The siege on the city of Mumbai by a team of just 10 or so terrorists has left us all trying to answer a number of questions. Why did this happen? What are India's and Pakistan's responses? What is Obama's response to this question?
Since our current President (W.) has basically left the building at this point, the next steps taken here by our President Elect will be the ones that the eyes of the world are focused upon.
So let's take a look at the situation--Pragmatic Pundit-style:
Q. Why did this happen?
A. We aren't sure yet, but it appears that there is an interest in the terrorists in destroying the seemingly growing "detente" between India and Pakistan. After all, both countries are democracies now (fragile as each may appear to be these days). It is in neither country's interest to attack the other.
Pakistan, in particular, has no interest in pursuing a policy where international strife darkens its western AND eastern borders. This is a country that is basically broke, from an economic standpoint (they have been taking loans from the IMF), and has enough internal tensions as it is. Pursuing a war with India at this point would be ruinous.
India, in turn, also has little to gain. The country had been thriving from an economic standpoint, and getting involved in an international entanglement, while the Afghanistani conflict is taking place not too far away, would provide them no benefit whatsoever. With a new democracy in Pakistan, the idea of pushing towards diplomatic ties (and even Cricket matches) made all the sense in the world.
The only answer at this point seems to be an intentional de-stabilizing of the region by groups intent on seeing the situation move towards their position. An al-qaeda like group, or perhaps one more specifically tied to the issues of Kashmir are the most likely culprits. They seem to be the groups with the most vested interest in turning the status quo in their direction these days.
Q. What could India or Pakistan do to make this better? What could their reaction be?
A. I think many in India would call for blood. It would be hard for America to tell them to sit on their hands, and do nothing, especially after our response to 9/11. However, it may be that our own overreaction to the events of 9/11 (not necessarily Afghanistan, but the language, the attack of Iraq, etc) serve as a warning to India as to what overreaction can lead to. An overreaction to Pakistan, and its leaders in particular, would be a powder keg that could propel a larger World War. There would be no winners in such a scenario. India has, and will continue to renounce such attacks, but could call for an immediate summit, or meeting with top Pakistani leaders, to discuss how to address the border, Kashmir, and the other issues that face the two nations.
Interestingly enough, this is a set of countries that has more in common than they do differences. It was a common colony under Britain only 60 years ago.
The good news is that I think that this kind of diplomatic solution is more apt to come to pass this time. More people recognize that war is not the answer to this kind of attack.
Q. What is Obama's response to the situation?
A. I think that condemning the attacks is the right first move, but that is kind of a given. No one encourages terrorism, as the leader of a sovereign nation, and should be expected to have any credibility.
But the hard part is what to do next. Obama and Clinton must use this as an opportunity to work with both the Indians and Pakistanis on a larger set of talks about the region, and what a concerted effort to fight terrorism could look like. Also, economically, Pakistan must be helped. It is a country of over 140 million people, and it is has a large educated, and economically savvy population. This is a country that can continue to be an ally of ours from many standpoints.
An initiative to help two countries solve their differences would go a long way towards easing relationships with the middle east as well. This horrible incident should be an opportunity to work on one of the 3 to 4 most difficult disputes in the world. Certainly, a peaceful solution to the Kashmir dispute, and the Indian/Pakistani conflict, could be a start to easing the "persecution complex" that so many in the Islamic world feel. To be sure, some of this feeling is justified in the Muslim community, and these feelings must be listened to, and addressed in some fashion.
Addressing the current crisis, in the larger context of solving Islamic/Hindu relations, would be a fantastic start. One I would hope President-Elect Obama would work towards. We don't need lofty speeches, and we certainly don't need threatening language from the US President. Hopefully we have learned that lesson over the past 8 years.
I see this incident as a reminder that the world is not a safe place, and probably won't ever be the kind of Pax-Romana that existed centuries ago. But I am more encouraged with the American response to this incident, and I hope that the pragmatic response from us, and the leaders of the countries in the region, carries the day here. It could turn the tide on the way these situations have been addressed the last 8 years.
Showing newest 21 of 33 posts from November 2008. Show older posts
Showing newest 21 of 33 posts from November 2008. Show older posts
Sunday, November 30, 2008
Saturday, November 29, 2008
It's Holiday Shopping Season--Thoughts for CyberMonday
I hope everyone had a great Thanksgiving. Apparently, not too many people went shopping yesterday, and those who went didn't buy as much as they have in years past.
