Check out the current status in Ukraine here: http://abcnews.go.com/International/ukraine-date-guide/story?id=22768235

It’s hard to believe the Cold War has been over for 25 years. Being a bit older, I grew up in the 50s and 60s during the Cold War. We actually did the drills in elementary school where you would “dug and cover” beneath your desk. Looking back on it, a cheap wood and steel desk would offer little protection against a high-yield thermonuclear blast. But the activity thrust the terrible reality into our little minds. My dad was in the Air Force, and for several years, his job was to fly the technicians to the various missile silos in the West from our base in Cheyenne, Wyoming.

Both the USSR and the USA had tens of thousands of missiles and warheads, only a few of which would have been necessary to eliminate all life on Earth. After so much time, it is hard to realize how things could have gotten so far out of control. Well, now we have Ukraine. Regardless of where you stand on the issue, it is troubling to see the Russian Bear exercising its formidable power on another country. The people in every other former Soviet satellite country have to be quaking in their boots. What is it about the Russian psyche, or at least that of Russian leadership, to be so afraid of attack that they needed a number of buffer states to protect the Motherland?

I have two theories. On one hand, Russians have every right to fear intervention. Just look at the history books. Both Adolf Hitler and Napoleon Bonaparte set their sights on Russia. In both cases, it did not turn out so well for the invaders. The other possibility is the desire for Empire. The glory days of Russia include the tales of Peter the Great and Catherine the Great. Most governments and cultures have given up on Empire, but I am not certain Russia has. If they are still of such mind, the future looks very grim for Eastern Europe and Central Asia, all of which used to be under their hegemony.

The one factor I am certain has nothing to do with it is Communism, which never worked in the USSR and continues not to work in China, North Korea and Cuba. Let’s face it. None of those places are Communist. They are autocracies. The folks at the top control everything (what Marx called the Benevolent Dictator, two words that should never be placed together), and mete out the least they can to keep everyone else alive.

I used to work with a factory in Partizanske, Slovakia, part of Soviet Czechoslovakia. I had many meals and meetings with people who lived under the USSR. A Polish production manager once told me why he looked forward to Christmas every year. Each December, every family would be allowed to buy 2 pounds of bananas (from Cuba). That’s it! The rest of the year, there were no bananas. It was a Spartan life, contrasted by the Politburo and their palaces and luxuries.

Enough memories! What do you think is going to happen next? And if Russia moves into Ukraine, what do you think the rest of the world will or should do about it?

Okay, I know the title of this post sounds partisan, but bear with me a while. My concern is more about the weighting of Senate members that their party affiliation. Now, I know the Senate is supposed to be the more calm, mature house of Congress where our elder statesmen rationally look at legislation and take state interests more in mind than citizen concerns. The theory of the founders was the House of Representatives was the people’s house, which is why they are apportioned by population and have shorter terms (after all, the populace changes their views often, and having them there for a longer term risks them losing touch with their base). Senators have a longer term so they are less affected by shifting political storms and can sit back and come to a consensus better. Of course, we all know that is not true, especially with recent changes to Senate protocol which has made the chamber strictly partisan, in my opinion.

Up until the early part of the twentieth century (before the 17th amendment), Senators were selected by their state governments. The thinking of the founders was that they would be representatives of the state, which is why there are two for each state. Each state would have equal representation so that more populated states could not run over the others. The 17th amendment changed that due to the cronyism of the body. The Senate was even called a “millionaire’s club.” It is funny that even after the change, it pretty much is a millionaire’s club even today, although many obtained that wealth due to their Senate seats. The drafters of the amendment clearly believed that by having the people vote for Senators, all the problems would go away. Of course, politics being what it is, that can never happen. Rather than having the Senate crammed with political buddies of the governors, it is packed with favorites of the political machines in each state. I cannot say which is better or worse. Even though I am personally in favor of repealing the 17th amendment, I know that will never happen. But let me cut to the point of this tirade.

