Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts

Wednesday, May 04, 2011

Issues: May 4, 2011: bin Laden, Iran, Gas, GOP's budget, Cities w/Jobs, & Divorce

Most of the Western world continues to celebrate the death of bin Laden, many in Pakistan vow revenge. See this slideshow. The president's approval ratings went up 11%, but if you're an Obama supporter, don't get too excited. Not to be a Debbie Downer but these rally effect approval rating hikes tend toward the ephemeral.

Remember the hike the first Bush received after repelling Iraq from Kuwait? His approval ratings reached an all-time high, but he failed to win reelection when voters blamed him for a stagnant economy. This is why there is a sense of "foreboding" (NYT) in the polls despite personal satisfaction with Obama.
Joshua Tucker believes this might be "a bit of a game-changer."
I've heard lots of calls from liberals that now is the time to get out of Afghanistan because the wars cost too much. How much? Read here. I disagree. Now is the time to double-down on non-military foreign aid. It's important to remind the Middle East that we're than just about hunting down terrorists. We want economic and democratic opportunity everywhere for everyone. This chart show U.S. aid in the Middle East.

Violence, in the case of bin Laden's death, can actually be a good, however, in the case of Syria, violence, as it typically is, is quite bad. Follow that? One outcome is the Iranians have shut up. They know they are next in Spring Revolutions.
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In related news, George W. Bush's declination to Obama invitation to appear with him at Ground Zero should not go unnoticed. I appreciate the fact that the former president has stayed out of the limelight. It shows grace that he's not seeking to hog the limelight. Obama gave the order to get bin Laden after serious debate, but what president would want to be known as the one that let bin Laden escape.
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In unrelated news, this chart breaks down the cost of gas. No, most of it is not in taxes. The economy is what most Americans care most about and the GOP, if it loses big in 2012, according to Anson Kaye, will have to blame their proposed and enacted budget cuts. For those whom the economy is not so hot, you might want to consider relocating to these cities where the economy is hot. Whether or not you think the economy is hot or not largely depends on how much money you make.
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What do Mississippi, Alabama, Arkansas, Texas, Georgia, Louisiana, Kentucky, Oklahoma and Maine have in common? They are high divorce, low-education states.

Thursday, February 25, 2010

What if He Can’t Give You The Platinum Wedding?



What if he can’t give you the platinum fairytale wedding? Do you pass him up and wait for a man who can? Has it all come down to the wedding? I think that it has to a certain degree. Women (many of them) seem to be falling in love with the idea of the wedding day itself, as much as with the men that they claim to want to spend the rest of their lives with. This is at least part of the reason why half of all marriages in this Country fail. They often aren’t based on anything real to begin with.

I guess I’m a little old fashioned. I though marriages and weddings were supposed to be based on real love. I guess that went out of style at some point. It must have. Because weddings have now turned into huge gluttonous events, where the bride gets to show off for her friends. That’s basically what weddings (and now even marriages) have become. You get the sense that they all have a competition going where one is trying to outdo the other.

A recent blog posting by the Field Negro (Philly Attorney), entitled The Power of the Bling, led me to write on this topic. The subject of his post was very similar - the venality & superficiality of women, particularly when it comes to the ring. Of course my response was a little hardcore, but it was painfully true. We are living in a society that is growing more and more shallow by the day. Money and material things are increasing in importance for many women. Most women are Gold Diggers or have the tendencies of same to some degree (and this varies). Sorry ladies. Love ya! But I can’t abandon the truth. To me, this includes women who won’t date a man unless he has a certain type of job, earns a certain arbitrary amount of money, or unless he’s a certain race (especially the race most synonymous with money & “success”); all the way up to the women who stalk entertainers, pro athletes, rich attorneys & CEO’s…and the Donald Trumps and will generally only pursue millionaires. These are often women who aren’t ashamed to admit that they want to marry for money. Anything less than the figure on their theoretical price tags is considered “settling” or marrying down. Notice I didn’t mention character at any point…. Because character apparently isn’t one of their top factors for finding a suitable partner (that’s a clue as to why they so often choose bad men… the dogs, playboys, the a--holes, the inconsiderate guys, or those who never seem to work out for them for one reason or another).

