Why Texans need change of their own.

The Dallas Morning News has a series of articles about Texas under the banner: State of Neglect. The Austin American Statesman has a series of articles on privatization of the state’s business that asks key questions:
1. How much the state of Texas has contracted to for-profit companies?
2. How much have we, the taxpayers, saved?

Both answers: “no one knows.”

We know of a very public failure of a contract between TX Health and Human Services and Accenture LLP. We also know of the serious difficulties with the contract between the TX Department of Information Resources and IBM. Then there’s the lesser known failure of the Camino Columbia private toll road in south TX.

The state’s budget isn’t in the red, because the TX constitution doesn’t allow deficits. The state has no documentation to show that the budget has been met by outsourcing, but there is a plethora of proof of the fact that the budget has been met by cutting state services; hence the State of Neglect.

The state’s expenditures are not declining while things get better, and there is no data being brandished that demonstrates where and how outsourcing is improving services while reducing cost, yet…

The US Department of Justice has found serious problems in the way Texas cares for its institutionalized people with mental health problems, and some folks are calling this a reason to continue to outsource the state’s work. I maintain that this is the continued effort of the state’s majority party trying to justify their claim of government as the problem, by governing badly.

In order to do better at serving Texans and meet budget guidelines the current legislative session would need to find a way to increase the state’s revenue in a soured economy. That would be best accomplished in a manner I suggested in the previous post. That would require the current majority party in both legislative bodies and the governor’s office to admit that they can’t deliver everything and a tax cut.

Those least able to afford the day to day costs of living, let alone lobby their state government, can expect life to get a little rougher as the State of Neglect is maintained.

There are more state, elected offices that will be contested in 2010. Make sure to register and vote for change here in Texas, too!

Taxation suggestions for Texas.

I hope to be wrong, but I think the 2009, TX, legislative priority will be an attempt to justify and continue the, "everything and a tax cut," nonsense. The majority in the legislature team with the governor to try to spend the rainy day savings account (RDSA) to cover the fraud. The RDSA grew rapidly while the price of fuel (gas and diesel) hovered around four dollars a gallon, but those days are gone; they’ll return, but nobody knows when. So spending the RDSA will deplete another valuable resource.

There will be active resistance to funding necessary/overdue transportation infrastructure via a rise in the state's, long dormant and oft re-directed, fuel tax.

There will be active resistance to the state raising the funds needed to get the state out of property taxes, reduce the state's need for high sales taxes and end the fraud of the 'business tax.'

The state needs a simple, clear and low, state income tax (unlike the complex, loop-hole infested, federal income tax).

Your income can not be reappraised higher, lowered statewide only to be increased locally, doesn't cause the cost of shopping to increase nearly 10% and doesn't add many thousands of dollars a year to home ownership.

Nobody likes paying taxes, but there needs to be organized, responsible governance of society and that isn't free.

'Market' operation and coverage nonsense.

Reading, watching or listening to business news one often hears things like, “instant markets,” “baked in,” or, “already reflected in ‘the market’…” This is an indication of the depth to which the mythology of ‘the market’ is ‘baked in’ to the mind set of those who are involved in the day to day coverage and operation of the business environment in the USA.

The studies revealed that the recession started in December of 2007 and was reflected in the stock market dive of September 2008; some instant market. The market is reactive, with darn slow reflexes, not proactive.

The mythology also suggests that the current mortgage crisis has core causes that are everywhere, except in ‘the market.’ The current crisis is centered on mortgage manipulation, same as (only worse than) the financial crisis of the 1980s: lots of cheap and easy credit made available while regulators napped.

Both financial catastrophes were created by ‘the markets’ insistence on demonstrated short term profit gains, and business growth (the Wall Street Two Step). Mortgages are very long term investments (15 and 30 years primarily) that introduce large quantities of money into ‘the market’ with each individual transaction; especially as ‘affordable’ housing is discouraged. ‘The market’ created a variety of kinds of “mortgaged backed” ‘investment instruments’ to attempt to pretend short term profits while allowing continued, unrestrained growth.

The Resolution Trust Corporation (RTC) cleaned up the mess of the 1980s without addressing, actually complete avoidance of, the aforementioned underlying causes. Now the US Treasury Secretary is attempting to prop up ‘the market’ with hundreds of billions of taxpayer dollars without increased regulation, and without establishing responsibility, of ‘the market’ players that are involved in the recurring financial crises.

