Bank bailouts and bonuses at the taxpayers’ expense enough to make me a one-issue voter…

July 24, 2010

I’m not usually a one-issue voter. I mean I don’t think I ever decided not to vote for someone over their stand on one issue, such as gun rights, abortion rights, school prayer, gay marriage, and so on, you know, the hot button topics.

But this bank bailout — history I know — but to realize from the latest news that taxpayers, which is all of us, were the benefactors of some $1.6 billion in bonuses to fat cat bankers who were bailed out by the federal government and that they will not be forced to pay them back is really enough to make me a one-issue voter.

I admit that I am often bewildered by the subject of economics. But on the one hand we were all told that the whole economic system of the United States would collapse if the government did not bail out the banks. So the banks took the money and then rewarded those who oversaw the near collapse of the economic and banking system with the bonuses, bonuses made possible by taxpayer funds.

From the very beginning, when George W. Bush proposed the bailouts and on through Barack Obama’s continuation of the bailout program, I blogged that it was wrong. Let the banks go bankrupt or be reorganized through existing government rules.

You see, economically challenged as I may be, I understand that what happens in capitalism is that while some capitalists fail, the void will be filled by others. I don’t think capital disappears, it just moves from one hand to the other.

It is true that holders of capital will sit on it for a while until they see the right timing or in times of change, such as now, until they know what the rules going forward are.

The government should be the watchdog over the economy to see that everyone is playing by the rules, and there does need to be rules. The government in lo these past many years has failed in its watchdog capacity and it did discard some of the rules.

And I am not too sure but what the Obama administation has made a mistake in enacting too many new rules with its latest reform legislation, but that is not my point here — the business community at least will now find out what the new rules are, although that will take time, I understand, as the new law goes into the administrative rule making process.

It is a mistake to have the government run the economy. Only the market can do that.

It is a mistake to think that no one should lose out. If no one lost out, no one would win.

In a robust economy, though, it can almost seem like everyone is a winner. Certainly, in that case, everyone has a chance.

What we are suffering from now is the battle of the extremes, with social elitists on one side trying to create a system in which no one ever suffers and special business interests on the other side who want the whole economy to work for them.

We need to go back to a more centrist approach in which business can thrive and the government can carry out its watchdog activities to ensure fair play in the market and fair play, but not direct subsidy, and safety rules for those who depend upon wages paid by capitalists, as well as modern environmental protections for the preservation of our planet and the safety of all.

A straight forward and far less arcane tax system would be of great benefit too. Too much capital is expended in enforcing the present tax code and too much revenue is lost in the process.

And I still believe that our continuing war exploits do little to ensure our defense and in fact only promote more hostility and may ultimately bankrupt us.

The Soviet Union spent many long wasteful years in Afghanistan and went bankrupt due to its military intervention there as well as the failure of the Soviet economic system itself.

But those bailouts and the idea that while everyone else is told they must tighten their belts, we must at the same time sit back and watch the bankers laugh all the way back to their banks with our money.

(And I realize that not all bankers fall into this category.)

Maybe the Tea Party is right on this one. We should throw out the whole ruling class and start over.

Whoa, that kind of sounds like what I’ve read about the French Revolution (I would hope we could do this at the ballot box and avoid the violence.)


Capitalists may need to know the rules more than they need bailouts…

April 29, 2010

I don’t have the credentials to speak about finance but I have credentials to speak as an ordinary person. And I still say that the government bailouts for Wall Street investment banks and for the auto companies were a mistake.

You’re not likely to get bailed out when you go to a casino and lose a bet, why should you get bailed out when you bet in the securities markets?

In fact the whole gambling industry would go down the tubes if there was such a thing as a bailout. The game would be ruined.

For there to be winners there has to be losers and for there to be big winners, there has to be big losers — win, win does not really happen in gambling and in Wall Street securities trading.

But it is important for the game to be on the up and up — people lose interest once they realize the deck is stacked. And if they do not realize it, they stand to lose their retirement in the financial markets.

An article I read in the Wall Street Journal (I believe it was there) indicated that regulatory agencies were understaffed. While it does seem to be true that some of the high-priced lawyers were wasting time looking at porn on government computers when they should have been doing whatever they could do to protect the investing public, the article noted, the agencies were understaffed, with lawyers having to do menial work usually given to support personnel. I would say the agencies need to be beefed up and maybe we need some more dedicated personnel.

But what really caught my eye was one of those debate articles in which a for and against position was given on whether collateral debt obligations have any social value. That article was in the New York Times. It was referring to so-called synthetic CDOs that play into the Goldman Sachs controversy.

Without getting into all the technicalities, the one side suggested that they were an innovation with no social value and should not be allowed. And that in fact they were partly responsible for causing the meltdown in the housing market.

But the other side argued that innovations, such as CDOs, are not the culprit. Instead, the culprit is a lack of regulation and the expectation that if things really go wrong, the government will bail people out.

Well that was my quick interpretation of it anyway. If I have misrepresented the arguments, I still basically believe what I’ve said. I know next to nothing — well more accurately, nothing, about CDOs themselves, but I would think most people agree there needs to be at least a modicum of regulation for financial markets to be fair and work for everyone and thus have utility for society, other than to be just crooked gambling casinos. And people who know they stand to lose everything (with no Uncle Sam to bail them out) will likely put a lot more care into what they do, be they buyer or seller.

P.s.

Indications from all the latest financial news seems to be that some type of recovery from this Great Recession is taking place. And some may tout this as vindication for the bailouts. But I am not sure but what things would have recovered anyway. A lot of time is wasted in bailout efforts, because if nothing else, the capitalists have to figure out how to game that system. There is always capital out there, but it wants to know what the rules are. When you monkey with the system, some of that capital lies idle waiting for a sign as to what the new rules will be. From what I have read one of the greatest things Franklin Roosevelt did during the Great Depression of the 30s was to relieve human suffering. But despite his activism in the financial sector it took nearly a decade and finally World War II and the demand it put on the economic system for production to get the economy going.