There is an entire wedding industry in this country that plays right into this f**knuttery. The numbers back up the fact that these are grand gluttonous events. The wedding industry does roughly $70 Billion worth of business annually, with the average wedding costing approximately $30,000 (Pre-economic collapse of 2008-2009). (also see here). And when you are talking about middle class professionals & the upper middle class, you are looking at weddings easily costing more than $50,000.00. In some parts of the country $50,000 is actually the average. So before you even get to what many would consider a platinum wedding (well over $100,000.00) you are paying tens of thousands….just as an average. I hover between lower middle class and working class. (although I have a graduate degree & a half at this point). For me the lower average of $30,000 is platinum territory. I would definitely see $50,000 as “platinum”. Who needs to spend that kind of money for a wedding? It’s insane. The cost of a wedding has increased several fold just over the past 3 decades or so. It wasn’t always like this. Back in the 1950’s, 60’s, 70’s…even the 1980’s, folks didn’t go into massive debt for “the big day”. There have always been platinum weddings, but they were typically limited to those at the very top- those who we refer to today as being the top 1 or 2 percent. These extravagant parties were not the burden of the average American. Most people really didn’t care much about the lavishness of the wedding ceremony or the reception in those days. Folks would spend a couple thousand bucks, use the house or a friends home as a venue and would have a great time. Why? Because it was about love, companionship and family, or at least that's the message that was sent. Coretta Scott married MLK in her parents house. MLK didn’t have much money at the time - he was a fledgling minister. I keep using that example because it says quite a bit about how society has changed in terms of values. And we don’t necessarily have to go back that far to find that kind of an example. I can recall my fathers wedding to my step-mother back in 1986. I was 12 years old and was the ring bearer. No lavish wedding… they had the wedding in the living room of our house in Kansas. Could they have had a bigger wedding? Absolutely. My parents could have thrown a military gala on post, could have invited dozens of their military and Shriner buddies….Or could have had a big private affair in town. But why spend all that money…or go into debt unnecessarily? They ended up having a small event with about 30 or so friends and a few family members from St. Louis who drove up for the weekend. The money was better spent on the house, their two kids, and a third child that was to come into the world about 18 months later (BTW..That child - the one who wasn’t even thought of in 1986 - is now serving in the Navy…the military tradition continues. They just love to say we aren‘t patriotic don‘t they?). Smart decision in my opinion. That wedding taught me a lesson about what was important.

The wedding industry racket that pushes lavish weddings is a rather recent phenomenon. Today it’s not just the top 1 or 2 percent that have the big expensive weddings…. The average couple is now expected to throw tens of thousands into a wedding. Most women not only want it, but there is an expectation that they’ll get it.

It should be no surprise that when weddings were about love and relationships, marriages tended to last longer. As weddings have gotten more superficial, so have the marriages. Cause & effect? No. But it says a lot about the values of a society when “things” are valued more than people & relationships. It also speaks to the issue of class and the widening gaps between groups. The U.S. is becoming more of a class based society...almost like India's Caste system in some ways (for instance...it is becoming more difficult to move up in the U.S. if you are at or near the bottom). The class stratification is getting worse. Yes it is true that weddings, relationships and marriage are about money to a large degree...and traditionally they have always been about money. But in past generations they were also about love, family, companionship and certain values. (I don't agree with the preceding NYTimes article that claims "marriage for love" to be a recent phenomenon). There were definitely reasons other than just money for marriage/family in the nations history. Money didn't mean everything...it didn't dominate in past generations the way that it does today. Family was much more important when the U.S. was more of an agrarian society. Having plenty of hands was important for survival. With the rise of modern commercial farming, with 50% or more of the population now living in urban areas....and with the independence of women since the 1970's and 80's, the practicality of large families and the need to marry have waned.

I occasionally watch programs like “Platinum Weddings”, “Rich Bride/Poor Bride”, “My Fair Wedding”, “Who’s Wedding Is It Anyway”, etc…. just to see how ridiculous the people are. They demonstrate how thoroughly screwed up our society really is. It’s like watching a sociological train wreck. It is clear to me that women are marrying money (not all …but certainly a significant portion of them). They are marrying material thing. Men in many cases (not all…but many) are simply conduits for women to live a certain status based lifestyle…to simply have access to the “things” they want. They are marrying “things” and not men.

I was watching Platinum Weddings a few days ago & it was the episode with Tony Gwynn’s daughter as the bride. Several hundred thousand was spent on that wedding. I caught another episode with an Asian bride & a white groom (cough cough) where something on the order of $100,000 was spent just on flowers. This kind of craziness has now crept into the mainstream. But is it right? More importantly, could it hurt the marriage itself? (not that marriage is a grand institution anymore… I happen to believe that weddings and the wedding culture are a joke, and the state of marriage is in the toilet). But the point is, could this just add to the reasons why men shouldn’t get married? Could it discourage marriage? I think it could. The more I learn about weddings and the state of marriage today- that both are largely about money and little else - the less receptive I become to the idea of marriage. In fact, it is making me run in the other direction, as far away from the idea as I can get. What incentives does a man have for getting married? In just about every measure… it’s a losing proposition for a man. There is no incentive. In fact, I would say that there is probably more of an incentive today for a man to stay single. Marriages are nothing more than business contracts today…and no good business man would want to sign a lopsided contract. In the business world it doesn't happen that way. Why would a business man sign a lopsided contract that benefit’s the other side 80%-20%? It's unheard of. So why should a man enter into an equivalent deal in the world of marriage? Men typically lose the most from beginning to end.... from the first time he meets his future wife (he spends tons and has to demonstrate financial prowess to impress), to the time that the divorce is final and she takes almost everything he has worked for....and in some cases...he loses financially for the rest of her life...if he has to pay alimony...not to mention any child support required.

