Industry, not war licked the Great Depression…

February 21, 2009

(Copyright 2009)

“Government of Wall Street and by Wall Street and for Wall Street must not parish from this earth”, to paraphrase, no parody, Abraham Lincoln.

It seems, especially to hear the Republicans tell it, but also so many others, the primary bench mark we must look at each week day to judge our nation’s viability is the Dow.

It’s down again, the reports stream in, therefore everything President Barack Obama just did or said is for naught.

Excuse me for bringing the is up, but were not those movers and shakers and traders the ones who by their actions and the results and interpretations of those actions the ones who inflated the bubble so hugely that it finally burst?

And Wall Street is really just a generic title. Bank of America, at one time, maybe still, the largest financial services institution in the world, is headquartered in Charlotte, N.C. Some worry that the bad assets from its Merrill Lynch acquisition, among other things, may pull it under (it could already in reality be insolvent, but then again, as we are finding out, nearly any business can be without the wider public knowing till it’s too late). And please, I have no idea whether it is solvent or not. I only know what I read on the web and the Wall Street Journal, traditional paper edition, when I get to the public library.

Bank of America is Bank of America in name only; it sold out years ago (okay was acquired). The name was kept, I suppose, for “brand recognition”, as the marketers and merger people call it.

It began in 1904 in San Francisco, founded by an Italian immigrant, who named it Bank of Italy. One story I read claimed he was able to rescue his cash from the rubble of the 1906 earthquake and fire and set up banking on a couple of wooden planks.

I knew a guy who took a Junior College banking course and upon completion went to work for Bank of America. I mentioned something about A.P. Giannini, the founder of Bank of America. “Never heard of him” he said, with a blank look on his face. (I had in conversation admitted to this guy that journalism did not pay well. This time he looked super puzzled: “why are you doing it?” he asked. No true journalist could have come up with a more obvious and at the same time probing question. I had no real answer).

But back to the problem of the failure of our economy and more specifically our banking industry:

Maybe the federal government needs to become the bank for awhile (isn’t it already?) and bypass Wall Street altogether. While preserving capitalism, maybe we need to work out a new business model.

Or, again, maybe the free market will sort this one out too eventually. If the big banks or the majority of them (not to mention small ones) are really insolvent (if the truth be known, as is often hinted in news stories and blogs), could they not be replaced by now smaller entities or even potentially larger ones who are independent of the Wall Street crowd as the source of capital?

I read in my local newspaper that one regional bank in my area never took part in all those subprime loans and therefore does not hold all that bad debt. I don’t know whether it has accepted federal bailout money, nonetheless – I would hope not.

I think at first everyone thought that some extraordinary emergency action, such as that started in the last desperate days of the Bush administration, could head off the disaster and we could all go back to business as usual. Such was not the case.

Bush, although he would end up being blamed for all the troubles just like Hebert Hoover was before him, would have done better to simply make sure that all investors were protected from bank failures up to the insured amounts and that financial scams were prosecuted and left it at that. But judging by his haste to do a 180-degree turn from traditional capitalism to state-run socialism, he either felt public pressure (and had legacy worries) or just a lot of pressure from cronies who said, do anything, just save our money and our way of life (or give us new money).

Meanwhile, although I realize he is politically committed otherwise, Obama would do better to concentrate on making sure the unemployed are offered benefits, health care is reformed, and education and job training prioritized.

At the same time, emergency infrastructure projects should be pushed forward to forestall such things as bridge failures. And there is nothing wrong with incentives to promote green industries. And along those lines, all industries. What we need is employment.

(Bailing out the failing auto industry is a mistake. We need an auto industry, but not a failing one, and funding the existing model will just prolong the agony. Please let a new more nimble and open-minded crowd of capitalists take over. As for big labor. You won’t have jobs unless there is healthy industry – leave it at that.)

Perhaps many thought there would be some utopia where all the smart people would invest money in money, rolling over dollars, not to produce products and services and employment, but to simply increase account balances.

Certainly people should be able to invest in anything they want to (and hooray for compound interest), but as long as the only incentive is to invest in interest on interest we will push ourselves toward a world where all the dollars one can earn will be worth very little, because people won’t be working to produce products and services and improving or even maintaining the infrastructure.