While I would never want war to be the answer anyway, today’s modern methods of fighting war seem to be more of a drag on the economy overall.

P.s. P.s.

And isn’t it strange that the American car company that did not take the bailout money, Ford, leads the pack now?

While the bailouts may in the long run have helped GM and Chrysler, they set a bad precedent for business. What seems to be saving all American auto makers now is that they are reportedly doing everything to be competitive, including taking advantage of bad publicity suffered by Toyota for either its safety failures or its lack of or slow response to customer complaints, or all of the above. I think the American auto companies for the most part and for too long shorted customers on real quality and longevity in favor of glitz and planned obsolescence and settled for a high-priced niche market, rather than compete with the foreign companies head on. They seem to be back in the game. And it doesn’t hurt that Ford pickups have such a loyal following.


Bad mortgages: To walk or not to walk? That is the question…

April 21, 2010

Is it wrong to walk away from a mortgage because your house is now worth far less than you agreed to pay for it? And is it even more wrong to do so if you can still afford to make the payment?

Technically the answers are probably yes and of course.

But common sense, the kind that many money makers use, would tell you no, circumstances may well make it the right thing to do.

The story on the TV I was watching said that the Mortgage Bankers Association was urging underwater homeowners not to default. “Think of your neighbors” , they said. It depresses property values, they said, but the narrator of the story pointed out that, paradoxically, the bankers association defaulted on the mortgage for its own skyscraper because of the lost value of it.

So there you go.

If you can’t afford to make the payments anymore there is really not much recourse.

I know from personal experience and from that of some people I know that the banks, contrary to what many so-called advisors will tell you, are not willing to listen to any renegotiation talk, and besides, you may well have nothing to offer them anyway.

Interestingly, a high number of the relatively few people who have managed to get assistance from the emergency rescue program from the Obama administration have wound up re-defaulting.

Defaulting is essentially just an unofficial bankruptcy.

Now as to willingly defaulting when you have the means to pay just because you make a gamble and lost, that does seem a tad immoral. But then again it’s human — it’s what people do to survive. And the big boys on Wall Street did get bailed out by the taxpayers on their gamble and on their crooked dealing — so there’s something to at least rationalize with.

Part of me says or wishes the government would have bailed out the homeowners, not the investment bankers, but part of me says neither was a good idea.

Consumers and big time investors were operating in a phony, corrupt market. The consumers should not have tried to take on more than in their hearts they knew they could handle and the high finance people knew what they were doing was wrong and could lead to no good. There was a collective lapse of judgment and morals and now so many are paying the price — not all. The shameless, such as Goldman-Sachs, are probably snickering as they stuff their pockets and rationalize away all their thievery, blaming any wrong doing on a few bad apples and ignorance of what was going on in the next cubicle or office.

When we get back to strict oversight in financial dealings, aimed not at protecting investments but rather insuring honest dealing, and when we let it be known that bailout is not an option, our economic vigor will recover.

And then maybe we an go back to producing things and services people really need rather than trying to make wealth out of nothing and winding up with nothing in the long run.


Wall Street bailout could hurt “conservatives” who failed to be conservative…

April 14, 2010

If ever there was a dark conspiracy and moral wrong in my lifetime (age 60) it is the bail out of the Wall Street bankers at the general public’s expense and then the audacity of the Wall Streeters collecting multi-million bonuses made possible by the gift from the taxpayers, extorted from them in the financial catastrophe caused by those who took the public bailout monies.

There really is no defense of this thing.

And why didn’t the Tea Party crowd make an uproar when that first was even suggested? (Actually, I think there was some protest — not enough, though.)

I think the Tea Party had not been formed quite yet. It took the election of the first black president and the realization that the Great Recession was really upon them and that maybe their complacent way of life — current events, what me worry? — was being upset. They found out that folks who call themselves conservatives can do some pretty radical things.

Bush went against what I believe are his own oft-stated principles of free flowing capitalism with its inherent risks and opportunities and of minimal government interference in business to enact the bailouts. Shockingly to me, Barack Obama, who seemed so reasonable during his presidential campaign, went along with and continued the immoral theft of public monies to the greedy and reckless gamblers on Wall Street. He even bailed out a couple of auto companies. And yet the one he did not bail out, Ford, is doing well on its own, or well as can be expected in this Great Recession economy.

And while I think that the so-called Tea Party is full of (possibly not limited to) a lot of ignorant people, some of them bigots, who are Johnny come latelies to the world of current events and even general civics, maybe late is better than never. Maybe the reasonable ones among them (if there are such people) will learn that the tag “Republican” or “conservative” does not always mean what they think it means.

I just read a blog by political activist Robert Creamer (via the Huffington Post), and he said the bailouts may turn out to be a “wedge issue” that divides the Tea Party and the Republican Party. While Tea partiers seem to naturally gravitate toward the Republicans and while Republicans are nearly falling all over themselves and drooling for the support of the Tea Party, those riled populists are none too happy about the Wall Street theft of public money (I am of course paraphrasing his message).

While the Tea Party feels government has gone too far into intrusion into the lives of the citizens on the health care issue, its members do seem to feel that government should rein in Wall Street, he blogged.

Actually, Creamer seemed to indicate some type of irony or disconnect in that they are against big government meddling in health care, but are for it coming down hard on Wall Street (but maybe they just mean they don‘t want government to interfere, not even to help.)

But I see the logic here. If they really believe in the laissez-faire approach, they would both believe that government should essentially stay out of the health care insurance industry and at the same time let business or bankers or investors ply their trade without government support.