I came to the realization about 6 years ago that marriage was not in the cards for me - that it was not likely to happen. And for the first time, I’m starting to get comfortable with that reality. I was 30 then. Now I’m approaching 37. The further I have gotten away from 30, the more I feel that I don’t want to get married at all. I see marriage, weddings, and the rest as something that I actually can’t afford. I see women and weddings as being for men who can afford them. (Yes, I see women & relationships and all the stuff they bring as being expense items at this point). A woman who fits the typical mold (which generally isn’t my type anyway) literally just isn’t affordable. I have already begun to come to terms with the idea of living the rest of my life as a single guy. I have been chasing an American Dream for the past 18 years that is becoming more elusive. And I never reached a point during all that time where I actually enjoyed life. It seems as though a long stretch of my life has been wasted. So I have been trying to figure out how I will contribute to the World solo. There is one bright side to this situation… being single for so long (basically all my life) means that I won’t really miss anything by remaining single. But I do hold the door open 5 years down the road when maybe I’m doing a little better on the employment and financial front for a sexy nerd who doesn’t care about Platinum weddings, or how much money I earn.

In the meantime, I will remain disgusted by our society.


Related Link

The future of America - Tyra Show segment on women teaching daughters to marry for money. (I don't really like Tyra Banks...never have. But I found this link on youtube and thought that the segment was actually useful...and that's rare for the Tyra Banks Show, lol).

Wednesday, August 19, 2009

Rising Income Inequality

Throughout this decade, rising income inequality has become a profound image of the new American economy. Our economy is built on service, financials, health care and government spending. But, underlying the American economy of the 21st century is a wide income gap, growing wider each year. The gap is even larger today than the gap preceding the Great Depression.

This gap is problematic for several reasons. First, any functioning democracy and capital system cannot have too much concentration of wealth. It skews true supply and demand. The fewer the economic elites, the fewer people determining the economic outcomes for the many.

Monday, July 27, 2009

Arguing with Shelby Steele on Racial Inequality

Conservative author Shelby Steele in the Washington Post opinion section tackled the ever-controversial topic of affirmative action and persistent racial inequality in the article “Affirmative Action Is Just a Distraction.”

In a nutshell, he argues that persistent racial inequality today between whites and African Americans is primarily a result of black underdevelopment rather than racism.

Today's "black" problem is underdevelopment, not discrimination. Success in modernity will demand profound cultural changes -- changes in child-rearing, a restoration of marriage and family, a focus on academic rigor, a greater appreciation of entrepreneurialism and an embrace of individual development as the best road to group development.


Moreover, Steele asserts that:

“this underdevelopment is primarily a black responsibility. And yet it is -- as historically unfair as it may be, as much as it seems to blame the victim. In human affairs we are responsible not just for our "just" fate, but also for our existential fate.

But continuing black underdevelopment will flush both races out of their postures and make most discussions of race in America, outside a context of development, irrelevant.”


Let me break down where I think Steele makes a good point—and where he and traditionally, most American conservatives, miss the mark.

Shelby Steele makes a good point:
• I believe Steele is right when he argues that the problem—or rather, the cause of the problem of inequality—is underdevelopment rather than discrimination.

I think Steele might be onto something when he argues that the problem of racial inequality isn’t as simple and reducible to white racism anymore. In my own experience as an Asian-American and an immigrant, much of my own personal setbacks personally, professionally and academically were not a direct result or byproduct of white racism but primarily is a result of being in unfamiliar territory where I did not know the rules of the game and I did not have mentors to help guide me on strategies how to advance.

Being thrown in unfamiliar turf (such as college or the Washington, DC white-collar workforce) where many of the players were white, upper middle class and above, and American-born does put me at a disadvantage. But the fact is, I was able to gain entry into that turf and get a chance to play. I see some validity in Steele’s point that although a minority in the white, white-collar world, white racism did not hold me back from entry into that world. How far I could advance in that turf is a mixture of a function of my own personal drive, ambition, skills and network. And yes, racism may play a key role in determining who gets to break into the upper echelons of management. But right now, I don’t see white racism as a factor in determining how far I can advance in my field as much as I see social class and how well my early education, college and being middle class has prepared me to enter the professional workforce.

Shelby Steele misses the mark:

• I believe Steele misses the mark in his prescription on how best to tackle black (and other racial) underdevelopment. He argues that a change in culture among African Americans is the best road to development. A cultural change that leads to changes in behavior that deal with child-rearing, marriage and family, a focus on academic rigor, a greater appreciation of entrepreneurship, and a focus on individual development as the best road to group development.

This is where Steele’s argument gets a bit hazy. He posits certain factors as all missing from the culture of those who are underdeveloped—the prescription, therefore, is to inject these elements into the underdeveloped culture and watch family, entrepreneurship, and academic achievement grow. And oh yeah, it’s primarily blacks’ (and other marginalized groups) responsibility to change their culture. In one fell swoop, therefore, he absolves white America of having any role or responsibility in the uplift of their fellow Americans of color in the social and economic margins.

