http://www.nytimes.com/2011/10/28/business/economy/us-economy-shows-modest-growth.html?_r=1&nl=todaysheadlines&emc=tha2
***************
"It ain't brilliant, but at least it's heading in the right direction." (Ian Shepherdson - Economist - on U.S. economic growth in the most recent quarter)
***************
It's always nice to hear positive economic news: any GDP growth news that cites a movement from 1.3% last quarter to 2.5% (3rd quarter initial) is good news.
Consumers spending more (for whatever the reason) on health care and utilities is much needed. Business investing more is the key to future growth. In the case of business spending, the software part worries me because that's often a substitute for re-employing people or doing the same job with fewer workers. That makes Larry Ellison happy but not the rest of the economy. Businesses spending more on vehicles (part of the current growth) is capital spending which is good, period.
As Ian Shepherdson, chief United States economist for High Frequency Economics, says "I want to see 4%, but given that people were talking about a new recession, I'll take 2.5 or 3." Then, there's the sobering perspective that this level of growth does nothing to reduce unemployment.
Real income is declining, housing prices are stalled and home sales in September were down for the third consecutive month. Personal disposable income (adjusted for inflation) fell 1.7% in the third quarter, its biggest drop since the third quarter of 2009.
So, we need to hear from "Dr. Doom" about this. Nouriel Roubini, chairman and co-founder of Roubini Global Economics, said he expects that the new 3rd quarter growth estimate will be revised downward to 1%. There goes Dr. Doom. He's always bursting the bubble of "hope."
Whatever the interpretation of the "data" implies, it doesn't appear to be "negative" GDP growth. That's something positive.
Friday, October 28, 2011
Friday, October 21, 2011
Globalization Losers and Infrastructure Winners
http://www.nytimes.com/2011/10/16/opinion/sunday/lets-admit-it-globalization-has-losers.html?emc=eta1
http://economix.blogs.nytimes.com/2011/10/21/the-infrastructure-two-fer-jobs-now-and-future-growth/?emc=eta1
***************
"The immature mind hops from one thing to another; the mature mind seeks to follow through." (Harry A. Overstreet)
***************
Steven Rattner, who was the lead auto adviser to the Secretary of the Treasury when GM and Chrysler went thru bankruptcy, writes about the fact that globalization has it's losers and we need to face up to "who they are" and "where they are." He now joins Alan S. Blinder (former vice chairman of the Federal Reserve and a professor of economics at Princeton) who has been saying for years that we face a dramatic loss of jobs in what I would call the "globalization sectors" of the U.S. economy.
Both Rattner and Blinder are free trade proponents but realize that winners in free trade (created by low-priced imported goods) are producing losers. Rattner's experience with the manufacturing sector, as the head of President Obama's Auto Task Force, produced his General Motors auto perspective: a typical GM worker costs the company $56 per hour, which includes benefits. In Mexico, a worker costs the company $7 per hour; in China, $4.50 an hour, and in India $1 per hour. So, while GM doesn't (yet) achieve United States-level productivity in China and India, its Mexican plants are today at least as efficient as those in the U.S.
So, GM has responded with what Rattner describes as inarguable logic: while reducing its U.S. hourly work force to 50,000 from 89,000 over the last 5 years, it's Mexican head count has risen.
The United Auto Workers (UAW) have responded to this situation by negotiating lower hiring rates ($14 per hour) with lower benefits. Volkswagon's new plant in Chattanooga, Tenn., adds 2,000 jobs but all with a starting pay of $14.50 per hour. As Rattner so accurately points out, $30,000 is "hardly the American dream of great middle class jobs."
Rattner again: "In these troubled times, any jobs are surely welcome. But, we need to reverse the decline in incomes, and this requires a more thoughtful approach than the pervasive, politically attractive happy talk (my "caps" here) NOSTALGICALLY CENTERED ON RESTORING LOST MANUFACTURING JOBS."
So, with the role of manufacturing in the U.S. economy down over the last 50 years from 32% to 9%, Rattner's position is that we need to acknowledge that and move on. As he says, "...retreating into protectionism would turn a win-lose into a lose-lose." Germany concentrates on a strength (sophisticated machine tools) - we should too.
Overall, America's strength (besides defense and aviation) lies in service industries with high intellectual content: education, entertainment, digital media and (uh oh) financial services. Rattner is giving us suggestions - we should act on them.
