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Hospitality starts with hospital

There is no way around it, United Airlines has found a new way to get mentioned on every social media at the same time. The article (at http://www.independent.co.uk/voices/united-airlines-passenger-beaten-flight-chicago-airport-apologise-newunitedairlinesmottos-trump-a7678296.html) gives us a first view on how the people are perceiving United Airlines. The headline ‘United Airlines hasn’t even bothered apologising to the passenger beaten on its flight‘ gives us the goods. The article goes into a few elements, although I am not entirely in agreement with: “this blood-soaked guy who simply wanted to go home and get to work the next day could have been any one of us“, I will at least admit that it is not entirely incorrect.

My issue is not initially with the act as such, it is with the utter stupidity of removing someone who had boarded without a proper reason. Consider that people check into flights, they get their luggage through, get past all the check and end up with a boarding pass. At that precise moment, that seat is taken! So basically up to an hour before the flight, this issue could and should have been clear, and this level of stupidity has consequences. Market watch reported ‘United’s stock falls 1.1%, wipes out $255 million off the airline’s market cap‘, which seems a little much so that one additional staff member could get on that flight. The quote “If you’ve flown anywhere in the last 10 years, you’ve definitely been on an overbooked plane. You might have even been offered a few hundred quid to skip your flight in order to make room for travelling airline staff” gives a fair view of what happens at time. In my case it was a first class passenger who had to get on the flight I was one and we were offered 600 euro’s and a free upgrade to get the next flight. I was not in the market, but someone took this offer. That is the easy option for the airline. In this case there was no option and someone got dragged off. As I would see it, a logistical screw up that gave a market dive of $255 million and that is not all. There is a solid chance that this doctor can sue the airline and the security detail that dragged him off costing the airline several million more. You see this is not a case of wrongful acting by the passenger. The passenger had checked in, went through all the screenings that happen and passed all the requirements. The passenger was given a boarding pass and was allowed to board the plane, it is at this point that the airline is screwed (as I personally see it). At this point it becomes an institutional failure of an airline to properly conduct its business. The excuse of a press conference where we see CEO Oscar Munoz calling the incident a ‘system failure’ and says staff could have solved it with ‘common sense’ is not a clear answer. The additional statement “proper tools, policies, procedures that allow them to use common sense” sounds like a joke to me. Common sense should be on the forefront of all this. The mere logistical part that the boarding procedure was not tattooed on the supervisors’ brainstem is not a medical requirement, but it might have saved them a quarter of a billion write down. I will give him that he took the blame towards himself, but in the end this failure went past the head of the hospitality crew, the pilot and captain of the flight and the security detail. Three levels that did not ask the questions that should have been asked before this disaster took shape. The fact that this was because of a needed seat for a staff member makes the disaster complete and a lot bigger too.

Now, there was also a mention that ‘aviation experts have said the company acted legally‘, is that so? You see, the contract of carriage of United Airlines: “If a flight is oversold, no one may be denied boarding against his/her will until UA or other carrier personnel first ask for volunteers who will give up their reservations willingly in exchange for compensation as determined by UA. If there are not enough volunteers, other Passengers may be denied boarding involuntarily in accordance with UA’s boarding priority“, here is the kicker: ‘may be denied boarding involuntarily‘, this was not the case, the man had already boarded and had boarded validly with a valid boarding pass. This is the part that will get United Airlines in hot water!

The other part that I do not get is the issue for one steward(ess), what was the beef here? There are close to 50 flights a day going from Chicago to St. Louis, so unless it was about a directly connecting flight, or better stated, even then, there would have been logistical solutions available. All this (I admit speculated) seems to reflect the opposite of what Oscar Munoz claims, mainly that the bulk of staff and support groups in Chicago airport were pretty much all devoid of common sense. So, from that point of view, no policy or protocol would have saved United Airlines the disaster it was heading to at full speed.

The part I disagree with in the article is that this is not about a Trump America, this is not about “This sort of stuff is becoming so commonplace that it’s difficult to feign surprise or disgust anymore. It’s become completely entangled in America’s psyche, and no one seems to care“, this was a collective act of utter stupidity, not a common sensing brain cell around to stop this from escalating. I would argue that this is linked to “A profit-driven airline company wanted to make room for employees, and so private security staff were more or less given the green light to beat somebody up to make it happen“, yet in this I am not sure if the second part on the private security side would be correct, yet as they dragged the valid passenger off the plane, questions will need to be asked with their superiors and the clarity of what had transpired will need to be scrutinised, because they too will feel the blows of what happened, I feel certain that the United Airlines legal team will be looking under every pebble to see where the costs, losses and blame could be placed.

