OnTheWayHere.com » Economy

Almost Great Depression To Be Over This Week.

Martyrdog — Mon, 23 Feb 2009 15:20:38 +0000

Exactly when this economic crisis began is arguable. Republicans often suggest that it was left from the Clinton years and point to evidence including excess growth, albeit benign, in 1994 and evidence of excess fluidity being addressed in December 2002. While there was occasional discussion by pundits on talk radio and the Sunday shows, the impending crisis didn’t begin to make the headlines until the Spring of 2008. Noticeably limping before the Masters and coinciding with the Bear Stearns collapse. By mid June 2008, it became obvious that things were not going to turn around any time soon and Tiger Woods announced after his heroic limping playoff victory at the US Open, that he would undergo more reconstructive surgery and would be out for ten months. Reaction on was immediate and has continued. Indymac Bank was nationalized. $300 billion subprime mortgage guarantee was put into law. The Fed nationalized Fannie Mae and Freddy Mac. Bank of America took over Merrill Lynch. Lehman Brothers collapsed. The Fed lent $85 billion to AIG. Paulson announced a financial rescue. WaMu was nationalized. Citigroup took over Wachovia. Congress passed the $700 billion TARP bailout bill. The crisis spread around the world. Obama was elected to stand in for our multi-racial and multi-cultural role model superstar icon. The markets continued to tank. Millions lost their jobs. Millions lost their health insurance. Wars continued. And so on. It’s finally officially over. Tiger Woods is back on the PGA Tour this week at the Accenture Match Play Championship in Arizona (Sen. McCain, R). While experts believe it may be many more months before the recovery is complete, all the world awaits the markets’ reaction.

Help Darwin.

Martyrdog — Fri, 20 Feb 2009 12:35:13 +0000

Contrary to cable news opinion, the automakers don’t want a bailout. The want to make and sell cars. The problem, of course, is that their capacity to make cars grotesquely exceeds their ability to sell them. The economy is bad, so consumers have stopped buying (they will be back when their cars wear out). Their businesses got too big not to fail.

Whether it is their fault or not seems an almost silly debate. Was it the dinosaurs fault they became extinct? Sure, the were too big when the meteor hit that brought on the ice age and they couldn’t find enough food. Same thing is going on now. Big change, though, when Dino died, there weren’t people around to try to say they are cute, appreciate their diversity and save him. But based on the movies I’ve seen, I think we are pretty lucky that they didn’t all make it. But I digress.

The working plan in Detroit and in DC is for the industry to get very lean and mean. We, the government, make their current cash flow, while the industry cuts overhead, workers, benefits, suppliers, dealers, investors and lenders, such that their capacity is realigned with demand and they can sell the cars they produce at a profit. The problem, okay, the problems include the incredible cost to the taxpayer to provide this soft landing; the punishing pain to their stakeholders that only delays the inevitable demise; the lack of funding for re-tooling; and that once scale is reduced, the auto industry won’t make enough cars to make enough money to be globally competitive.

So just how do we help Detroit survive, re-tool to make innovative new vehicles that people actually want, have adequate capital to manufacture, inventory, sell and generate a profit? Send out an RFP. I propose that we send out a request for proposal for purchase of a new fleet of vehicles for use by federal, state and municipal government... Read the rest of this story

Striving for the Best Lowest Common Denominator.

Martyrdog — Mon, 16 Feb 2009 17:33:15 +0000

The true genius of our so-called founding fathers was more luck than wisdom and more about fear than courage. Rich white male industrialist entrepreneur New Englanders in the same room with rich white male planter slave owner Southerners designed a government to protect the best of themselves from the worst of each other. Land owners knowing they would never vote to tax themselves, set it up so only they could vote. Worried that a president could too easily usurp power to become monarch, they balanced the powers not once, but twice, and added the electoral college just to make sure. Worried that a government sponsored religion could force them to tithe and attend church, they mandated separation of church and state. Worried that a central government would trump their regional fiefdoms, they held on to their state powers. Worried that population could trump state standing and regional culture they created the Senate. Our union has succeeded not for what it has done, but for what it has not. And how could it? Ours is a government where bold, decisive action should not be possible except, and temporarily, in time of war.

