Wells Fargo needs to be closed down for robbing customers; honchos had to know what was going on

September 8, 2016

Talk about the greed of the one percent.

Wells Fargo Bank needs to be shut down. I mean if what has been reported is true that one percent of its work force was involved in setting up phony accounts so individual employees could get sales bonuses and as a result customer accounts were robbed and customers were subjected to fees and overdraft penalties, then there is no reason that the bank should be allowed to remain in business.

It was reported that 5,300 employees have been fired over the scandal.

It seems to me the chief executives and their underlings should be the first to go. I mean that is what they get paid the big bucks for, to take responsibility.

And I would think there ought to be quite a few people sent to prison. A message on this needs to be sent.

That many employees could hardly have participated in the fraud without the consent and in fact encouragement from higher-ups. The bank did not lose, until now, possibly, the customers did.

While it is reported the bank is being fined 185 million dollars, I think the penalty should go further than that. The bank will no doubt just somehow siphon that out of it’s customers somehow.

All honest business people should be outraged.

The FDIC or whatever regulatory agency should shut it down, not just fine it.

I would advise any customer to close his or her account and move funds elsewhere.

For that many people to be involved in fraud in one entity is shocking and sickening and indicates that there really are no ethics or morals left it the finance industry — if there ever was. Okay maybe a bit strong, but this sounds like an ethical crisis to me.


I do no business directly with Wells Fargo. Did use the bank in the distant past for my measly account.


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.


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.

Hopefully some clarity on health care, anti-socialized medicine hypocrites, and interesting stuff about banking…

September 9, 2009

A headline to an online article about President Obama’s health care speech tonight quoted him as admitting he might have left too much “ambiguity” in his proposals for the overhaul of the health care system – you think?

Hopefully he will clear that up tonight in his nationwide address, which I understand will not be covered live by FOX News – why does that not surprise me? If that is true, how can that network claim to be a credible reporter of the news? It’s a speech by the president of the United States about a vital topic. News outlets – fair and balanced? – are not supposed to decide whether to cover something based on political point of view.

I think I don’t have much time to blog today because I expect to go back out on the road (still have to get mobile with this thing) at any time.

There’s an interesting article in the Huffington Post today about how the Fed has complete mind control of the whole economic system and why that has caused the great economic gurus to have missed so much, such as the over leveraging of the whole nation’s – world’s – economy over the past decades and the coming of the current what is being called, I notice, the Great Recession.

Also I am reading a book called ” Lords of Finance: The Bankers Who Broke the World”, by Liaquat Ahamed. I have not had a lot of time and have not made a lot of progress on it yet, but I already feel that I know a vast amount more about economics and banking than I ever did before and even about World War I, although I think the main thrust of the book is what led up to the Great Depression of the 30s that is usually said to have begun with the great stock market crash of 1929, but really had its beginnings a lot earlier.

One highly interesting thing I have learned from it so far is this thing about returning to the gold standard. Seems we were on it and things were quite stable – that’s good – but it was hard to expand the availability of capital when it was needed because there is only so much gold and it’s a hassle shipping bullion back and forth and across the ocean – and that was really done.

Financing World War I – a war that history seems to indicate made no sense at all , if any wars do – played a major part in ruining the economic system. And today the cost of war certainly has its effect.

At any rate, I hope a radio has been put in my truck and I will be able to catch some or all of Obama’s address on health care.

My current attitude on health care is just please make it so everyone can cover themselves in some way (with help from Uncle Sam or not), and I do believe it is a personal responsibility to do for yourself what you can. But everyone’s situation is different. It is in the best interests of society that folks are covered. A healthy society is a more productive society. We need a healthy society just as much as we need good roads. How we pay for all of that is always a good question. Even some federal interstates in the Midwest and back east are toll roads, out here in the west, not so much.

