheat has
begun, but will accelerate over the next decade. The mom and pops are
already closing up shop in record numbers. The shocking revelation that
major mega retailers such as a Target or a Kohl’s might not exist in ten
years will not be believed today. Ever hear of Montgomery Ward?
What most people don’t understand is that the
mega-retailers’ strategic plans were based upon never ending store
growth, 5% comparable store growth for all eternity, a continuous flow
of increasing easy credit, the American population staying frozen
between the ages of 30 and 50 years old, and a delusional materialistic
greed embraced by the masses. Mega retailers without growing comp store
sales are like sharks that can’t swim. They will die. The comp store
sales growth is essential to overcome the effects of cannibalization
from new stores. The CEOs of these companies have never modeled a decade
of declining sales. They still believe it can’t happen, even though it
must happen. Delusions die hard, especially for CEOs.
I’ll use Target as an example. Almost everyone would agree they have
been one of the best run retailers of the last two decades. They have
over 1,700 stores in the US, with annual sales exceeding $65 billion and
profits of $2.5 billion. How could a retailer this large and successful
ever go bankrupt? They have $16.5 billion of debt and $15.3 billion of
equity on their balance sheet for a 52% debt to equity level. This is
not a dangerous level, but it is a heavy debt load. The deterioration
always begins on the sales side. Comp store sales have been
deteriorating since 2005 and were negative in 2008 and 2009.
The impact of this sales deterioration can be seen in their net
income over the last five years. It is at the same level as it was in
2005 and $361 million lower than 2007. Target opened 343 new stores
between 2005 and 2009 and its net income is the same. Net income per
store has dropped from $1.72 million in 2005 to $1.43 million in 2009, a
17% drop per store. In their peak profit year of 2007, they generated
$1.79 million profit per store.
What most people don’t know is that Target goosed their profits using
the same method that Americans used to get “rich”. EASY CREDIT. When
you’ve run out of ideas to grow your business, offer easy credit to your
customers. It worked like a charm for Target until it didn’t. They
issued millions of credit cards to the delusional masses. Who needed to
sell stuff, when you could make so much lending money? In 2007, the
Target credit card accounted for $1.06 billion of their $2.85 billion
profit, or 37% of total profits. This was up from 22% of their profits
in 2004. They’ve been learning a difficult lesson as credit card profits
plunged to $400 million in 2009 as they desperately tried to sell their
rapidly deteriorating portfolio with no takers to be found.
robert shumake hall of shame
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robert shumake detroit
Come November, it is the intention to throw the bums out. All of them. Many Senate seat challengers, while running as Republicans, have risen to the top with backing from the “tea party.” Wisconsin’s Ron Johnson is just such a candidate. A fiscally conservative businessman, Johnson has never run for public office and is an inexperienced campaigner. But the way his rhetoric matches with fact, he already seems the pro. Ron Johnson can now distinguish the bum’s face. That bum is incumbent Senator Russ Feingold.
Now campaign finance filings found by The Awl show that despite his vigorous denouncement of the bank bailouts, Johnson’s campaign has received funding from many of the same banks who received bailouts. This means you and I have helped fund Ron Johnson’s anti-bailout campaign. So we should get to know him.
Johnson has gladly taken the tea party badge. Back in May, Washington Post columnist and conservative icon George Will said Johnson “is what the Tea Party looks like.” FreedomWorks, the Dick Armey-run conservative organization that organized the 9/12 rally in 2009 but is not at all behind many “grassroots” tea party events, called Johnson a “Champion of Freedom.”
His website’s rundown of his personal history (“Meet Ron“) begins, “Ron grew up in a family and in a place where one of the greatest compliments you could give a person was to say that he or she was a hard worker.” And it only gets more vague. Apparently, this is intentional. Johnson declined to meet Feingold in all six debates, agreeing to just three. That a long-time incumbent is challenging his newcomer to debates should immediately raise raise a red flag. Without detailed positions, what is there to specifically criticize? Johnson’s campaign has taken to dismissing all criticisms of the candidate as typical political attack ads, even as Johnson’s crew runs similar spots. This kind of electioneering doublethink infects Johnson’s campaign, a rhetoric capable of forgetting whatever it’s necessary to forget, only to draw it back into memory at the moment it is needed.
Johnson claims to be for freedom, his rallying cry being “First of all, freedom.” But then he believes marriage can only be between a man and a woman.
He is passionate believer in the values of Rand’s Atlas Shrugged. But not the book’s fundamental view of the “monstrous absurdity” of original sin, as he is a fervent and active Lutheran who says “freedom of religion doesn’t mean freedom from religion.”
Johnson has adopted an all-green design and logo, giving the impression that he is a friend of the environment. But he is fervent supporter of fossil fuels, defending BP against recent criticisms and calling climate change theories “lunacy” and “not proven by any stretch of the imagination.” (Johnson has suggested sunspots have caused recent weather changes, despite sunspots being at historic lows.)
Johnson demands a smaller, less-involved government, saying our current one is “robbing the bank accounts of future generations of Americans.” But even while Johnson calls government spending and subsidies a “threat to our freedom” and insists “government doesn’t create jobs,” he refuses to acknowledge that his company received millions of dollars in industrial revenue bonds. Johnson’s campaign maintains the money he received was not a government handout. Yet this exact form of government subsidized loan is what fiscal conservative temple The Cato Institute calls “corporate welfare.”
As everyone debates whether or not this constitutes a government subsidy, the blog Uppity Wisconsin reveals Johnson’s membership on the board of an industrial development corporation partly funded by the city and county that “has successfully helped area business apply for and secure over a million dollars in Customized Labor Training (CLT) grants… designed to assist companies that are investing in new technologies or manufacturing processes by providing a grant of up to 50% of the cost of training employees on the new technologies.” Yet, Johnson insists that subsidization “doesn’t work through the free market system very well.”