So, should Washington jump in and do more (as it did with Solyndra, the failed solar energy company that wasted $535 million)? No. Washington can't even pick winning business sectors, let alone companies. Washington needs to spend it's capital where the need is more obvious - like INFRASTRUCTURE! The Kauffman Foundation, which focuses on entrepreneurship, has identified other possible solutions, including providing visas for entrepreneurs, etc.
Laura D'Andrea Tyson, who is a business professor at the Haas School of Business (UC, Berkeley) and was chairwoman of the Council of Economic Advisers under Bill Clinton, feels very strongly about infrastructure investment. Here, she joins Mark Zandi, an economists at the center of the most powerful suggestions on what to do when the U.S. was (and we could say: "still is") in the middle of the worldwide financial crisis (Zandi continues to be a "voice" in the sense that both political parties want to know what he thinks). Zandi has spoken of the multiples of spending from infrastructure that will create other jobs.
According to Tyson, the Jobs Act, which proposes about $90 billion in infrastructure spending as part of a $450 billion package of tax cuts and spending, would create about 2 million jobs. The President's Council On Jobs and Competitiveness (of which Dr. Tyson is a member) sees infrastructure investment as a "twofer" that creates jobs in the near term and promotes competitiveness and productivity in the long term. But, more than that, our bridges and roads are old and in need of repair. It's nice to know about the "multiples," but the work needs to be done anyway! The American Society of Civil Engineers indicates a 5-year gap of more than $1.1 trillion between the amount needed for maintenance and improvements of the U.S. infrastructure and the amount of public funds available for such investment.
Using Moodys and Congressional Budget Office data, $1 billion of infrastructure spending generates about a $1.6 billion increase in GDP. On a jobs ratio basis, $1 billion of government infrastructure spending creates 4,000 to 18,000 jobs.
Obviously, there have to be monitors on infrastructure spending - too often local governments spend infrastructure money on new roads and bridges instead of older roads and bridges in need of repair.
Regardless, spending on infrastructure is needed and will create jobs. How can any politician be against that?
http://economix.blogs.nytimes.com/2011/10/21/the-infrastructure-two-fer-jobs-now-and-future-growth/?emc=eta1
***************
"The immature mind hops from one thing to another; the mature mind seeks to follow through." (Harry A. Overstreet)
***************
Steven Rattner, who was the lead auto adviser to the Secretary of the Treasury when GM and Chrysler went thru bankruptcy, writes about the fact that globalization has it's losers and we need to face up to "who they are" and "where they are." He now joins Alan S. Blinder (former vice chairman of the Federal Reserve and a professor of economics at Princeton) who has been saying for years that we face a dramatic loss of jobs in what I would call the "globalization sectors" of the U.S. economy.
Both Rattner and Blinder are free trade proponents but realize that winners in free trade (created by low-priced imported goods) are producing losers. Rattner's experience with the manufacturing sector, as the head of President Obama's Auto Task Force, produced his General Motors auto perspective: a typical GM worker costs the company $56 per hour, which includes benefits. In Mexico, a worker costs the company $7 per hour; in China, $4.50 an hour, and in India $1 per hour. So, while GM doesn't (yet) achieve United States-level productivity in China and India, its Mexican plants are today at least as efficient as those in the U.S.
So, GM has responded with what Rattner describes as inarguable logic: while reducing its U.S. hourly work force to 50,000 from 89,000 over the last 5 years, it's Mexican head count has risen.
The United Auto Workers (UAW) have responded to this situation by negotiating lower hiring rates ($14 per hour) with lower benefits. Volkswagon's new plant in Chattanooga, Tenn., adds 2,000 jobs but all with a starting pay of $14.50 per hour. As Rattner so accurately points out, $30,000 is "hardly the American dream of great middle class jobs."
Rattner again: "In these troubled times, any jobs are surely welcome. But, we need to reverse the decline in incomes, and this requires a more thoughtful approach than the pervasive, politically attractive happy talk (my "caps" here) NOSTALGICALLY CENTERED ON RESTORING LOST MANUFACTURING JOBS."
So, with the role of manufacturing in the U.S. economy down over the last 50 years from 32% to 9%, Rattner's position is that we need to acknowledge that and move on. As he says, "...retreating into protectionism would turn a win-lose into a lose-lose." Germany concentrates on a strength (sophisticated machine tools) - we should too.
Overall, America's strength (besides defense and aviation) lies in service industries with high intellectual content: education, entertainment, digital media and (uh oh) financial services. Rattner is giving us suggestions - we should act on them.