And this sticks in my craw – some people who detest the idea of government-run health care and hate (and I do mean hate) Obama, think nothing of partaking in Medicare and its related programs – which of course are all part of government-run health care, as is military health coverage. Go figure!

I mean if you detest anything socialized so much, why did you not accumulate your own fund – self insure so to speak?

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.

Right and left seem to have conspired, perhaps unwittingly, in economic collapse…

May 9, 2009

By this time I’ve forgotten what the big bank bailouts were all about or at least how they were supposed to operate.

I know I did hear along the way the canard that banks were forced to take government money and the strings that went along with it. Maybe I have it wrong, but I don’t think anyone was actually forced to do so. In mid October, when Bush Jr. was still president, then U.S. Treasury Secretary Henry Paulson and other government officials sat down with some high level bankers and told them this is the way we are going to do this, and they were ASKED to sign on the dotted line. They all did.

(My source: http://online.wsj.com/article/SB122402486344034247.html )

But had any of the participants not wanted to play that game, certainly they could have just said, thanks, but no thanks, we’re good.

They were not good, though, and they knew it. The bankers were facing bankruptcy, and had men still worn hats, they would have been literally hat in hand, but they were figuratively hat in hand. So they signed.

My own opinion is that it should have never come to that. The big banks should have been allowed (forced) to go insolvent. Bankruptcy and/or the federal banking rules (as you can tell, I am not versed in these subjects, but who is?) would then take over. Probably not a pretty picture, but is it a pretty picture now? And have we not been forced to throw billions of public dollars at these institutions? And has not the government had to borrow billions from China? And will not the taxpayers who fund all of this simply have to end up paying interest to borrow their own money back?

And yet, the banks are still calling the shots. The Wall Street Journal reports (I get this indirectly off of a journal report carried on Yahoo online) that in the recent so-called stress tests for the big banks the government bent to the demands of the bankers and toned down their capital requirements, even though the bankers still think they are being unfairly treated. And now I forgot what the penalty is for not having enough capital. The big banks are “too big to fail” the government has already told us, so I guess we would just have to borrow more money to give them so that they can eventually loan us the money back at interest.

People that really understand banking probably won’t be reading this blog, and by chance if any readers who do understand it all read it they might laugh at my naivete. But I challenge them to think hard and then answer that if in reality I have not pretty well summed it up, albeit in oversimplified terms.

Where were the conservatives we hear so much about when they should have been railing against all of this? Well, yes, I know that many of them complained, but their complaints were too full of talk on side issues such as gay marriage, co called “pro-life” (anti-abortion), family values, when their message should have been a well thought out and reasonable and sober assessment of every-day economics and the basics of capitalism and free enterprise.

I think many of the conservative voices were spooked by the idea that the whole economic system could have indeed come crashing down and that all of the king’s horses and all the king’s men would not have been able to put Humpty Dumpty (the economy) back together again.

The Republican presidential candidate tried in vain to appease the conservative element of his party, but perhaps as a campaign ploy to show he was “presidential” in a crisis, or perhaps out of real concern, remember? he temporarily “suspended” his campaign and rushed back to Washington to take part in the bailout – so much for conservatism.

And since the conservatives had no coherent alternative, except to vote no (a good start, but there still has to be a well articulated alternative to catch the public interest), they ceded the job of economic repair to the left-of-center crowd, which strangely enough at first was led by a faux conservative, none other than George W. Bush (to the extent that carrying water for billionaires is conservative, Bush was conservative, but that is all).

If you’ve read this far you might likely come to the conclusion this blogger thinks of himself as conservative. Not really. I stick to middle of the road. But while I support government involvement for the well being of its citizens, I am not so supportive of a government-run economy that seems too socialist in nature or of a too cozy relationship between government and business that seems almost national socialist (NAZI) in nature.

Just like left and right resemble each other at the extremes (totalitarian government), I think our current economic crisis can be to a large extent blamed on the extreme left and right who perhaps unwittingly conspired together to use government for their own ends. An example, the extreme left wanted to put every citizen in his or her own home, regardless of income. The extreme right wanted to sell them that home (with the backing of the government).

