Tag Archives: economic crisis

Live Thursday Night: Futility, the Series

Obama before joint session of CongressThursday night, our President will address a joint session of Congress to again ask Congress to take up emergency measures dealing with unemployment and the greatest economic crisis facing our nation in three generations. He asked to give the speech on Wednesday. Republicans said, “No.”

President Obama is expected to ask that Congress extend unemployment benefits for those fortunate enough to have had a job to lose when Bush’s economic crisis struck. Republicans are expected to say, “No, the unemployed need to get a job.”

President Obama is expected to ask that Congress extend a payroll tax cut for those fortunate enough to still have a job. Republicans are expected to say, “No, they just need to get a second job.”

President Obama is expected to ask Congress for a bill to rebuild decaying public schools, which will create hundreds of thousands of new jobs. Republicans are expected to say, “No, not until we also subsidize rebuilding of Christian schools – wait a minute, we already do that – no.”

President Obama is expected to ask that Congress create an “infrastructure bank,” enabling states and local governments to pay for rebuilding decaying bridges and highways, creating thousands of jobs and keeping us all safer. Republicans are expected to say, “No, not until a Republican is in the White House.”

President Obama is expected to ask that Congress renew the gas tax, which funds highway construction and will save millions of jobs. Republicans are expected to say, “Once it expires next month, it would be a new tax and Grover won’t allow us to do that. We’ll just wait. Then, no”

President Obama is expected to ask that Congress renew FAA funding from landing fees, which will save thousands of jobs and increase safety for those wealthy enough to afford flying. Republicans are expected to say, “Maybe, if you outlaw unions. Otherwise, not until a Republican is in the White House and we outlaw unions.”

President Obama is expected to ask Congress for additional FEMA funding to help those affected by recent natural disasters. Republicans are expected to say, “Maybe, as long as you let us gut Medicare and Medicaid. Wait a minute, weren’t those disasters in blue states? We’re gonna need to gut Social Security, too.”

President Obama is expected to ask that Congress approve trade agreements with South Korea, Panama and Columbia that have nothing to do with jobs, and likely will make things worse. Republicans are expected to say, “Maybe, just get rid of that human rights crap.”

President Obama is expected to make vague references to green jobs, investments in alternative energy and building a smart energy grid. Republicans are expected to say, “No way. You tried that and it didn’t work.”

President Obama is expected to remind Congress that tens of millions of Americans are out of work and need their help. Republicans are expected to say, “Liar.”

President Obama is expected to remind Congress that times are really tough, that action must happen now, and that the risk is global. Republicans are expected to say, “What world are you living in? Bring it on.”

President Obama is expected to ask that Congress end Washington political games and remind them that they were elected to help all Americans. Republicans are expected to say, “No, we weren’t.”

President Obama is expected to challenge all members of Congress to put country before party. Republicans are expected to say, “You have got to be kidding.” Democrats, on the other hand, are expected to say, “That all you got?”

Futility: my speech or my silence, indeed any action of mine, would be a mere futility. – Joseph Conrad

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Update 090711:

What I’d like President Obama to Include:

