Blog Posts

Different Models for Bankruptcies

4/22/2014

Every bank CRA will come up with their own regulations on how to deal with bankruptcies and will have the legal authority to deal with and enforce their regulations. Banks would be rated on these results, which will be clearly posted on any loan contracts.

If one does not like the rating on a contract, they would have the option of going to another bank regulated by another CRA that has more favorable bankruptcy policies.
The best will continue to be topped and the bad policies will not be viable. Many new and innovated models could emerge. One examples would be to transfer debt to share loans or volunteer hours.

Private Law

4/13/2014

I've posted this here for reference. I do not agree entirely with all the points in this book or in these speeches, however it is a good exposure to other valuable ideas. I think the Competitive Regulatory Agencies that I put forth would make Robert Murphy’s private law work much better without losing the values of liberty. I believe that violent criminal issues still need to be addressed by the government, however my law and order page discusses many ways in which free market can make things much better. Military is also better managed by my Military Policy than by Murphy's policy.

Crime and Punishment

The Possibility of Private Law

Patents and Copyrights

3/16/2014

Exclusive property rights over an invention or creation has proven to be very useful in the advancement of technology, knowledge, tools, art, etc.

The structure of CRAs gives CRA sector boards the power along with the ratings system to structure patents in their sector of business. This will create different models across different fields based off that sector’s needs. This will also have multiple models implemented at the same time, thus giving great experience of different methods.

The advancement of intellectual property has vastly different needs and costs in the clothing, movie, book, computer, medical, or manufacturing industries, just to name a few. While they are treated differently now, they do not have the power to experiment without major congressional actions.

Ideas

In some areas such as genetic research, the balance between strong and weak protections is not the only challenge. Often times, dozens or even hundreds of patented genes are needed to bring out another advancement, thus making it almost impossible to gain all the many authorizations or deals with the owners of all those genes.

Let me express a different paradigm. Once a genetic advancement or discovery is made that deserves a patent, allow others to build on that advancement without having to get authorization. There would be a board put in place to determine the correct percentages of ownership or royalties of the new discovery belonging to each individual or organization.

This is just one of many new paradigm or models that could be tried in various sectors. Often patents harm inventions and advancements. The structure is critical. politicians simply do not have the knowledge to strike the correct balance and different sectors of the economy needs different balance points.

Although I have recommended this document, I do not mean to say I share the same position as the author. I just love learning from great minds.

Government Control over Major Financial Institutions: Fail

2/23/2014

While many governmental acts have greatly harmed our economy, this page will concentrate on Fannie Mae which was created and is still heavily controlled by the government.

While government regulates all financial institutions significantly and to their detriment, Fannie and Freddie are Government-sponsored enterprises, thus they have a business model directed by the government. They were bailed out (2008) when they were managed with abject incompetence and were told to enhance the policies that destroyed the value of the company. Moreover, their actions harm millions of individuals directly with the liberal policies of predatory lending, sold as ‘Fairness”, and was a major factor the financial crisis of 2008.

ndymac's failure followed hot on the heals of the collapse in the share prices of mortgage giants Fannie Mae (the Federal National Mortgage Association) ..

Federal National Mortgage Association (FNMA) Click to see a interactive chart of their stock price, looking back up to 5 years.

This heavily erratic stock price shows ranges from $0.09 to $5.44, thus a wildly unstable ‘penny stock’ in one year and heavier losses in the five year range. We are talking over 99% loss.

Fannie Mae Has very nice Sounding Goals

“As the leading source of residential mortgage credit in the U.S. secondary market, Fannie Mae is supporting today's economic recovery and laying the foundation for a better housing finance system.”

However their actions are very harmful in their attempt. They claim “We guarantee and purchase loans from mortgage lenders to ensure families can buy homes, refinance, or rent a good home.”

The problem with this is giving up on good underwriting standards. Over the years, banks have determined what underwriting standards were important to making good loans. Good loans are not just good for the banks and those that invest in the bank, they are vitally important to the families that borrow the money. Lower foreclosures rates for banks means less families being financially devastated.

Fannie Mae, along with many other government Acts, Agencies and Programs have forced many banks to lower underwriting standards, thus harming those poorer people the bill intends to help.