And even though I don’t quite understand why, I have an idea that down the line, a year or two, maybe sooner, we are headed for major inflation (good at first, not so good as it continues to climb) and maybe that old 1970s nemesis “stagflation”.

So while all this is being sorted out, the best that veteran workers can do is adjust to the ever evolving labor market (what there is of it). If you can go to school or get training, do it.

For the young, there is only one answer: get the best possible education there is for yourself and get the type that fits you best. People in all walks of life need to be more knowledgeable than ever because of technology and the need for extreme flexibility in the workplace.

Some say Obama is doing too much (committing too much money – I have suggested that), others say not enough. I imagine no one really knows.

I’ve touched on the idea before that some now say that FDR’s New Deal, although mitigating much human misery, did nothing to bring the nation out the Great Depression, only World War II did. But here’s a new twist I heard on that and I like it:

It was not the war itself that brought us out of the Great Depression, but the giant surge in our industrial output. Suddenly people had jobs in the war industries (and nearly all industries were turned into war industries, even the USA’s own division of Steinway Piano, if you can believe it (they manufactured wooden gliders). But once the war ended, the industry was in place and re-tooled from anti-aircraft guns to automobiles and from Radar to refrigerators, and the GIs came home, made use of their GI bill education benefits and moved to the suburbs.

The lesson here is not old history, but the need for industrialization. Yes it supports consumerism, but consumerism alone will not do the trick (have you noticed?), and solar panels will be nice, but I think we have to diversify.

Advertisements

We’ve done this before, but what’s the answer?

January 26, 2009
(Copyright 2009)
We’ve been here before, but I don’t know exactly what we did or what we did that really worked to get out of this mess. That’s partly because I wasn’t born yet. But I also think that history almost does repeat itself.
Doesn’t anyone read our own American history?
Capitalism unchecked and human greed causes great problems every time.
I’ve been reading a book by the late historian Samuel Eliot Morison called the Oxford History of the American People, and it seems that nearly everything that we face now in the current financial crisis was played out in the 1920s and 1930s.
There was a lack of regulation and there was wild speculation in which a large part of the population (including those not at all market savvy) got caught up in the frenzy to get rich quick, and there was market manipulation and then the bubble burst and eventually market controls had to be instated or reinstated.
And fast forward to the 1980s and 1990s and 2001 or so and controls were lifted and here we go again.
What is so hard about that to understand?

I just read through the part about the Great Depression. I’m still not sure what got us out of it, except that it does seem — and no big news here — that the production of war materials for World War II (even before we got involved directly as combatants) certainly helped matters.

Trouble is, we don’t want to have World War III to jumpstart the economy. And history probably would not exactly repeat itself. The rules and methods of war are always changing.

Right now, I think, we are spending a lot more every week for the war effort in the Middle East that we did for all of World War II, but far from helping our economy, it is primarily a drag on it.

And I think it would be immoral to fight a war to improve our economy, although I have to admit that most wars in some way or another involve economies. They are usually a contest for power and resources.

At any rate, we seem to be financing our current military efforts largely by issuing bonds that are bought up by China and Japan.

The history book that I am reading says that we financed about 40 percent of World War II through taxation and the other 60 percent by issuing bonds. I’ve seen the 1940s era news reels urging patriotic citizens to “Buy War Bonds”. I haven’t seen any war bond drives aimed at the general public in my lifetime, and in fact, it’s been a long time since I’ve seen a public service announcement urging the public to buy U.S. Savings Bonds. I did read recently that desperate investors were parking their bucks in government bonds at zero or near zero interest just to avoid losing money.

Our current military spending in some way may help our economy, but it is not like that in World War II where we had to start from near scratch and build up a modernly-equipped military to fight a massive land and sea war. We had to produce one heck of a lot of goods and put a lot of civilian men and women to work in the war production effort, beginning a year of two before Pearl Harbor and then four years afterward. And a large percentage of  young men were drafted or volunteered for the military (and women volunteered in large numbers too), thus instantly becoming employed. Unemployment went from double digits to nothing.

Pre-war efforts such as the Civilian Conservation Corps and other so-called make-work programs put huge numbers of the population back to work, helped put food on their tables and restored their dignity. Most people simply wanted work, not a handout, although the latter was sometimes necessary to ward of disaster.