Re-industrialization could save America; time can save Republicans…

May 2, 2009

While I am not a Republican and doubt I ever could be, I am thinking the GOP might find its salvation if it can just have some patience and it probably wouldn’t hurt if a few of its leaders didn’t feel they had to kowtow or at least walk on egg shells around the talk show blowhards that give it such a bad name. They already have accepted Bush Jr. as a bad memory, that’s a good first step on the road to salvation. And maybe they ought to talk Dick Cheney into going peacefully into retirement.

While I along with most folks hope the nation’s economic ills will improve soon, I think reality is that while there will likely be improvements in some areas there will also be much discontentment – cue the Republicans.

And maybe we don’t really want to use our tax dollars to guarantee warranties for domestic autos but at the same time cut aid to the needy (trouble is the Republicans probably don’t want to use tax money for warranties, but don’t mind cutting the aid).

While President Obama seems like he can’t lose right now, over time some of his program will wear thin – again cue the Republicans.

I didn’t jump on the bandwagon and try to assess President Obama’s first 100 days, but, belatedly now I’d say he certainly has faced the most pressure at one time of any president of the United States in my lifetime: the worst economic disaster since the Great Depression, ongoing wars in the Middle East and terrorists close to grabbing nuclear weapons in Pakistan, health care that is becoming costlier and less available to the populous, global warming (or at least some type of extreme environmental change), and a possible pandemic.

But for the most part he has come through with flying colors. He is calm, cool, and collected. He gives press conferences and to my ears his answers seem well thought ought and reasonable whether I agree with all of his points or not. He is able to use clear English sentences and is not given to goofy looks, malapropisms, or deer-caught-in-the-headlights moments. He did make an unfortunate reference to the mentally challenged a while back on the Jay Leno show while perhaps acting a little too glib and cool (maybe presidents don’t need to be on late night TV).

I agree with Arianna Huffington, for someone who has done such a good job so far on so many things it is dismaying that he is bungling in his bailouts, that is to say he should not be bailing out banks or big business.

I mean billions to Chrysler and what do we get? Bankruptcy. We could have had that without billions in taxpayer dollars. We want to preserve our domestic auto industry but to do it Chrysler has to make a deal with Fiat of Italy.

At least saving the auto industry has something to do with preserving jobs.

The big bank bailouts? All they seem to have to do with is throwing money down a rathole. I still say let the big banks fail. Something will take their place. Why doesn’t the government just cut out the middle man and loan money to businesses and individuals? (not forever – just in the short term.)

As we all know, there are thousands of relatively small banks around the U.S. that acted like traditional bankers, extremely cautious with their money and did not get into trouble. Why can’t there be newer large banks, if they are needed, to replace the thieves and greedy devils who got us into this mess in the first place?

President Obama says he does not want to keep running the car companies and that he does not have the power to get the banks to do what he wants, at least not right away.

I say quit trying to run the car companies Mr. President; you have way too much else to do. And you do have power over the big banks because they would not be in business were it not for the generous giveaway bailouts of taxpayer money begun by George W. Bush and continued by you. Tell them either do what you want or you cut off the money and demand what you have given them back (although the latter is problematic).

From now on out let’s stop this hideous bailout program for private enterprise. While the bailouts may seem by some a means to save private enterprise they are in fact the seeds of destruction for private enterprise.

And this may be the answer the Republicans are looking for. I think they need to calm down and stick to their supposed free market principles and let the cards fall where they may. Hyper inflation along with a continued stagnant economy seems likely to be in the offing (although I certainly hope not). Get your act together Republicans and come up with coherent and acceptable programs to counteract this disaster. Just saying no and calling the Democrats “socialists” will not suffice.