So, should Washington jump in and do more (as it did with Solyndra, the failed solar energy company that wasted $535 million)? No. Washington can't even pick winning business sectors, let alone companies. Washington needs to spend it's capital where the need is more obvious - like INFRASTRUCTURE! The Kauffman Foundation, which focuses on entrepreneurship, has identified other possible solutions, including providing visas for entrepreneurs, etc.
Laura D'Andrea Tyson, who is a business professor at the Haas School of Business (UC, Berkeley) and was chairwoman of the Council of Economic Advisers under Bill Clinton, feels very strongly about infrastructure investment. Here, she joins Mark Zandi, an economists at the center of the most powerful suggestions on what to do when the U.S. was (and we could say: "still is") in the middle of the worldwide financial crisis (Zandi continues to be a "voice" in the sense that both political parties want to know what he thinks). Zandi has spoken of the multiples of spending from infrastructure that will create other jobs.
According to Tyson, the Jobs Act, which proposes about $90 billion in infrastructure spending as part of a $450 billion package of tax cuts and spending, would create about 2 million jobs. The President's Council On Jobs and Competitiveness (of which Dr. Tyson is a member) sees infrastructure investment as a "twofer" that creates jobs in the near term and promotes competitiveness and productivity in the long term. But, more than that, our bridges and roads are old and in need of repair. It's nice to know about the "multiples," but the work needs to be done anyway! The American Society of Civil Engineers indicates a 5-year gap of more than $1.1 trillion between the amount needed for maintenance and improvements of the U.S. infrastructure and the amount of public funds available for such investment.
Using Moodys and Congressional Budget Office data, $1 billion of infrastructure spending generates about a $1.6 billion increase in GDP. On a jobs ratio basis, $1 billion of government infrastructure spending creates 4,000 to 18,000 jobs.
Obviously, there have to be monitors on infrastructure spending - too often local governments spend infrastructure money on new roads and bridges instead of older roads and bridges in need of repair.
Regardless, spending on infrastructure is needed and will create jobs. How can any politician be against that?
Wednesday, October 12, 2011
Free Trade
http://economix.blogs.nytimes.com/2011/10/12/whose-jobs-are-at-risk-in-free-trade/?emc=eta1
http://www.nytimes.com/2011/10/13/business/trade-bills-near-final-chapter.html?emc=eta1
***************
"To be able to concentrate for a considerable time is essential to difficult achievement." (Bertrand Russell)
***************
While I know that there is a strong possibility that I am speaking to soon, the NY Times reports that there may be a deal in Congress to approve trade agreements that have been held up because of union objections. Trade agreements with South Korea, Columbia and Panama (as well as a benefits package for workers who lose their jobs to foreign competition) appear to have bi-partisan support.
According to a new report just released by the Joint Economic Committee of Congress ("Nowhere to Go...") which can be reviewed by clicking on the "Economix Blog" attached, the workers most likely to lose their jobs as a result of increased trade are older workers and those without a college education. The most obviously affected industry has traditionally been manufacturing, where workers tend not to have college degrees and an increasing number tend to be 45 or older.
Free trade agreements eliminate tariffs and other policies designed to protect the participating nations. Economists generally predict (well, right there we have a problem) that free trade deals create a larger common market for participants, increasing sales and reducing prices. But, while consumers may benefit from the availability of cheaper foreign goods, American workers (who make up a more costly labor force) often lose jobs as a result of less costly imports.
The modestly projected increase in demand for U.S. goods (from these trade pacts) will come mostly from South Korea which, as the world's 14th largest economy, would join a short list of developed nations that have free trade agreements with the U.S: Australia, Canada, Israel and Singapore.
While I'm sure that American car companies will now be able to sell more cars in South Korea, I worry that jobs will be eliminated in the U.S. textile industry because of increased imports from South Korea.
Free trade is good. Tariffs are not good. But, job eliminations aren't good either.
http://www.nytimes.com/2011/10/13/business/trade-bills-near-final-chapter.html?emc=eta1
***************
"To be able to concentrate for a considerable time is essential to difficult achievement." (Bertrand Russell)
***************
While I know that there is a strong possibility that I am speaking to soon, the NY Times reports that there may be a deal in Congress to approve trade agreements that have been held up because of union objections. Trade agreements with South Korea, Columbia and Panama (as well as a benefits package for workers who lose their jobs to foreign competition) appear to have bi-partisan support.