Even with the government programs unemployment remained high for most of the 30s, with the war finally coming along to lift the economy and put everyone to work.

The boom continued even after the war because servicemen came home and were able to use the GI Bill and go to college and get good jobs and there was a pent up consumer demand from war time privations (something we have not had this time around, except that,again, I think the billions we have spent in the Middle East have drug down our economy), and we became the leader of the free world and spread our economic tentacles all over the globe.

But the rest of the world caught up or is catching up and so we are no longer playing the same game.

And a theme I can’t let go is that we have to our detriment become a nation primarily of consumers rather than producers (a generalization that of course does not fit everyone, but the majority of the nation nonetheless).

Our new president talks of promoting new green industry. A good thing, no doubt. I think the Republicans if they are smart will co-opt him and pretend it was their idea all along. It would make good political and business sense.

But green or conventional, we need to revitalize our industry and make use of our natural material resources, such as coal and oil and natural gas, and lumber, and minerals, and agriculture and put people back to work in well paying jobs and forget this service economy.

Services are vital, but they are a supporting role; you can’t make a living out of just servicing services. I agree with poor disgraced former Democratic House Speaker James Wright who complained during the Reagan presidency: “we can’t all deliver pizzas to one another”.

I’ve used that line before, and we as a nation have been here before, and perhaps we are doomed to repeating our actions over and over again like the Groundhog Day movie.

P.s.  We knew former President George W. Bush was not a good student, so we can understand him saying things such as the “fundamentals of our economy are strong” as it fell apart around us, thus looking like he was doing a Herbert Hoover impersonation. But unsuccessful presidential candidate John McCain who professed to be a fan of Republican reformer President Teddy Roosevelt seemed to indicate he knew a little history. But Teddy was early 20th Century — McCain should have read further. “The fundamental strength of the nation’s economy is unimpaired,” said President Hoover, and nine days later what had been until recently the biggest bank failure of  the nation’s history occurred. Last Fall, McCain was using the phrase “”the fundamentals of our economy are strong” as major banks fell. 

 

 

 

 

 


No relief valve for another Great Depression…

December 1, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

It could indeed get ugly quick if things don’t turn around economically.

I wonder if we as a nation have the fortitude to stand up to and endure something like or even worse than the Great Depression of the 1930s.

Speaking in broad generalities, we’ve had it too soft for too long, two or three or more generations now.

And there is no relief valve.

Back in the 30s a large portion of the population still lived out on the farms. A lot of folks had to leave the cities and move in with relatives still down on the farm. At least they had somewhere to go.

And then came World War II, the biggest relief valve of all. Young and not so young men were called up or joined the military in droves (women volunteered too), while a large portion of the workforce was directly or indirectly employed in the war effort.

A lot of women got a chance to do men’s jobs and did quite well at it (and I have something to add somewhat relative to that at the end of the blog).

But this time around there are not all those farms out there to go back to. Besides, not all the folks who live out in the country are into raising their own food as they might have back in the 30s. I recall that back in the 1980s (I think it was) when farmers were having it rough in many rural areas people were reportedly going without enough food even when surrounded by tillable land. It seems that a lot of farmers are more into specialized and big equipment type farming – gardening skills have declined. It was not uncommon back in the 30s for even commercial farmers to raise some of their own food, with vegetable gardens and chickens running around and a hog to butcher and such.

I know there are folks today who have farms or just acreages who practice what you would call subsistence farming. Providing they can pay their taxes and hold onto their land and maybe still have some outside source of income and/or marketable skill, I would think they are in the best position to weather the current economic downturn (aside from those who simply have so much money that they are just insulated from the whole thing).

By and large, though, we are just not self-sufficient enough to get by. We are extremely vulnerable to any economic upset, price surge in fuel (it could easily happen again), or natural disaster (recall Katrina on that last one).

A couple of days without deliveries and the grocery stores would be wiped out.

I saw a rather chilling video news report before I started writing this blog. A black woman working at some type of warehouse – in Detroit I think – was reacting to the fact that they were going to lose their jobs due to the problems in the auto sector. She said young people are already robbing older people and that this will just make it worse.

