Author Archives: Les Schreiber

Who Are They To Hate Now?

Virginia’s GOP has suffered some significant loses over the past few days. The “Stars and Bars” have become toxic, Roe v Wade is still the law of the land, the Affordable Care Act has again been ruled Constitutional by the Supremes and gay marriage is the law of the land. Isn’t it time for fauxconomist Dave Bratt, Kirk Cox,and their band of modern day “Know-Nothings” to start coming up with some real ideas instead of focusing on who we should hate?

— Les Schreiber

Coal Business

For those looking for something to do on a hot Sunday, have a look at the business section of today’s New York Times. On the first business page there is a very “interesting” article concerning Richmond based Massey Energy and Don Blankenship . The story told is not a pretty one and led to the Upper Branch Mine disaster that killed 29 men in 2010.

— Les Schreiber

Who Are the Real Fiscal Conservatives?

Source: "Truth and Integrity  in State Budgeting"

Source: “Truth and Integrity in State Budgeting”

Paul Volcker is one of the real heroes of the modern economic profession. During the late 1970’s and early 1980’s he conquered the “Great Inflation” by taming the growth of the money supply. Interest rates rose to levels unprecedented in modern American history. During my time in charge of cash management at AIG, I bought and sold money market securities yielding 20%; today similar instruments yield less than 1%. His efforts led to President Ronald Reagan’s “Morning in America” and a renewed attention to monetary policy. His success, as painful as it was,  gives him lots of “street cred.”

The Volcker Alliance recently published an analysis of the budgets in three states:  California, Virginia, and New Jersey.  The results will be surprising to many.  He gives kudos to California and Virginia, and holds a dim view of New Jersey, home of Republican presidential wanne-be, Chris Christie.

Standing alone, California would be the world’s eighth biggest economy with domestic output equaling US$2.1 trillion. Under Democratic Governor Jerry Brown, the Golden State’s credit ratings have been raised multiple times by the rating agencies.  Under his leadership,  voters have approved some temporary tax hikes, increasing budget reserves and improved funding for pension liabilities of teachers and other government employees.  According to Volcker, California’s outstanding debt has been reduced by approximately US$10 billion in three years.

The Old Dominion comes in for praise by the former Fed Chairman.  In an interesting comment he states that the budget professionals in Richmond serve for many years while the Governor is restricted to one 4-year term.  Budget cycle planning, which takes as long as 6 years, removes some of the politics out of Virginia’s budget process.  Virginia’s unfunded pension liability of US$ 3,436 per employee is only a few dollars more than that of the Golden State.

New Jersey, home of Gov Christie, leaves much to be desired according to the former Fed Chairman.  Volcker’s analysis paints a messy picture of the Garden State’s fiscal condition.  Volcker lists myriad accounting and financial tricks that have been employed to balance the home of the Jersey Boys: these do include not using the proceeds of bond sales for their stated purposes.  Frequent use of non-recurring revenues for operating purposes.  And diverting tolls from the turnpike from their stated use to maintain that highway.

It is a shame that Volcker did not include Kansas in his analysis.  Governor Sam Brownback, a Tea Party favorite, has enacted a budget cutting, tax reducing program that only a “fauxconomist” like David Bratt would endorse.  The budget deficit has ballooned, school systems in some detracts have closed early due to lack of funding, and a liberal website reports today that the Kansas Gov has threatened to cut off funding for the judicial system if it does not rule in his favor should a court challenge arise to his policies.

— D. Leslie Schreiber

Is This Guy For Real??

Please go to Salon. a liberal website, and read the story about an interview given by Dave Bratt on immigration. This is so over the top for 2015 .

— Les Schreiber

Think Competition Isn’t Important?

The recently shuttered Westbury Pharmacy was a compounding pharmacy. These institutions make up drugs per the instructions of a doctor when a special medicine is needed for an unique problem. A member of my family was a patient and the charge was $200 per refill. Now that Westbury is out of business, South River Compounding Pharmacy charges $550 for exactly the same  prescription. Competition is important.

— Les Schreiber

The New Republican Wardrobe for Spring: Wooden Shoes and White Sheets

As I was researching the N Y Daily News web site yesterday, for a reason why the Yankees keep winning with a line up of virtual unknowns, I ran across an interesting article: Geert Wilders has been invited to speak at a G.O.P. event in Palm Beach Florida.  For those who don’t follow Dutch politics, Wilders is an openly pro gay man who is head of the Dutch Party for Freedom.  Their interest in economics is negligible, however they support strong measures to restrict and  hinder the practice of Islam in Holland.  Many commentators of European politics compare them to the racist National Front once led by the bigoted, anti-semitic Jean Marie Le Pen of France.