He also claimed that the Tea Party thinks that with the new Health Care law the government is stepping in between doctor and patient and even though that is not so (he claims) that argument has such strong personal and emotional pull it has great traction among the populists.

I personally am not quite of the Tea Party mindset, but I agree that big government does not need to prop up big business.

I have talked to people who spout off the small government and conservative line and think the government gets too involved in everyone’s business. But these same people never seem to have any trouble collecting unemployment, Social Security, Disability, small business grants, and so on. They complain about welfare for those who don’t do anything and don’t even try and blame in on the Democrats or the “liberals” or the “socialists” (that used to read “communist” back in the Cold War days). If the government is helping me it is okay — I “deserve” it; if it is helping someone else, that is a problem. And while they say the Democrats are always pushing welfare for the masses, they seem to look the other way at welfare for the big corporations and the Wall Street bankers (or as I said, themselves). Many of them bought into the myth that anything that helps business interests actually helps the individual in the free market economy. But the fact is the citizens at large are being robbed by Wall Street, even Main Street (business) is being ripped off by Wall Street.

Of course there is the trickle down theory, but we seem to be in a drought right now.

At any rate, it is heartening to know that this bailout of the big shots at the public’s expense may come back to bite those who supported it, both Democrats and Republicans.

Creamer said Democrats should utilize this new wedge issue. They can try. But have you ever tried to argue with someone who automatically hates all Democrats and liberals and socialists? Good luck.

I admit, the far right crowd irks me most of the time, but I do try to take their point of view in and even start going along with it — it just seems like they have a hard time following their own ideology themselves at times. 

P.s.

One more time — the bailouts were wrong. Bankruptcy or something equivalent should have taken place, just as it does with individuals. I realize that the crash of major financial institutions would cause havoc for everyone (well, in fact it has). Innocent citizens whose retirement is based on Wall Street investments would suffer. But the Great Recession was caused by insiders gaming the system and ordinary citizens being imprudent and even just as greedy as Wall Streeters in the housing bubble. We were living on a false economy and are now paying the price. I would have preferred that any bailout go to the public at large. Meantime it is imperative that we get back to a real free market system based on honest dealings with strict government oversight (not control) to ensure that all are playing on a level playing field. The electorate, who either went along with or failed to notice the dismantling of so many Depression era market safeguards, is partly to blame.


Business owes government, government does not owe business…

June 17, 2009

I watched “Breaking the Bank” on PBS’s Frontline last night, all about last fall’s economic meltdown, concentrating on Bank of America and its acquisition of Merrill Lynch, with the death of Lehman Brothers playing a key supporting role (I mean it all began with that).

In a nutshell this is basically what I retained, plus some of my own interpretation (and one way to see the program for yourself if you missed it is to Google Frontline):

What with computers and the new way of doing business everything nationwide and world-wide is so interconnected and there is such a symbiotic relationship between the major players and within the whole economy that if one entity goes down, they are all sure to fall.

(Reaching back here into my memory, seems like I read some time back that there was a financial panic in I think the first decade of the 20th Century and fearing that the whole financial system was in jeopardy, was it J.P. Morgan? I don’t know, anyway the big money boys chipped in and worked everything out without the hand of government. Probably even the thought that the government could bail out the private sector was not even there at that time, and regardless, the private sector knew better than to let it go to that. Okay, I checked on that and my instant research indicates J.P. Morgan and monied cronies saved the economy with their money in 1893 and 1907.

Back to Frontline: So Treasury Secretary Hank Paulson last September caught wind that Lehman Brothers was in trouble and that its impending demise could take the whole economy under. He called the big bankers together and urged someone to buy Lehman Brothers. Well these guys did not get where they were by doing something as foolish as that (even if they did trade in highly risky paper), so there were no takers.

Plan B: Paulson and others in the government apparently decided that they could mitigate the effects of the demise of Lehman Brothers if they could get someone to buy Merrill-Lynch, also in trouble and apparently a lot more so than most anyone knew. Conveniently, Ken Lewis over at Bank of America, nowadays headquartered in Charlotte, N.C., always had a dream of doing just that. The modern B of A is really the former NationsBank, southern boys who wanted to show up Wall Street (B of A began in San Francisco, but sold out to NationsBank and destroyed its own honorable legacy with it).

The former CEO of the former NationsBank explains that his bank’s mission was to supply capital for southern “bidness”. As to why they got so big, he explained that in “bidness” you can’t just sit still, you have to grow.

John Thain of Merrill Lynch knew he was in trouble and wanted to at least save his bonus and the bonuses of his high rollers and so the deal was done with B of A over a weekend.

Lewis indicates that he was chagrined to realize that while Merrill Lynch was going under, in subsequent negotiations all Thain and his gang seemed worried about was their bonuses. Even though they had run Merrill Lynch into the ground they all shared some $5.8 billion in bonuses and compensation through those negotiations (and eventually made possible by taxpayer money).

Lewis would also soon find out that Merrill Lynch was in worse shape than he knew.

Now the whole large banking industry (not so much in some of the smaller regional banks) was in trouble over risky sub-prime real estate loans. Once those adjustable mortgages set to a level at which huge numbers of risk-unworthy borrowers defaulted the whole house of cards collapsed.

Why were so many bankers and other investors so imprudent? you ask. Actually in other blogs I have said that I think that it goes something like this: if the other guy is doing something that might seem unwise, but not illegal (unethical perhaps), and is making tons of money doing it, if you are a CEO or whatever, you find yourself either doing what he is doing too or without a job because your board of directors and/or stockholders are going to demand that you produce as much quarterly profits as the other guy (and of course you want to make as much money as you can for yourself), and there is no other way to do it than to do what he does.