While I realize that a lack of jobs could lead people to crime, it has been my observation that by and large the criminal element is the criminal element (black and white and Asian) regardless of the state of the economy. On the other hand, if people get desperate enough, that is if they get hungry enough, anything could happen.

If people will trample a store worker to death to get early Christmas bargains (as happened last Friday on Long Island), what would they do in a real desperate situation?

I also read a story in today’s newspaper that said the survivalist movement so popular in the 1990s has experienced a resurgence. What has always made me wonder about those folks who head for the hills with their canned and freeze dried food and their guns and who say the government is the enemy, is what do they think will happen if our government really did break down. Would they be able to stand up to well-equipped outside invaders?

While I do understand some of the sentiments (not all) of the survivalists, I am just as wary about them as I would be about the mob or outside invaders or the government. (In the same vein, I am no more comfortable with the liberal judge who lets a criminal go free than with the vigilante mob out for blood or even the jury who decides to ignore the evidence or lack of it.)

You may have read about that so-called Russian analyst who wrote a paper with the thesis that the U.S. will fall apart and break into separate nations. I doubt that. And I certainly hope that would not be the case.

United we stand, divided we fall.

P.s. When I was in college a little firecracker of a woman attorney gave one of my classes a presentation. She had represented some female employees of a Sacramento area defense plant during , I think, the Korean War. The women were doing some highly technical work on gyroscopes used in jet aircraft. They taught men how to do the job and then wound up working for those men who then became their supervisors. They also had to suffer sexual indignities on the job. That attorney eventually got them a big settlement.


A lot has transpired in mom’s 98 years…

November 11, 2008

(Coopyright 2008)

The WALTHER REPORT

By Tony Walther

We recently celebrated my mother’s 98th birthday.

She’s seen some major changes in society and has lived through a lot of history. There was World War I when she was a little girl (her future husband lived out in the countryside and his family I am told changed the name on the mailbox from the German to denote the French side of the family – the U.S. fighting Germany at the time), the Roaring Twenties when she was a teenager (wild financial speculation and a social liberalization of society with jazz and daringly-dressed and somewhat liberated young women), the Great Depression when she was a young married woman (the bubble of the 20s had burst– sound familiar? The more things change, the more they stay the same, and mom would verify that). At one point, she and my father lived on the earnings of a paper route. He later became a professional journalist. They lived through World War II. My dad helped grow victory gardens in San Francisco. Food was rationed for the war effort.

They had their first child, my oldest brother, in 1929, the year of the great stock market crash that presaged the Great Depression. The next child was my sister born in June of 1941. They were taking pictures of her in on Sunday, Dec. 7 that year when dad got called in to work at the newspaper in San Jose, Ca. because the Japanese had bombed Pearl Harbor, ushering the nation into World War II. And as that war was ending, my next older brother was born in 1945, and then, surprise, I came along in 1949 (both of us boys part of the “baby boom” generation).

My folks raised children through the 1950s (and into the 60s) while their eldest son advanced through his Navy career. During that era our nation became a world super power, while living under the threat of nuclear annihilation due to the Cold War with the Soviet Union. And thanks to me, they had a child around until the latter part of the 1960s, a decade I think that finally shed the morals and societal rules of the past and led to what we have today (hmmm, I’d have to think on how good that is – perhaps a mixed blessing at best).

Mom was a stay-at-home mother for the most part, although she had a whole earlier adult life without me around that I am only somewhat privy to. I know she drove a team of mules at times as part of the ranch work as a young married woman, her and my dad working a place across the road from the ranch he grew up on. I use the term “ranch” because that was the term dad liked to use and I guess others in his area used. Elsewhere in the nation they might say farms, but you know, this is out west.

I know that mom worked in peach canneries and such during her younger years, and then when I was in high school she worked at a peach cannery and also at a prune processing plant.

During the 1950s when she had three offspring at home, ranging from a daughter in high school to the middle grades for one son and kindergarten through fifth grade for the other, she was a homemaker as they called it back then. I remember her baking cookies for PTA meetings and sewing our Halloween costumes. I even came home from school for lunch many times.

Mom was the maid, cook, nurse when we were sick, and adventurer on the weekend, often talking dad into us all going on a ride somewhere.