Today, the Times Dispatch informs us of a Facebook post by Republican delegate from Hanover, indicating that recent protesters in Baltimore should have been subjected to police dogs similar to those experienced by Civil Rights protesters in the 1960’s.  “Buddy” should resign immediately.  The G.O.P’s tolerance of this type of politics speaks more for their values than any platform ever will.

Les Schreiber

They Keep Getting Worse in the Republican Party in Virginia

Recently, newly elected Congressman David Bratt held a meeting with supporters in Richmond.  According to press reports, Bratt continued to emphasize the issue of immigration that led to his surprise primary victory over Eric Cantor.  His only other qualification is that he is a PhD economist.  In fact, Mr. Bratt’s hatred of “the other” recently compelled him to refuse to fund the government department whose task it is to fight “real” terrorist group, i.e. ISIS.

Bratt’s fervent hostility to immigrants brings into question his qualification as an economist.  In the 1980’s,  Japan was considered the “miracle economic engine” of the world.  For over two decades now, growth has stagnated and shows no sign of recovering its former vigor.  Many economists who have examined the end of the post-war economic miracle site Japan’s program that virtually eliminates immigration as a retardant to achieving its economic potential.

America’s economic history is full of industries started by immigrants from the Sarnoffs who started NBC to Andy Grove whose family left Hungary during the revolution of 1956 who started Intel.

Unfortunately, the history of immigration in the United States has a dark side. The 19th century saw much anti-Irish, anti-Italian, and anti-Catholic politics that birthed the No-Nothing Party that is an early ancestor of today’s G.O.P. Congress also passed a Chinese Exclusion Act in the early 20th Century and in a prelude to World War II refused to hike quotas that would have provided a haven to some European Jews.  The tragic fate of the S.S. St Louis demonstrates where a hatred of “the other” that Bratt embraces might lead.

Rumor has it that this Bratt is planning another rally at a rural location to be determined later.  Attendees are responsible for bringing their own sheets and hoods, and Dave might provide the fiery cross and an ample supply of matches.

— Les Schreiber

You Must Be Joking

The RTD reports today that the city of Richmond will PAY the Redskins about $250,000 for having summer camp in the city. Is this true or did the newspaper publish the April Fools edition a month early?

— Les Schreiber

Has Economic Reality Hit Education?

Last week several interesting articles about education appeared in the Richmond Times-Dispatch and the New York Times.  Locally, Henrico County might hire more teachers in response to complaints over large class sizes.  The NYT reported a significant decline in the number of recent graduates applying to the Teach for America program.  This program places recent graduates in inner-city schools.  Reflecting an improving economy, Teach for America has advised some school districts that its applications are down about 10%.  Additionally, the NYT‘s article indicated participation in undergraduate education programs is down about 13%.  For some districts, Teach for America supplies as much as 20% of teaching staff.

Salaries in education have been nominally stagnant for many years.  Since I retired at the end of the 2008-09 year,  my former colleagues at the Governor School have experienced only one increase of 2% which is in-line with the general trend of teacher salaries.  Utilizing the Bureau of Labor’s inflation calculator, an individual making US$40,000 in 2008 would need a nominal salary of US$43,981 to maintain the same level of purchasing power. At what point will politicians and educrats understand that promising employees a diminishing standard of living is not a business model that assures success?

– Les Schreiber

“Putinomics” Comes to Virginia

Several weeks ago, I was shocked to read a story in the TD that Dominion, Virginia’s dominant electric monopoly, was suing several land owners as a result of their refusal to allow a survey team to access their land to measure for a potential pipeline that Dominion and several other firms want to build.  The land is privately held, i.e. not in the public domain, private property and privacy are essential elements of a democratic and capitalistic society.  I was later informed that 10 years ago, the Virginia legislature in effect granted the right of eminent domain to Dominion, a private corporation.  Conceptually, eminent domain is used by governments to obtain property for public use such as schools, highways, and hospitals.  This is a prime example of anti-capitalist behavior on the part of Dominion and all of those “capitalists” in the General Assembly.

Today,  the TD reports that the electricity monopoly is playing accounting games with the legislature in an attempt to pass on inflated costs to its customers as it closes older power plants. Companies depreciate capital investments over a number of years.  Dominion failed to mention the original costs of these plants and that the charges that they have taken to their profits as legitimate depreciation.  The present book value can not be the same as replacement costs.  These costs are amortized over many years.

Perhaps Dominion should take the approach utilized by Lloyd Blankfein of Goldman Sachs to justify taking part in the huge A.I.G. bailout.  Lloyd said: “We do God’s work.” Vladimir Putin could not have said it better.

— Les Schreiber