The interesting side is that this is not the first time, the same week saw an issue with the president of an investment firm flying back from Hawaii, as well as an issue with two teenage female passengers wearing leggings, yet in that case there are a few issues that give optional valid defence of United Airlines as these were ‘pass travellers‘, where the passengers have to comply with company policy as they are in fact free staff flights.

There is no denying that the United Airlines will suffer a while longer as the social media is pushing and pulling the quotes in all directions to let viral reign continue, which is equally not fair on United Airlines, yet that is the world we live in nowadays. The fact that we now see surging stories of UA overbooked flights, with people getting send-off going all the way back to 2015. Then it was Nobel Prize-winning economist Robert Shiller who lost his seat. These stories seem a waste of time and I would agree immediately, yet the effect is that for the next few months, people will initially book with whomever has a flight not named United Airlines, which stops the overbooking danger, yet in equal measure it will drive forecasting down by a fair bit, so this disaster could cost United Airlines a lot more than the quarter of a billion cap loss. How much is not clear and I reckon no speculation will be on the mark, no matter how good you know this industry. Whenever social media goes viral on several paths, all bets are off, United Airlines is experiencing this effect in person.

To finish this off, we also see another side of social media. It is Fox News who reports (at http://www.foxnews.com/tech/2017/04/12/twitter-accused-deleting-tweets-slamming-united-airlines.html) the issue that allegedly, Twitter has been deleting tweets on United. The quote: “One user, @Jay_Beecher, says that a number of his United-related tweets were deleted, including one poking fun at the airline over the now-notorious incident. “Within seconds of tweeting I noticed that my tweet had disappeared,” he told Fox News. “After rewriting the same tweet numerous more times, I began to suspect that Twitter was censoring/automatically deleting any slightly critical tweets which contained an @United tag.”” gives us that at times Twitter seems to be doing whatever seems to please those with a vested interest. This is now also becoming an issue on cases where Twitter did not intervene, giving additional strength that Twitter has certain options, yet refuses to use them. This is not even close to the end for Unites Airlines as we see: “The airline kicked off the #UnitedJourney campaign last week in an attempt to get passengers to share their travel photos. Instead, the hashtag is being used to slam the airline and share memes related to Sunday’s now-notorious incident.

There is currently no end to this viral motion as we still see the News act on events nearly a week old, with the latest news merely three hours ago, as such it seems clear that Mr Munoz has his work cut out for him. The rehashed news regarding “United customer Geoff Fearns, who told Los Angeles Times columnist David Lazarus on Tuesday that United threatened to put him in handcuffs last week if he didn’t surrender his first-class seat to a “higher priority” passenger” gives rise on more issues, the most prominent being the one where United Airlines needs to seriously redefine what a high priority passenger is, especially when such a person makes ‘demands‘ on his last minute booking, whilst seemingly not being able to time manage his travel needs. It is my personal view that any company that facilitates to the arrogant and possibly loud mouthed will see their value decrease in ways that was not even close to the value of the ticket sold. It is a lesson they might learn from, but as this situation is created in America, I highly doubt it.

 

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17 or 70 trillion?

Even though we see so many ‘stories’ on how well the US is doing, we must ask ourselves on what value these numbers are trying to convince us of.

The thoughts I am about to phrase started a little after the following had been released (at http://blogs.marketwatch.com/capitolreport/2014/06/06/standard-poors-is-concerned-about-the-u-s-debt-burden/). “Standard & Poor’s Ratings Services put out research Friday confirming the AA+ rating of the U.S.“, so the US has dropped a notch on the credibility scale. This in itself should not be a reason for direct concern. The one part that does worry is that S&P was the only one doing this. The other part we should notice is the quote “The federal debt was $16.1 trillion at the end of fiscal year 2012, according to the Government Accountability office.” why are we not seeing a 2013 number, which according to some is over 17 trillion? How interesting is it to see the numbers game whilst the numbers quoted are not up to date?

The next part is the article from Bloomberg on April 29th 2014. Here we see the following “The drop in net marketable debt will be $78 billion in the April-June period, $38 billion more than the pay down projected three months ago, with an end-of-June cash balance of $130 billion, the Treasury said today in Washington. The improvement will be short lived — net borrowing of $169 billion is projected next quarter, with $130 billion in cash Sept. 30th“. Can anyone see the issue I have with this? The debt of well over 17,000 billion is getting met with a quarterly pay down of less than 0.4588%. How is this progress and even though we see that the US still has a high credit score, is the likelihood of a continued credit score even realistic?