A very important underwriting standard

Franklin Raines earned $90 million in salary and bonuses while he was head of Fannie Mae.[20]
Fannie Mae and Freddie Mac are the only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having. In the event that there was some sort of financial collapse within either of these companies.

A List of Things that Did Great Harm
From wikipedia-Fannie_Mae

Fannie Mae held a monopoly over the secondary mortgage market.

The corporation's purpose is to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities (MBS).

Ginnie Mae, which remained a government organization, supports FHA-insured mortgages as well as Veterans Administration (VA) and Farmers Home Administration (FmHA) insured mortgages. As such Ginnie Mae is the only home-loan agency explicitly backed by the full faith and credit of the United States government.

In 1992, President George H.W. Bush signed the Housing and Community Development Act of 1992. The Act amended the charter of Fannie Mae and Freddie Mac to reflect the Democratic Congress' view that the GSEs "... have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families in a manner consistent with their overall public purposes, while maintaining a strong financial condition and a reasonable economic return."

In 1999, Fannie Mae came under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers by increasing the ratios of their loan portfolios in distressed inner city areas designated in the Community Reinvestment Act (CRA) of 1977. Additionally, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers at interest rates higher than conventional loans.
(Personal note: This is the definition of Predatory Lending!)

7 Jaw-Dropping Numbers From the Fannie Mae Earnings Report By Patrick Morris | More Articles
February 22, 2014 | Comments (2)

Key Quotes

“The regulatory issues in the 1990s will not be limited to safety and soundness, but will increasingly emphasize fairness: whether or not banks are fulfilling the needs of their communities.” Lawrence B. Lindsey Member Board of Governors of the Federal Reserve System Address to the
California Bankers Association May 11, 1992.

Failure to comply with the Equal Credit Opportunity Act or Regulation B can subject a financial institution
to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent
of the creditor’s net worth in class actions. Regulation B Equal Credit Opportunity 12 CFR202.14(b).
Underwriting Standards and practices Page 14

Since the global financial crisis in 2008, the U.S. government, through Fannie, Freddie and the Federal Housing Administration, has backed about 90% of all new mortgages.

This is not simply free market. This creates moral hazards in the attempt to make things equal. This harms the poor the most!
Blog: Picking up the Mantle of King or the Klan?

The Power of Regulators and the Big Money Influence

2/16/2014

This Blog is to demonstrate how big money buys or at least influences government regulators and politicians. Do the regulators and lawmakers hold this power so that they can be wined and dined? Do they do this for campaign donations? Do they do this for the simple power over others? Do they do this because they think they are smarter than the business owners or their customers? All these questions are ‘YES’ to one degree or another.

There is an innate desire in everyone to hold power over others. This is very evident in politicians. They will claim that they hold this power to protect the average man from business owners’ power over their customers. Politicians’ solutions are usually taking power, then creating policies that reward those that wine and dine them and give campaign donations. Often, these policies restrict customers’ choices, thus making them worse off.

It used to be more hidden and denied; however, more, and more politicians and business owners unashamedly state their desire to buy and sell influence. Donald Trump stated that he and his business friends consider it a cost of doing business. Newt Gingrich states that earmarks were a powerful weapon to control congressmen.

The list of people trying to make this ‘OKAY’ is growing. They hide this corrupt behavior less in an effort to normalize this. Many figures if we all just act like it is normal, the voters will start to accept this type of control. In fact, many candidates campaign on bringing home funds to the district. They claim how many jobs were created.

Senator Mitch McConnell very publicly announces that defense contractors need to give big donations to his political allies. He very clearly links more taxpayer money going to their businesses. Mitch McConnell clearly has the motivation to add extra profits to these businesses to allow for these political donations.

When real Estate Developers Mark and Barbara Fried give about $2 million to Virginia politicians, are they expecting to have red tape cut for them and doubled up on their competition? Politicians love to have their campaign war chest to fight off competition. The citizens should not expect politicians to overcome the overwhelming incentive to sell favors, whether hidden, justified or blatant.

Aviation

2/10/2014

I do not claim expertise in aviation; however, I do claim that if you allow different models to emerge and that they are rated, that the best will continually be topped. Many industries are regulated dealing with the technology of the past.