I think it was noted that Merrill Lynch was once a conservative brokerage house but it found itself pressured to compete in the high stakes gamble of sub prime mortgages.

Back to Frontline again: so anyway – skipping over many of the details here – at some point (and this was still during the Bush administration you will recall) all the major bankers were called in for a meeting conducted by Paulson and were pressured (intimidated?) into signing an agreement (they still did not have to do it and in fact Lewis now says he wished he hadn’t) to take government money with the idea that it would help unthaw frozen credit markets and accept what amounts to an at least partial nationalization of the banks.

Personally, I feel the government should not have done this. I also feel that if anyone of those guys who signed on now complains, you have to ask him why he signed. No law said he had to. And if businessmen can run things better than the government, then they should do so. But if you sign on to take taxpayer money, you are going to have to accept the strings that come along with it.

Some would say letting Lehman collapse was the big mistake and that it had such a negative impact (the B of A/ Merrill Lynch thing did not soften the blow after all) on the stock market and the economy that it proves the government had to step in.

I don’t even pretend to know the real answer to all that. I can only surmise that it would have been better to let the private capitalists work it all out. They know that a collapse of the system means their own demise. Necessity is the mother of invention. For nothing more than self-preservation you would think they (the capitalists) would want to save the system. If the government had not interfered with the natural course of the markets perhaps they could have corrected themselves.

That’s kind of water under the bridge now. But it seems to me that we need to move away from government being the lifeline of business. Only business can produce the prosperity that in turn produces the revenue for government. Both the business sector and the public at large depend upon government for the framework and support of our whole society and the service and protection it provides. Business owes government, government should not owe business.


Whether it’s Dick Nixon or Barack Obama, powers given are hard to remove…

June 16, 2009

Sometimes I run across a quote and I think I ought to use that in my blog or maybe make a whole blog based on it.

Ran across one of those in the Wall Street Journal Opinion section:

“Let this be a lesson to any modern democracy that cedes broad power to government in a time of crisis: Granting power to the executive is easy, getting it back isn’t.”

That was in a piece decrying the left-leaning and dictatorial manner in which Argentina’s first woman to be elected president, Christina Kirchner, along with her husband and former president, Nestor Kirchner, are running and have run the government there, including the stifling of the free press, something dictators, from the left and right, are prone to do.

As I said this was in the Wall Street Journal, of which a large portion of its readers (Republican and business-minded conservatives) and certainly its editorial board, probably are worried that Barack Obama, whom they no doubt feel is left-leaning to the point of super socialist, might be assuming way too much power.

Although I don’t follow Argentine politics closely (or hardly at all), as I recall, Mr. Kirchner came to power some years ago during an economic crisis there. Then when he could not run again for president, his wife did. They are in, I understand, some faction of Peronism in their politics, a kind of combination of left and right tailored to Argentine conditions and pleasing opposing factions (or playing both ends against the middle like Juan Peron himself used to do) to gain power.

Well, anyway, I think that quote about giving an executive extra powers in a crisis coming back to haunt you later because once given rights are not easily rescinded, could have applied to, say, Lyndon Johnson (Democrat who pushed through liberal policies and fought an undeclared war, thus bypassing the constitutional role of congress in war), Richard Nixon (a Republican, who continued that undeclared war and used it as cover for extreme executive actions, some of which turned out to be outright illegal), and George W. Bush (a Republican who used the shield of 9/11 to grab powers and use police-state tactics).

No one can argue but that the U.S. is in a major economic crisis now that rivals the Great Depression. First, former Republican president Bush took extraordinary actions via the bank bailouts to meet a crisis that he and his advisers said would bring the nation down if not dealt with in such a way, and now Democratic President Barack Obama has continued and enhanced those extraordinary powers with not only more bank bailouts but what amounts to an at least temporary takeover of some domestic auto production, and he’s moving toward some type of universal health care to be imposed by government (and I’m not necessarily complaining about that last one).

The only real point here is that power once given is hard to remove. Democracy needs strong leadership but is vulnerable on that point too.

—————— 

The piece from which I took the quote that inspired my essay was written by Mary Anastasia O’Grady, a member of the WSJ Editorial Board.


Republicans finding fault but still short on solutions…

June 9, 2009

While I know Ford is the one U.S. automaker still in business without a government bailout (so far), I drove passed a once prosperous Ford dealership in the town south of where I live and its lot was empty. The owner/manager of the dealership not so long ago was praised by so many in the area for being a winning businessman. But I guess the economic downturn, coupled with higher gasoline prices and, worst of all, a shut off in credit from the financial system for car buyers ruined his business.

We were on a trip to the Sacramento area to see my oldest daughter and along the way I picked up a right-wing radio talk show I used to listen to, the host of which got his start on radio as some kind of business guru. He was sarcastically remarking about the take over of the government of the auto industry and was expressing bewilderment about how Chrysler is deciding which dealers stay open and which do not. While he did not say so himself, I think a caller questioned whether the dealership survival selections were being made on a political baisis. And I think the host kind of said that while he did not know about that, nonetheless something does not seem to pass the smell test.

With all the road noise in our foreign car and the fact my wife did not want to have the radio up loud enough where I could hear it anyway, I really did not catch all that was said and finally turned it off. But I am sure that I could sum it all up by saying that the host thinks whatever is being done is not right because it is being done by a Democratic administration. And I can safely assume he has no alternative, except keep the government out of the car business or business in general and lower his taxes.

Actually I totally agree with keeping the government out of the car business and who wants to pay higher taxes?

What I still have not heard, though, is an alternative solution to this economic mess from the Republican party, other than keep taxes low.

Besides the mantra of lower taxes, about the only thing the Republican Party seems to have been interested in for so many years now is regulating private behavior (abortion and gay lifestyle) and securing access to oil under the guise of the war on terror. Yes, 9/11 happened, but I don’t think that justifies everything afterward.