Johnson could not be more different than Feingold when it comes to creativity and a voice for Wisconsin. Johnson is a voice for money. He admits as much, saying of Wisconsin’s loss of manufacturing jobs to NAFTA “there are always winners and losers.” For a candidate who complains about a private sector tax base, those “losers” include the 177,000-odd manufacturing jobs Wisconsin has lost in the last decade; that’s 177,000 incomes that paid taxes.
From a GOP perspective, he is a midterm wet dream. Giving all the appearance of the throw-the-bums-out attitude of the zeitgeist, Johnson has nonetheless endorsed all the old bums’ ideas about how to fix things. For health care Johnson says “Mitch Daniels has the solution,” referring to the incumbent Indiana GOP Governor. On taxes, Johnson points to old-school GOP insider Ronald Reagan. Johnson has said that during Reagan’s era, the top income rate of 28 percent meant “we were 72 percent free,” which suggests Johnson may endorse a complete elimination of the income tax.
For solutions to entitlement reform, Johnson points to fellow Wisconsinite and incumbent GOP Congressman Paul Ryan. (It’s noteworthy that while Johnson castigates opponent Feingold for being a career politician, he reveres Congressman Ryan, whose never held a job outside government since graduating college in 1992. Spectacular doublethink).
The greatest doublethink of all is the impression that Johnson is a self-made millionaire, that thanks to the opportunities provided by the American Dream, he pulled himself up by his bootstraps, an example of how America can reward hard-working citizens. On his website, the story goes that after moving to Wisconsin “Ron started a business called Pacur with his brother-in-law” and he has said he built his business from “from scratch,” from “the ground up.” But what Johnson’s campaign doesn’t often mention is that the candidate was set up with the business by his billionaire father-in-law. Uppity Wisconsin has unearthed evidence that Johnson’s firm Pacur is the beneficiary of less-than-market-driven business from its main client, Daddy Inc.
Reading a candidate’s website for his position papers is for suckers. To really understand how a candidate will vote, one needs to be in on the fund-raising calls he or she spends the majority of the day performing. Since that’s impossible, the next best thing is to look at which of those calls were successful. Where each candidate stands is directly defined by the money trail.
Russ Feingold’s Federal Election Commission report reads like a who’s who of labor. American Maritime Officers Voluntary PAC. American Dental Association PAC. Alliant Energy Corporation Employees PAC. Air Conditioning Contractors of America PAC. Committee on Letter Carriers PAC (yes, this exists). Association of Postmasters. Amalgamated Transit Union. Writers Guild. Sheet Metal Workers. Air Traffic Controllers. United Brotherhood of Carpenters. American Nurses. Optometric Association. Assisted Living Federation. Associated Milk Producers. Boilermakers. Longshoremen. Walt Disney Productions Employees PAC. Bricklayers. Even the PAC from Awl friends the Human Rights Committee supports Feingold (since 1997).
Meanwhile, Ron Johnson has largely self-funded his campaign, running three TV ads for each one of Feingold’s. When asked how much of his fortune he will spend to defeat Feingold, Johnson has said, “All of it.” He’s off to a good start, spending $4.4 million in the run-up to the primary, or about $9 per vote. That’s a lot more than the many thousands of dollars both he and his wife gave in 2004 to Feingold’s GOP challenger, Tim Michels.
Johnson doesn’t really need the $5,000-odd donations brought in by his committee, Ron Johnson for Senate Inc. That’s why looking at his list of donors is even more telling. A newcomer, Johnson’s list of financial supporters is short; but it includes the American Bankers PAC, American Express Company PAC, American Insurance Association PAC, Deloitte & Touche PAC, Financial Services Roundtable PAC, National Venture Capital Association PAC, and the Exxon Mobil PAC. The last of those donors recently got Mr. Johnson in some trouble when it was revealed that all his defense of oil exploration in the Gulf, and his criticism of the Obama Administration’s treatment of BP, might be because he personally holds hundreds of thousands of dollars in BP and Exxon stock.
Much like many of this year’s tea party-associated GOP candidates, one of Johnson’s core campaign points is criticism of the financial bailout. Funny then that Johnson’s campaign has been the beneficiary of the largess of the very corporations he believes should not have received bailout money.
For example, the cash Johnson received from the Financial Services Roundtable PAC on August 27 and the American Bankers Association PAC on July 8 and July 30 came from, amongst others, hardcore Treasury bailout beneficiaries such as JP Morgan Chase, SunTrust, Bank of America, Regions Financial, Zions and First Horizon. The money Ron Johnson received from the Bluegrass and Senate Majority Fund PACs came, in part, from one of the greatest bailout beneficiaries of them all, Goldman Sachs. Despite statements about staying out of politics this cycle, Goldman donated to both PACs on March 31 of this year. On June 24, Ron Johnson’s campaign received two $5,000 donations from the Bluegrass PAC, a day later the campaign received two donations from the Senate Majority PAC in the same amounts.
To be clear, while it may not be the backbone of his funding, some of the very bailout money that Ron Johnson has criticized is now funding his campaign.
Tea Party members might also be interested to know that some of the $2,700 PAC donation he received on August 27 came from Sallie Mae.
Johnson’s campaign ignored repeated requests from The Awl for comment.
Johnson has, and will continue to, paint Feingold as a Washington D.C. insider. But would a Democratic insider have voted against dismissing President Clinton’s impeachment proceedings? Feingold did.
When it comes to true politician insiders, potential Johnson supporters should ask about his connections to Americans for Prosperity’s old Republican establishment strategist Mark Block. State political blog One Wisconsin Now even makes a good case for how Johnson worked with supporters to actually diminish true grassroots tea party involvement after former Governor Tommy Thompson dropped out of the race. Johnson’s dismissal of Wisconsin tea party groups and alignment with Americans for Prosperity’s tea party is a microcosm of how the entire movement has been clandestinely hijacked by the GOP. And those who genuinely are grassroots tea party patriots should be worried about Johnson’s connection to the retail version of their movement. As One Wisconsin Now also just uncovered, Americans for Prosperity, along with Republican party leaders, are dragging the tea party reputation into good old GOP voter suppression tactics.