That part can be seen in the Market watch quote “We believe that renewed debate over the debt ceiling could resume after the midterm elections in November 2014 under certain scenarios. While we expect the discussions about the debt ceiling to be ultimately resolved as they have been, we still see risks that these debates entail.” So, not only is there no solution to the current debt levels, the chance of any serious solutions occurring within this current administration is close to zero, which means that the next administration will inherit a debt closer to 20 trillion. I do find the headline about ‘US debt level concerns‘ hilarious. Many with me had raised these dangers for well over 2 years and now as the game is up, some are ‘raising’ concerns, whilst those in charge and those on the watchdogs of economy had long known that any level of lowering the debt had been a mere myth for over 2 years.

There are of course other views. One is from Chad Stone who wrote in US News (at http://www.usnews.com/opinion/economic-intelligence/2014/05/16/too-much-deficit-and-debt-reduction-too-soon-will-wreck-the-recovery) “now about $17.5 trillion, found on the ‘debt clocks’ that are so popular with debt hysterics. Gross debt (and its close cousin, ‘debt subject to limit’) is debt held by the public plus debt internal to the government“. This is fair enough, yet there is no information, not even any indication when this debt will start to lower. There is another side to consider. When we look at the IRS data book (at http://www.irs.gov/pub/irs-soi/13databk.pdf), consider that the IRS collected a net value of taxation of 2.4 trillion dollars. A slightly more accurate number is 2,490 billion.

When we consider all the numbers thrown at us, like the ‘% of the GDP’ and so on, even if we accept that the 17 trillion dollars debt is held on multiple level, compared to what the IRS collects, we see a number that reflects the tax collected, compared to the total debt. The US gets through taxation a mere 14% of where the debt is at. How is any of that realistic? So, the total collected taxation, before any other cost is taken into account (like paying government staff and utilities), it only amounts to 14%, after all that is done 0.1% is left if the US government gets a fitting budget (something that has not been achieved since president Clinton was in office).

My issue is not just with the US debt levels, it is also about the ‘blasé’ approach economists are throwing at the people stating that things are not that bad and that it will all work out. That part is a figment of THEIR imagination, because for things to resolve, actions must be taken and none are getting taken at present (or in the near future for that matter). My biggest issue with the Article of Chad Stone is seen at the end. His quote “Lowering the debt ratio comes at a cost, not only risking the recovery if it’s done too fast but also in burdening businesses and households with larger spending cuts, higher taxes or both to stabilize the debt ratio“. There is truth in that statement, yet the issue that the money should have NEVER been spent is an issue that is ignored. The culprits of this dangerous endeavour are not named, not held accountable and many of them walked away with millions in bonuses.

We are however nowhere near the end of this debacle. The articles give another view on the matter. An article was published in 2013 stating an entirely different matter of debt. The REAL total debt is set at 70 trillion (at http://www.foxnews.com/politics/2013/08/15/california-economist-says-real-us-debt-70-trillion-not-16-trillion-government/). The quote that matters is “Hamilton believes the government is miscalculating what it owes by leaving out certain unfunded liabilities that include government loan guarantees, deposit insurance, and actions taken by the Federal Reserve as well as the cost of other government trust funds. Factoring in those figures brings the total amount the government owes to a staggering $70 trillion

Now we are off to an entirely different race, this only gets worse if we take the Bloomberg article into account from March 2014, which headlines as ‘Debt Exceeds $100 Trillion as Governments Binge‘ (at http://www.bloomberg.com/news/2014-03-10/debt-exceeds-100-trillion-as-governments-binge.html). Make sure you realise that this last article is about global debt and not about US debt.

This was already on my scope for another reason, but I will return to that shortly. I need to return to the Fox News article where it stated the view of Professor Hamilton, an economics professor from San Diego. The reason for this is because I try to stay fair and balanced (statement plagiarised from Fox News) and as such, as I found additional views from the professor, it is only fair that I mention that too. This all is linked to a paper he published in 2013 (at http://econweb.ucsd.edu/~jhamilton/Cato_paper.pdf), it is the starting quote “This paper examines the growth of federal liabilities that are not included in the officially reported numbers” which should grab your attention. Yes, we are talking about ‘off’ the book liabilities, which should make us all wonder whether ANY government should be allowed to be part of liabilities that are not on the books to begin with. If our job is to stem the tide of irresponsible spending, then keeping things ‘off the books‘ as the ‘kids’ seem to state, should not be allowed under any condition. If we look at the quote that was found in the Econ browser by professor Hamilton, we see “Similar calculations from the trustees reports for Medicare report Medicare’s net unfunded liabilities for current program participants to be $27.6 trillion. For more details see Table 4 and the accompanying discussion in my paper.” The floor should open to an entirely different debate and soon. I think it is high time that these events are properly mapped out and as such ALL governments need to adhere to a different level of ‘accounting’. Their books can no longer remain silent in regards to unfunded liabilities. Is it any wonder books are not in order in a massive amount of nations?