Back to the car thing, though, I am concerned that throwing billions of taxpayer dollars at the domestic auto industry is folly. I can only think that the Obama administration feels inclined to do this as payback to the autoworkers union vote and support and the fact that, yes, if the domestic auto companies shut down all at once there would be economic havoc because so much of the economy (we have all found out) depends upon the auto industry.

But there is no evidence or reason to think that artifically propping up General Motors and Chrysler will ensure their survival. There has to be a demand for their products, people have to have money to buy the products, and the companies have to be able to compete economically on the global market.

Government is not structured and is not meant for running businesses and making business decisions and figuring out what consumer demand is and how to capitalize on that demand. While President Obama has vowed that he does not want to run the auto industry it is already evident that the industry has to please the government. It cannot bite the hand that feeds it (even if the investment banks got away with that). One CEO has already been forced to resign.

No the Republicans actually are on to something if they complain that the government is trying to run business. But they have to come up with more than just noting that government and business should be separate. They need to come up with clear alternatives to get us all out of the economic doldrums. They need to address the fact headon that their own administration got us all deep into this mess and they need to explain why they think that in light of that fact they would be better qualified to get us out.

While I myself would be more inclined to support the notion that government does need to be a protector of the public welfare than your average Republican, I would also suggest that we have gone down the road to pure socialism and a state-run economy (something I see no evidence that shows it has ever worked anywhere) a lot quicker than I thought possible. But what I would have never predicted is that a Republican president who considered himself a pro-business conservative, George W. Bush, would have started the ball rolling on that.

On foreign policy, I think the Republicans are truly concerned that Obama actually might be on to something by extending the olive branch to the Muslim world, even as he vows to press ahead against extremists or terrorists in Afghanistan and Pakistan (and elesewhere I presume).

I see that actor John Voight during a Republican fundraiser last night ridiculed Obama’s speech to the Muslim world and its gracious gestures of understanding and willingness to make peace. Don’t recall his exact words but he said something to the effect that Obama thinks that we can push each other in swings like on a playground. 

Voight accused obama of making the nation weaker.

For now I don’t see his point. Obama has put more troops into Afghanistan and just as importantly has clearly signaled that he is finished playing games with North Korea. I heard an analysis by Washington insider (for both Republican and Democratic administrations) David Gergen this morning that said the Clinton administration tried to buy North Korea off, the George W. Bush administration vowed to get tough but then reverted to trying to buy them off, and that  the Obama administration has signaled that it will stand up to them and not buy them off.

Hezbollah (enemy of the U.S.) has lost elections in Lebanon and that nut case of a president in Iran is getting a run for his money in the upcoming election, and these situations appear right after Obama’s outreach to the Muslim world.

All the Republicans did for the past eight years or so was get the country bogged down in a costly and misdirected war in Iraq that sent oil prices skyrocketing which helped propel a world-wide economic collapse. Both Republicans and Democrats had supported measures that led to the wild real estate speculation that was the chief cause of that collapse.

Things may well get worse, which ironically might put the Republicans eventually back in the driver’s seat. But will they really know where to go?

CORRECTION:

Oh so many blogs ago I made reference to a GM/Fiat deal. I should have said Chrysler/Fiat deal. I subsequently corrected that blog, but if you read the original post — yeah I realized I was wrong — probably in the middle of the night.

But I still wonder why we go to so much trouble trying to save a domestic automaker for the benefit of a foreign enterprise (and a Chinese company is buying the Hummer brand?). But I do support keeping the work here if we can, no matter who owns the companies.

P.s.

Still another Republican gripe: The Obama administration is pushing us into government health care and the government will be making health care decisions and not doctors and there will be long waits. Actually, the Obama administration has taken the approach of offering to co-exist with private health care while pushing for coverage for all who cannot afford it. The Republicans say that private health care will be run out of business by competition from the government and that is probably the real Democratic motive after all. I just read an opinion piece on the Wall Street Journal site written by a doctor originally from Canada. He said that in Canada and Great Britain and Sweeden and in other nations that have universal single payer health care that health care is not as good and the waits are longer and that in fact in Canada and elsewhere governments are moving toward public-private partnerhships. Well if that is what it takes to provide guarateed universal health care, so be it. The only people who do not think we need universal health care are those fortunate to have good private plans or possibly those already covered under some type of government assistance program. Meanwhile emegency rooms are overcrowded by people seeking normal and often non-emergency treatment because laws mandate that emergency rooms see people and millions go without health care because they either cannot afford private plans or they are not in on employer-sponsored plans because none is offered or they lost their job or they are on part-time and do not qualify. The fact that our leaders all these years have been unable and unwilling to take the lead on universal care is a national disgrace. One big problem is that too many are looking for free health care and there is no such thing. But certainly there has to be equitable and humanitarian health care.


We head down the old road of single industry when we should be diversifying…

June 2, 2009

While I have not agreed with President Obama’s auto company bailouts, with GM going into bankruptcy but propped up by billions of taxpayer dollars and a 72 percent government ownership stake (60 percent U.S. and 12 percent Canadian), and Chrysler coming out of a relative quick bankruptcy – propped up by the government bailout program as well, I sure hope it all works out.

The government has loaned GM nearly $21 billion, but to no avail so the company filed for bankruptcy on Monday and the taxpayers are left with a majority ownership of a failing business.

(And I have to ask why American taxpayers have to fund this whole thing when Chrysler is merging with the Italian car maker Fiat. Also I heard the president say that the government was the only entity that could come up with enough money to bail out GM. And that is probably true since only the government can essentially print its own money – how much that phony stuff will be worth in the long run is hard to know. We are looking at heavy inflation down the road, I’m quite confident.)