For example, the “legal basis” of Lincoln’s executive order abolish slavery, the Emancipation Proclamation, was the implicit powers given to the President as Commander-in-Chief “as a necessary war measure”. (Same basis for interning the Asian-Americans during WWII and the wiretapping, torture and legalized corruption of the Bush Two presidency, etc.)

No, our founding fathers, wanted our government weak, decentralized and anything but bold and decisive. Where change would come slowly and poorly. Where the best laws and actions from our national government would be the lowest common denominator*. Fear-based, paranoia-based government because they only trusted themselves, but not so much as a group.

So what changed? A lot. Read the rest of this story

It’s the Capacity, Stupid.

Martyrdog — Fri, 13 Feb 2009 17:23:19 +0000

Beneath the fold in Paul Krugman’s column today, was this little tidbit, “The Congressional Budget Office, not usually given to hyperbole, predicts that over the next three years there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce. And $800 billion, while it sounds like a lot of money, isn’t nearly enough to bridge that chasm.” Last your our GNP was about $14.3T, so it represents about 20.2%.

Having aced Economics 101, this sounds like the perfect capitalist storm. But before we go there, consider what it means to society and in people terms. Society will lose the benefit $2.9T of good and of wealth that could be produced. A loss to be written off and will not happen. In people terms, it will be a decrease of $2.T in our standard of living that could have been. These things are tragic results and should be mourned.

From a capitalist 101 point of view, its impact can be devastating and difficult to turn around. Unit costs of manufacturing will go up. Low demand will mean prices will be down. Which will mean profits will be down. Which will mean employment will go down. Which will mean consumption will go down. Which will mean capacity will go down. And it repeats. Until we turn turn it around or become third world.

So what is the right stimulus amount and is $800B not enough? Read the rest of this story

Flash to the Future.

Martyrdog — Thu, 12 Feb 2009 16:35:14 +0000

What would a successful economic turnaround look like?

Flash forward. Still President Obama lands our helicopter directly in from of the New York Stock Exchange and walks triumphantly onto the floor surrounded by jubilant traders and takes his place on the balcony with a sign behind him reading, “Mission Accomplished.” “The recession is over,” he announces to the cheering throng. Our GDP has grown for two straight quarters (all that is required to claim victory). The markets are bullish. The Dow creeping steadily toward 10,000 again (for those who can afford to be in the market). Loans are being made (to those with good credit). Housing sales are up (for those who have down payments, a good job and unscarred credit). Unemployment down (but many millions are still unemployed). Happy days, again (for the audience of the stock exchange).

Shallow Victory.

When Bush announced victory, all that had happened was we had toppled a government and destroyed or disbanded everything that allowed the Iraqi people to take care of themselves. We replaced self-sufficiency with pallets of cash. Tossed a few seeds of freedom and democracy on the scorched ground and expected the spring would take care of the rest. Shock and awe when the seeds all but died.

This time, the drumbeat of fear are the weapons of mass financial destruction. The smart bombs we are using are being used strategically for maximum effect. Save Wall Street - BOOM. Save the banks - SHABOOM. Prop up the unemployed for a while - TA DA DING DONG. More, but temporary funding for Medicare - LING A LING A LING. OH LIFE COULD BE A DREAM.

Where is our David Petraeus? Read the rest of this story

Intended Unintended Consequences of Co-Pays

Martyrdog — Thu, 08 Jan 2009 18:39:11 +0000

Co-pays work really well for the chronically well and the chronically well off. Averaging about $40 for a doctor visit or outpatient procedure, $20-$40 for prescriptions and a little more for hospital admission. Might not sound like much every now and then. Insurance companies do this to prevent what they call a “moral hazzard.” I don’t know about you, but I’m convinced that my healthy friends would spend as much time as possible in a doctor’s waiting room if were not for co-pays. Great way to catch up on your reading from, say, 4 years ago. Plus, everyone loves a good colonoscopy and what woman wouldn’t prefer an extra mammogram or two a year? Surely, the typical mother of three who makes minimum wages has no problem working 20 or so extra hours to get her kids an annual check up. Read the rest of this story

Get Me Off The Road, Please.