The problem I have with Steele’s culturally-based argument is that if you break it down to matters of public policy and how laws are implemented, government programs and resources are allocated, and the role of private citizens in making this happen all of Steele’s prescriptions boils down to a lot of feel good conservative rhetoric that lectures people on their supposed personal shortcomings—and not much else.

Furthermore, his singular focus on group responsibility to pull themselves up by their own bootstraps neglects the fact that persistent inequality is an American problem. In my opinion, Steele is far too eager in absolving white America of wrongdoing or moral culpability in matters of racial inequality and overlooks the idea that in a society we are all in the same boat.

The Persistence of Class

Where Steele and many pundits see racial inequality I actually see class. Historically, there have always been two schools of thought as to how an underclass should best to deal with the problem of inequality in capitalist economies: (1) for those at the bottom to learn how to play the capitalist game, to advance as individuals up the socioeconomic ladder and perhaps lead the way for other members of their group to advance as well; (2) for those at the bottom to challenge elite dominance through political activism, legislation and to transform capitalist society to be more equitable in distributing power, wealth and the rewards of society to the poor and working class.

Personally I do not see an inherent contradiction between these two strategies as methods to advance politically, socially and economically for marginalized groups. By that I mean an individual can be academically-inclined, aspire for professional success, and attain wealth in this society. At the same time, he or she can support political causes and activism whose aim is to advance class-based issues such as improving education for poor and working class students, providing meaningful healthcare to the uninsured, affordable housing, etc.

Steele and most conservative commentators see issues of inequality solely through the lens of individual effort and personal responsibility. They imply through their morally-laced arguments that if you are at the bottom of society and are not a member of the middle to upper class there must be something wrong with you and how you approach the problem of living in the complex, post-industrial America of the 21st century.

The way I see it, class is a natural byproduct of capitalist economies. There is a need for garbagemen, janitors, and service industry workers in this economy as there will be a need for doctors, lawyers, corporate executives and white collar professionals. The basic problem that Steele and other conservative commentators do not address is a question of fairness—is it fundamentally fair that the schools that service industry workers children go to, the housing and neighborhoods available to them, are inherently inferior and sub-standard in quality compared to the schools that the middle and upper classes’ children go to? Is it fair for the those who can afford to have excellent health and dental care while those who cannot afford have to do without? Is it fair for the children of professionals to have natural advantages in the quality of education they receive and preparation for life compared to the children of service industry and blue-collar workers?

Steele’s prescription is for minorities at the bottom to aspire to become middle and upper middle class, to take on the values and trappings of success as it is defined by those at the top. If your life sucks as a working class person, Steele and other conservatives argue that what you need to do is to aspire to be upper middle class where life sucks less.

I’m not saying there is anything wrong with that. What I am doing is to pose the question: why does life, opportunity, and other aspects of modern living have to suck for working class people? Wouldn’t a public policy and strategy that lifts all boats so it sucks less for marginalized groups make a lot more sense?

Where Does this Leave Affirmative Action?

By this time you probably would have guessed that although I come from quite the opposite political perspective from Shelby Steele, I actually agree with his assertion that the affirmative action debate in its current form is increasingly becoming irrelevant.

I am a proponent of injecting the notion of social and economic class and fairness in the equation of asking the question of what do we as a society do about inequality? I would argue that inequality is an American phenomenon – not just a black and white issue. If you actually look at the statistics, most poor and working class people in America are white. Addressing inequality has to do not just with ushering members of the poor and working class up the socioeconomic ladder without questioning the fundamental fairness of a social and economic structure where the fruits of society are only enjoyed by those at the top. I would argue that tackling inequality also has to do with how society allocates the rewards and resources at its disposal for the common good.

Monday, June 15, 2009

Made in America?

Here's something sad, maddening and a bit amusing:

Made in America: Corporate PR, Not Practice

Big Business wants it both ways: It wants to wrap itself in the ol’ red, white and blue while feeding the decline of the U.S. economy through its actual practices.

Here’s the latest example of such corporate hypocrisy. Over the Memorial Day weekend, J.C. Penney advertised a silkscreen T-shirt bearing the slogan, “American Made.” Yet when Joe Allen, a retired apparel manufacturer in the Dallas area, bought the T-shirt, he found it actually was made in Mexico—”of USA fabric.”

Allen didn’t just shrug off such a blatant sleight of hand. He took action, contacting Steve Capozzola at the Alliance for American Manufacturing. Capozzola sent an e-mail to J.C. Penney, saying that the ad was deceptive and asking why the shirt “was emblazoned with an ‘American Made’ slogan when it was in fact made in Mexico.”

Here’s what J.C. Penney spokesperson Kelly Sanchez had to say:

"You indicate that there was a shirt that depicted the slogan “American Made.” This type of slogan is referring to the actual person wearing the shirt and not to the manufacturing of the merchandise."

Full article at the AFL-CIO Blog.

Sunday, May 03, 2009

Mortgaging the White House

Hat tip: Craig Hickman

On CommonDreams.org



Published on Saturday, May 2, 2009
Mortgaging the White House
by Bill Moyers and Michael Winship



Finally, here we are at the end of this week of a hundred days. As everyone in the western world probably knows by now, this benchmark for assessing presidencies goes back to Franklin Delano Roosevelt, who arrived at the White House in the depths of the Great Depression.