This now grabs back to other observations I made and more important the small revelation my data implied. On March 22nd 2013 I wrote the blog article ‘60% confiscated and counting in Cyprus!‘, here I quoted “If this is what frightens the US, then consider the consequences of a system like LIBOR being manipulated through the total value of trade. If that would have been off by 11.2%. Out of $1000T (UK and US combined) then that difference would be $112T“, I implied to some extent that not only were the percentages messed with, I had some reason to believe that someone had messed with the total trade value that LIBOR represents. Perhaps my mistake (to some extent) was thinking that it was ‘just’ manipulation. In my defence, I came up with these findings before Professor Hamilton had finished his paper, so as a non-economist I was slightly in the dark to begin with. Consider that some politicians could be overspending, whilst using the options of unfunded liabilities within LIBOR to excuse themselves for accountability? What will other governments say, when such events are brought to light (if that would be happening). More important, if my number was closer to the truth then many considered, the global economy is playing high stakes poker with debts twice the size then most realise and our cost of living is based partially upon the irresponsible spending of both Washington and Wall-Street. How are the people ever to get a fair shake at a happy life, when a group of no more than 3000 people have been spending the dreams and futures of well over 1 billion people? Most do not realise that this goes way past the borders of the US, if there is indeed an established group editing the total value of trade considering the manipulation of the LIBOR percentage, the established setting of unfunded liabilities, as well as the breaking up on loans as they might occur. For this example, I would like to point you towards www.lsta.org/WorkArea/DownloadAsset.aspx?id=2480, here we see a paper from Credit Suisse made by Julia Kingston in August 2006. The next part is just pure supposition on my side. Look at slide 35, here we see a term loan set in three parts. What happened when something falls over in 2 or 4 months? How many parts when Wall Street made its 8 trillion bungle was not written off? Is my consideration that the TOTAL LIBOR trade value has a massive amount of ‘entries’ that had remained hoping it would turn for the better? We have seen a multitude of financial advisors playing just such a card on many levels in the 2008-2011 periods. My question now becomes, was my implied 11.2% just the tip of the iceberg?

I am not claiming, nor do I pretend to have the actual answer here, My issue, as it was in the past is that ‘proclaimed’ Journalists sitting in the top newspapers have not taken a hard look at some elements. It is nice for them that Reuters does much of their work for them and many aspire, but will never come close to people like Paul Mason, Robert Peston or Deborah Hargreaves. Yet, how deep did they dig into LIBOR? Also linked (especially with the Guardian) was the claims that Jullian Assange made in regards to banking, they were never followed up (or so it seems), not even by the Guardian as far as I could tell. Consider the article the Guardian had on February 10th 2011 (at http://www.theguardian.com/media/2011/feb/10/julian-assange-wikileaks-book-claims). The quote “Asked about the ostensibly sensational bank leaks Assange keeps suggesting he is ready to release, Domscheit-Berg said the only banking documents he knew WikiLeaks had were ‘totally unspectacular’ is at the heart of this”. When it was ‘just’ about the US military there was some upheaval (especially by the US), yet when banking issues were raise (slightly mentioned in the Forbes interview in November 2010 at http://www.forbes.com/sites/andygreenberg/2010/11/29/wikileaks-julian-assange-wants-to-spill-your-corporate-secrets/). The interview gives us the following “Will we? Yes. We have one related to a bank coming up, that’s a mega leak. It’s not as big a scale as the Iraq material, but it’s either tens or hundreds of thousands of documents depending on how you define it. Is it a U.S. bank? Yes, it’s a U.S. bank. One that still exists? Yes, a big U.S. bank.

After this the hunt for Jullian Assange really takes on additional energy. I have no idea what he found, or if it is even related, the issue is that there is a recorded atmosphere of unaccountability within the banks (on a global scale) which must stop, if not, not only will governments be allowed to continue in irresponsible ways, but the additional ‘myth‘ that banks and governments apply checks and balances need to be thrown out of the nearest window. A last quote from the Forbes interview is every bit as important “We’re still investigating. All I can say is: it’s clear there were unethical practices, but it’s too early to suggest there’s criminality. We have to be careful about applying criminal labels to people until we’re very sure.

This is the part I had written about for some time, it was not just that the issue with Goldman Sachs imploded the financial industry; it was the issue that they, in black letter law, basically had not broken any laws. The people lost well over 8 trillion and no crime was committed even though their money was basically gambled away. It is that part, especially in the LIBOR sight, as well as the issue raised by Professor Hamilton in regards to unfunded liabilities. No laws are broken, but we are all kept in the dark in regards to the debts inflicted upon us, which in itself is a massive wrong.

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