  • I’d like him to deliver each initiative written and as a separate bill and hand it to the Speaker during the speech with a challenge of a debate and an up or down vote on each.
  • I’d like him to say that everyone in our country deserves a chance to pay taxes (click for more details), which means they deserve a chance to have a job and a living wage in order to do so. I’d like him to remind Congress of the grotesque waste each non-working American represents in terms of their and their families happiness and their productive contributions to society. I’d like him to challenge Congress to imagine what our country would be like and what great things we could do if 20+ million of us were working again.
  • I’d like him to announce a new deal: anyone unemployed can exchange their unemployment compensation – or their disability check – for a job paying at least minimum wage. Then I’d like him to ask Congress to allow it, fund it and include incentives for companies to keep them as permanent employees. Then I’d like him to announce the private corporations – for profit and nonprofit, who have agreed to honor it. I’d also like him to list the governmental agencies who also would – the park service, the military, VA, FEMA, EPA, etc., as well as states and municipalities. I’d also like him to ask for a similar program for our vets. And an extension of unemployment compensation for one time, to anyone who doesn’t, or doesn’t still qualify for unemployment compensation.
  • I’d like him to ask Congress to fund a free education initiative to teach or re-train our unemployed and underemployed workers about senior and preventative care; mental illness and substance abuse care and other important and costly needs our nation has. I’d like the Medicare and Medicaid rules amended to allow this new work force to help those who need help with in-home care.
  • I’d like him to ask Congress to fund a ten-year NASA-like program to find answers to our fossil fuel dependency – a private and public initiative where the patents would be owned by all of us. Then do the same to cure cancer and other horrible diseases.
  • I’d like him to ask Congress to open the Federal Reserve discount window to states and municipalities to use the money as they see fit – for industrial development, infrastructure and lend capital directly to businesses who will create jobs. Click for more details.
  • I’d like him to ask Congress to charter a new national bank – privately owned, but nonprofit, that could operate in all 50 states to provide consumer debt relief. The idea is simple – this new bank would contract directly with consumers and their credit card lenders that would allow anyone in the US to enter into a contract with the following provisions: 1) consumers must agree not to get into any more debt during the term of the deal; 2) consumers could combine all revolving family credit card debt into a single payment at a 2% interest rate and amortized over five years; 3) the new bank would contract with the credit card lenders where the lenders would freeze the accounts, immediately get the money owed, but the lenders will still have the risk of default until it is paid in full; the fees would pay for the cost of servicing the debt. Click for more details. I’d also like them to create a national mortgage company to do the same for people in foreclosure and help people stay in their homes.
  • I’d like him to ask Congress to re-write the tax system. Make it flat or flatter with deductions only for charity. Offer progressive standard deductions. Get rid of corporate income tax, but tax shareholder dividends as income. Likewise estate taxes. And most important, roll payroll taxes and Social Security into the rate. Click for more details.
  • I’d like him to ask Congress to allow any business that believes providing private insurance to their employees is to costly, to be able to buy-in to Medicare.
  • And, yes, I’d like him to ask for all of those things we expect him to, and those things people much smarter than me, would add.
  • Finally, I’d like him to ask Congress to reinstate the draft – require graduation from high school or require military or alternative service for those who drop out. Yes, this sounds crazy to be mixed in with jobs initiatives, but if we are going to have jobs for the next generation, we must find a way to keep our kids in school. Service is a much better alternative than lifetime poverty or prison.

I’d like President Obama to pull out all the stops. To think big. To use this national emergency to fix structural problems we have. To set us on a path for a better tomorrow. Almost none of this will cost taxpayers anything, but any costs in the short term could be covered by bringing our troops, and our private war contractors, from around the world home.

There are so many other productive things we could be doing instead of bickering about regulations, size of government, and how best to divide lobbyists’ campaign contributions. This should be a national referendum. One that decides who we are as country and whether anyone in office deserves to be in office, next year. Take the risk, please. Have the audacity. Do this, and maybe, I’ll forgive you for selling out our clean air by caving on the ozone rules – no, you need to fix that, too.

New China Syndrome

maoThe Chinese are a bunch of commies. Just look at how they are handling the economic crisis. When their largest trading partner (us), suddenly announced a banking crisis, massive new unemployment, the loss of a third of stock market value and plans for massive borrowing to fund stimulus programs that would take years to recover and surely devalue its currency, what did they do? When they were faced with canceled contracts, factory closings, empty cargo ships and 20 million unemployed, how did they handle it? Well, they sure didn’t bailout Shiji Avenue.

They bailed out people – a purely communist idea if I ever heard one. Their program’s goal was to stimulate the economy and to create demand for factory capacity. To keep people employed. To keep them happy and healthy. To keep them spending. And, most of all, to keep them from overthrowing the government.

The Chinese are funding massive infrastructure programs – building roads, railroads and public housing – and Chinese actually use shovels and had them ready. They didn’t bail out banks. What they did was let the Chinese banks compete to finance the state programs, which kept the banks profitable. They didn’t send money to huge businesses to make up for imaginary losses, they sent money directly to individuals who did something totally expected: they spent it. Business didn’t shut down, because people where buying. Layoffs stopped. Factories reopened, shifted production to what their Chinese consumers wanted, and production increased 8.3% in March. Per capita disposable income is up. Real estate markets are improving. The Shanghai stock market is up 40%. Chinese auto sales rose 37% last month. And the Chinese GDP, which will slow from previous years when the US was buying, is expected to be 7-8%. The US GDP is currently down 6.29%. It’s a communist plot.

An American Self-Portrait

amportrait2

This is what we look like as a nation. Two-thirds of us don’t or no longer work at all. 22 million of us work directly for the government and many more work providing products and services contracted to the government (nobody knows a real number, but is likely another 15 million or so and it could easily be higher since government spending in 2009 will represent over 44% of the nation’s GNP).

That leaves something less than 25% of our citizens working in “private enterprise” and generating what wealth is created and the economic crisis picture begins getting clearer.

The economic crisis effects us all. The American Recovery and Reinvestment Act offers targeted assistance toward some of the pieces of pie, but hardly all.