Martyrdog — Mon, 29 Dec 2008 15:09:31 +0000

Driving on the interstates is inherently irrational. To think that the drivers of all those other cars would voluntarily and routinely entrust theirs and their family’s lives to me is nuts. Based solely on a ten minute driving test in high school, with no knowledge of my driving skills, my car maintenance or my attention span, and regardless of whether I’m returning a call, Twittering, checking email, drinking coffee or booze, locating an iPod playlist, picking my nose, watching a DVD, lost or lost in thought, they have enough faith in me to share the highway at speeds guaranteed to to kill and maim. With my car aimed directly at theirs... Read the rest of this story

Holiday Wrap Up.

Martyrdog — Tue, 23 Dec 2008 16:04:59 +0000

It Could Be a Wonderful Life. A rewrite of the original substituting poor old George Bush for George Bailey. George is having a really bad day. This time, all of the Building and Loans had come up short - hundreds of billions short. In today's version, millions of people who have lost their jobs, their houses and their life savings are on the bridge feeling suicidal. When they hear the splash interrupting their jump and rescue Clarence the angel, in unison they wish that George had never been born. Granting the wish, we walk with the angel through a very different place than we have been used to for the last eight years. A world where Al Gore did become president. The surplus wasn't squandered with tax breaks for the wealthy, but President Gore worked with the Republican Congress to pay off our national debt and found the accumulating trillions could easily afford to invest in securing Social Security and Medicare. Investments in clean, renewable energy ended our dependence on foreign oil, resulted in a vibrant stock market, millions of new jobs, raised the standard of living for us all and exportable technology securing a positive trade balance. The surplus allowed us to rebuild on infrastructure with thousand of new schools, safe bridges and mass transportation. Trains, clean and cheap, became commonplace, saving the lives of thousands from traffic accidents. Universal healthcare removed the burden from industry and increased our worldwide competitiveness, lengthened lives and made us more healthy, and dramatically reduced bankruptcy which strengthened our financial system. College tuition became free in exchange for community service, resulting in a motivated and smart new generation of productive taxpayers. Teacher salaries were increased and no child was left behind. Lobbyist are banned for Washington and self interest is replaced with common good. With the budget surplus secure, we were able to turn a generous eye to the rest of the world – providing clean water, access to power and sustainable agriculture to the third world; investing in our hemisphere with positive trade practices, the immigration issue was solved; and working with the UN as a partner in the world, peace and democracy spread like wildfire. Oil prices never spiked so the oil dictators lost power. We had a competent government that paid attention to warnings and September 11th never happened, no innocent women and children were bombed, no suspects tortured, religion never became a profile, thousand of our best lived long and wonderful lives with their families. Enron never bubbled or collapsed. Dick Cheney was still serving time for bribery and illegal trading with Iraq. Joe Lieberman was replaced in Gore’s second term with the then new senator from Illinois who is now president elect. Finally, the millions of people who walked with Clarence and viewing this world where W never lived, realized that we could have had “A Wonderful Life” and never chose to go back. • Social Networks Caused Economy Crisis... • CSI North Pole... • A Free Idea for the Car Companies... • A Free Idea for 39 States Who Are Looking for Some Millions... Read the rest of these stories

The celebration is over in Piedmont Park.

Martyrdog — Fri, 19 Dec 2008 16:29:45 +0000

For 10 days or so after the election, there was exuberance. Their faces shone. New hope. Belief this was the time. Energy. Real joy. And, parties that would go late into the night at the bench outside my window. The conversation, always vigorous and boastful, now had a new topic: their future. One after another they pledged to get out of the park. This was the time. In the weeks that followed, one after another kept the promise and left. One mended fences with his dad and went home. Another called his grandma and she sent a bus ticket. One finally got his ID so he could get his disability and could get out on his own. One was befriended by stranger who found him an apartment for couples so he could be with his current true love. One got on the list with the VA and was waiting. And another just left. I missed them. Those that could, left me an email address or a relative's phone number, but life has taught me that we wouldn't stay in touch... Read the rest of this story

Where’s Chicken Little When You Need Him?

Martyrdog — Thu, 18 Dec 2008 17:13:09 +0000

Here we are in the last week before Christmas. The time to cast fear to the wind and spend, spend, spend out of hope, love and tradition. Surely our best and brightest, the good men and women who run our government have things under control – unless they are all out reading their copies of The Pet Goat instead of the daily security briefs. Surely the pundits would be screaming even louder if something really bad was going to happen – unless they just don’t have the video, or are under orders from the top to lighten up the holiday buzz kill... Read the rest of this story