According to a new report just released by the Joint Economic Committee of Congress ("Nowhere to Go...") which can be reviewed by clicking on the "Economix Blog" attached, the workers most likely to lose their jobs as a result of increased trade are older workers and those without a college education. The most obviously affected industry has traditionally been manufacturing, where workers tend not to have college degrees and an increasing number tend to be 45 or older.
Free trade agreements eliminate tariffs and other policies designed to protect the participating nations. Economists generally predict (well, right there we have a problem) that free trade deals create a larger common market for participants, increasing sales and reducing prices. But, while consumers may benefit from the availability of cheaper foreign goods, American workers (who make up a more costly labor force) often lose jobs as a result of less costly imports.
The modestly projected increase in demand for U.S. goods (from these trade pacts) will come mostly from South Korea which, as the world's 14th largest economy, would join a short list of developed nations that have free trade agreements with the U.S: Australia, Canada, Israel and Singapore.
While I'm sure that American car companies will now be able to sell more cars in South Korea, I worry that jobs will be eliminated in the U.S. textile industry because of increased imports from South Korea.
Free trade is good. Tariffs are not good. But, job eliminations aren't good either.
Monday, October 10, 2011
An Ugly Forecast
http://www.nytimes.com/2011/10/09/your-money/a-recession-forecast-that-has-been-reliable-before.html?src=me&ref=business
***************
"Progress is often just a good idea away." (John C. Maxwell)
***************
I'm always interested in economists whose forecasts have been right over "years." I didn't know there were any. Over the weekend, the NY Times published a story about the Economic Cycle Research Institute (ECRI) which uses leading indicators to predict business cycles.
Relying on a series of proprietary indexes, the institute correctly predicted the beginning and end (I don't agree that it ended and I think most labor economists would side with me but the "technical end" did occur at a date certain time) of the last recession. So, over the last 15 years, it has gotten all of its recession calls right, while issuing no false alarms.
One of my all time favorite quotes is by Paul Samuelson ( an economists whose textbook was the most widely used by generations in college over the last half of the 20th century): "The stock market has called nine of the last five recessions." That's about what I think of forecasting. Or, everybody's all time favorite: the Harvard Economic Society in 1929 declaring that a depression was "outside the range of probability."
Back to the folks who know what they're doing: the folks at the ECRI say that, as bad as the economy has been, it's about to get worse. So, I guess that means the standard BLS unemployment rate statistic (currently 9.1%) goes to double digits. Their prediction for GDP growth is that it goes negative by the first quarter of 2012, "if not sooner." The GDP doesn't have far to go to do that.
The institute's U.S. Leading Diffusion Index has dipped into territory that, with only one exception, would have signaled the recessions of the last 60 years.
And, it gets worse: the ECRI people say more frequent recessions are likely to be the norm in the future.
I hope they're wrong.
***************
"Progress is often just a good idea away." (John C. Maxwell)
***************
I'm always interested in economists whose forecasts have been right over "years." I didn't know there were any. Over the weekend, the NY Times published a story about the Economic Cycle Research Institute (ECRI) which uses leading indicators to predict business cycles.
Relying on a series of proprietary indexes, the institute correctly predicted the beginning and end (I don't agree that it ended and I think most labor economists would side with me but the "technical end" did occur at a date certain time) of the last recession. So, over the last 15 years, it has gotten all of its recession calls right, while issuing no false alarms.
One of my all time favorite quotes is by Paul Samuelson ( an economists whose textbook was the most widely used by generations in college over the last half of the 20th century): "The stock market has called nine of the last five recessions." That's about what I think of forecasting. Or, everybody's all time favorite: the Harvard Economic Society in 1929 declaring that a depression was "outside the range of probability."
Back to the folks who know what they're doing: the folks at the ECRI say that, as bad as the economy has been, it's about to get worse. So, I guess that means the standard BLS unemployment rate statistic (currently 9.1%) goes to double digits. Their prediction for GDP growth is that it goes negative by the first quarter of 2012, "if not sooner." The GDP doesn't have far to go to do that.
The institute's U.S. Leading Diffusion Index has dipped into territory that, with only one exception, would have signaled the recessions of the last 60 years.
And, it gets worse: the ECRI people say more frequent recessions are likely to be the norm in the future.
I hope they're wrong.