I know in times way past I often heard something to the effect that our economy is driven by car production, but it always kind of whizzed by me like so much freeway traffic.

Seems like a lot of us were thunderstruck a year or so ago when we realized that the U.S. economy was virtually totally dependent upon car and light truck production and a super-inflated real-estate market that suddenly deflated.

Going forward it sure seems we need to diversify – never a good idea to put all your eggs in one basket as the old adage goes. Surely we can produce a lot more than cars. We used to.

Rather than go down that wrong road again by bailing out the failing automakers, it seems government efforts would be better spent promoting highly diversified industry for this country, everything from tennis shoe making to highly technical so-called green energy projects. We need to produce things and get people working. How are we going to support the unemployed when too few are employed?

We have come to this pass via the evolving global economy. So many saw the global economy as a panacea, that is as long as the U.S. controlled it, selling Coca-Cola, cigarettes, and cars around the world.

But somehow we lost control of the whole thing. Through inflated real estate values and maybe to some extent inflated wages (and I wish I could have gotten in on more of that) we became a nation of consumers more than a nation of producers.

One of the reasons for all of this no doubt is that capital by itself is not patriotic. Those who have it may or may not be in their own right, but the rules they play by have nothing to do with the interest of their own nation. You invest capital to make more capital. And generalizing here, those with the money found it more profitable is so many cases to invest outside of our borders because labor in less developed nations was cheap. I knew we were in trouble when we no longer made our own Levis here and not even cowboy boots. If memory serves me correctly, Levi Strauss, a company with a proud uniquely American heritage, closed down its last plant in El Paso, Texas and moved south of the border. Justin Boots also moved its production outside the country, as well.

The car production things seems to have gone something like this: American car manufacturers over the years seemed to have decided that the reality of the market and of production costs meant that they would be better off pushing essentially bigger muscle cars and trucks to satisfy a large demand here in the USA and in order to be able to make more money on each unit. They ceded most of the small car market to primarily Asian producers.

And I just heard an auto company CEO concede something we already knew, the Japanese beat us on car quality a long time ago. He claimed, though, that now American manufacturers are catching up (a few decades too late perhaps). To me it is not that we could not produce quality, it is that the automakers did not want to. Planned obsolescence and making money on repairs was long the game plan out of Detroit and its environs and at the old dealership, so many of which have now been closed down.

And I’ve read that investors, such as these so-called hedge funds, look to quick and big profits rolling in each quarter – they’re not big on long-term planning or research and development. As I stated earlier, capital does not think in terms of what is good for the country.

And then there is the consumer. People want what they want. In the case of the United States with the high standard of living it was enjoying, large numbers of consumers went for comfort and did not consider things like gas mileage too much except when fuel prices would spike. The spike last summer really did it. Gasoline approaching or at or more than $5 per gallon, combined with increasing unemployment or fear of unemployment or reduced wages gave the consumer a dose of reality of now and future.

But now I read that although the Obama administration aims to force car producers by way of policy and law ( not to mention ownership – even if Obama vows not to run the companies) to produce smaller and more fuel efficient vehicles, if gas prices don’t go up too much, it might be hard to get folks to buy vehicles smaller than they are used to. And notice, I automatically combined SMALLER and FUEL EFFICIENT. That’s because the assumption always seems to be that in order to get to fuel efficient we have to go smaller.

Well we probably need to go smaller than a main battle tank in the U.S. Army or one of those civilian Hummers you see on the road or those oversized or supersized pickups and SUVs.

But something I would like to look into is just what kind of gas mileage did your average, say, 1956 Chevy get? The reason I ask that is that to me the 1950s really seems the golden age of American cars. I was only a little kid in the 50s, and my folks had a ‘53 Studebaker – kinda small, but more or less a regular sized family car. But seems to me those Chevies and Fords of that era were plenty big for a family and were comfortable to ride – I just am at a loss of what the gas mileage was (see end of blog).

Of course I know they were heavy. They were actually all steel – you had something solid – instead of so much fiberglass.

I do recall that through unfortunate circumstances, an accident with the Studebaker (it survived), we wound up with a second car, a Plymouth station wagon, that began as a temporary replacement car and stayed on as a second car. It was comfortable, had more room, but not so good on gas mileage, I’m sure.

But it seems to me that the consumer ought to be in the driver’s seat when it comes to deciding what the car market should be. Individual car buyers will and should be able to decide what they want and what they need and what they can afford. As for fuel mileage and other environmental concerns, let’s take that on one at a time. We know from last summer’s big fuel spike what it takes for Americans to go for more fuel efficient vehicles and/or cut down on unnecessary driving. – of course we have an indication they will tend to turn the other way when fuel prices go the other way. But on fuel mileage, letting the market dictate seems to have a pretty powerful effect. As for other environmental concerns, such as the amount of pollutants cars put out, the market will not control that, the government does have to set some standards. But those standards have to be realistic and based on hard science and should not be based on some congressman’s idea of, say, pushing corn based ethanol (which really does no good for the environment) because he’s from Iowa.

And standards should be set by the federal government, not states, so that they are uniform across the nation. Once the automakers, to include foreign makers, know what the standards are, they will produce cars that meet those standards – they have no choice.

Something tells me that private enterprise in competition will likely do a better job of meeting consumer demand and meeting pollution standards, that is making cars people will and can buy and use to their best advantage, rather than a government one-size-fits all approach.

I think competition from foreign car makers, to include ones who assemble right here in the U.S., can be healthy for our own homegrown industry. But as long as the government is there to prop up industry, the corporate powers that be will not learn how to compete.

The government set a bad precedent back in 1979 when it propped up Chrysler with loan guarantees. “We’ll do better”, they promised at the time — what happened?

I can only hope we haven’t fallen for that same line again.

P.s.

