The collapse of Lehman Brothers occurred five years ago this week. In hindsight, this investment bank’s disorderly failure proved to be the critical domino that set into motion economic and financial disruptions that are still with us today. What have we learned?

For starters, we've learned that some of our financial institutions have gotten too big to fail, unless we want to endure yet another financial credit crisis. We have also learned that a credit recession, unlike a normal business recession, takes much longer to work its way through the economy. Today few, if any, western economies have regained their stride. GDP growth is still far below the rate necessary to sustain full employment. What growth there is has come with a huge price tag in added debt.

These last five years have also witnessed the transfer of power from the private sector to the public sector in the ability to control and influence markets. Various central banks, wielding policy tools that were never meant to insure that stock markets moved higher or mortgage rates lower, now determine how much you make or lose on your investments on a daily basis.

It is Central bank chairmen like Ben Bernanke, Mario Draghi in the EU, and Japan's Haruhiko Kuroda who move markets today. Even Warren Buffet is small potatoes compared to the pronouncements of our central banks. I'm not criticizing those bankers, far from it, were it not for them the financial world would be in tatters, which leads us to yet another result of the Lehman fiasco.

It is clear to me that our elected officials do not have the will or the ability to deal with this on-going financial crisis. It was, after all, our lawmakers, in league with their Wall Street campaign contributors that precipitated the credit crisis in the first place. The repeal of the Glass-Steagall Act, for example, which allowed banks to re-enter the speculative side of finance, is just one of the many legislative mistakes made in the name of "free markets." Nothing could be further from the truth.

Not one single ranking official of any of the major institutions that precipitated the crisis has ever been indicted, let alone convicted of any wrong doing. The statute of limitations for financial fraud has now run out, guaranteeing that the perpetrators of these crimes of the century will never be brought to justice. How, readers might ask, did this happen?

You see, under our legal system you can't be convicted of a crime unless you can prove intent. The Securities and Exchange Commission (SEC), which was charged with going after the bad guys, had to prove to a jury, beyond a reasonable doubt, that these top guns intended to commit fraud. Evidently, they couldn't or wouldn't.

The majority of the Dodd-Frank financial reforms, adopted with great fanfare over three years ago, have still not been implemented. This "never again" legislation has been effectively hamstrung by politicians on both sides of the aisle. These delays have been aided and abetted by the banking lobby (imagine that). As of September, just 40 percent of the provisions of this law have been finalized and integrated into law. In the meantime, several too-big-to-fail financial institutions have racked up billions in losses by transacting the same type of excessive speculative trades that triggered the subprime crisis.

So what have we learned?

If you lost your job and are unemployed, you've learned how to support a family by working part-time jobs, asking for government help or simply begging. If you kept your job, you've learned not to expect a raise no matter how hard you work, lest you be replaced for less money. Investors learned not to trust anyone on Wall Street, least of all their brokers.

However, if you are one of the bad guys you've learned that crime does pay. If you are an elected politician, you've learned that no matter what you promise, always protect your campaign contributors.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Over the last two decades America has participated in three different wars and several military interventions. The economic bill for these actions has been substantial. Today, intervention in Syria is front and center. In this age of supposed frugality, why are Americans still willing to pay for air strikes on Damascus or anywhere else?

One would think that with all the concern over our national debt and deficit that taxpayers would demand an end to these incursions. Yet, Americans are still a soft touch when it comes to protecting those who appear to be victimized whether in Dachau or Damascus. Since 1990 alone, we have stood in the way of bullies in Saudi Arabia, Kuwait, Somali, Haiti, Bosnia, Kosovo, Afghanistan, Iraq and Libya.

But war has a cost and I'm not talking about the human costs. There is no dollar-and-cents price tag I can assign to death and suffering: instead, I want to focus on the economic costs of war. For example, the decadelong conflicts in Afghanistan and Iraq may cost this country as much as $6 trillion, according to a report issued in April by Harvard University's Kennedy School of Government. That would be equivalent to a tax bill of $75,000 for every American household.

That would make Iraq and Afghanistan the most expensive wars in U.S. history. In comparison, World War II cost America $3.6 trillion, which was twice the cost of World War I. Today, Harvard estimates it cost the U.S. $1 million to deploy one American soldier for one year. That is several times the cost of deployment during the height of the Cold War or WW II. Why so much?

Modern-day American warriors fly around in helicopters, cargo aircrafts and gas-guzzling armored vehicles. As a result, it takes 22 gallons of fuel to support one soldier per day in Afghanistan versus just one gallon per day back in WW II — and that conflict was global. Today's soldiers are loaded down with high-tech body armor and weapons and the most advanced electronic equipment money can buy. They have the best medical treatment of any war, anytime in our history. And afterwards, they sit down to steaks and at least three flavors of ice cream at the mess hall.