Saturday, October 8, 2011
Unemployment & the Economy
http://www.nytimes.com/2011/10/08/business/economy/us-adds-103000-jobs-rate-steady-at-9-1.html?emc=eta1
***************
"Keep your mind off the things you don't want by keeping it on the things you do want." (W. Clement Stone)
***************
Wait, alert the authorities, the economy added jobs last month but not enough to reduce the unemployment rate! What a shock!
For those of us who follow the unemployment rate (or rates) because it is the most important lagging indicator for any economic recovery, we're not surprised. The "official" employment number is that the nation added 103,000 jobs in September. Now, of course, we need to subtract the Verizon employees who were out on strike and have now reported back to work: so, 103 - 45 = 58,000 which, perhaps, might be a more accurate number. Then, of course, we'll have the first revision and then a second revision of the numbers (standard operating procedure for the government) which could raise or lower that number later on.
What this all means is this: "we" never recovered from the worldwide financial crisis. The economists (and I use that term advisedly) will tell us that two consecutive quarters of negative GDP growth constitutes a recession, so they officially declared an end to the U.S. recession in June, 2009 (don't hold me to that date exactly - I just have no plans to look it up) where that criteria must have reversed. Today, there is consensus amongst most economists (this may be a "first") that the U.S. economy is running at stall speed: GDP growth at 1% or less. So, some of these economists are predicting a return to recession (that would be the recession that we never got out of).
Most economists see 125,000 to 135,000 jobs created per month in the U.S. economy as what's necessary to keep up with population growth. The unemployment report was actually encouraging to some economists (those who are being treated for depression) who had predicted a "net loss" of jobs for September.
There are 14 million people counted as unemployed in the United States today. An additional 9.3 million are working part time and would rather work full time. And 2.5 million have simply given up looking for a job. So, roughly 26 million, or 16.5% of working-age Americans want full-time work and can't find it.
Is there any good news? Well, yes there is: the temporary help industry added 20,000 jobs. For years, temporary help has been an early positive sign with the economy because it's the first thing that happens when employers are ramping up but don't want to hire (or hire back) permanent employees yet. The average workweek also lengthened slightly and wages went up slightly.
Government jobs, usually a plus in the past, went down 34,000: mainly from local governments which laid off teachers and other school employees. State and local governments have cut more than 500,000 jobs since June, 2009 (when "economists" declared an end to the recession).
Until the Top 500 CEOs start spending the more than $2.2 trillion in cash (an all time record) they have sitting on their books for capital projects (which will, in turn, cause spending by the next 500 in size and also small businesses), nothing will improve for years. In addition, "the gang that couldn't shoot straight" (aka, our people in Washington) needs to go big for infrastructure spending (something the U.S. actually needs) which will add, by some measures, $1.5 dollars to local economies for every 1$ spent (that's a Mark Zandi perspective).
If I'm a student, I major in petroleum engineering. Or, I major in civil engineering but not software engineering. If I'm in business school, I get an accounting degree, MS in same and a CPA (with Sarbanes, that's a job for life). If I have other interests and I'm getting a BA, I go to graduate school while the economy continues to suck (an economic term). If it's law school, I become a divorce lawyer and NOT a tax lawyer. Why(?), because, as Alan S. Blinder says, tax law can be done overseas, divorce law requires everybody being here. The division in the "globalized" world is no longer skilled vs unskilled in terms of where the work gets done, it's "what skill" and where can it most effectively be done?
My hope is that the U.S. economy will improve. "When" is the question.
***************
"Keep your mind off the things you don't want by keeping it on the things you do want." (W. Clement Stone)
***************
Wait, alert the authorities, the economy added jobs last month but not enough to reduce the unemployment rate! What a shock!
For those of us who follow the unemployment rate (or rates) because it is the most important lagging indicator for any economic recovery, we're not surprised. The "official" employment number is that the nation added 103,000 jobs in September. Now, of course, we need to subtract the Verizon employees who were out on strike and have now reported back to work: so, 103 - 45 = 58,000 which, perhaps, might be a more accurate number. Then, of course, we'll have the first revision and then a second revision of the numbers (standard operating procedure for the government) which could raise or lower that number later on.
What this all means is this: "we" never recovered from the worldwide financial crisis. The economists (and I use that term advisedly) will tell us that two consecutive quarters of negative GDP growth constitutes a recession, so they officially declared an end to the U.S. recession in June, 2009 (don't hold me to that date exactly - I just have no plans to look it up) where that criteria must have reversed. Today, there is consensus amongst most economists (this may be a "first") that the U.S. economy is running at stall speed: GDP growth at 1% or less. So, some of these economists are predicting a return to recession (that would be the recession that we never got out of).