The five states with the highest population have a total of 10 senators, obviously. Therefore, they get 10% of the vote in the Senate, while their states contain 37% of the people. On the other end, the five least populated states also have 10 senators, but in total represent just over 1% of the national population. That does not sound much like equal representation to me. So, if the senators do not really represent the state governments, who do they represent? Let’s compare the top and bottom states by population. I know each senator represents the entire state, but let us assume each represents one-half of the population. In California (where I live), each senator represents 17,6000,000 people. In Wyoming (where I did live for a while), each represents less than 300,000. I do not want to dredge up the issues that led to the 17th amendment, but if there are such large differences in populations by state, and their is no direct connection between the senators and state government, then who do they really represent?

To be fair, it should be known that I lean to the right, and as such, I probably should not say anything about this because most of the low population states are red. It still does bug me that solving one issue with the 17th amendment only created new issues. But hey, I am talking about politics, so who would imagine that anything ever gets solved by government.

Everyone is talking about growing income inequality in the United States, and they are correct. However, the reality is never as simple as what newscasters and politicians report. Currently, the QE (whatever) program provides that the Federal Reserve Board will inject $85 billion of new money into the economy each month in order to keep interest rates low so that companies will invest and grow, and just maybe, provide more jobs. It sounds great, but it is not and most likely cannot work.

Companies grow and hire people when the demand for products outstrips their capability to provide them, period. With an ongoing tepid economy at best, and a dragging half-recession at worse, there is no demand for companies to add sales people or build new factories. So, they do not hire anyone and they do not borrow money and all that cash just sits in the Fed and major banks. If a company is smart (and many are), and they have a heavy debt load, they will borrow new money (at virtually 0% interest) to pay off their debts, instantly increasing their profitability. Still, no new jobs. But what makes QE the disaster you think it is, Karl?

Let’s look at the average shmuck (namely me). He keeps some savings in the bank where the principle is nice and safe, along with a small IRA or 401k. Turns out the money in the bank is not so safe after all. If I earn 0% on my balance, and inflation is even only 2%, then in effect, I’m losing 2% of my principle each year. So, what can I do to stop losing money? I move my cash into the equity markets (stocks)! Let’s say I find an index fund or individual stock with an average return of 5%. That’s fantastic, going from 0% to 5%. Unfortunately, I am not the only shmuck who thought of this. We all take our cash and pump it into the market, causing stock prices to go up, which is exactly what we are seeing now. Where is this leading?

Let us say so many people follow suit that the price of my stock doubles. Well, the company is not suddenly going to grow or become more profitable because the stock price is up. The company does not get any money from stock sales in the market (assuming no new issues or company-held stock), so the return goes to 2.5%. Of course I am disappointed, but it is still better than 0% from my bank. Unfortunately, all good things come to an end.

The Federal Reserve is already ratcheting back on the QE program. Even they realize that if the money supply gets too big, the value of the dollar will drop like a safe (envision Germany post WWI). As they cut back on printing money, interest rates go up. If the prime rate reaches 2.5%, suddenly my stock value will plummet. Anyone can now put their money in the bank and get the same return as I get in the more risky market. Why risk your principle to get 2.5% when you can get the same in a bank? If my company was foolishly leveraged, they may even go bankrupt, as their debt payments exceed their ability to earn profits.

And that leads to income inequality. Most people cannot invest significant capital in the market. We just do no have the resources. So now, the rich get all the winnings from the soaring markets, which leads to big bonuses and stock incentives for their leaders. They may pay a heavy price when the market swings downward, but believe me, the rich will be just fine. Since there are no new jobs and inflation rises, the poor get poorer.

And none of this points to the disaster that will occur in government spending when interest rates rise! Think of the impact on spending when the interest rate moves from 0% to 2.5% on $17,000,000,000,000 in government debt. The payment on the debt goes up $425 Billion a year. That is money that can no longer be used to pay our service men and women, or pay benefits to the poor, fund Social Security and Medicare, or whatever else the government does.

Maybe I am exactly wrong. Perhaps sunshine and lollipops will abound and kittens and puppy dogs will save the planet. What do you think?