She was also an avid fan of the news. For some strange reason my brother and I slept in a bedroom that doubled as a family room, with our one and only and black and white television that was subject to doing that rolling picture and horizontal and vertical line thing as those old sets would do. Even before I got out of bed in the mornings she would switch on that set and watch the Today Show. Although I’m sure they did that fluffy stuff they do nowadays, seems to me they concentrated more on hard news back then. At any rate, I was up to speed at a young age on such things as the Suez Crisis and the re-election of Dwight Eisenhower (well, okay, I didn’t really fully understand the Suez Crisis at that time).

Even though dad was the journalist, I have to credit mom with my interest in the world and current events. Dad was always available in the evening for more insight into the subjects, as well.

Mom often envied the few unusual women in the small town we lived in during much of the 1950s who had their own outside jobs.

I think she made a few attempts at getting some type of training, but nothing seemed to suit her.

For my selfish part, I’m glad she didn’t. It was always so nice to have her around home, and I am sure it made it a lot easier on dad – although both of my parents were rugged and could have endured what many go through now, both parents working and straining to make ends meet.

Besides the fact that the folks were naturally frugal, one of the reasons we were able to get by is that we, except on vacations, almost never went out to eat and mom prepared all the meals, mostly from scratch and not from pre-prepared ingredients.

She had lived through the Great Depression and knew how to economize. I think the experience stuck with her so much so that when she made new dishes or desserts from recipes, she often skimped on the called-for ingredients and often left some things out altogether. She was rather stubborn that way.

Many times during my childhood and in later years my folks raised a vegetable garden. Even when he raised a large garden, dad never used power equipment, no power tiller, just a shovel, hoe, and rake (I often helped him, and that was the one kind of work I actually took to and I don’t really know why). He felt doing everything by hand was more economical.

Also, when they went camping, something my dad especially enjoyed, and I think mom did too, my folks used no more than a tent. In fact when we kids were at home and we went camping, the kids slept in the tent and mom and dad slept outside. I remember once we were camping in the high mountains and one chilly morning I came out of the tent and saw my mom and dad under a tarp, only their heads sticking out, and my dad had frost on his whiskers.

When times are rough, I often wish I was as rugged as my folks.

And here’s something that might surprise some who revel in what it is like to be poor, but hardy enough to endure it and even enjoy it: for her part, mom often says there is nothing good about being poor. And in politics, of which she is an avid fan, she proudly proclaims that she is a “bleeding heart liberal”.

But I quickly add, mom worked for her keep all of her life that she could and never expected a handout from anyone. She just doesn’t see the righteousness in suffering, I think.

For my part, I am not as rugged as mom and never had to live in abject poverty (well not yet, anyway), but politically I feel more comfortable with thinking that I’m middle of the road.

But what I often wish is that I could be as rugged and self-reliant as my folks and my ancestors who migrated from Europe to the middle west and to the west and some to the far west and who endured a much tougher environment than I ever have.

Hopefully our new president with the help and support of the rest of our government will be able to help turn this current financial crisis around before we fall into another Great Depression, but if not, a whole lot of us will wish we were as rugged as some of our ancestors, and who knows? We may find that we are.


The socialization of America; a war loss…

October 14, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

I think our economy is fundamentally unsound and what we are doing now, the bailouts and what amounts to a partial nationalization or socialization of the economy by our government, will only act as a band-aid or a pill that at best will temporarily mask the symptoms of what ails us.

Admittedly I know little of economics, but like most of us, it has been so much in the news these past several weeks and in so much detail, I feel like after all these years I really do understand some of the fundamentals.

Before I go any further, I would suggest reading a piece by Harvard lecturer and economist and Libertarian Jeffrey Miron, now posted on CNN Politics.com. While I have never thoroughly bought into libertarianism, I think that they seem to be the only true conservatives (and they are liberal on social issues, although not government involvement in social issues).

Back to my thoughts: I will wander here, as I sometimes do. But last night while I was trying to read a novel, I had the TV on low and caught a portion of some finance commentators from Britain, I believe. They read an e-mail from someone who complained about the bailouts and also noted that he began his career as a gofer for some financial firm in 1969 at $129 (American) per week. “Now these guys come out of college and think they should start at $200,000 per year.”

