The Building Tsunami (October 13, 2008)

Posted in Economics, Federal Reserve, Housing on October 13, 2008 by e-commentary.org

Things are collapsing.  The mortgage/house is no longer an ATM (Automatic Teller Machine).  Mortgages were given to individuals who could not pay.  At least with a mortgage there was a structure providing some collateral to support the loan.

The populace is still spending beyond their means.  The staggering amount of credit card debt is another Great Tsunami.  Credit cards are being given if not shoved down the throats of individuals who cannot pay.  These Improvised Explosive Devices (IEDs) are plastic explosives delivered daily by the United States Postal Service.  They will all explode within the next year.  And then the Congress, the Fed. (Federal Reserves system), and the business and economic press will express surprise, display panic and engender fear.

The geopolitical concerns are overlooked or disregarded.  The rest of the world is now taking over the US by “investment not invasion” as American becomes a “second world former superpower.”  More later.

Bumper sticker of the week:

Déjà vu all over again?

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A Bleak Day: The Trillion Dollar Tragedy (October 6, 2008)

Posted in Bailout/Bribe, Bush, Debt/Deficits, Economics, Federal Reserve, Greenspan, USA PATRIOT Act on October 6, 2008 by e-commentary.org

Congress failed.  Again.  The Bailout Bill will accelerate the Meltdown by misallocating funds and burning day light needed to address the underlying problems.

A three page travesty delivered by Bush became a 451 page travesty cum pork adopted by Congress.  These votes may rank with the Gulf of Tonkin Resolution, the Iraq war resolution, and the USA PATRIOT Act vote.

The public saw a 1.1 Trillion dollar drop in the value of their investments/401(k) IRAs last Monday and seemed to believe that a 700+ Billion bribe was worth the gamble.  The Bailout Bill will cost at least 1 Trillion to administer directly and will cause Trillions more in losses and damage.  Bribing the big players not to pull the plug until after the election is over is almost criminal if not treasonous.

Few note that the current crisis will be made worse by this bailout/bribe.  Beyond concerns about “moral hazard” and “bailouts for billionaires,” the problem is that the bailout is creating an even great credit crunch for the country.  There is way too much money in the economic system in the wrong hands.  The new money is being funneled into the wrong vessel, into a bowl not a colander.  The money will be hoarded.  The money is being not made available to the public.

Raising the deposit amount insured by the FDIC from $100,000 to $250,000 appears to offer something to the public, yet it also discourages the individual investor from monitoring his or her financial institution.  Individuals are deluded into believing that everything is ducky.  Individuals not just the government must act as regulators.  Banks that will soon be taken over by the FDIC are offering much higher interest rates to gobble up as much money as possible before the collapse.

Consumer confidence has never been higher.  Consumers are confident that the entire economic and political system is broken.

Business confidence has never been higher.  Businesspersons know that they are lying and, of greater import, that all other businesspersons are lying.  Reading between the lines of the economic reports is a challenge.  Reading between the lies is vexing.

So many fought to declare and establish independence for this country.  Last Friday, Congress voted to establish and fund a czar/dictator/central planner.  Two hundred thirty-two years later, we have a King of Finance.  Emperor Paulson.  One of the individuals who created the problem has been crowned to deepen it.

Fear once again triumphed over hope and reason.

Bumper stickers of the week:

Those who repeat history are doomed to repeat history.

If you think 401(k) is your mother-in-law’s bra size, then you might be a redneck.

—–Jeff Foxworthy

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Futile Efforts (September 29, 2008)

Posted in Bailout/Bribe, Congress, Economics on September 29, 2008 by e-commentary.org

HSB

Washington, D.C. 20510

Senator _________:

Enough.  This bailout/handout is obscene.

Risk is the handmaiden of reward.  Success and failure are American.  Privatizing success and socializing failure are unwise if not criminal.  And no way to run a Republic.

Why are we as a country creating a dictator/czar who is not subject to congressional oversight or judicial review to decide how he will run the country?  Paulson was previously the Chairman and CEO of Goldman Sachs.  The wolf is in charge of the hen house.  He has done nothing for years.

This problem has been with us for many years.  Why get excited now?  We as a country got all excited and passed the PATRIOT Act, went to war with Iraq, etc.  Now is the time to reflect.

Reflect on the three articles in today’s NYT:  Kristol, Krugman and Cohen.  Cohen’s article addresses the international dimension.  The rest of the world does not care about the developments in the USA and is not going to do anything to help.  Let’s not be so concerned about the rest of the world on this issue at this time.