As we know, Black Friday is so named because the Friday after Thanksgiving represents the time when many retail stores start to show a profit, or go "out of the red, and into the black" for the year.
Well, this year Black Friday may represent the retail massacre that is a comin'. We can hope for "Cyber Monday" (ie, the Monday after the holidays, when everyone spends the first day back to work, buying things on-line) to help pick up the slack.
Personally, I am hoping that sluggish sales can provide me with some discounts. So here are the items that I never see go on sale, but I can hope...
1. Rock Band2--xBox 360--My son has been asking for this for months now. Gotta have it. The video game is somewhere between $18-86, and the console is $66-400. I am going to wait a week or two, and see whether I can get both at the lower end of the range.
2. iPod Shuffle--Looks like I can get this from $25-70! Not bad! I'd like to wait on this too.
3. jaw bone--Just cuz--I will probably just go to www.dealtool.com, or something, and find a good deal. Looks like I can get a pure bluetooth for something like $30, if I am reading that right.
4. Hannah Montana Video game--for the xBox. My daughter is now just old enough that Miley Cyrus is the first famous person she goes completely ga-ga over. As long as I am breaking down to get the xbox...
5. NFL Power and Glory Soundtrack--Could be the best music to watch football films ever. I love this CD. I can always take the CD, and download to my new iPod, right? This could be the best $10 gift I ever get myself.
6. Gift for the wife--Any suggestions here would be most appreciated. I have a few ideas, but nothing really says "I love you" at this point. The best thing I have come up with so far was a bottle of Yellow Tail Pinot Grigio. I have to do better than that if I want to have the same wife next year...
Anyways, I'll check the stats next week, and see how sales are going for the holiday season. Ho, Ho, Ho. Merry Christmas, Happy Holidays (for the Bill O'Reilly fans out there...).
As we know, Black Friday is so named because the Friday after Thanksgiving represents the time when many retail stores start to show a profit, or go "out of the red, and into the black" for the year.
Well, this year Black Friday may represent the retail massacre that is a comin'. We can hope for "Cyber Monday" (ie, the Monday after the holidays, when everyone spends the first day back to work, buying things on-line) to help pick up the slack.
Personally, I am hoping that sluggish sales can provide me with some discounts. So here are the items that I never see go on sale, but I can hope...
1. Rock Band2--xBox 360--My son has been asking for this for months now. Gotta have it. The video game is somewhere between $18-86, and the console is $66-400. I am going to wait a week or two, and see whether I can get both at the lower end of the range.
2. iPod Shuffle--Looks like I can get this from $25-70! Not bad! I'd like to wait on this too.
3. jaw bone--Just cuz--I will probably just go to www.dealtool.com, or something, and find a good deal. Looks like I can get a pure bluetooth for something like $30, if I am reading that right.
4. Hannah Montana Video game--for the xBox. My daughter is now just old enough that Miley Cyrus is the first famous person she goes completely ga-ga over. As long as I am breaking down to get the xbox...
5. NFL Power and Glory Soundtrack--Could be the best music to watch football films ever. I love this CD. I can always take the CD, and download to my new iPod, right? This could be the best $10 gift I ever get myself.
6. Gift for the wife--Any suggestions here would be most appreciated. I have a few ideas, but nothing really says "I love you" at this point. The best thing I have come up with so far was a bottle of Yellow Tail Pinot Grigio. I have to do better than that if I want to have the same wife next year...
Anyways, I'll check the stats next week, and see how sales are going for the holiday season. Ho, Ho, Ho. Merry Christmas, Happy Holidays (for the Bill O'Reilly fans out there...).
Friday, November 28, 2008
Car Efficiency--What can it do for US? For you?
I hear a lot about fuel efficiency, but it always seems to be in the context of global warming, or some sort of larger debate. Let's strip that away, and just look at some raw facts here. I wanted to see what kind of impact fuel efficiency alone could have in retail car and truck sales. The result? A little troubling.
Okay, so here's what I have learned:
-The average person drives 12,500 miles per year
-The average automobile gets 25 miles to the gallon
-Each year there are about 16 million new cars purchased in America (although 2008 is shaping up to be a significant decrease to 14 million new cars. The first one of this size in at least 10-12 years).
-The average automobile has a 17 year life (that sounded a little high, but when trucks, and other vehicles are factored in, it didn't sound unreasonable. I still know people with a 1991 Taurus kicking around...)