So why do taxpayers grouse about the bank bail-outs and out-of-control federal spending while condoning trillions of dollars in military spending? One reason is that government spending can be an important source of economic demand during times of low confidence and downturns. As I have written in previous columns, government defense spending can lead to the development of new technologies, generate new industries and create additional sources of demand and jobs.

Depending upon how war is funded, it can also have adverse effects on the economy. America has paid for its wars through debt in the case of WW II, the Cold War, Afghanistan and Iraq. Part of the $6 trillion in cost estimates for Iraq/Afghanistan stems from the massive interest payments we will have to pay on that war debt for years into the future.

In the case of Korea, the war bill was paid for in higher taxes while Vietnam's costs were inflated away during the Carter years. In every case, taxpayers have been burdened and private-sector consumption and investment have been constrained by war spending. Yet, I believe the most telling reason for ignoring this most expensive of pastimes is that while the price of war is rising, it is declining as a percentage of our country's GDP. In my next column I will be addressing that concept further.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

After almost 30 years of stagnation, Japan is seeking to re-gain its competitive edge. Critics argue that this island nation needs to re-invent itself if it ever hopes to find its place amid a multitude of fiercely competitive global players. The question is, how can that be done?

For any other nation, re-inventing one's self might be an impossible task but Japan has a proven track record in doing just that. As far back as the Meiji Restoration in the 19th century, for example, Japan was able to leap- frog into the industrial world by skipping the age of sail altogether. Despite the opposition of powerful industrialized nations, backed up by gunboat diplomacy, the Japanese developed a formidable steam-powered navy that was the marvel of the world.

Against all odds, Japan became a world power by the onset of World War II. After its defeat and dismemberment at the hands of the U.S. and its allies, this pauperized nation rose from the ashes once again during the 1950s. Thirty years later it was the export wonder of the world, benefiting from enormous demand for its state-of-the-art electronics and automobiles.

In my last column I argued that social, economic and geopolitical events have conspired to present Japan with both a challenge and an opportunity today. Japan faces serious regional challenges that will only grow as long as it lacks an advanced deterrence capability. In this day of U.S. budget cuts, it can no longer afford to rely solely on America to be its policeman in Southeast Asia. For Japan, however, a strong defense industry could also evolve into a lucrative export industry.

Japan's aerospace and defense industries (A&D) have made great progress since the days after the Pacific War. Today they build components for most advanced civilian aircraft while co-producing advanced military aircraft such as the F-15s. Thanks to cooperation with the U.S., Japan already has one of the most advanced missile defense systems in the world. As for ship-building, some of the biggest, most sophisticated commercial vessels in the world have been produced there for decades. Manufacturing more aircraft carriers like the recently-launched Izumo would be child's play for the Japanese.

Japan's competitive strengths are in high-technology, high value-added manufacturing and reliability in quality and scheduling. They are also skilled in industrial security and intellectual property. In addition, they excel in long term acquisition and planning, cost containment and highly efficient production capacity. All of the above skills can easily be applied to the defense sector.

By beefing up their own aerospace and defense spending, Japan can reduce military imports and increase exports while strengthening ties with its allies. It can assume the responsibility and obligation to protect its own borders and at the same time present potential enemies with a significant deterrent to further territorial encroachment. For the domestic economy the benefits could be enormous.

Typically, A&D industries hire workers with experience and education, i.e. high-quality employment for Japanese citizens, while reducing unemployment and increasing tax revenues. In addition, investment in defense tends to spur development in other industries. Japan's ability to develop new breakthrough technologies ("leap frogging") in defense can also be applied to the electronics, computing and commercial aerospace industries. In addition, the skills required to develop complex defense systems are easily transferrable to other businesses and commercial industries.

Re-arming may not be the only way, or even the best way, of re-inventing Japan but it is a viable option. Certainly, the United States government, in my opinion, would welcome such a development while other countries, with more to gain by maintaining the status quo, will express their outrage. So what else is new?

Are the majority of Japanese people ready for such a radical new direction today, probably not. But Japan is a nation of consensus and building agreement among its people will take time. In order to accomplish such a momentous and historic step, the present leaders of Japan will have to work slowly and carefully, acquiring public approval at every turn.

So far they appear to be doing just that. The new government, for example, is working on changing its arm export policies as you read this. I believe much of the ground work to move forward has already been laid behind the scenes (as is the custom within Japan). I expect we will hear a great deal more about Japan's defense sector and Article 9 in the months ahead. Stay tuned.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Japan is an island nation surrounded by countries who have expressed hostile intent in one form or another over recent years. It is also faced with turning around an economy that until recently was mired in a decades-long malaise. The launching of the Izumo, a 19,500-ton aircraft carrier, last week may be Japan's answer to both problems.

Japan boasts the third-largest economy on Earth and yet it is one of the few remaining countries that has no standing army, navy or air force. War, as a means of settling international disputes, is outlawed under Article 9 of the Japanese Constitution written into law (under U.S. insistence) on May 3, 1947. However, Japan (under U.S. occupation at that time) was allowed to maintain a "self-defense force."