If we as a country are going to nationalize the industries, why not nationalize the industries rather than just the losses?

If we reject the bailout, there will be some inconveniences and costs, yet life will go on.  We will get up in the morning, put on our socks and go on with life.

If the legislation is passed, there is no rescinding it according to its term.  The long-term negative consequences of a bailout/handout to the taxpayer and the country are incomprehensible.

It is time to say No! to this travesty.

This legislation is unwise and imprudent.

Over the last few days, I have been surprised at how united _______ are on this issue.  Across the political spectrum, there is disgust and outrage.

It is time to reflect.

Sincerely,

_______________

****************************************************************************************************

RHOB

Washington, D.C. 20515

Dear Congressperson ______:

The politicians must quit digging.  “When you are in a hole, quit digging.”  Now is the time to reflect and think clearly about this “Economic 9/11” that has been foisted on the Republic by Wall Street with the involvement of far too many equally greedy American citizens.

The bailout bill is a travesty that will create more intermediate-term problems without solving any current ones.  The only way to fund the bailout will be to print money or borrow it from the Chinese and other countries.  Either source of funds is fraught with even worse economic consequences in the next six months.

If ma and pa store owner in [local towns] cannot get credit, then establish a program to allow direct short-term emergency loans from the government, perhaps the SBA, to meet their credit needs.  If someone cannot get a loan to purchase a vehicle, establish a program to provide a loan and take a security interest in the vehicle.  The New York banks have all the money in the world and still refuse to loan it.  Why reward that behavior by giving them more money?  Why push on a string?

The Senate is often described as the more deliberative body.  It is a wholly-owned subsidiary of the banking industry, lock, stock and sinker.

Bernanke showed tremendous promise, but he has failed.  Paulson is part of the problem and should not be vested with the powers of a czar/dictator/central planner so that he can benefit his friends and former colleagues.

The economic and business press is behind this bill in part because, with a few notable exceptions, they have so miserably misunderstood and misrepresented the problem for years.

This is a time for courage.  Vote against this version and make a public statement that the “leadership” must make another effort to provide a sound bill or the negative economic consequences will be their responsibility.  Let the House shine.

Regards,

________________________

Bumper sticker of the week:

Otter:  “I think this situation absolutely requires a really futile and stupid gesture be done on somebody’s part.”

Bluto:  “We’re just the guys to do it.”

“Animal House” movie (1978).

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August 1, 2008

Posted in Uncategorized on August 1, 2008 by e-commentary.org

Hiatus

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July 1, 2008

Posted in Uncategorized on July 1, 2008 by e-commentary.org

Hiatus

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Hiatus (June 1, 2008)

Posted in Bush, Depression, Economics, Global Climate Change on June 1, 2008 by e-commentary.org

The “Bush Depression” is inevitable.  World War III proceeds apace.  We are behind the power curve addressing climate change.  Nothing helps; nothing works.  Time for a break.  [See the e-ssay dated May 11, 2005 entitled “The Coming Depression Is Not Depressing.”]

Bumper sticker of the Summer:

Insanity is doing the same thing over and over again and expecting different results.                             Al Einstein


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$4 in June, $5 in July, . . . . (May 26, 2008)

Posted in Economics, Taxation on May 26, 2008 by e-commentary.org

$4 a gallon in June, $5 in July, $6 in August . . . . or October?  Speculators and hoarders may be distorting the market somewhat.  The real problem, of course, is one of supply and demand, too little of the former and too much of the latter.  Our global addiction is growing along with the number of new addicts.  Citizens of the world are voting daily in the world’s global voting booths – the maternity wards of the planet.  Those little mouths will consume their daily supply of unrefined bread and refined oil.  They say that if the rest of the world consumes like a typical American (which they are and will), we will need to colonize three more planets.  However, the last census concluded that there is only one planet.  For over a third of a century, since at least 1973, the world has been on notice that oil is finite.  Little has been done to reduce the luster of and lust for oil.  Seems like the time to act?

Bumper stickers of the week:

Pass the Terrorist Tax

Check those tires

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Less Government Regulation Series: Love and Marriage (May 19, 2008)

Posted in Gay Politics, Government Regulation, Less Government Regulation Series, Miscegenation on May 19, 2008 by e-commentary.org

Some day, being gay will be akin to being left handed.  No big deal.  Some opine that  there are differences between those who are right handed and those who are left handed yet not enough to start passing legislation mandating disparate treatment.