Make your program or proposed program known and when things get bad enough, the electorate will turn back toward you, realizing they didn’t want so much socialism after all.

And lest anyone get the wrong impression about what I personally think, I will say right here and now that both parties have accepted forms of socialism for decades and so do I. But eventually there is a limit, just like there is a limit to free-wheeling capitalism (we reached that limit round about last September).

The independence and flexibility true private enterprise presents is eroded by the artificial element bailouts present in what should be a natural market of supply and demand and success or failure dependent upon business expertise rather than the generous hand of Uncle Sam, who will not be able to be generous once the money is gone (China will not be able nor willing to support us forever).

Rather than fund Wall Street-type big bankers and auto makers and others who have failed to make good business decisions, the government should be rescuing, lending a helping hand, to those citizens in need – not necessarily on a lifetime permanent basis, but on an emergency basis. But the government coffers to enable government to come to the aid of the citizenry are being depleted by the profligate and shortsighted ways of the business elite who use their lobbying powers to extract as much out of Uncle Sam as they can before the well runs dry.

Of course the political power of the United Auto Workers has played a big part in getting President Obama to work so hard to salvage as much as he can of its memberships’ jobs too. Now the UAW is taking a 55 percent ownership stake in Chrysler. Hopefully at least that will give its members incentive to help operate a lean and mean machine that can survive tough competition without more government aid.

Saving jobs is a good thing, but how far can the government go? Will it step in to save your job?

What we need is something that probably cannot be done via politics, at least not directly. We need a new attitude among those in business that says that their mission, aside from the obvious one of making a profit, is to produce products and services for a sustainable economy that will keep our nation strong for our generation and the next generation and for all to come.

We’ve gone too long on the notion that quick profits and making money solely through speculative bubbles is the way to go. We need capitalism, but regulated capitalism. We do not want to smother ourselves in total socialism, which stifles the very soul of a nation and each human being.

Yes, we do need to energize the economy through new green energy sources, but we also need to re-introduce ourselves to the industrial sector as a whole. 

While researching for a separate transportation blog I do, I was dismayed to read that a big truck manufacturing executive predicted that partly due to the current recession and the lower returns his industry is seeing it will likely move all production to Mexico or elsewhere where labor is cheaper.

Personally I think that is an unpatriotic attitude on the part of industry. Any industry that moves out of the country and then tries to import its products back in, all the while enjoying the benefits of the American taxpayer, to include legal protections and free-world defense, should face a strong tariff for those goods.

I am not so sure that free trade is what it was cracked up to be. It seems kind of a lopsided deal to me. We are cutting our own throats in the process.

The socks, the work shoes, the jeans, the shirt, and the cap a truck driver wears and the rig that he drives could all be made in the United States. More people would have jobs and there would be more freight to haul. Right now fewer people have jobs and there is less freight to haul – although granted a large portion of what freight there is comes from overseas.

Our elites thought they were clever when they said we could be a service economy, shut down the smoke stacks and live clean and not get our hands dirty. We shipped our jobs overseas and now have a lot less to do here. And we will not be able to continue to pay ourselves to stand around and do nothing, even if we do go to more socialism.

World trade of course must continue to be part of the equation. But what we call “free trade” ought to be replaced by “fair trade”. Other nations heavily subsidize their industry and many do little to nothing for their citizens who must endure terrible working and living conditions. As for competing with modern industrial nations, that should not be a problem.

Re-industrializing alone will not solve the problem I realize. Germany, for instance, is a major industrialized nation and it is suffering from the worldwide recession and is facing major unemployment and for the first time in decades its industries and skilled workers are facing doubts about the future.

Unfortunately, boom and bust seem inherent in capitalism. We need to be ready for the boom.

The problem is really all about how we divide up the fishsticks…

April 24, 2009

While on any given day with all the bad economic news I am prone to think that the situation is hopeless or at least that we will be in this recession (depression?) for a long time, I also realize that the world governments, particularly the richer westernized democratic ones, probably have the power to save us all.