The great irony of course is that the newly angry who long for fiscal reason and weep for the Constitution, those who have become the “party of no,” could not have a greater ally than Russ Feingold.
Feingold voted against the 2008 TARP bailout. In fact, he voted against the repeal of the Glass-Steagall Act, which in large part caused the need for the bailout. He voted against NAFTA. And just days after 9/11 and at the height of that event’s fervor, Feingold hauled his giant balls up to the voting machine and registered a nay vote against the “USA Patriot Act” on the grounds that “The Founders who wrote our Constitution and Bill of Rights exercised that vigilance even though they had recently fought and won the Revolutionary War. They did not live in comfortable and easy times of hypothetical enemies. They wrote a Constitution of limited powers and an explicit Bill of Rights to protect liberty in times of war, as well as in times of peace.” He was the only senator to vote no. By all means, read his full remarks in the wake of the vote and ask yourself why Russ Feingold isn’t getting speaking invites for tea party rallies.
The once-progressive Republican Wisconsin Idea may have suffered greatly of late, broken and ill, slouching toward yore. But the election of Ron Johnson over Russ Feingold would be the ultimate blade run across its throat.
George Will’s backseat make-out session with Johnson in May heavily leaned on Atlas Shrugged symbolism, noting it was Johnson’s favorite book. Will noted Johnson’s belief that we are already living in the “novel’s dystopian world.”
When newspeak replaces debate and the nation’s vocabulary gets smaller every election cycle, where doublethink goes unquestioned by voters, we are indeed sliding into a novel’s dystopian world, but it wasn’t written by Ayn Rand.
Abe Sauer is enjoying autumn in Wisconsin.
Photo by WiscPolitics.com via Flickr
Submitted by Jim Quinn of The Burning Platform
10% Savings Rate + Consumer Spending At 65% Of GDP = Retail Disaster
Now that the Wall Street Journal, New York Times, CNBC and every
other mainstream media outlet have figured out what some financial blogs
had figured out months ago http://theburningplatform.com/blog/2010/08/26/the-great-deleveraging-lie/,
everyone knows that the American consumers have not yet begun to
deleverage. Consumer credit outstanding peaked at $2.58 trillion in July
2008. It has plummeted all the way to $2.42 trillion today, a 6%
reduction over two years. The full $160 billion reduction can be
attributed to write-offs by the Wall Street, Ivy League MBA run, banks.
American consumers do not want the Age of Mammon to end. They will
need to be dragged kicking and screaming into the Age of Austerity.
Consumer expenditures peaked at $10.2 trillion in the 3rd Quarter of
2008. They reduced spending for two quarters, but when Big Daddy
Government handed them billions and told them to spend it on cars,
appliances, and homes, they dutifully obeyed. Today, consumer
expenditures stand at an all-time high of $10.3 trillion, still
accounting for 70.5% of GDP. There really has been no hint of austerity
by Americans. It is a false storyline. The major reductions in
consumption still loom in the future.
The myopic financial “experts” have no sense of history or the
concept of reversion to the mean. They didn’t get it with home prices
and they don’t get it with consumer expenditures. The country has been
on a 30 year drunken binge of debauchery, debt accumulation and
delusions of never ending 10% annual home price gains funding a glorious
30 years of retirement on an island in the Caribbean. These visions of a
sugar plumb life of leisure are slowly giving way to the nightmare
scenario of eating cat food in your very own cardboard box McMansion.
The bombastic Boomers are turning 50 years old at a rate of 10,000 per
day. A staggering 38% of workers between the ages of 45-54 have less
than $10,000 of retirement savings and a mind boggling 29% of workers
over 55 have less than ten grand in their retirement savings, according
to the Employee Benefit Research Institute. It is no longer a matter of
people deciding whether to save, it is a matter of saving or else living
in abject poverty in their old age.
In the good old days, before the advent of the credit card in 1969,
Americans saved up to buy a house, a car, or an appliance. Consumer
expenditures as a percentage of GDP stayed in a range of 61% to 64% from
1960 until 1980. This range was reflective of a balanced economy that
provided good paying wages to blue collar workers who produced products
that were sold in the US and in foreign countries. What a concept.
America ran a trade surplus. The financial industry did not drive the
economy, they provided financing for businesses that wanted to grow and
produce. Sounds quaint. As the Boomers entered their 30s in the early
1980s the easy credit delusion, promoted by Wall Street and
the mainstream marketing machine, convinced the spoiled materialistic
Boomers that wealth was measured in cool stuff rather than accumulated
savings invested over time. Consumer spending as a percentage of GDP
surged from 62% to 70% over the next two decades.
Real wages have been stagnant since the early 1970s. With moribund
wage growth there was only one way for Boomers to live the faux American
Dream – Borrow to the hilt. And borrow they did. The personal savings
rate fell from 12% in the early 1980s to below 2% in 2007. The concept
of deferred satisfaction was cast aside by the “no worries” Boomers.
Saving and frugality was for the Depression era old fogies. The old
timers didn’t understand modern finance. Why wait until tomorrow when
you can have it today by just whipping out a plastic card? The delusion
of debt based “wealth” grew for 25 years, encouraged and stimulated by
Alan Greenspan and his bubble blowing machine.
The debt party reached its apex between 2005 and 2007. Boomers
willfully ignored or chose to not comprehend the concept of reversion to
the mean. They believed with all their hearts that their homes would
appreciate at 10% per year for all eternity. To prove their faith in
this belief, they used their homes like an ATM and withdrew $1.9
trillion of “equity” between 2005 and 2007 and spent it on 2nd homes,
cars, boats, flatscreens, vacations, home theaters, and other assorted
must have doo dads. They borrowed against their homes at the absolute
peak in home prices. Prices have fallen 30% from the peak, with some
markets down 50%. This has left millions up to their eyeballs in debt.
The home ATM flashes “INSUFFICIENT FUNDS” when they attempt a withdrawal
today.
So here we stand, two years after the financial system collapsed.