The California Supreme Court ruled on equal protection grounds that gays in California can marry.  The decision to marry is an individual choice.  The collective (judicial, legislative, executive, bureaucracy) should not define it.

“This is hard to say as a guy, but you aren’t real judgmental.  I think I’m, like, 15 percent gay.”  “I am satisfied that I just don’t have any such impulses, yet I understand that Nature wires some members differently.  . . .   By the way, how does that work?”  . . . . . . . . . . .

The science jocks say that sexual orientation is spread along a continuum.  A small percentage of the population is strictly heterosexual.  Are most members of the population dealing with demons and fears and anxieties that distort their perspective and politics?  Will the constituency for freedom of marriage include those who have no impulses at all toward those of the same sex, those who do, and a few stray free-thinking civil libertarians?

In another generation, however, no one will care.  The current restrictions will be as anachronistic as yesterday’s miscegenation laws.

Bumper sticker of the week:

There oughta not be a law.

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Economics and Economists (May 12, 2008)

Posted in Economics on May 12, 2008 by e-commentary.org

In the contemporary College of Arts and Crafts, the “Department of Economics” is the “Oakland Raiders” team.  Most departments in America’s Colleges of Arts and Sciences want you to feel good.  Economics should require one to think clearly.  Even if you feel badly.  Any question should be fair game.

The discipline today is premised on questionable assumptions that cannot be abandoned by the profession or most doctrine would need to be rejected.  Or at least questioned.  A person is greedy and self interested and all that, but that does not mean that she (or he) is even capable of acting in her (or his) own economic self interest.  If individuals cannot or do not act in their own economic self interests, markets are not likely to behave properly or to reach equilibrium.

The area of economics known as “behavioral economics” ask how a person actually behaves.  That should be the province of economics.  How and why do people act or fail to act.

What could be more fun than playing with Lagrange multipliers and toying with the Slutsky equation and endeavoring to move others to a state of Pareto optimality?  Economics is sexy.  And economists?

Bumper sticker of the week:

An economist is someone who stands behind you in the bread line and tells you how it happened.

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The Economic Numbers Game (May 5, 2008)

Posted in Economics, Inflation, Unemployment on May 5, 2008 by e-commentary.org

“The truth, though it would not exactly set Americans free, would at least open a window to wider economic and political understanding.  Readers should ask themselves how much angrier the electorate might be if the media, over the past five years, had been citing 8 percent unemployment (instead of 5 percent), 5 percent inflation (instead of 2 percent), and average annual growth in the 1 percent range (instead of the 3 – 4 percent range).

. . .

The real numbers, to most economically minded Americans, would be a face full of cold water.  Based on the criteria in place a quarter century ago, today’s U.S. unemployment rate is somewhere between 9 percent and 12 percent; the inflation rate is as high as 7 or even 10 percent; economic growth since the recession of 2001 has been mediocre, despite a huge surge in the wealth and incomes of the superrich, and we are falling back into recession.

If what we have been sold in recent years has been delusional “Pollyanna Creep,” what we really need today is a picture of our economy ex-distortion.  For what it would reveal is a nation in deep difficulty not just domestically but globally.”

Kevin Phillips

The CPI (Consumer Price Index), the benchmark for measuring inflation, underreports the actual prices for necessities such as food and energy.  [See the e-ssay dated July 16, 2007 entitled “Back Door Inflation.”]  The current CPI is “inflation sans inflation.”  The U-3 unemployment figures underreport unemployment, whereas the U-6 figures are more accurate.  The reporters should report the U-6 figures.

Perhaps the government should simply state and the media could mindlessly repeat that there is no inflation and are no unemployed citizens while the economy is growing ten percent every year.  How much less true would these statements be than the current statistics?

“Transparency” is the rage in many disciplines today.  Presenting accurate information and revising all the past information to conform to consistent and reliable benchmarks across time is a positive and long overdue start.

See www.shadowstats.com by John Williams and navigate from there.

Bumper stickers of the week:

73 percent of all statistics are made up on the fly.

Lies, Damn Lies, and Government Statistics.

Disraeli was 100 percent right.

U-6 Not U-3 Unemployment Figures.

[Mildred Loving, one of the plaintiffs who challenged the miscegenation law in Virginia, died today.  See the e-ssay dated March 14, 2005 entitled “’Strict Construction’ Strictly Construed.”]

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