The average driver looks a little like this:
Let's assume that we can get mileage standards up THIS YEAR alone 5 miles, from 25 to 30 mpg. But let's assume that some people will continue to purchase cars like the Toyota Prius (with a 45 MPG average) or the Toyota Camry Hybrid (35 MPG average).
What does that mean for the average consumer? Let's see:
Not bad, but that may be a little pricey, especially in these times. People may not want to buy cars and trucks unless they HAVE to. Can the government provide incentive? Stronger tax breaks? Tax exemptions, even? Possibly. It couldn't hurt, given where we already are.
So let's say, 70% of all new cars are sold with a 30 MPG average, and the rest are between 35-45 MPG. Let's get a little aggressive here.
Here's what we would save in a year--roughly 38 million barrels of oil. Which would be something we could build on each year, and significantly cut into that demand. Not bad, right? But what does this mean about our dependence on foreign oil? Check out this site
http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption
You will see that the US uses 20.8 million barrels of oil a DAY. All this effort would lead to about 2 days of oil saved a year. Not exactly the stuff of legends here.
It's a little disconcerting, when you break it down. But there is a silver lining here.
1. The US IMPORTS 10.4 million barrels a day, which means we would really be saving about 4 days a year of oil if we continued to push towards higher CAFE standards.
2. The 4 days a year savings would represent a yearly savings, so next year it would be 8, then 12, then 16, and so forth. I recognize that this assumes the car inventory will stay flat, which it won't. However, the hope is that trends like 2008 will persist over the next few years on new purchases (down 14%) and heightened awareness of fuel usage continues to increase.
3. We have got to start somewhere. Every little bit helps.
Okay, so here's what I have learned:
-The average person drives 12,500 miles per year
-The average automobile gets 25 miles to the gallon
-Each year there are about 16 million new cars purchased in America (although 2008 is shaping up to be a significant decrease to 14 million new cars. The first one of this size in at least 10-12 years).
-The average automobile has a 17 year life (that sounded a little high, but when trucks, and other vehicles are factored in, it didn't sound unreasonable. I still know people with a 1991 Taurus kicking around...)
The average driver looks a little like this:
Let's assume that we can get mileage standards up THIS YEAR alone 5 miles, from 25 to 30 mpg. But let's assume that some people will continue to purchase cars like the Toyota Prius (with a 45 MPG average) or the Toyota Camry Hybrid (35 MPG average).
What does that mean for the average consumer? Let's see:
Not bad, but that may be a little pricey, especially in these times. People may not want to buy cars and trucks unless they HAVE to. Can the government provide incentive? Stronger tax breaks? Tax exemptions, even? Possibly. It couldn't hurt, given where we already are.
So let's say, 70% of all new cars are sold with a 30 MPG average, and the rest are between 35-45 MPG. Let's get a little aggressive here.
Here's what we would save in a year--roughly 38 million barrels of oil. Which would be something we could build on each year, and significantly cut into that demand. Not bad, right? But what does this mean about our dependence on foreign oil? Check out this site
http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption
You will see that the US uses 20.8 million barrels of oil a DAY. All this effort would lead to about 2 days of oil saved a year. Not exactly the stuff of legends here.
It's a little disconcerting, when you break it down. But there is a silver lining here.
1. The US IMPORTS 10.4 million barrels a day, which means we would really be saving about 4 days a year of oil if we continued to push towards higher CAFE standards.
2. The 4 days a year savings would represent a yearly savings, so next year it would be 8, then 12, then 16, and so forth. I recognize that this assumes the car inventory will stay flat, which it won't. However, the hope is that trends like 2008 will persist over the next few years on new purchases (down 14%) and heightened awareness of fuel usage continues to increase.
3. We have got to start somewhere. Every little bit helps.
Thursday, November 27, 2008
Happy Thanksgiving
No thoughts for today. Just wanted to wish anyone reading a Happy Holiday. Hopefully you will get to spend the day as I will--Eating Turkey with family, watching football games, getting tired, and smiling.
We'll get back to the punditry stuff tomorrow...
We'll get back to the punditry stuff tomorrow...
Wednesday, November 26, 2008
Bailout--What is the Government Doing? Let's break it down...
Here we are, Thanksgiving Eve, 2008. The Bush administration is coming into the last 10 yards of the great Presidential Relay, and they are dog-tired. As they stumble, and lunge ahead to pass the baton to Barack Obama, they are also passing along the piano that is tied to Bush's back, known as the financial bailout. We keep hearing things about this, but what is the size and scope of what we are talking about?