Government stimulus has provided an artificial boost to GDP. They have
tried every trick in the book to convince Americans to keep consuming at
a rate higher than they are earning. It is failing because consumers
have been shaken from their materialistic stupor. They are slowly coming
to the realization that they must save or they will suffer greatly in
the next 30 years. The savings rate has been moving erratically higher
and is now in the range of 5% to 6%. Ideally, it would need to reach 14%
in order for Americans to save enough to cover their retirement. This
will never happen. Americans will cut back but they will not revert to
the frugal ways of their grandparents.
The GDP of the country is $14.5 trillion. Over the next decade
consumer expenditures as a percentage of GDP will fall from 70% to 65%
because it must. With stocks destined to return 5%, bonds yielding 2.5%
and no equity left in their houses, consumers have no choice. The annual
reduction in consumer expenditures will be north of $700 billion. The
annual disposable personal income of Americans is $11.3 trillion. The
savings rate is 6%. It will rise to 10% over the next few years. This
would be $450 billion more savings and $450 billion less spending. This
will not happen overnight. It will take at least a decade. Mass delusion
wears off slowly and one person at a time. Charles McKay summed up the
last 30 years in two quotes from his book Extraordinary Delusions and the Madness of Crowds, written in 1841.
“Money, again, has often been a cause of the delusion of the
multitudes. Sober nations have all at once become desperate gamblers,
and risked almost their existence upon the turn of a piece of paper.”
“Men, it has been well said, think in herds; it will be seen that
they go mad in herds, while they only recover their senses slowly, and
one by one.”
Does this paint a picture of an economy roaring ahead? We have at
least a decade of low or no growth ahead. Deleveraging after the biggest
debt party in history is really a bitch. The industry which is about to
be dealt a mortal blow is the retail industry.
Retail Death Knell
Our entire consumer society has been built upon a foundation of lies.
The biggest being you could get wealthy without saving. The other being
that you were wealthy if you owned stuff that made you look wealthy.
There are 1.5 million retailers in America. There will not be 1.5
million retailers in 2020. The winnowing of the chaff from the wheat has
begun, but will accelerate over the next decade. The mom and pops are
already closing up shop in record numbers. The shocking revelation that
major mega retailers such as a Target or a Kohl’s might not exist in ten
years will not be believed today. Ever hear of Montgomery Ward?
What most people don’t understand is that the
mega-retailers’ strategic plans were based upon never ending store
growth, 5% comparable store growth for all eternity, a continuous flow
of increasing easy credit, the American population staying frozen
between the ages of 30 and 50 years old, and a delusional materialistic
greed embraced by the masses. Mega retailers without growing comp store
sales are like sharks that can’t swim. They will die. The comp store
sales growth is essential to overcome the effects of cannibalization
from new stores. The CEOs of these companies have never modeled a decade
of declining sales. They still believe it can’t happen, even though it
must happen. Delusions die hard, especially for CEOs.
I’ll use Target as an example. Almost everyone would agree they have
been one of the best run retailers of the last two decades. They have
over 1,700 stores in the US, with annual sales exceeding $65 billion and
profits of $2.5 billion. How could a retailer this large and successful
ever go bankrupt? They have $16.5 billion of debt and $15.3 billion of
equity on their balance sheet for a 52% debt to equity level. This is
not a dangerous level, but it is a heavy debt load. The deterioration
always begins on the sales side. Comp store sales have been
deteriorating since 2005 and were negative in 2008 and 2009.
The impact of this sales deterioration can be seen in their net
income over the last five years. It is at the same level as it was in
2005 and $361 million lower than 2007. Target opened 343 new stores
between 2005 and 2009 and its net income is the same. Net income per
store has dropped from $1.72 million in 2005 to $1.43 million in 2009, a
17% drop per store. In their peak profit year of 2007, they generated
$1.79 million profit per store.
What most people don’t know is that Target goosed their profits using
the same method that Americans used to get “rich”. EASY CREDIT. When
you’ve run out of ideas to grow your business, offer easy credit to your
customers. It worked like a charm for Target until it didn’t. They
issued millions of credit cards to the delusional masses. Who needed to
sell stuff, when you could make so much lending money? In 2007, the
Target credit card accounted for $1.06 billion of their $2.85 billion
profit, or 37% of total profits. This was up from 22% of their profits
in 2004. They’ve been learning a difficult lesson as credit card profits
plunged to $400 million in 2009 as they desperately tried to sell their
rapidly deteriorating portfolio with no takers to be found.
benchcraft company portland or
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(CNN) – House Speaker Nancy Pelosi's favorability rating has reached a new low in Gallup polling, an ominous sign for House Democrats who can't help but be associated with the California Democrat two weeks ahead of the midterm ...
robert shumake hall of shame
robert shumake hall of shame
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Watershed debuts Waterproof Bag for iPad | iLounge <b>News</b>
iLounge news discussing the Watershed debuts Waterproof Bag for iPad. Find more iPad Accessories news from leading independent iPod, iPhone, and iPad site.
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Jim Oberstar and Chip Cravaack didn't just face each other this morning at the Duluth Entertainment Convention Center Auditorium, they faced angry mobs of their opponent's supporters.
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Come November, it is the intention to throw the bums out. All of them. Many Senate seat challengers, while running as Republicans, have risen to the top with backing from the “tea party.” Wisconsin’s Ron Johnson is just such a candidate. A fiscally conservative businessman, Johnson has never run for public office and is an inexperienced campaigner. But the way his rhetoric matches with fact, he already seems the pro. Ron Johnson can now distinguish the bum’s face. That bum is incumbent Senator Russ Feingold.
Now campaign finance filings found by The Awl show that despite his vigorous denouncement of the bank bailouts, Johnson’s campaign has received funding from many of the same banks who received bailouts. This means you and I have helped fund Ron Johnson’s anti-bailout campaign. So we should get to know him.
Johnson has gladly taken the tea party badge. Back in May, Washington Post columnist and conservative icon George Will said Johnson “is what the Tea Party looks like.” FreedomWorks, the Dick Armey-run conservative organization that organized the 9/12 rally in 2009 but is not at all behind many “grassroots” tea party events, called Johnson a “Champion of Freedom.”