Most bureaucrats do not know enough to run the businesses they regulate.

November 20, 2007 - The air transportation market is increasingly a global one. With continued advancements in transport technologies, the growth of strategic airline alliances, and the emergence of international "Open Skies agreements," the need for an effective and efficient transportation infrastructure becomes imperative. Anything less will only add to the growing list of problems facing the United States airline industry.

Economic Activity: Regulations and Taxes

1/22/2014

Economic activity happens naturally because people find it easier to get what they want when they trade for it.

In trade, the buyer has a certain price range in which they are willing to buy, and the seller has a certain range in which they are willing to sell. If the two ranges intersect then the exchange happens, and both parties are better off.

If government regulations and taxes are added into the equation, there will be three parties involved. The buyer and seller still have their ranges, but the government now has its own range. All three ranges must intersect in order to have an exchange. Naturally, there are fewer exchanges because the government's range often does not intersect with the other two.

There are other ranges the government creates that often stop economic exchange, starting with taxes. Whatever the tax rate is, the other two ranges must overlap with that amount. Therefore, if the buyer and seller are only at a ten percent overlap, any tax rate above ten percent will stop the exchange. At the current 50+% tax rate (all taxes) on the high-income earners, many ranges simply do not overlap to that amount, thus causing lower exchanges to happen.

Regulations also have major effects. If regulations call for an employer to pay a certain amount to an employee. That range limitation forbids by law, employment of those that are not worth the wage mandated by the law, to that employer. The minimum wage of zero is often the result.

Other regulations might mandate certain environmental controls that take the cost of manufacturing out of the range of a business owner from starting a project that would have resulted in many exchanges and could have enriched many. While some controls are worthwhile, the balance is crucial because often we acquire the same products from overseas where the controls are much weaker and results in more pollution there and fewer exchanges (jobs) here.

Other regulations in health care and health insurance are all about stating what cannot happen and often stating what has to happen, which excludes all other things from occurring. This severely limits new business models from emerging and forces most business to one model. The range of the buyer and seller only overlaps a certain amount, and these government regulations create a range often outside the other two ranges. Quite simply, many health care exchanges do not happen because the third range forbids by law two willing people from exchanging. Thus they are worse off because of the regulation.

The FDA regulations very often create a range of acceptable exchanges that the two sides cannot even come close to meeting. Orphan drugs are a good example. A solution to health issues that affect less than a certain number of people is not even considered by drug companies. The regulations have pushed up the cost of new drugs so high that pharmaceutical companies only try if the population of possible users is high enough.

A significant example of the government's range stifling development would be energy regulations. People in the USA often get their oil from other countries that are far less concerned with the environment; thus, the balance is costing US jobs and harms the environment.

A Speech by Newt about Regulation

1/19/2014

Show 22 Newt Gingrich speech transforming Medicaid
Jan 25, 2006
Show 22 Newt Gingrich Speech Newt discusses how to transform Medicaid into a 21st Century solution on August 19, 2005. He then answers questions on immigration, the Iraqi war, and more. Rating 7 out of 10. Check out newt.org Newt for Pres!!

This speech was made close to a decade ago, about one year before Barack and the liberals took control of the government. It is interesting to see how much more relevant this information is now that the government has taken even more control over regulation. We went in the opposite direction from Newt, and things have gone downhill.

Newt does not advocate my ideas. He clearly wants the government to have more power than I see necessary or healthy, but he has great free market principles. His ideas for running Medicaid and Medicare would likely be an improvement. However, I believe the best results will occur when the free market is trying out more ideas at the same time, and patients are given a choice. The exact same plan when people have the choice is far superior to the same plan that everyone is forced to use.

Publicly Traded Companies Owning a Lake

1/5/2014

Governments usually own lakes, rivers, among other large areas whether wet or dry. Under the Haley2024 plan, publicly traded companies will take ownership of these areas or at least control. The government (city, state or Federal) will mandate a certain minimum rating. At this point, we have an organization that will be responsible for up-keeping that area.