In his first hundred days, FDR came out swinging. He shut down the banks, threw the money lenders from the temple, cranked out so much legislation so fast he would shout to his secretary, Grace Tully, "Grace, take a law!" Will Rogers said Congress didn't pass bills anymore; it just waved as they went by.

President Obama's been busy, but contrary to many of the pundits, he's no FDR. Our new president got his political education in the world of Chicago ward politics, and seems to have adopted a strategy from the machine of that city's longtime boss, the late Richard J. Daley, father of the current mayor there. "Don't make no waves," one of Daley's henchmen used to advise, "don't back no losers."

Your opinion of Obama's first 100 days depends of course on your own vantage point. But we'd argue that as part of his bending over backwards to support the banks and avoid the losers, he has blundered mightily in his choice of economic advisers.

Last week, at a hearing of the Congressional Oversight Panel (COP) monitoring the Troubled Asset Relief Program (TARP), Treasury Secretary Timothy Geithner tried to correct AFL-CIO General Counsel Damon Silvers. "I've practiced law and you've been a banker," Silvers said. Never, Geithner replied, "I've only been in public service."

We beg to differ. Read Jo Becker and Gretchen Morgenson's front-page profile of Secretary Geithner in Monday's New York Times, and you'll see how Robert Rubin protégé Geithner, during the five years he was running the New York Federal Reserve, fell under the spell of the big barons of banking to whom he would one day help shovel overly generous sums of money at taxpayer expense.

During "an era of unbridled and ultimately disastrous risk-taking by the financial industry," the Times reported, "... He forged unusually close relationships with executives of Wall Street's giant financial institutions.

"His actions, as a regulator and later a bailout king, often aligned with the industry's interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records."

Wined and dined at the Four Seasons, and in corporate dining rooms and fine homes by the very men whose greed and judgment helped bring on the Great Collapse, Geithner became so much a favorite of the Club that former Citigroup chairman Sandy Weill talked with him about becoming the bank's CEO.

According to Becker and Morgenson, "Even as banks complain that the government has attached too many intrusive strings to its financial assistance, a range of critics -- lawmakers, economists and even former Federal Reserve colleagues -- say that the bailout Mr. Geithner has played such a central role in fashioning is overly generous to the financial industry at taxpayer expense."

The two reporters write that Geithner "repeatedly missed or overlooked signs" that the financial system was self-destructing. "When he did spot trouble, analysts say, his responses were too measured, or too late."

In choosing a man to manage the bailout of the banks who's so cozy with its players, and then installing as his White House economic adviser Larry Summers, who in the Clinton administration took a laissez-faire attitude toward the financial industry which would later enrich him, the president bought into the old fantasy that what's best for Wall Street is best for America.

With these two as his financial gatekeepers, President Obama's now in the position of Louis XVI being advised by Marie Antoinette to have another piece of cake until that rumble in the streets has passed on by.

In fact, other Wall Street insiders -- many of them big contributors to the Obama presidential campaign, and progressive in their concern for the public interest -- privately are expressing serious concerns that Geithner, Summers and their associates are leading the president and America's taxpayers down a path toward further economic disaster.

This week, as Senate Majority Whip Richard Durbin of Illinois unsuccessfully fought for a congressional amendment he said would have helped 1.7 million Americans save their homes from foreclosure, the senator told a radio station back home that, "The banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

He could say the same of the White House.



There is a reason so many of us have serious doubts about Fredo and Summers and whether they are serving The President. I'll say it: I don't think their primary loyalty is to The President of the United States, and him listening to these crooked clowns could lead to him being a one-term President.

Monday, February 23, 2009

Economic Meltdown 101

I consider myself someone who tries to be informed about current events but sometimes the issues get so complex and events happen so quickly that it is all but impossible to keep up and still keep things in proper context and have a full understanding of what is going on. This is true, for me, of the economic meltdown and the after effects it has had in the worlds of politics and culture.

That is why I am sharing these resources for ordinary laypeople like me who are trying to get a grip on the economic issues. Here are three links that I discovered this morning that I feel are excellent primers on the economic meltdown and the chain of events that led up to it. Hat tip to the Common Cause blog for this information.

Common Cause Blog: The Economic Downfall for Dummies
The economic crisis exposed the myriad ways in which our financial institutions are interconnected in an intricate web of relationships. When one element of this intricate web turns toxic the rest of the web get infected and the whole thing starts falling down like dominoes. For me, the best look at each domino and how its toppling led to the next.

PBS Frontline: Inside the Meltdown (VIDEO SERIES)

Time Magazine: 25 People to Blame for the Financial Crisis

Time for Action to Fix The Banks & Bring Back Confidence - But Geithner Is Coming Up Short

Attention Team Obama - Peter Pan is not meeting the test.