Most economists see 125,000 to 135,000 jobs created per month in the U.S. economy as what's necessary to keep up with population growth. The unemployment report was actually encouraging to some economists (those who are being treated for depression) who had predicted a "net loss" of jobs for September.
There are 14 million people counted as unemployed in the United States today. An additional 9.3 million are working part time and would rather work full time. And 2.5 million have simply given up looking for a job. So, roughly 26 million, or 16.5% of working-age Americans want full-time work and can't find it.
Is there any good news? Well, yes there is: the temporary help industry added 20,000 jobs. For years, temporary help has been an early positive sign with the economy because it's the first thing that happens when employers are ramping up but don't want to hire (or hire back) permanent employees yet. The average workweek also lengthened slightly and wages went up slightly.
Government jobs, usually a plus in the past, went down 34,000: mainly from local governments which laid off teachers and other school employees. State and local governments have cut more than 500,000 jobs since June, 2009 (when "economists" declared an end to the recession).
Until the Top 500 CEOs start spending the more than $2.2 trillion in cash (an all time record) they have sitting on their books for capital projects (which will, in turn, cause spending by the next 500 in size and also small businesses), nothing will improve for years. In addition, "the gang that couldn't shoot straight" (aka, our people in Washington) needs to go big for infrastructure spending (something the U.S. actually needs) which will add, by some measures, $1.5 dollars to local economies for every 1$ spent (that's a Mark Zandi perspective).
If I'm a student, I major in petroleum engineering. Or, I major in civil engineering but not software engineering. If I'm in business school, I get an accounting degree, MS in same and a CPA (with Sarbanes, that's a job for life). If I have other interests and I'm getting a BA, I go to graduate school while the economy continues to suck (an economic term). If it's law school, I become a divorce lawyer and NOT a tax lawyer. Why(?), because, as Alan S. Blinder says, tax law can be done overseas, divorce law requires everybody being here. The division in the "globalized" world is no longer skilled vs unskilled in terms of where the work gets done, it's "what skill" and where can it most effectively be done?
My hope is that the U.S. economy will improve. "When" is the question.
Friday, October 7, 2011
A Weary Cynicism
http://www.nytimes.com/2011/10/07/opinion/krugman-confronting-the-malefactors.html
***************
"Originality is the art of concealing your source." (Thomas Edison)
***************
Paul Krugman's post yesterday reminded me of why I like to read him. His perspective on the "Wall Street Protests" is that the protesters are completely right about "why" they are protesting. He says a "weary cynicism" (a belief that justice will never be served) has taken over much of our political debate.
I have no interest in the political debate here but I will comment on the economy and business. Krugman's description of how "... outrageous the story of our economic woes really is" is a classic which he describes as a play in three acts: in the first act, bankers took advantage of deregulation to run wild (and pay themselves princely sums), inflating huge bubbles through reckless lending. Act two: the bubbles burst, but bankers were bailed out by taxpayers, with remarkably few strings attached. And, in the third act, bankers showed their gratitude by turning on the people who had saved them, throwing their support behind politicians who promised to keep their taxes low and dismantle the weak regulations that were being proposed after the crisis.
And I quote, "Bear in mind, too, that experience has made it painfully clear that men in suits not only don't have any monopoly on wisdom, they have very little wisdom to offer. When talking heads on, say, CNBC mock the protesters as unserious, remember how many serious people assured us there was no housing bubble, that Alan Greenspan was an oracle and that budget deficits would send interest rates soaring."
And I quote, "But Democrats are being given what amounts to a second chance. The Obama administration squandered a lot of potential good will early on by adopting banker-friendly policies that failed to deliver economic recovery even as bankers repaid the favor by turning on the President. Now, however, Mr. Obama's party has a chance for a do-over. All it has to do is take these protests as seriously as they deserve to be taken."
And, if the protests goad some politicians into doing what they should have been doing all along (as Krugman so accurately points out), Occupy Wall Street will have been a smashing success.
And, all that's nice. I have a definition of "freedom" that I've always liked: "freedom" means we can do whatever we like (within the law and ethical bounds) unless it impinges on the freedom of others. If I want to use a bridge the "protesters" are blocking, they aren't free to do that. I don't care what they're protesting - that doesn't mean they get to shrink my freedoms.