If businesses and individuals on a lake relies on clean water stocked with fish and properly dammed, to enjoy and do business, publicly traded companies controlling the lake would have plenty of incentives to keep up the lake because their funding comes from those businesses and individuals. There would be CRA's dealing with this type of ownership, and these would be rated on many issues. Governments at all levels could mandate certain minimum rating levels. Corporate Proxy Groups would be a key reform to ensure better outcomes.

Through many decades of common law, all the issues of private ownership of land have been worked out. There is a parallel of most issues of dry land to the issues that arise under water ownership. While a few unresolved issues will have to be resolved in like fashion, this is attainable. All the issues involving private ownership of bodies of water are currently being dealt with by government ownership. This proposal is just to change what organization owns the body of water.

Currently, governments own these bodies of water and have addressed many of the ownership rights issues. They decide how much pollution enters the body of water. They decide fishing, boating, swimming among other policies. They damn the lakes and manage levels. The issues surrounding water rights and ownership are being dealt with currently by politicians. This proposal just changes the entity that has ownership and control.

There is a long history of water rights. Homesteading was and is a very important factor in water as it is on land. Courts have ruled that long history of a fishing industry, particularly when the industry maintains the water, has rights to continue using the water. Likewise, if there is a long history of pollution or water runoff, courts have ruled that government cannot put a full stop on that, companies, farms, homes among others have ‘homesteaded’ rights to allow runoff.

This transition will use the Haley2024 standard transition with a few adjustments. During a one-year period of time before the switch, any person or company that wants to make a claim on the water, either by runoff, recreation, work, travel among others will submit their case before the rating system of the River and Lake Sector.

The Rating System, with judicial authority, will make determinations on ownership rights and award a certain percentage of stocks or other consideration of the lake corporation to each person or company, depending on their case. Yes, the government could make a claim on public use of the lake as a right of all citizens. Governments claim on public use could allow it to accept public park funds.

Rivers do present more issues than lakes; however, those are also already addressed with government ownership. The switch in ownership to free enterprise does not present new or different issues that need to be addressed, just who addresses them.

Governments and the courts already deal with major battles over how much water farms can divert, water levels for boats, runoff that travels through many states among others. The Mississippi River among others on occasion have too much snow melting too rapidly and flood land next to the river. This is a concern whether the government or a corporation owns the river.

If a corporation owns the river, all the parties that use or are affected by the river could and would likely buy stock in the river. Using Corporate Proxy Groups, stock owners could affect corporate leadership. This method of picking the leadership of corporations ensures the votes of stockholders are more vested in good river leadership versus politicians that get their votes from people with dozens of different concerns.

Politicians have dozens of things that demand their time and attention; however, corporate leadership has the single focus of the river. Private owners of the river will see value in maintaining fish, travel, recreation, industrial use, beaches among other values. The stockholders of the company are likely to be the ones physically closest to the river and would gain the greatest benefit from aesthetically pleasing river views and would elect corporate leadership that also values the same.

As stockholders, the fish industry will understand the value of industrial use and the industrial use will see the value of beaches because all these uses come with money flowing in, raising their stock prices and even corporate dividends. Money has a way in the free enterprise system of creating cooperation among all parties.

Different models could be tried. One possibility is the ‘home owner’s association’ model where land ownership surrounding the lake has part ownership/ voting rights, in the deed of the land. Other possibilities would be a hybrid where part of the stocks come attached to land ownership and the others in open bid to the public. The best results happen when many models are tried and free enterprise lessons learned, thus constantly improving.

Unemployment Insurance Should be Privatized

12/29/2013

Government taking over unemployment insurance really limits the different business models that might arise in the free enterprise system.

There are many items that could lower the cost to this product. The insurance company could lower the time limits.

They could require volunteer hours at charities. They could set up a temp agency and require certain hours. They could employ ‘Head Hunters’ or run a robust job-seeking system. There are many who want very long time limits for eligibility and those that want very short to zero limits. Every employee should buy the policy that they wish.

Government’s monopoly controls create a one size fits all system that is based on political considerations. A politician being able to vote on more or less generous plans or the length of those plans cause many problems. If there has to be a plan, just require the company to pay a certain percentage into the premium of a plan in the open market that each employee picks out.

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