His website’s rundown of his personal history (“Meet Ron“) begins, “Ron grew up in a family and in a place where one of the greatest compliments you could give a person was to say that he or she was a hard worker.” And it only gets more vague. Apparently, this is intentional. Johnson declined to meet Feingold in all six debates, agreeing to just three. That a long-time incumbent is challenging his newcomer to debates should immediately raise raise a red flag. Without detailed positions, what is there to specifically criticize? Johnson’s campaign has taken to dismissing all criticisms of the candidate as typical political attack ads, even as Johnson’s crew runs similar spots. This kind of electioneering doublethink infects Johnson’s campaign, a rhetoric capable of forgetting whatever it’s necessary to forget, only to draw it back into memory at the moment it is needed.
Johnson claims to be for freedom, his rallying cry being “First of all, freedom.” But then he believes marriage can only be between a man and a woman.
He is passionate believer in the values of Rand’s Atlas Shrugged. But not the book’s fundamental view of the “monstrous absurdity” of original sin, as he is a fervent and active Lutheran who says “freedom of religion doesn’t mean freedom from religion.”
Johnson has adopted an all-green design and logo, giving the impression that he is a friend of the environment. But he is fervent supporter of fossil fuels, defending BP against recent criticisms and calling climate change theories “lunacy” and “not proven by any stretch of the imagination.” (Johnson has suggested sunspots have caused recent weather changes, despite sunspots being at historic lows.)
Johnson demands a smaller, less-involved government, saying our current one is “robbing the bank accounts of future generations of Americans.” But even while Johnson calls government spending and subsidies a “threat to our freedom” and insists “government doesn’t create jobs,” he refuses to acknowledge that his company received millions of dollars in industrial revenue bonds. Johnson’s campaign maintains the money he received was not a government handout. Yet this exact form of government subsidized loan is what fiscal conservative temple The Cato Institute calls “corporate welfare.”
As everyone debates whether or not this constitutes a government subsidy, the blog Uppity Wisconsin reveals Johnson’s membership on the board of an industrial development corporation partly funded by the city and county that “has successfully helped area business apply for and secure over a million dollars in Customized Labor Training (CLT) grants… designed to assist companies that are investing in new technologies or manufacturing processes by providing a grant of up to 50% of the cost of training employees on the new technologies.” Yet, Johnson insists that subsidization “doesn’t work through the free market system very well.”
Johnson could not be more different than Feingold when it comes to creativity and a voice for Wisconsin. Johnson is a voice for money. He admits as much, saying of Wisconsin’s loss of manufacturing jobs to NAFTA “there are always winners and losers.” For a candidate who complains about a private sector tax base, those “losers” include the 177,000-odd manufacturing jobs Wisconsin has lost in the last decade; that’s 177,000 incomes that paid taxes.
From a GOP perspective, he is a midterm wet dream. Giving all the appearance of the throw-the-bums-out attitude of the zeitgeist, Johnson has nonetheless endorsed all the old bums’ ideas about how to fix things. For health care Johnson says “Mitch Daniels has the solution,” referring to the incumbent Indiana GOP Governor. On taxes, Johnson points to old-school GOP insider Ronald Reagan. Johnson has said that during Reagan’s era, the top income rate of 28 percent meant “we were 72 percent free,” which suggests Johnson may endorse a complete elimination of the income tax.
For solutions to entitlement reform, Johnson points to fellow Wisconsinite and incumbent GOP Congressman Paul Ryan. (It’s noteworthy that while Johnson castigates opponent Feingold for being a career politician, he reveres Congressman Ryan, whose never held a job outside government since graduating college in 1992. Spectacular doublethink).
The greatest doublethink of all is the impression that Johnson is a self-made millionaire, that thanks to the opportunities provided by the American Dream, he pulled himself up by his bootstraps, an example of how America can reward hard-working citizens. On his website, the story goes that after moving to Wisconsin “Ron started a business called Pacur with his brother-in-law” and he has said he built his business from “from scratch,” from “the ground up.” But what Johnson’s campaign doesn’t often mention is that the candidate was set up with the business by his billionaire father-in-law. Uppity Wisconsin has unearthed evidence that Johnson’s firm Pacur is the beneficiary of less-than-market-driven business from its main client, Daddy Inc.
Reading a candidate’s website for his position papers is for suckers. To really understand how a candidate will vote, one needs to be in on the fund-raising calls he or she spends the majority of the day performing. Since that’s impossible, the next best thing is to look at which of those calls were successful. Where each candidate stands is directly defined by the money trail.
Russ Feingold’s Federal Election Commission report reads like a who’s who of labor. American Maritime Officers Voluntary PAC. American Dental Association PAC. Alliant Energy Corporation Employees PAC. Air Conditioning Contractors of America PAC. Committee on Letter Carriers PAC (yes, this exists). Association of Postmasters. Amalgamated Transit Union. Writers Guild. Sheet Metal Workers. Air Traffic Controllers. United Brotherhood of Carpenters. American Nurses. Optometric Association. Assisted Living Federation. Associated Milk Producers. Boilermakers. Longshoremen. Walt Disney Productions Employees PAC. Bricklayers. Even the PAC from Awl friends the Human Rights Committee supports Feingold (since 1997).
Meanwhile, Ron Johnson has largely self-funded his campaign, running three TV ads for each one of Feingold’s. When asked how much of his fortune he will spend to defeat Feingold, Johnson has said, “All of it.” He’s off to a good start, spending $4.4 million in the run-up to the primary, or about $9 per vote. That’s a lot more than the many thousands of dollars both he and his wife gave in 2004 to Feingold’s GOP challenger, Tim Michels.