Ron Suskind has a new book that was reviewed by Joe Nocera in the New York Times over the weekend: "Confidence Men." It's about what has gone on thus far in the Obama administration. Nocera points out that Suskind makes a persuasive case that Obama's inability to manage his own White House is a critical reason the administration has struggled to devise coherent economic policies. Of course, first and foremost, he brought in the wrong people - my favorite is Lawrence (don't call me "Larry") Summers, who stint as Harvard's president was one of the all time great disasters (women everywhere should read about it), is first among those. One of the worst among the many stories Nocera recounts is that, when there was a rare "almost" consensus among Obama's economic advisers (and I use that term loosely) that winding down Citigroup would be the right thing to do (here Obama actually made a decision to agree to do it), Treasury Secretary Tim Geithner simply waited the situation out and didn't do it. Dwight Eisenhower would have fired him - Obama did nothing.
I have a "weary cynicism" and it has a lot to do with electing the wrong people, appointing the wrong people, an economics profession that had no idea a worldwide financial crisis was coming (except, of course, for "Dr. Doom") and has no idea what to do to get the worldwide economy going again.
Somebody wake me when the unemployment rate is back down to 5%.
***************
"Originality is the art of concealing your source." (Thomas Edison)
***************
Paul Krugman's post yesterday reminded me of why I like to read him. His perspective on the "Wall Street Protests" is that the protesters are completely right about "why" they are protesting. He says a "weary cynicism" (a belief that justice will never be served) has taken over much of our political debate.
I have no interest in the political debate here but I will comment on the economy and business. Krugman's description of how "... outrageous the story of our economic woes really is" is a classic which he describes as a play in three acts: in the first act, bankers took advantage of deregulation to run wild (and pay themselves princely sums), inflating huge bubbles through reckless lending. Act two: the bubbles burst, but bankers were bailed out by taxpayers, with remarkably few strings attached. And, in the third act, bankers showed their gratitude by turning on the people who had saved them, throwing their support behind politicians who promised to keep their taxes low and dismantle the weak regulations that were being proposed after the crisis.
And I quote, "Bear in mind, too, that experience has made it painfully clear that men in suits not only don't have any monopoly on wisdom, they have very little wisdom to offer. When talking heads on, say, CNBC mock the protesters as unserious, remember how many serious people assured us there was no housing bubble, that Alan Greenspan was an oracle and that budget deficits would send interest rates soaring."
And I quote, "But Democrats are being given what amounts to a second chance. The Obama administration squandered a lot of potential good will early on by adopting banker-friendly policies that failed to deliver economic recovery even as bankers repaid the favor by turning on the President. Now, however, Mr. Obama's party has a chance for a do-over. All it has to do is take these protests as seriously as they deserve to be taken."
And, if the protests goad some politicians into doing what they should have been doing all along (as Krugman so accurately points out), Occupy Wall Street will have been a smashing success.
And, all that's nice. I have a definition of "freedom" that I've always liked: "freedom" means we can do whatever we like (within the law and ethical bounds) unless it impinges on the freedom of others. If I want to use a bridge the "protesters" are blocking, they aren't free to do that. I don't care what they're protesting - that doesn't mean they get to shrink my freedoms.
Ron Suskind has a new book that was reviewed by Joe Nocera in the New York Times over the weekend: "Confidence Men." It's about what has gone on thus far in the Obama administration. Nocera points out that Suskind makes a persuasive case that Obama's inability to manage his own White House is a critical reason the administration has struggled to devise coherent economic policies. Of course, first and foremost, he brought in the wrong people - my favorite is Lawrence (don't call me "Larry") Summers, who stint as Harvard's president was one of the all time great disasters (women everywhere should read about it), is first among those. One of the worst among the many stories Nocera recounts is that, when there was a rare "almost" consensus among Obama's economic advisers (and I use that term loosely) that winding down Citigroup would be the right thing to do (here Obama actually made a decision to agree to do it), Treasury Secretary Tim Geithner simply waited the situation out and didn't do it. Dwight Eisenhower would have fired him - Obama did nothing.
I have a "weary cynicism" and it has a lot to do with electing the wrong people, appointing the wrong people, an economics profession that had no idea a worldwide financial crisis was coming (except, of course, for "Dr. Doom") and has no idea what to do to get the worldwide economy going again.
Somebody wake me when the unemployment rate is back down to 5%.
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