During the Cold War, the U.S., in desperate need of armed allies, quickly realized the folly of its ways but couldn't get the Japanese to drop Article 9 and re-write their constitution. Since then the United States has had the responsibility (and the cost) of maintaining a nuclear umbrella over its island ally and surrounding seas. It has been a good deal for Japan, although to be fair, after the nuclear holocaust in Hiroshima and Nagasaki, the vast majority of Japan's population was adamantly opposed to war and to re-arming their nation at any cost.

Times have changed, however, and those that suffered Hiroshima have given way to a new generation. A generation who have grown up by first being threatened by a hostile Soviet Union, then the People's Republic of China and two generations of maniacs in North Korea. Disputes over the sovereignty of various islands, islets, rocks, fishing grounds and energy fields have pitted this nation against countries that could mount an offensive expeditionary force or launch a wave of ballistic missiles at a moment's notice.

At the same time, the United States has made it clear that we can no longer afford to act as the world's policeman. Budget cutbacks in defense, including the 10-year cuts agreed to under the sequestration, have underscored the declining defense role of the U.S. toward Japan going forward.

Now I'm sure there are at least some readers out there who are going to take exception to the idea of re-arming Japan although where were they when Germany re-armed? Pacifists, World War II veterans, most liberal thinkers and even a large number of Japanese will be dead-set against the idea. Fair enough, but at the same time all of the above also applaud the reduction in U.S. defense spending. You can't have it both ways.

Prime Minister Shinzo Abe, a longtime supporter of re-arming Japan, has announced plans to revise Japan's pacifist constitution. At the same time, Japan's top general is calling for a big increase in military spending. But "big" is a relative concept when Japan is only spending 1 percent of their GDP on defense each year since 2002 compared to almost 4 percent in the U.S.

One of the main criticisms of Japan's present efforts to turn around their economy is that their past premier position as the world's exporter can't be resurrected. By initiating a U.S.-style stimulus program, their currency may decline, but critics argue that no matter how low the yen falls, Japan's bread-and-butter product operations have already been shipped overseas. Their plants are now in Europe, South and North America and elsewhere, blunting the impact of yen currency declines. Japan not only needs to boost their economy but they need to do so by re-inventing themselves. In my next column I will examine how that could come about.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Recently, the minimum wage in America has been the subject of much debate. Proponents of increasing the wage argue that people holding those jobs can't possibly make ends meet. Those against it contend that by doing so even more people would be priced out of the work force. Why should you care?

After all, minimum-wage workers are usually younger folks who work part time or after school. Today, just about 4 percent of all hourly-paid workers receive the minimum wage and only 2 percent if you count all wage and salary employees. That is still quite a lot of people, but when you break down those who are actually supporting a family on minimum wage, the numbers decline even further.

Consider that over 63 percent of minimum-wage workers who would gain by increasing the minimum wage are second or third earners in a family that overall is making well above the poverty line, according to the U.S. Bureaus of Labor Statistics (BLS). A full 43 percent of minimum-wage workers, according to the BLS, live in a household that is earning over $50,000 a year in income.

Bottom line: it appears that half of the minimum-wage work force are teenagers and young adults (under 25). Spouses and children of wage-earners providing a second and third income to a household account for 63 percent. As the minimum wage increases, this segment of the work force would be even more likely to seek entry-level jobs to supplement household earned income. As such, they become an even larger percentage of this wage group and will tend to "crowd out" those in poverty who truly need these jobs.

Advocates of raising the minimum wage (to above $10/hour) claim that by doing so we would create 140,000 new jobs, which would contribute $32.6 billion to our GDP. I find that rather hard to believe given that so few wage earners are getting the minimum wage. So, why do I still advocate raising the minimum wage?

Last year I wrote a three-part column on "Inequality in America" revealing that the U.S. ranks last among developed nations in income equality throughout the world. Since then, this country's divide between the haves and have-nots has widened. As such, anything that can shift the playing field in favor of the middle-class, if only in a small way, is a step in the right direction.

Forty percent of U.S. workers make less today than what a full-time minimum-wage worker made back in 1968 when adjusted for inflation. And those of us that do have jobs work harder and longer hours than ever before with fewer benefits. While the rich get richer, our real wages have continued to decline. Rather than pay out benefits or raises, the trend among American corporations is to hire part-time workers.

There are many reasons why this country is experiencing severe dislocations in the work force. Recession, a mismatch of skilled workers in certain sectors, American attitudes toward acquiring the new skill sets necessary today for a well-paying job, overseas wage competition pressures, technological change, lack of education, etc. But while this country sorts out these issues, there is nothing wrong with at least re-distributing some of the wealth via the minimum wage.

God knows, Corporate America is not going to do it themselves.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.