Johnson doesn’t really need the $5,000-odd donations brought in by his committee, Ron Johnson for Senate Inc. That’s why looking at his list of donors is even more telling. A newcomer, Johnson’s list of financial supporters is short; but it includes the American Bankers PAC, American Express Company PAC, American Insurance Association PAC, Deloitte & Touche PAC, Financial Services Roundtable PAC, National Venture Capital Association PAC, and the Exxon Mobil PAC. The last of those donors recently got Mr. Johnson in some trouble when it was revealed that all his defense of oil exploration in the Gulf, and his criticism of the Obama Administration’s treatment of BP, might be because he personally holds hundreds of thousands of dollars in BP and Exxon stock.
Much like many of this year’s tea party-associated GOP candidates, one of Johnson’s core campaign points is criticism of the financial bailout. Funny then that Johnson’s campaign has been the beneficiary of the largess of the very corporations he believes should not have received bailout money.
For example, the cash Johnson received from the Financial Services Roundtable PAC on August 27 and the American Bankers Association PAC on July 8 and July 30 came from, amongst others, hardcore Treasury bailout beneficiaries such as JP Morgan Chase, SunTrust, Bank of America, Regions Financial, Zions and First Horizon. The money Ron Johnson received from the Bluegrass and Senate Majority Fund PACs came, in part, from one of the greatest bailout beneficiaries of them all, Goldman Sachs. Despite statements about staying out of politics this cycle, Goldman donated to both PACs on March 31 of this year. On June 24, Ron Johnson’s campaign received two $5,000 donations from the Bluegrass PAC, a day later the campaign received two donations from the Senate Majority PAC in the same amounts.
To be clear, while it may not be the backbone of his funding, some of the very bailout money that Ron Johnson has criticized is now funding his campaign.
Tea Party members might also be interested to know that some of the $2,700 PAC donation he received on August 27 came from Sallie Mae.
Johnson’s campaign ignored repeated requests from The Awl for comment.
Johnson has, and will continue to, paint Feingold as a Washington D.C. insider. But would a Democratic insider have voted against dismissing President Clinton’s impeachment proceedings? Feingold did.
When it comes to true politician insiders, potential Johnson supporters should ask about his connections to Americans for Prosperity’s old Republican establishment strategist Mark Block. State political blog One Wisconsin Now even makes a good case for how Johnson worked with supporters to actually diminish true grassroots tea party involvement after former Governor Tommy Thompson dropped out of the race. Johnson’s dismissal of Wisconsin tea party groups and alignment with Americans for Prosperity’s tea party is a microcosm of how the entire movement has been clandestinely hijacked by the GOP. And those who genuinely are grassroots tea party patriots should be worried about Johnson’s connection to the retail version of their movement. As One Wisconsin Now also just uncovered, Americans for Prosperity, along with Republican party leaders, are dragging the tea party reputation into good old GOP voter suppression tactics.
The great irony of course is that the newly angry who long for fiscal reason and weep for the Constitution, those who have become the “party of no,” could not have a greater ally than Russ Feingold.
Feingold voted against the 2008 TARP bailout. In fact, he voted against the repeal of the Glass-Steagall Act, which in large part caused the need for the bailout. He voted against NAFTA. And just days after 9/11 and at the height of that event’s fervor, Feingold hauled his giant balls up to the voting machine and registered a nay vote against the “USA Patriot Act” on the grounds that “The Founders who wrote our Constitution and Bill of Rights exercised that vigilance even though they had recently fought and won the Revolutionary War. They did not live in comfortable and easy times of hypothetical enemies. They wrote a Constitution of limited powers and an explicit Bill of Rights to protect liberty in times of war, as well as in times of peace.” He was the only senator to vote no. By all means, read his full remarks in the wake of the vote and ask yourself why Russ Feingold isn’t getting speaking invites for tea party rallies.
The once-progressive Republican Wisconsin Idea may have suffered greatly of late, broken and ill, slouching toward yore. But the election of Ron Johnson over Russ Feingold would be the ultimate blade run across its throat.
George Will’s backseat make-out session with Johnson in May heavily leaned on Atlas Shrugged symbolism, noting it was Johnson’s favorite book. Will noted Johnson’s belief that we are already living in the “novel’s dystopian world.”
When newspeak replaces debate and the nation’s vocabulary gets smaller every election cycle, where doublethink goes unquestioned by voters, we are indeed sliding into a novel’s dystopian world, but it wasn’t written by Ayn Rand.
Abe Sauer is enjoying autumn in Wisconsin.
Photo by WiscPolitics.com via Flickr
Submitted by Jim Quinn of The Burning Platform
10% Savings Rate + Consumer Spending At 65% Of GDP = Retail Disaster
Now that the Wall Street Journal, New York Times, CNBC and every
other mainstream media outlet have figured out what some financial blogs
had figured out months ago http://theburningplatform.com/blog/2010/08/26/the-great-deleveraging-lie/,
everyone knows that the American consumers have not yet begun to
deleverage. Consumer credit outstanding peaked at $2.58 trillion in July
2008. It has plummeted all the way to $2.42 trillion today, a 6%
reduction over two years. The full $160 billion reduction can be
attributed to write-offs by the Wall Street, Ivy League MBA run, banks.
American consumers do not want the Age of Mammon to end. They will
need to be dragged kicking and screaming into the Age of Austerity.
Consumer expenditures peaked at $10.2 trillion in the 3rd Quarter of
2008. They reduced spending for two quarters, but when Big Daddy
Government handed them billions and told them to spend it on cars,
appliances, and homes, they dutifully obeyed. Today, consumer
expenditures stand at an all-time high of $10.3 trillion, still
accounting for 70.5% of GDP. There really has been no hint of austerity
by Americans. It is a false storyline. The major reductions in
consumption still loom in the future.
The myopic financial “experts” have no sense of history or the
concept of reversion to the mean. They didn’t get it with home prices
and they don’t get it with consumer expenditures. The country has been
on a 30 year drunken binge of debauchery, debt accumulation and
delusions of never ending 10% annual home price gains funding a glorious
30 years of retirement on an island in the Caribbean. These visions of a
sugar plumb life of leisure are slowly giving way to the nightmare
scenario of eating cat food in your very own cardboard box McMansion.