(I know, conservatives will pounce on this and remind me that “government is not the answer”.  And as a middle-of-the-roader I will remind them back that no government or anarchy is not the answer either. We can maintain our freedom and at the same time cooperate with each other through government to maintain some type of order.)

Overall there is no shortage of food and we have not destroyed our planet yet (the fact that Eskimos in Alaska are being flooded out due to a melting of the polar ice cap notwithstanding)  and there is no shortage of work to be done. And as far as a lack of money or too much money owed, one must keep in mind that there is no intrinsic value in money, especially since paper money or computer accounts do not represent some specified amount of, say gold.

In an introduction to economics class I took we had a text that used hard-to-understand economic terms but also had simplistic but probably quite accurate explanations as well. It gave a little illustrative story about the nature of money. As I recall, it basically told of an island (this is fictional, of course) where the natives traded fish as money and then moved on to trading fish sticks because they were easier to handle and could be stored over time. The king kept the fish sticks in his bank, but then there was a fire and all the fish sticks were destroyed and all the islanders were in a panic because they thought they were all broke. But the king said not to worry because he would issue paper representing fishsticks and they could trade back and forth just as before and that he would by his authority guarantee the soundness of the paper fishstick currency (this is my recollection of what I read in Economics, the Science fo Common Sense, by Elbert V. Bowden, copyright 1977).

As I have blogged previously, I along with a lot of others grew up hearing and reading that a government could not successfully simply just print money based on nothing. It had, for example, been tried by Germany in the 1930s and failed miserably with a haus frau having to push a wheelbarrow full of marks to the bakery to buy a loaf of bread. In more recent times, people in Zimbabwe had to hand over millions of their equivalent of dollars to buy a loaf of bread.

But today in the United States of America our government is essentially printing make believe money which represents no more than the full faith and credit of the USA. And people still want dollars.

Part of the value of our dollars is based on money our government is borrowing from countries such as China and then giving it to the Federal Reserve to in turn give it to the banks who in turn loan it to businesses (or are supposed to).

I realize that anyone who is learned in economics realizes that I am already in way over my head here, but if you can show me how I am wrong, go ahead and comment at the end of this blog.

But really money is not bars of gold or silver or fish sticks, it has become a device we use as kind of tickets or coupons to divide and share our resources. In our semi-capitalist society we operate on the notion that the dividing is not done necessarily on an equal basis but a basis determined on what we do for each other. If you can do more for others than the next guy you have created more value and you get more coupons or tickets or dollars. But in our benevolence we also dole out fishstick paper to those who may not be able, temporarily or permanently, to put forth effort to create value.

If ever there was a pure dog-eat-dog capitalist society with no social safeguards or socialist type policies we have not had one in the USA since the at least Great Depression of the 1930s.

With Republican rule we did our best to move away from too much socialism (maybe) and promote more capitalism, but strangely it ended with Republican President George W. Bush unexpectedly in a financial panic moving our government to some form of what looked like national socialism (not completely unlike the Nazis if the 1930s, as far as the relationship between the government and big business).

And now the Democratic President Barack Obama has taken it a step further, essentially nationalizing the banking industry and the domestic automakers (minus Ford so far).

Some ultra conservatives might want to go back to a system in which some men simply put in a day’s work for a day’s pay and others who had saved up capital lived off the profits of their businesses and the interest they made on their capital and where for those who because of lack of talent or health could not make it depended upon the charity of churches and family.

And I am not going to say that what I just described in the previous paragraph is completely undesirable, but I will say that society seems to have decided long ago that it was not completely comfortable with that approach.

What we have in the USA now is basically an economic system based on capitalism but with some elements of some form of socialism, and we have a democratic republic for a government that incorporates some socialism, especially in terms of an economic safety net.