I was skeptical about Obama’s choice for Treasury Secretary from the very beginning. Here is a man who had a hand in bungling the management of the financial crisis on Wall Street last year and who couldn’t keep up with his own Federal taxes. Now he is expected to be the chief financial steward for the nation? But I was willing to wait to see how he would perform. So far I have not been impressed. He has not instilled confidence, at a time when confidence is the key. Treasury Secretary Timothy Geithner has been mostly a failure so far and, in fact, appears to be exacerbating the nations financial situation.

President Obama has not dealt with this situation very well as a whole. We still don’t have a Commerce Secretary a full month after the inauguration. In the middle of an economic situation as bad as this, it seems to me that it would be important for Obama to have a full economic team in place. Obama wasted weeks with the Judd Gregg fiasco and the Lincoln bi-partisan nonsense. Enough already!!! It’s time to get to work. We are on a ship that seems to be taking on more water by the day.

At least half of the problem that Obama, Geithner and the rest of the economic team faces has to do with a lack of confidence… a lack of confidence from investors, from voters, from bankers, and from business owners. It’s psychological. But the actions of the Obama Administration - or lack thereof- have only added to the uncertainty and anxiety in the financial sector. They have not even made any serious efforts to bring calm and confidence to the markets. Instead, Obama has played up the crisis a little too much by talking down the economy at every opportunity. That doesn’t instill confidence.

Investors and voters, uncertain about the intentions of the Bush Administration, took a pause from the panic of last year because they wanted to see what the Obama Administration would propose. Since January 20th, Americans have been waiting for a plan. They want to see details about how Banks will be stabilized. Particularly, everyone has been waiting to hear how the Obama team would deal with taking bad assets off the hands of the banks so that the banking system could rebound. Keep in mind that Americans have already witnessed the bungling of the first half of the TARP funding. Americans have also witnessed the uncertainty from Former Treasury Secretary Henry Paulson, who offered one plan (buying toxic assets or somehow relieving banks of these assets temporarily) but then changed his mind a few weeks later, and failed to follow-up with any sensible cogent alternative plan. That kept the nation in limbo for weeks.

With the inauguration of Barack Obama, people were hoping for a sense of stability and a rebound in stocks. But that hasn’t happened. Geithner tried to offer yet another plan on February 10th, but that plan was rejected outright by observers. There were not enough details offered. The reaction of the markets should have been a clue to someone that another approach was needed.

The Geithner plan calls for a system of “Stress Tests” for the nations biggest banks to determine which institutions have the most toxic assets and the most liquidity problems. According to plan, the Government would buy a greater stake in the banks that are more susceptible to the pressures of the “Stress Tests” and would need more Capital.

But this is not the plan that people were waiting all this time for. People don’t want to hear anything about “Stress Tests”. This doesn’t seem to be a well thought out plan, and in fact, it’s only making matters worse. The lack of detail on what will happen next is also compounding the crisis. Investors and voters want to hear details on what the Obama Administration plans to do to remove the toxic assets from the balance sheets of the banks. This was the single most important thing that observers and investors were concerned with. But Geithner failed to address it.

Dealing with the bad assets is the most logical approach proposed so far. Henry Paulson and Ben Bernanke should have stayed with this original plan of parking bad assets until their values could improve (and they would have improved once the housing market and the overall economy began to recover). So why did the Obama Administration decide to float this idea? It only introduced more uncertainty. The situation is not likely to improve anytime soon unless and until the issue of the toxic assets is dealt with clearly and with certainty.

Obama misfired in his initial attack of the economic crisis. He allowed himself to get bogged down in too much political nonsense, spending far too much time selling the Stimulus bill and impersonating Abraham Lincoln, and not enough time dealing with the task at hand. He lost several weeks on his bi-partisan experiment, which ironically ended up being extremely partisan, when time was of the essence. Obama should have attacked these issues simultaneously - the banking system - jobs/recession - and the crisis in the housing market. Instead, he tried to take on these issues, almost one by one…. And in the wrong order. The fact is, team Obama appears to be just as clueless about how to tackle this problem as the Bush Administration was. Obama has assembled two economic advising committees, made up of what are supposed to be some of the greatest economic minds in the nation. Yet, no one seems to understand that at least half the problem (if not the majority) is psychological and that confidence is key to restoring some semblance of order. Why is this so hard for these people to understand? This problem is just as much about human psychology as it is about economic theory.

And after the pathetic Geithner announcement earlier this month (Feb.) regarding the “Stress Tests”, while the market tanked yet again… the Obama Administration failed to offer any sort of follow-up. We haven’t heard anything from Geithner since then. They allowed the uncertainty to fester….allowed rumors to swirl and left too many unanswered questions lingering. This has only exacerbated the crisis. The stock market has dropped around 700 points since Geithners’ announcement.

Eight years of the Bush Administration and the constant negative news reports have led to a sort of psychological malaise among Americans. People are now sitting around waiting for the next batch of bad news to react to, rejecting anything positive. And we have been stuck in this mindset for years. Obama managed to use his hope message to break through some of that during the campaign, but now, when hope is needed more than ever, he seems to be embracing the old politics of fear.