The bombastic Boomers are turning 50 years old at a rate of 10,000 per
day. A staggering 38% of workers between the ages of 45-54 have less
than $10,000 of retirement savings and a mind boggling 29% of workers
over 55 have less than ten grand in their retirement savings, according
to the Employee Benefit Research Institute. It is no longer a matter of
people deciding whether to save, it is a matter of saving or else living
in abject poverty in their old age.
In the good old days, before the advent of the credit card in 1969,
Americans saved up to buy a house, a car, or an appliance. Consumer
expenditures as a percentage of GDP stayed in a range of 61% to 64% from
1960 until 1980. This range was reflective of a balanced economy that
provided good paying wages to blue collar workers who produced products
that were sold in the US and in foreign countries. What a concept.
America ran a trade surplus. The financial industry did not drive the
economy, they provided financing for businesses that wanted to grow and
produce. Sounds quaint. As the Boomers entered their 30s in the early
1980s the easy credit delusion, promoted by Wall Street and
the mainstream marketing machine, convinced the spoiled materialistic
Boomers that wealth was measured in cool stuff rather than accumulated
savings invested over time. Consumer spending as a percentage of GDP
surged from 62% to 70% over the next two decades.
Real wages have been stagnant since the early 1970s. With moribund
wage growth there was only one way for Boomers to live the faux American
Dream – Borrow to the hilt. And borrow they did. The personal savings
rate fell from 12% in the early 1980s to below 2% in 2007. The concept
of deferred satisfaction was cast aside by the “no worries” Boomers.
Saving and frugality was for the Depression era old fogies. The old
timers didn’t understand modern finance. Why wait until tomorrow when
you can have it today by just whipping out a plastic card? The delusion
of debt based “wealth” grew for 25 years, encouraged and stimulated by
Alan Greenspan and his bubble blowing machine.
The debt party reached its apex between 2005 and 2007. Boomers
willfully ignored or chose to not comprehend the concept of reversion to
the mean. They believed with all their hearts that their homes would
appreciate at 10% per year for all eternity. To prove their faith in
this belief, they used their homes like an ATM and withdrew $1.9
trillion of “equity” between 2005 and 2007 and spent it on 2nd homes,
cars, boats, flatscreens, vacations, home theaters, and other assorted
must have doo dads. They borrowed against their homes at the absolute
peak in home prices. Prices have fallen 30% from the peak, with some
markets down 50%. This has left millions up to their eyeballs in debt.
The home ATM flashes “INSUFFICIENT FUNDS” when they attempt a withdrawal
today.
So here we stand, two years after the financial system collapsed.
Government stimulus has provided an artificial boost to GDP. They have
tried every trick in the book to convince Americans to keep consuming at
a rate higher than they are earning. It is failing because consumers
have been shaken from their materialistic stupor. They are slowly coming
to the realization that they must save or they will suffer greatly in
the next 30 years. The savings rate has been moving erratically higher
and is now in the range of 5% to 6%. Ideally, it would need to reach 14%
in order for Americans to save enough to cover their retirement. This
will never happen. Americans will cut back but they will not revert to
the frugal ways of their grandparents.
The GDP of the country is $14.5 trillion. Over the next decade
consumer expenditures as a percentage of GDP will fall from 70% to 65%
because it must. With stocks destined to return 5%, bonds yielding 2.5%
and no equity left in their houses, consumers have no choice. The annual
reduction in consumer expenditures will be north of $700 billion. The
annual disposable personal income of Americans is $11.3 trillion. The
savings rate is 6%. It will rise to 10% over the next few years. This
would be $450 billion more savings and $450 billion less spending. This
will not happen overnight. It will take at least a decade. Mass delusion
wears off slowly and one person at a time. Charles McKay summed up the
last 30 years in two quotes from his book Extraordinary Delusions and the Madness of Crowds, written in 1841.
“Money, again, has often been a cause of the delusion of the
multitudes. Sober nations have all at once become desperate gamblers,
and risked almost their existence upon the turn of a piece of paper.”
“Men, it has been well said, think in herds; it will be seen that
they go mad in herds, while they only recover their senses slowly, and
one by one.”
Does this paint a picture of an economy roaring ahead? We have at
least a decade of low or no growth ahead. Deleveraging after the biggest
debt party in history is really a bitch. The industry which is about to
be dealt a mortal blow is the retail industry.
Retail Death Knell
Our entire consumer society has been built upon a foundation of lies.
The biggest being you could get wealthy without saving. The other being
that you were wealthy if you owned stuff that made you look wealthy.
There are 1.5 million retailers in America. There will not be 1.5
million retailers in 2020. The winnowing of the chaff from the wheat has
begun, but will accelerate over the next decade. The mom and pops are
already closing up shop in record numbers. The shocking revelation that
major mega retailers such as a Target or a Kohl’s might not exist in ten
years will not be believed today. Ever hear of Montgomery Ward?
What most people don’t understand is that the
mega-retailers’ strategic plans were based upon never ending store
growth, 5% comparable store growth for all eternity, a continuous flow
of increasing easy credit, the American population staying frozen
between the ages of 30 and 50 years old, and a delusional materialistic
greed embraced by the masses. Mega retailers without growing comp store
sales are like sharks that can’t swim. They will die. The comp store
sales growth is essential to overcome the effects of cannibalization
from new stores. The CEOs of these companies have never modeled a decade
of declining sales. They still believe it can’t happen, even though it
must happen. Delusions die hard, especially for CEOs.
I’ll use Target as an example. Almost everyone would agree they have
been one of the best run retailers of the last two decades. They have
over 1,700 stores in the US, with annual sales exceeding $65 billion and
profits of $2.5 billion. How could a retailer this large and successful
ever go bankrupt? They have $16.5 billion of debt and $15.3 billion of
equity on their balance sheet for a 52% debt to equity level. This is
not a dangerous level, but it is a heavy debt load. The deterioration
always begins on the sales side. Comp store sales have been
deteriorating since 2005 and were negative in 2008 and 2009.