  • The retired, disabled and unemployed are getting a little help, and they do pay taxes, but the assistance is targeted for survival and a little consumption, and not much will impact economic recovery.
  • The increases in government spending will surely generate some new jobs, and those employees will pay taxes and consume, but their jobs ultimately are funded by the taxes paid by the other pieces of the pie.
  • The education and health sectors will also get some help, and while education is an important long term investment toward creating wealth and health is an important investment toward preserving wealth, neither segment contributes much directly or immediately to our nation’s capacity toward creating wealth.
  • The construction segment has gotten a lot of attention (they have shovels that are ready), will generate some direct jobs, create wealth in what they build and purchase some manufacturing and services capacity.
  • The professional and business services help is limited to the financial industry, which only profits off the remaining pieces when they are healthy. The trillions from TARP and Fed guarantees being used to shore up the financial industry are being done so on the hope that with money to lend, liquidity will somehow start flowing, with interest, to the rest of the pie.
  • That leaves a couple of dark green, magically innovative, productive and self-reliant pieces of the pie that are largely responsible for our way of life – the most important of which is manufacturing, with no real help for recovery, save the hope of being able to borrow money some day, but with so few buying their capacity, how long will these pieces of the pie remain fresh enough to serve?


Sources: http://www.census.gov/main/www/popclock.html; http://www.bls.gov/news.release/empsit.nr0.htm; http://www.census.gov/population/projections/SummaryTabB1.pdf; http://www.bls.gov/news.release/empsit.nr0.htm; http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/; http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/; http://www.census.gov/population/www/socdemo/school/cps2007.html; http://en.wikipedia.org/wiki/Prisons_in_the_United_States; http://www.usgovernmentspending.com/us_20th_century_chart.html


The Imaginary Fix

Emperor's Clothes

Since computer bits replaced paper which replaced precious metals which replaced labor, our monetary system has been imaginary. Value has always been faith-based. Wealth is the large scale accumulation of imagined value. While the commodity markets trade on imaginary quantities of real things, the stock market makes real trades of real things that have imaginary value. Hedge funds make leveraged deals in imaginary risks of imaginary things. It all worked really great for those who trade on greed and fear until some kid in the crowd yelled out that emperor is naked.

In reality, there were quite a few in the parade who were only dressed in our imagination. The Bush weak imaginary dollar allowed consumers to buy inexpensive Chinese goods at Walmart, pay for them with credit (aka: imaginary dollars) that was secured by imaginary home values and faith that income and home values would continue to increase. The credit was offered by banks who used tiny amounts of imaginary capital, as allowed by imaginary regulators, by selling the loans to Freddie and Fannie and others who pretended they were backed by the good faith of our government. These secondary sources used tiny amounts of their capital by packaging giant chunks of loans and selling them to hedge funds who got AIG to guarantee everyone was wearing clothes ($32 trillion in guarantees makes Palin’s wardrobe seem a bargain).

The fashion issue became really important when the Chinese and Saudi’s (who bought large chunks of imaginary value in exchange for cheap goods that weren’t really cheap when one includes unimaginable costs of our government’s imagined guarantee) pointed out that the Wall Street pin-stripe no longer was hiding all their flaccid privates. So the Bushies had to step in to save AIG and others so the parade could go on. Damn that little kid in the crowd.

The 32 trillion dollar question: Can we fix an epic-scale imaginary problem with real solutions funded by more imaginary dollars?

All the king’s men are working on it. The fairy god mother is flailing her wand. The genie’s rubbing like crazy. We’ve thrown a few trillion imaginary dollars to stabilize an economy that has lost 10 or 20 times that. But loans are still not being made on the imagined scale. Real people by the million have lost their jobs, their incomes, their homes, their health insurance, their credit cards and their ability to buy real things they need, or anything of imagined need.

This week, our maligned Treasury Secretary will announce his imagined solution to this real crisis – a program, I kid you not, to guarantee the risk of new hedge funds so they will buy troubled assets (a moniker for the loans on homes whose values are not now imagined to be much) from our banks who have been imagined to be too big fail. I really didn’t make this up. We are going to the very source of most of the expensive missing clothes and are planning to offer them a huge chunk (at least another trillion) of imaginary dollars to be paid back with our imaginary future so that they can start buying and trading in last year’s fashions and we can all live happily ever after.

I have now lost track of how crazy this has become. Layer upon layer of utter insanity. Somebody needs to be embarrassed that they are butt-naked and go get dressed. Hedge funds and the lack of government oversight caused this and bribing hedge funds to hedge our way out of this is worse than asking Jim Jones for something to drink. Hedge funds should be heavily regulated or outlawed except in casinos. At best, they’ll cause it again in a few years and, at worst, is beyond our imagination.

We have a program for fixing this already: bankruptcy (let a Federal judge decide who or if AIG should give bonuses or get them back). For those too big to fail, for god’s sake, make them smaller. We do not need to clean up the banks to make credit flow (it is not flowing because there are too few good loans to make), we need to nationalize them. Fix the regulations and help consumers get to where their real needs are met and they have jobs. Then comes confidence. Then faith. Then consumption. Then values will rise. Until then, there is no imagination, just a lot of ugly naked people.