And I’m afraid that the temporary reprieve that investors and voters gave Obama might be about to end. Americans might resume their panic, now that they see that the toxic assets won’t be managed as originally thought and since plans keep changing. Geithner’s “Stress Test” approach will likely only lead to more speculation (and less certainty and confidence) about which banks might be in trouble. This could lead to crashes in bank stock and potentially a run on those banks. A run on any major bank may spread to even the healthy banks, causing a run on those banks as well. Remember, much of the problem is psychological and Americans, especially investors, are not behaving rationally at the present time. Anything can spook the financial markets.

The stock market…and banks may tank even further in the next few days and weeks… unless Obama and his economic team can find their voice and begin to instill some kind of confidence. Obama will be giving a big speech on Tuesday and it will be a chance to instill confidence & hope. And it would be nice if he offered a plan to fix the financial mess.

Sunday, February 22, 2009

“Free Trade” vs. “Protectionism” is a False Debate

Labor activist Jonathan Tasini over at the Working Life Blog makes a good point when he says:

[N]o one is against trade. Trade has taken place since the beginning of human history. The only question is what RULES we put in place to manage trade. The issue of so-called "free trade" and, by extension, how one views the power of corporate America to shape our economic lives is, from my little vantage point, THE deep, systemic change question on the economic vision side.

I have argued for a very long time that "free trade" is just a marketing phrase. It does not exist in the world today -- and perhaps never has. What we have are a very set of complex rules that are about one thing: seeking the lowest wage possible.

He adds:

So-called "free trade" lives in the same economic neighborhood as sub-prime mortgages, CEO greed, the attack against unions and the divide between rich and poor -- all of which point to the real challenge we must address: the collapse of wages for most Americans. Until we take that head on, we won't get out of the economic crisis we find ourselves mired in.

The issue of so-called "free trade" is precisely an area where we need to have a vigorous, consistent, unyielding "loyal opposition" to the Administration. We can't depend on the president to change the debate on trade because he is a captive of a system that can only see trade in the prism of the debate between two false marketing phrases: "protectionism" versus "free trade".


In another post, Tasini radically re-frames the argument on economic policy beyond the limitations of “free trade” versus “protectionism” to one that examines the relationship between wage growth and productivity. He says:

Basically, the basic bargain was roughly this -- if you worked hard and became more productive, you would see that sweat of the brow in your wages. And from the post-war era until the 1970s, that deal basically held -- as you can see from the lines that are basically close together until the 1970s. (The graphic in the link illustrates his point).

Then, the lines diverge--dramatically. You can see it yourself. If the lines had continued to track closely together as they did prior to the 1970s, the MINIMUM WAGE would be more than $19 an hour. THE MINIMUM WAGE!!!

So, in short: people had no money coming in their paychecks so they were forced to pay for their lives through credit -- either plastic or drawing down equity from their homes. There are lots of reasons that this happened -- greed, the attack against unions, de-regulation, dumb trade deals.

But, the point is: we will never fix the economic crisis, whether through short-term economic stimulus and certainly not through tax cuts, until paychecks are re-inflated. Dramatically.

Tasini argues for a radical way of re-framing the bailout and stimulus debate and designs a bailout plan for the working and middle class in this post.

What do you all think? I think Tasini is on to something. Whether or not you agree with his conclusions, I think he is absolutely right on target when he says the “free trade” vs. “protectionism” debate is a false one between two empty and meaningless marketing phrases. We have to get beyond that type of thinking if we are to come up with creative and effective ways to cope with and come up with solutions to this economic crisis.

Friday, January 30, 2009

Middle Class Task Force Is Unveiled by Obama

Today, the Obama administration unveiled a new initiative specifically designed to address the concerns of the middle class. This is the first explicitly Populist and pro-Labor move that the Obama administration has made.

Obama, Biden Task Force On Middle Class (MSNBC)
On the campaign trail then-candidates Barack Obama and Joe Biden cast themselves as champions of labor and middle class, men who had not forgotten where they came from and who would fight for the concerns of ordinary Americans.

Today's announcement of a task force aimed at studying ways to raise living standards for middle class Americans and help the poor become middle class is in line with that same populist theme and with Obama's consistent focus on economic issues at a time of rising unemployment.


Middle Class Task Force (White House Web site)

The Task Force is a major initiative targeted at raising the living standards of middle-class, working families in America. It is comprised of top-level administration policy makers, and in addition to regular meetings, it will conduct outreach sessions with representatives of labor, business, and the advocacy communities. The Task Force will be chaired by Vice President Joe Biden. The Vice President and members of the task force will work with a wide array of federal agencies that have responsibility for key issues facing the middle class and expedite administrative reforms, propose Executive orders, and develop legislative and policy proposals that can be of special importance to working families.

Members of the Middle Class Task Force include: Vice President Biden, Chair; the Secretaries of Labor, Health and Human Services, Education, and Commerce, as well as the Directors of the National Economic Council, the Office of Management and Budget, the Domestic Policy Council, and the Chair of the Council of Economic Advisors.