Wandering still: I note that Barack Obama has the political guts or maybe savvy to concede in his stump speech that although a lot of our problems are caused by greed and malfeasance on Wall Street, there is also blame to those on Main Street, so to speak, who knew they were getting in over their heads and did it anyway. I think he is being honest there and is also trying to appeal to the centrists, much as I believe Bill Clinton often did. I recall that at one time during his presidency Clinton was referred to as a centrist or maybe even a slightly conservative or “new” Democrat.

Whatever, he supposedly balanced the budget and left office with a surplus. Actually I think that is a lot of accounting trickery that both the major parties engage in, such as when they propose new spending, then cut that proposed new spending slightly and claim they have reduced government spending. This charade is aided and abetted by the news media, which in some cases does not understand what is going on and in others just settles for it because to do otherwise takes too many paragraphs of explanation.

All that aside, Clinton was aided by a robust economy, the Dot Com bubble, as I recall, was a big part of it. But under Clinton the federal budget was balanced (in governmentspeak anyway) and Welfare reform was enacted, something you would have expected Republicans to do.

Bush came into office promising to keep taxes low (especially for folks who could most afford to pay them in the first place) and to loosen government control on free enterprise. He now prepares to leave office while presiding over the biggest socialization of government since Franklin Delano Roosevelt (maybe bigger).

It seems that a lot of the laissez faire free enterprise folks, to include George W., don’t have the courage of their convictions. To be sure, this bailout and nationalization stuff has caused a split in the GOP, which will in part to be blamed for John McCain losing the election, as he at this time seems destined to do. I still think he could win if the stock market were to stay up and gasoline prices kept falling, and if there were to be some attack on the nation or if as I read in another blog that the Bush Administration is able to announce that Osama Bin Laden has been caught. Now this does not make sense. But the voting record of the American electorate is often driven by fear and emotion. This time around it does seem,though, that folks – the Palin contingent aside – seem to be looking at things more thoughtfully and more people are taking part.

What I meant to say in this blog and did not get around to, is that our economy is fundamentally unsound because we (as a nation) have spent too much time consuming and not enough time making. When we get back to the making, which we are quite capable of doing, conditions will improve greatly, I feel. When we get back to investing in our own nation and not industry elsewhere and not in nation building in the Middle East, things will turn around.

Still wandering, but I fear that all of this government infusion into the economy is going to lead to wild inflation. I just heard an economic pundit on TV say that he thinks we are in danger of going into something worse than the Great Depression. We’ll have high unemployment but unlike the Great Depression, we’ll also have inflation.

Wouldn’t it have been better to let the investment banks and other banks fail and be replaced by new bankers who would operate like the bankers of old, prudently?

And finally, I want to jump to the subject of war. In all of this economic upheaval we have forgotten about the wars we are fighting.

Unlike Vietnam (something a couple of generations now have no memory of), there is no draft and the numbers of casualties and troops involved are much smaller (but no less important). But people are dying and being gravely wounded and none of us really know what for, beyond the jingoistic phrases of “fighting terror” or “fighting for freedom”, that have no thought behind them.

I want to mention this because I was thinking about a boyhood acquaintance that dates back to first through fifth grade. He had a stutter, and beyond that I can only describe him as the typical all-American boy. He probably did not do well in school (I don’t know. Our family moved after fifth grade). I recall going over to his house and a bunch of us kids playing on the slip and slide he had just got. I often think back to those kids because it was a time when we were all so happy, free and easy, with no responsibilities (at least I didn’t have any).

I had just got through entertaining my youngest daughter with my memories of that kid who stuttered (not about his stutter, just the fun) and went back into the house to go on the computer. Quite by chance I ran across his name. He died as a Marine in Vietnam from enemy fire.

None of us knew what that war was all about either, except something about fighting for the cause of freedom, and yet no one was freed, except from life on earth.


Shouldn’t lend money just to make money…

September 23, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

So I suppose it’s all but a done deal with only some haggling to be done on the details. The federal government will assume a trillion dollars or more worth of bad debt and it will be unfair in that the big shots will be bailed out and the individual will be left to slog it out on his own or actually will do his part to finance the whole thing via taxes and an economy drug down by government debt.

Somehow as unfair and bad as it is, I think the country will get along and it may actually be an opportunity to reassess and get it right.