By the way, this ain’t over. Watch your head. Pretty soon, and to continue the clothing metaphor, more (sic: other) shoes will drop.

Finally, a Path Forward on Foreclosures

According to the Washington Post, the Obama administration’s homeowner plan will be announced today:

President Obama will unveil today a $75 billion foreclosure prevention program, which the administration expects to reach up to 9 million homeowners.

“The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it,” Obama will say at a speech in Mesa, Ariz., according to an advance text released by the White House.

The Homeowner Affordability and Stability Plan includes measures to allow homeowners to refinance into loans with cheaper payments, according to a summary of the plan. For example, if a lender agrees to lower a borrower’s payment so that it comprises no more than 38 percent of his income, the government would pay to lower the payments further to 31 percent of income. The aim would be to make the payments affordable.

The plan offers incentives for lenders that modify troubled loans, with up to $1,000 for each modification and then another monthly “pay for success” fee as long as the borrower stays current, according to the summary. If the lender reaches an at-risk homeowner before they miss a payment and modifies their loan, the lender would be eligible for another incentive payment.

Homeowners will also be eligible for incentive payments. Those that stay current on their loans could qualify for a “monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan,” according to the summary. The homeowner could receive up to $1,000 a year for five years.

The Obama plan does not include provisions to help investors and is focused solely on owner-occupied homes. Officials said the administration is trying to provide enough help to stem foreclosures while not rewarding borrowers who purposefully stop paying. At the same time, Obama’s team wanted to risk only as much taxpayer money as absolutely necessary.

The plan “will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans,” Obama will say, according to the text of his speech.

The administration estimates that the plan could stop the slide in home prices by up to $6,000 per home, simply by reducing foreclosures. “The effects of this crisis have also reverberated across the financial markets. When the housing market collapsed, so did the availability of credit on which our economy depends,” Obama says in the prepared text. “As that credit has dried up, it has been harder for families to find affordable loans to purchase a car or pay tuition and harder for businesses to secure the capital they need to expand and create jobs.”

Other sources: Politico, HuffPo


It’s All About Size

Rahm Emanuel - Size Matters

One of the many bad things about men running the world is that size does matter. How you use it is for losers and wannabes. Take this particular economic crisis (please). The banks, insurance companies and Wall Street firms were bailed out because they were too big to fail. It was scale of the stimulus, not so much the details, that mattered to Obama. It wasn’t that we needed $700B for TARP, it was, according to Bernanke, just about the right size for the markets to react to it. Bush was against government intervening in the markets until the size of the crisis was known. Our Treasury is only going to stress test and buy toxic mortgages from banks of the right size (>$10B – there are only 13 of them).

Sure, maybe it’s just pecuniary envy, but those average among us are having problems, too. Small businesses are flaccid and needing a stimulus. We are teased nightly on the news, but all we get to do is watch. While taking something for our economic dysfunction has side effects (our hearts might stop working; sudden hearing loss, blindness, surges in blood pressure; and the chance of our excitement lasting longer than 4 hours which could do permanent harm), we are willing to take the risk to feel young, vibrant and powerful like those who have been endowed larger. We promise to love our politicians in the morning even if they end up (bleeping) us.

The Audacity of Nope

America with shack face

It’s going to be hard to give up my idealism. Oh, pragmatism, neither hot nor cold, I will spew thee out of my mind (apologies to John and Revelation 3:16).

It has been so long. Was it JFK? LBJ? Or RMN who was the last Dem to hold the office? Matters little. They have taught us for so long to compromise that I might as well accept my fate. After all, the difficulty of reaching out across the aisle is dependent upon on how far you are away. I must find solace in the lyrics of the Stones that “if you try sometimes, you might find, you get what you need.”

Short of the moments with my family, the election of Barack Obama is the greatest moment I’ve heretofore lived. I mean it with all my heart. I love to hear this brilliant man speak and to believe this his glowing face will be the symbol of American for the world. But we don’t want for tributes of this moment, my heart is elsewhere.

At this historic moment when all the planets are aligning (Obama, Democrat majority, the economic crisis, etc.) when it seems that all we need to do is reach out and we could touch the stars, the only reaching we are doing is across the aisle and to pick the pocket of our children to reward the hard work of thousands of lobbyists. At perhaps the only moment in our lifetimes when a blank check could be written and honored, we are choosing to use it to buy more roads, bailout banks, while only throwing a few coins in the can of the unemployed, the underemployed, the frightened, the homeless and the soon to be desperate. At a time when we could paint a new brilliant new landscape of dawn in America, we are choosing instead to touch up the shack face our hungover society is waking with after sleeping with Bush. Please don’t look in the mirror.