From his remarks upon the announcement of the creation of the Middle Class Task Force

I also believe that we have to reverse many of the policies towards organized labor that we've seen these last eight years, policies with which I've sharply disagreed. I do not view the labor movement as part of the problem, to me it's part of the solution. We need to level the playing field for workers and the unions that represent their interests, because we know that you cannot have a strong middle class without a strong labor movement. We know that strong, vibrant, growing unions can exist side by side with strong, vibrant and growing businesses. This isn't a either/or proposition between the interests of workers and the interests of shareholders. That's the old argument. The new argument is that the American economy is not and has never been a zero-sum game. When workers are prospering, they buy products that make businesses prosper. We can be competitive and lean and mean and still create a situation where workers are thriving in this country.


What do you think of this move by the Obama administration?

Thursday, January 08, 2009

President-Elect Obama's Speech: American Recovery and Reinvestment

Friday, December 05, 2008

Naomi Klein Profile at the New Yorker

Visit the New Yorker for an excellent profile of the work of Naomi Klein, political author, activist and critic of neoliberal globalization economics.

The profile contains a synopsis of Klein's latest book, The Shock Doctrine:

The central thesis of the book is that capitalism and democracy, free markets and free people, do not, as we’ve been told, go hand in hand. On the contrary, capitalism -- at least fundamentalist capitalism, of the type promoted by the late economist Milton Friedman and his “Chicago School” acolytes -- is so unpopular, and so obviously harmful to everyone except the richest of the rich, that its establishment requires, at best, trickery and, at worst, terror and torture. Friedman believed that markets perform best when freed from government interference, so he advocated getting rid of tariffs, subsidies, minimum-wage laws, public housing, Social Security, financial regulation, and licensing requirements, including those for doctors -- indeed, virtually every measure devised to protect people from the market’s harsh logic. Klein argues that the only circumstance in which a population would accept Friedman-style reforms is when it is in a state of shock, following a crisis of some sort -- a natural disaster, a terrorist attack, a war. A person in shock regresses to a childlike state in which he longs for a parental figure to take control; similarly, a population in a state of shock will hand exceptional powers to its leaders, permitting them to destroy the regulatory functions of government.

Full article at the New Yorker.

Wednesday, October 29, 2008

The Rich are Different Than You and Me: They Cheat

A couple of Econ professors combed through old IRS data and have reached the conclusive conclusion that the rich cheat more on their taxes. That might explain why they have more than you. You're a regular Honest Abe and the rich are a bunch of Shoeless Joe Jacksons.

Analysis
A good start at cleaning up the fiscal mess we're in would be to actually collect all that is owed the federal government. You may not like paying taxes, but it's the law. You shouldn't get to pick and choose which laws to obey. Leave that to me.

Increase fines and penalties on financial miscreants. It's one thing to make an honest error, but these folks who pay tax lawyers and accountants millions a year to hide millions more should be ashamed. My God, think of the children!

I'm not for a flat tax - it is not fair, but I do support a trimmed down federal tax code. That would certainly help.

Friday, October 17, 2008

Addressing the economic issue, again

joe the plumberOne of my commenters suggested that I was going after Joe the Plumber. Well, he actually said, "this is so typical how the weak intellectually deficient left wing liberals address an issue." This brings up two issues -- first, I did not say that "Joe the Plumber" is a bad guy or was a terrorist or was morally deficient. Instead, I pointed out the facts as they stand. "Joe the Plumber" may not be a plumber nor a contractor since he is not licensed to do either in Ohio. Secondly, I've addressed the issues in several posts (here, here). I addressed these issues long before John McCain made Joe the Plumber a household name.

Trickle-down economics doesn't work and has never worked. Republicans have been unable to create jobs in comparison with the success of the Democrats. Since Truman, Democrats and their policies have consistently been able to create more jobs than Republicans. This isn't my opinion. This is fact.

Creating incentives to get more money into the hands of the middle class stimulates the economy and causes small business to grow. Again, this isn't my opinion. This is fact.


John McCain and the rest the Republican Party have proposed nothing new for our country's economic woes. Their answer to every crisis is tax cuts for the rich. That is their answer. We've learned over the past 27 years that what happens is that the rich get richer and the rest of us are left behind.

Finally, I would like to address the notion that empowering the middle class is something akin to Marxism, socialism or whatever other derogatory term the right wing is using today. The middle class is the fiber of our country. As such, they are the engine that makes industry great. Under Franklin Roosevelt we saw increased taxes on the rich and a government that supported unions. Yes, I mentioned unions. Unions work to increase wages for the middle class. Unions are sometimes the only leverage that the middle class has against management. Unions also work to suppress inflated CEO salaries. So in the "40s and "50s, as a result of these forces, there was a compression of our society. The rich were a little less rich but the benefits of these policies made the poor a little less poor. Anything that benefits the middle class directly is something that I will support because it is good for America and good for our economy.

Monday, October 13, 2008

Congratulations to Paul Krugman for winning the Nobel Prize in Economics

I became disgusted with Krugman during the Primary Season as he turned into a Hillary shill, but give respect when it's due.