Those who deny history feel free to repeat it.

GM is not too big to fail!

There is an effort to say that the U.S. government must save the American automakers from themselves; socialize failure, without consequences.

Nonsense!

In the 1970s the price of gas was going up, and the American consumer needed to get a car from Japan for fuel efficiency. They discovered that the imported cars didn't start to fall apart after the 3 year or 60,000 mile barriers that KO'd cars from the 'big three (GM, Ford and Chrysler).' This was the first indication that there was a systemic problem at the 'big three.'

The market, and government, had their first opportunity to restructure GM via the bankruptcy system in 1989/90, and didn't; about five years after the taxpayers had underwritten the restructuring of Chrysler.

Here we are again facing the fact that GM, Chrysler and Ford, like Wall Street, can't find their own backsides with both hands; even while sitting on those very same hands.

Yes, it will be painful to allow GM, Chrysler or Ford to fail, but throwing money at these companies has not been successful, let alone painless.

Solving Wall Street: Step One.

A great many companies in the financial services sector (a.k.a.: Wall Street, the market) are in trouble, because the credit worthiness of their ‘mortgaged backed’ paper, collateralized debt obligations (cdo) and credit default swaps (cds) are being downgraded arbitrarily in a panicked flurry of activity. This devaluation frenzy needs to stop. The aforementioned ‘investment grade’ paper was given an initial rating of AAA by the agencies responsible for said ratings, and those need be frozen as is temporarily.

Pause, to catch a breath, then go back and (figure out?) follow the paper trail.

These investment instruments were created (by geeks hired specifically for that purpose) and sold, with an arbitrary initial debt rating of AAA, to generate immediate cash from long term investments: mortgages. They were very successful, so the call went out for more. The next generation was also very successful, so the market decayed into the irrational exuberance that accompanies any trend, that is successful long enough, on Wall Street.

Time needs to be taken to find all that paper and determine what’s still AAA, what’s junk and what’s somewhere in between. This is not being done because once the paper trail is straightened out it will be obvious that Wall Street caused its own problem.

The market has never accepted any responsibility for failure, and is of no mind to start now.

Can you feel the winds of change?

We, taxpayers, paid for a bail out of the trouble caused by the financial entity charged with making home loans (the Savings and Loan businesses) without solving the underlying problems: too much easy credit, not enough regulatory effort. That was 1987 and the Reagan administration did not want to expose the underlying problems, because it would expose the sordid underbelly of 'trickle down.'

So, here we are, again, bailing out the culprits with a concerted effort to avoid the root causes of the problem.

The difference this time is that people's wallets have been affected too often by the detrimental nonsense that is 'trickle down;' leave the richest folks with the least responsibility for, and no oversight for their activity in, the environment that allowed them to earn such wealth in the first place.

There's an election, early voting starts in the next few days, this year and the winds of change are in the air!

Government's role in the economy...

During economic down cycles the government needs to check where regulation, or lack thereof, might have contributed to the problem and change what is found wanting. The appropriate executive agencies need to investigate to see if criminal activity contributed to the down turn, and prosecute as needed. The government also needs to invest where the market will not, so that services will be available to assist in the economic turn around that has, so far, always followed a down turn.

Texas has very few (grandfathered) municipal telecommunications networks, because they are illegal. This must change because telecommuting, distance learning and official/legal/emergency communication will play a large part in the future of Texas. The rural nature of the vast majority of the state of Texas means that there will never be sufficient customer base to provide a profitable return on investment (ROI) for private telecommunications companies; the government must provide this service.

Sunshine and wind are something that are well known to almost every Texan, but the best places for mass harvesting of said attributes are in rural areas. There is no private company that will take on the investment needed to provide the large, intelligent, power distribution network that could bring this power from where it is generated to where it is needed; a constant, huge drain on profit.

There is no private company that will invest in the roads needed to interconnect Texas, because profitable toll rates are more than most are willing to pay; the Camino Columbia Toll Road is an example.

There is no private company willing to invest in rail connections across Texas or within the metropolitan areas, because (once again) common carriage is incapable, at an affordable cost to the user, of generating sufficient profitability.

You've noticed a pattern by now: that common carriage infrastructure (especially in a huge, largely rural, state; like Texas) is not something in which a privately or publicly held company, most interested in generating a profit, will invest. The municipal, county, state and federal governments must do this investing or it will not get done properly, if at all.