As to what the gas mileage was on your average 1950s model family car, my oldest brother said his resident expert suggests about 15 to 22 mpg. I’ll bet we could produce cars just as roomy with slightly better or even far better mileage (partly because we use lighter weight materials nowadays) even using the existing internal combustion engine model, with just some slight tweaking. I’m sure we will evolve into another technology, but we need to consider does it really save energy and what unforseen effects might there be on the environment when all things are considered and what it will take to provide the infrastructure (you know, things like electrical outlets to plug your car into and how to make it all affordable).


If “local” news gathering can be outsourced to India and U.S. taxpayers must fund GM to produce cars in China — just what is OUR function???

May 29, 2009

I just read on the Editor and Publisher site that the Hartford Advocate newspaper (out of Connecticut), along with two other alternative newspapers connected with it, in what was first proposed as a joke and then became serious, has published at least one edition in which all or virtually all of its local news was done by outsourced writers – from INDIA!

On my first read of this item I did not get whether this was a one-time thing or a new way of doing things. This is not the first time something like this has been done. And in the case of the Advocate, it seems some of these writers are quite highly qualified, having written for the Guardian (out of England), the BBC, and the Times of India. Interestingly, the Advocate personnel said the whole thing was “not cheap”.  But at least one other U.S. newspaper tried (still is?) outsourcing local news because they could get the job done for a lot less money (really kind of like just accepting the news release written by city hall instead of doing your own reporting – but really the story for the local newspaper is not so much about what happened at the council meeting, but what led up to it and what is the result and so on – good reporting is not transcription). My own local newspaper is starting to use more submitted articles. Back in the old days, local newspapers often used so-called “stringers” who worked on a kind of low piece rate (or maybe for free for their own vanity – kind of like I’m doing here). Back to the oursourced writers from India. Of course they do all of this by phone, calling to the U.S. for interviews from the Indian subcontinent. It’s bad enough they’ve taken over medicine (at least where I live), but our local news reporting too!?

Reading this on top of learning by way of the web and some on cable news that General Motors plans to use taxpayer bailout dollars to make cars in China (and even import some of them back into the U.S.) leaves me to ask the question: just what is OUR function on this planet?

(Maybe we’re all supposed to join the Army. Then again, that could be outsourced — like the French Foreign Legion — not a bad idea.)

Going back and reading the E&P item again I saw that the Advocate is a weekly and the whole thing was done as a kind of spoof to prove a point (or not). They (the paper) explain it themselves and if I can get this link correct you can get that explanation at: http://www.hartfordadvocate.com/article.cfm?aid=13171

And if that didn’t work, just Google Hartford Advocate.

They also mentioned that they got the idea from news some time ago that a newspaper in Pasadena, Ca. decided to outsource some local coverage by doing such things as linking up their Indian correspondents via webcam to local city council meetings. Having attended far too many council meetings when I was a reporter (I actually liked them at first), I’d say that’s one job I’d almost not mind giving up.

Seriously. Besides all the obvious logistical, practical, ethical, even cost, considerations associated with outsourcing news coverage, doesn’t one have to ask at what point do we lose our personal identity?


Expand Medicare, stop bailouts, reinstate draft, support science, admit that to be gay is genetic…

May 18, 2009

Some more public policy suggestions from Tony Walther’s Weblog:

HEALTH CARE:

Expend a lot fewer resources and energy on the subject. Simply expand Medicare by extending it to those who cannot afford or are not eligible for private insurance, regardless of age. There of course would have to be a strict means test for this. And I don’t mean to suggest that it would be inexpensive to do this, but it might be no more or even less expensive and more practical than what we are doing now or what is being proposed (which is not clear at all). And it could be all done so much quicker (how long has congress faced the health care issue? Decades now).

It occurs to me that health care could be seen as a personal right in our modern society, but it might also be seen as a personal responsibility at the same time. I don’t think those two conditions are mutually exclusive. While it is a personal responsibility, if you cannot afford that responsibility, you need help.

And I realize we read that both the Medicare and Social Security trust funds are fast running out. But something will have to be done about that. I doubt that either program will be cancelled, so our elected representatives will have to, dare I say it, make some decisions and the electorate itself has to accept certain priorities. But it would seem that a secure and stable retirement system and some form of universal health care (I refer to a system in which no one is denied health care simply on the basis of cost) would be at least near the top of those priorities. 

ECONOMIC STIMULUS:

Give business back to business for the most part. Stop all bailouts. Let failing enterprises, banks included, go bankrupt. But at the same time offer incentives, such as tax breaks, to businesses that create American jobs (and these need to be jobs that don’t require further government subsidy to workers – such as the old Walmart approach of handing out how-to-get-government-assistance flyers to employees). At the same time apply penalties to businesses that ship jobs overseas, such as high tariffs on products being imported back in. And I was going to write simply, enact penalties for outsourcing (maybe a penalty tax on outsourcing). But I don’t know how practical or practicable that would be. But if there is enough incentive for hiring American, then maybe that would not be necessary.

Our government should encourage a return to the production of manufactured goods and consumer products, again through incentives such as tax breaks.

Also, renegotiate our so-called “free trade” agreements with other nations so that we are all playing on a fairly level field. Other nations subsidize industries and/or have labor forces that work at extremely low wages. We need “fair trade”, not so much “free trade”.

Instead of bailing out failing businesses, divert some of that funding to help displaced workers, but do not make this commitment open ended. The ultimate goal for able-bodied people should be new jobs.

DEFENSE:

Make our policy one of defense rather than offense. While I don’t think the United States, even under George W. Bush, has been an imperialist nation, we have long held the belief that we have to exert our influence all over the world. I think we should promote our form of democratic government by example more than by force. We should be supportive to the extent we can of nations who would model themselves after us, but leave it at that.