Right now our system has been severely damaged and we are trying to fix it. I think we can because in the end it is always a cooperative effort and I think that even if we disagree wildly with each other on the finer points of how our system should work, we have thus far agreed on preserving our nation and the ideals of individualism and freedom of expression and freedom of the pursuit to life liberty and the pursuit of happiness.

Now if we could just figure out how to divide up the fishsticks….


Please view my German-American blog at http://vonwalther.wordpress.com

Bankers can’t have contracts broken, unions can…

April 5, 2009

Question for all of you Wall Street apolologists and the Obama administration, who just can’t do enough for the billionaire bankers:

If the parent company New York Times can attempt to force the unions at the Boston Globe to accept abrogated contracts, then why couldn’t  the investment banks have abrogated their contracts with the million dollar bonus babies who put them into insolvency?

Over supply, under demand for cars; let businesses and banks go bankrupt…

April 2, 2009

As I take my daily walk down the street I often see cars and trucks with for sale signs on them parked along the curb or in vacant lots.

I wonder why our government has seen fit to get into the business of selling new cars (the auto bailouts and the Treasury Department guarateeing warranties off all things) when so many are shedding the ones they have, but can no longer afford.

I am not at all sure there is much of a market for new cars. We may well have an over supply already. Of course a lot of people would likely prefer to have a new car but cannot afford one now with the recession (or depression).

It seems like the market place should determine the fate of the auto business.

As to all the new incentives, such as offers by the auto companies to make your payments should you lose your job, extended warranties, and equity protection, well that is maybe a good deal, but the buyer surely pays a hefty price at the other end of the contract. It is a big insurance policy. I would say that if you expect you might be losing your job, now is not the time to be purchasing a new car. As to the warranties and equity protection, if the American manufacturers had been making superior products, they would not be necessary. Maybe the era of planned obsolescence and making the big money in parts and repairs is coming to an end, hopefully.

And don’t get me started on the repair con jobs. I went to my foreign car dealer to get my door fixed and found out the guy wanted me to sign on the dotted line to just look at the problem (minimum half hour labor) and at the same time he is telling me that they likely would not be able to fix it. I refused to sign, so he looked at it for free and told me he could not fix it. I took it to a body shop and they fixed it in five minutes for free (I had done business with them previously). I’m no mechanic, to say the least, but I was a truck driver and knew from experience that adjusting a door that won’t open and close properly is usually about a five-minute job (unless there has been major damage). What I am trying to say here is that most of us go into auto repair places and get ripped off because we have little idea of what they are doing (to us).

But even though I have a negative attitude toward the car business – oh and one more story: many years ago I haggled with a car salesman who claimed he was going to give me a super deal on my trade in that no one else was willing to give. But when I suggested that he was simply tacking more dollars on to the other end of my contract he sheepishly admitted to it.

However, back to the auto business itself: it is important and I have no doubt it will survive. I think it could have done so without government help. It might mean different people running it, but where there is a demand for a product, certainly there is a viable business opportunity. As I have written previously, one of the big mistakes of the domestic manufacturers was to not be flexible enough to meet changing demands in the market place.

….Just read a blog by a respected economist – Pulitzer Prize winning one – who said what I and so many others have suggested. The bank bailouts are not working because the bankers have been just taking the money and paying themselves. I am referring to the big banks that took the bailouts. Okay, you want a source for that. I’ll break here and look it back up. Here it is: American economist Joseph Stiglitz, interviewed by the German magazine Der Spiegel. Just Google Der Spiegel and you can get the English language version.

Treasury secretary Timothy Geithner and many others contend that simply letting the major institutions go bankrupt would have been a disaster. On the other hand, many, many economists differ, saying that bankruptcy would be the answer.

My contention would be that governments should stay out of directly funding and/or running businesses, although providing some incentives might be wise. Where governments must act is in protecting the welfare of the population on an emergency basis, and businesses should support that. To do otherwise will risk chaos, in which everyone loses.