I know so little about economics it’s not worth me wasting words on this screen, but that won’t stop me.

Just saw former president Bill Clinton on Dave Letterman, and while I will always resent what Mr. Clinton did to bring shame to the cause of good government by his own personal actions, I have to admit he is a highly intelligent and perceptive and articulate person and we would have been no doubt better off if he could have served past a second term.

He said a lot about the economy and gave I think a reasonable explanation of what has gone wrong, and believe it or not he did not do a lot of finger pointing. He did say that the government has to step in but he also called for a program to help stem the tide of foreclosures. He said if that doesn’t happen the problem that caused the collapse of lending markets will persist – people reneging on their mortgages which in turn makes the mortgage-based securities used in the financial trade worthless (now I just kind of paraphrased there and added some elements of what I got in an earlier conversation from someone who understands this all better than I, plus what I have read over the past week).

Clinton, as is his wont, said a lot, but one thing I took away loud and clear, something that has occurred to me before all of this: “we have to quit loaning money just to make more money.”

Clinton said that there was an over investment in real estate. He suggested that government incentives could make other investments, such as so-called “green energy”, attractive and would create jobs that would in turn, among other things, help people buy homes and make good on their mortgages.

And my position is that while the money traders on Wall Street no doubt provide a necessary element in the economy – they help in the free flow of capital – at some point we have to be producing things and employing people in the effort to produce things. We can’t sustain a high standard of living for the broader public on an economy based solely on importing products made elsewhere and low level service jobs to provide comfort for just part of society.

On principle, I am against the bailouts that have taken place. But I am not the one that makes the decisions. I would rather see the nation move forward than come to a standstill and point the fingers of blame. Let’s learn from the mistakes and move on.

There needs to be more regulation on lending and borrowing and financing with complex instruments that may represent no or little real equity.

Above all, there needs to be more savings, and it seems such cannot come about until there is more incentive to save. Lower interest rates may be good for borrowing and business investments, but they don’t provide the motivation to save. On the other hand, if interests rates are too high that stifles business, but the more money folks make on savings the more they are liable to save and the more capital that will be available to borrow, and that in itself brings down interest rates somewhat, almost a vicious cycle to be sure. And that may be why there needs to be sound government involvement to keep things on an as even a keel as possible without upsetting the whole system.

It seems strange that after the tragedy of 9/11 the nation was urged to go out and spend money. Most of that money, due to our import-driven economy, goes overseas. We’d have been better off to put more of that money in savings and investments in our own country. We are now fighting wars in the Middle East and having to buy a huge amount of oil from the Mid East to do that. A lot of that oil money no doubt inadvertently goes to fund the very forces we are fighting. A lot of our money also goes to China, from which we borrow, and to which we pay so much for imports. While we try to maintain good relations with China, it is our main rival in the world today.

In my last blog, I wrote that I was beginning to like Ron Paul’s Libertarian ideas. I do. But I know he is not going to be elected. He’s not even on the ballot. Besides, he’s too old. So is John McCain. In addition, McCain has admitted economics is not his strong point. I fear that anyone he would have advise him would be like the advisers Bush has had, ones who have an agenda, an agenda that is aimed more at their own ability to make money than the overall economic health of the nation.

Barack Obama puts off the aura that says he is intelligent, wants to listen to others, and can reason things out.

I want to think that McCain means well, but he does not inspire the feeling in me that he has the patience or even the ability to weigh the complex issues that the next president faces.

There is a chance that the government will in the end come out ahead in this debt assumption because it would eventually be able to sell off assets after things stabilize. That is hard to get one’s arms around – how you make good on worthless paper.

I’ve always read about how cheap things were in the Great Depression, because since few had money to buy things, demand was low, prices were low.

But I recall the 1970s. Wages for many were stagnant, the whole economy was stagnant. And yet, prices went up and up. It was called “stagflation.” I hope we are not headed for that again, but with the current mess, it seems ever more possible. If markets remain in turmoil the flow of capital will be shut off and without that there will be little business activity and high unemployment. But the cost of things like food and oil, according to current conditions, will continue to rise. Yup, stagflation.

I suppose the cost of doing nothing could be long years of suffering, maybe even a depression bigger than the Great Depression.

Let’s hope the cost of doing something does not cause similar pain.