The impact of this sales deterioration can be seen in their net
income over the last five years. It is at the same level as it was in
2005 and $361 million lower than 2007. Target opened 343 new stores
between 2005 and 2009 and its net income is the same. Net income per
store has dropped from $1.72 million in 2005 to $1.43 million in 2009, a
17% drop per store. In their peak profit year of 2007, they generated
$1.79 million profit per store.
What most people don’t know is that Target goosed their profits using
the same method that Americans used to get “rich”. EASY CREDIT. When
you’ve run out of ideas to grow your business, offer easy credit to your
customers. It worked like a charm for Target until it didn’t. They
issued millions of credit cards to the delusional masses. Who needed to
sell stuff, when you could make so much lending money? In 2007, the
Target credit card accounted for $1.06 billion of their $2.85 billion
profit, or 37% of total profits. This was up from 22% of their profits
in 2004. They’ve been learning a difficult lesson as credit card profits
plunged to $400 million in 2009 as they desperately tried to sell their
rapidly deteriorating portfolio with no takers to be found.
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iLounge news discussing the Watershed debuts Waterproof Bag for iPad. Find more iPad Accessories news from leading independent iPod, iPhone, and iPad site.
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iLounge news discussing the Watershed debuts Waterproof Bag for iPad. Find more iPad Accessories news from leading independent iPod, iPhone, and iPad site.
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iLounge news discussing the Watershed debuts Waterproof Bag for iPad. Find more iPad Accessories news from leading independent iPod, iPhone, and iPad site.
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Jim Oberstar and Chip Cravaack didn't just face each other this morning at the Duluth Entertainment Convention Center Auditorium, they faced angry mobs of their opponent's supporters.
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Twitter supplies you with a way to stay connected with friends and up-to-date on the latest new stories, but why can't it do the same for your financial life? When you are busy working during the day and spending time with your family at night there isn't much time to research personal finance. Luckily, the twitterverse is rife with finance websites and blogs that you can keep up with on the go. Here is a list of ten great feeds (in no particular order) to follow so that all your financial information needs can be found right in your feed.
1. @CNNmoney
They bill themselves as the "World's leading business and financial website," and not without cause. You should follow them because it is CNN and in this case, bigger does mean better. 220,000 followers agree.
2.@ftmoney
The personal finance feed from The Financial Times. Not only do they routinely tweet Financial Times resources such as news, articles and podcasts, but occasionally they will feature deals on Financial Times personal finance resources. Recently they gave word of a discount on their iPad app. The best way to stay in the loop with personal finance happenings in a one concise package.
3. @WSJpersfinance
Similar to the Financial Times' feed, but features less news and more how-to guides, helpful hints, and concise lists. Recommended if you seek more help and less info than the Financial Times has to offer.
4. @HowToFinance
A feed that consists entirely of links to other finance resources around the web. Again, similar to the previous two, but with the added benefit of a wider spread of sources.
5. @trenttsd
Twitter feed of Trent Hamm, author of 365 Ways to Live Cheap and The Simple Dollar: How One Man Wiped Out His Debts and Achieved the Life of His Dreams. His take on personal finance is easy to read and accessible. He focuses on frugality and simplicity in financial life and offers guidelines like his detailed "14 Money Rules" are methods for reusing things in life.
6. @canadianfinance
Tom Drake authors this feed, with links a Canadian finance blog with input on investing and saving. Good if you are looking for a more advanced finance opinion, or if you need input on the Canadian financial system.
7. @colourful_money
Michael Ronquillo's finance feed links back to articles from colourfulmoney.com. They bill themselves as supplying a "unique and unusual" way to invest and save. Follow for a more advanced financial input without compromising accessibility.
8. @ChristianPF
For those of a religious persuasion, this blog out of St. Louis offers financial information and help with a Christian background. Good because it takes an ethical look at money use without being overtly preachy. Their site is also well-designed and features articles for a variety of knowledge levels.
9. @GetOutOfDebtGuy
Steve Rhode calls himself the Get Out of Debt Guy and promises to get you out of debt completely for free. As the founder and former president of Myvesta, a finance non-profit, his experience is vast, but he focuses on making sure life is lived and loved while still managing debt and finance.
10. @AmandaSteinberg
Amanda Steinberg writes for Daily Worth, a finance blog exclusively for women. They provide daily hints, articles, and how-to's for the female financial life. Featured in magazines like Forbes and Self and on NPR, this is a great resource for women looking to have an accessible, organized finance resource written just for them.
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Watershed debuts Waterproof Bag for iPad | iLounge <b>News</b>
iLounge news discussing the Watershed debuts Waterproof Bag for iPad. Find more iPad Accessories news from leading independent iPod, iPhone, and iPad site.
Crowd gets raucous at Oberstar-Cravaack debate | Duluth <b>News</b> <b>...</b>
Jim Oberstar and Chip Cravaack didn't just face each other this morning at the Duluth Entertainment Convention Center Auditorium, they faced angry mobs of their opponent's supporters.
TRENDING: Bad <b>news</b> for Dems: New low for Pelosi in Gallup poll <b>...</b>
(CNN) – House Speaker Nancy Pelosi's favorability rating has reached a new low in Gallup polling, an ominous sign for House Democrats who can't help but be associated with the California Democrat two weeks ahead of the midterm ...
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Watershed debuts Waterproof Bag for iPad | iLounge <b>News</b>
iLounge news discussing the Watershed debuts Waterproof Bag for iPad. Find more iPad Accessories news from leading independent iPod, iPhone, and iPad site.
Crowd gets raucous at Oberstar-Cravaack debate | Duluth <b>News</b> <b>...</b>
Jim Oberstar and Chip Cravaack didn't just face each other this morning at the Duluth Entertainment Convention Center Auditorium, they faced angry mobs of their opponent's supporters.
TRENDING: Bad <b>news</b> for Dems: New low for Pelosi in Gallup poll <b>...</b>
(CNN) – House Speaker Nancy Pelosi's favorability rating has reached a new low in Gallup polling, an ominous sign for House Democrats who can't help but be associated with the California Democrat two weeks ahead of the midterm ...
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