I do, though, realize that in some situations we may find that the best defense is a good offense. This would be in cases of true emergency when it comes to our attention that, say, a rogue nation or rogue regime in a nation might come within grasp of having the means along with the aim of destroying us. Strangely, that last sentence sounds like Bush 2’s rationale for going into Iraq. So, if he and Cheney had been honest about such, that is if Iraq would have really been in the position to attack us or supply weapons of mass destruction to our enemies, I might have seen the Iraq invasion as the necessary choice (although a more surgical choice might have been wiser). But the information that has come out points the other way (and some of this info was at least hinted at even before we went into Iraq). I believe Bush and Co. have even admitted they were wrong (if not that they knew they were wrong at the time). They had a predilection, that is they were predisposed to go into Iraq and then they manufactured an excuse.

Iran’s (reported) continued development of nuclear weapons capability might someday require an offensive, pre-emptive reaction, and perhaps more urgenty, the possibility of Islamic militants getting hold of Pakistan’s nuclear arsenal. But let’s hope none of that becomes necessary. But let’s also hope no potential adversary doubts our resolve to defend ourselves.

MILITARY SERVICE:

I think the all-volunteer professional military has big advantages and that we should maintain a large and highly-trained and motivated professional cadre, or really a permanent professional force that would be larger than the word cadre connotes. But along with that professional force I would be supportive of a mandatory military service of youth, beginning at age 18. Two years of active duty would seem appropriate, if a little bit arbitrary. There of course would probably be provision for conscientious objectors with some type of compulsory public service. I think with a new military draft or compulsory service you would find that we would be a lot more thoughtful and careful about using military force. We might also have more resolve once we did commit force. And why is it not everyone’s duty to defend the nation?

My reading of recent history is that the so-called neo conservative movement was disappointed with the nation’s lack of resolve in Vietnam and thought it endangered us by making us look weak. The liberals who had pushed for ending the draft got caught in their own trap. The neocons decided that the all-volunteer force would leave so many off the hook that it would be easier to commit forces where they desired. And I think it did make it easier.

But it seems to me we are all in this or should be all in this together. Not everyone serves on the local police force and that is understandable. But too many have come to view the military as a police force that they can simply expect to “handle it”. When only a minority is left with the responsibility to protect a nation I think we lose our sense of nation and one day might be in jeopardy of losing the nation itself.

 ENVIRONMENT:

We need strong public investment in science more than anything else. And it is the government’s job to protect the environment and to enact laws that support that. Environmental regulation needs to be based on science and not politics. We cannot afford to cut off our nose to spite our face by enacting unreasonable and over-reactive environmental regulations that stifle commerce, but at the same time we do not want to destroy our planet or our quality of life.

THE MORAL QUESTIONS:

Societies have rules, often called “morals”. The United States has been unique in that we are a blended society whose members may have similar, but not necessarily the same moral code. We are not all of the same religion and we are indeed not all religious, although for the most part our laws regulating social behavior are I suppose based on Judeo-Christian principles.

For the most part there is not a problem. We virtually all agree, for example, that it should be illegal to murder someone. We don’t all agree on the proper punishment, though. There has been a continuing debate over capital punishment. I think I am correct in saying that the anti-capital punishment forces seem to be holding the edge on this one. I have my own opinion, but I think this has to be left to voters and legislatures, and to some extent the courts (who seem to be frequently confronted as to the question of the constitutional prohibition of cruel and unusual punishment – you can execute someone as long as it is not cruel? Unusual?).

Abortion and gay (or homosexual) marriage seem to be the hot moral topics now.

As to these two subjects, I have to ask whether there is a rightful governmental interest.

Abortion is a far more complicated topic than those on both sides of the argument make it out to be. But under current law, based on the Roe Vs. Wade decision, the Supreme Court has held that the intent of the constitution was to in the name of individual liberty leave such a personal decision up to the individual. The justices at the time had to reach for that decision by finding it based in part on what was not explicit but what they felt nonetheless was implicit in the constitution. But that is really often the case with decisions in courts. If literal meaning was always evident we probably would not need justices to render decisions (think about it).

As to gay marriage, the only government interest is that marriage is a contract and the government has oversight of contract law. As to the religious aspects, the government has no rightful role. It’s all more a problem of terminology and context and tradition. We have simply called these government-sanctioned contracts between, yes, what have been traditionally men and women, “marriage”. We might have been better off to call all of them “civil unions” from the beginning. Some religious people object to gays forming unions with each other and calling them “marriage”. They have been willing to compromise by accepting “civil unions” for gays. But civil unions are not always equal to marriage and not equally recognized within the 50 states. And if you legislate that only heterosexuals can have “marriages” and homosexuals must have “civil unions”, even if those civil unions were supposedly made equal to marriage, I think you would have something equivalent to the “separate, but equal” doctrine that was used to justify Jim Crow laws that forced black people to be discriminated against. Separate but equal was originally recognized by the Supreme Court, but decades later was struck down by the high court.

Those who oppose gay marriage argue that homosexuality is anti-social behavior. Most everyone else has come to realize by simple observation that homosexuality is apparently genetic and has come to accept it even if they are not always comfortable with it.

One solution would be to take the government out of the marriage business and have it issue civil union contracts to all, straight and gay. The churches could handle marriages as a religious and symbolic ceremony. That seems an equitable approach to me, but might be socially confusing (how would we refer to a couple now joined? they’re married, no they’re “civil unioned”, and how would you refer to already married people under the old rule, and it’s a whole can of worms).

As to the implications on our society moving forward if we fully accept the gay lifestyle under the law by granting gay marriage or unions, I actually think there is a question, but I do not think it is one government can resolve.

One of the problems is that government itself may have lost some of its moral authority.

Just some ideas.