Let's break it down.
I read an excellent article today in the New York Times (page A24), laying out what the Feds are trying to do.
So let's break this down some, shall we:
1. The Federal Government--your neighborhood Insurer--Think of this as your dad, or your well-to-do-uncle, co-signing the mortgage on your first house, or co-signing your first car, when you were younger. Your dad doesn't pay the loan back unless you can't make your payments. Since most of you have been 17 years old, and in this position, it should make you a little queasy to think about the fact that if you missed a payment, you may have gone to that same Dad for the money, and he probably gave it to you, as long as you promised to mow the lawn for the next decade, or so. If you substitute a prominent bank as you, and the federal government as your dad, you pretty much have the situation right. But at this point, we are where we are. So let's go through the specifics:
a. Major Bank Insurance--First, the Fed wants to basically insure the debt that the major banks would like to issue, to keep their businesses running. They have committed to doing this for as much as $1.5 TRILLION through June of next year, which sounds sky high, except for the fact that they will only be guaranteeing the bonds in case the institutions go belly up.
b. Citi-specific--Specifically, $306 Billion of this amount is earmarked for Citigroup, which was announced over the weekend.
c. Money Market Security--The fed is also guaranteeing Money Market funds, as if they were Certificate's of Deposits, up to $600 Billion more. They have spent $70B so far.
d. Fannie/Freddie Insurance--The Treasury will cover losses on Mortgage foreclosures, up to $200B. I suppose if it gets higher, we are in a whole NEW heap of trouble...
2. The Federal Government--your friendly Investor--The Feds are also trying to "encourage" the banks to get back to their business--notably by doing the following:
a. We'll "buy" your commercial paper--promising to inject funds into these banks by "buying" Commercial Paper from these banks that may need additional capital. Again, the commitment is $1.6 Trillion. The actual funds spent is far less--only $266 Billion
b. TARP--ie, We'll just GIVE you the money--under the guise of "direct investments into the financial institutions. Hey, they have only given away $330 Billion at this point. We know $85B went to Citigroup and AIG. Where did the rest go, anyway? Do we really need to know what happened to $245B of our money? If you asked that question of your teenage daughter, she would probably throw a fit, and ask you why you didn't just trust her to do the right thing with the money. And that's pretty much what we have heard from Paulson and his side-kick, Neel Kashkari (Hopefully Neel will be more prepared the next time he faces the Congress...). Anyway, in addition to the $330B spent, there's a commitment to spend an additional $370 Billion. But at least the Treasury has to trudge themselves all the way up to Capital Hill to get the money. Oh, and they have to be insulted by about 50 Senators and Congressmen, and then they will just get the money.
c. We'll just "invest" in our OWN Products, so there!--The Feds will also buy an additional $600 Billion in mortgage-backed securities from Fannie, Freddie, and Ginnie Mae (yeah, don't hear much about Ginnie, or their black-sheep cousin, Sallie Mae much. They must feel left out).
3. The Federal Government--your local Lender--when all else fails, it's time to get into the lending act yourself. How hard can this be, right?
a. Term auction facilities--Making $900 Billion available for 1-3 months to other financial institutions. So far, they have lent out $415 Billion of that. Wonder how that's been working out so far? Me too.
b. We'll just lend it ourselves--Another $550B lent right out of the Fed discount window. To you and me? Nah, to the banks. So far $142B has been lent. Yeah, I am curious to know how THAT one is going too.
c. Term Asset Backed Securities Loan Facility (TALF)--TALF? Seriously? It's bad enough we all got to hear about TARP, which basically was them admitting they were throwing a tarp over the corpse that is the current federal banking system. Now we have TALF. A lending facility for investors who are already holding securities backed by consumer and small-business loans. Commitment? $200B.
WHEW! That's a lot of info there. What does it all mean?
It means that there are an awful lot of ways the federal government is trying to rebuild Humpty Dumpty. All the kings horses and all the kings men are trying to put Humpty together again, piece by piece.
Let's see whether they can get there before the automotive industry goes bust. Then we can have this discussion again, about 3 weeks from now.
Anyone got $7 Trillion handy? Wait until we get to Medicare, 2010...
Let's break it down.
I read an excellent article today in the New York Times (page A24), laying out what the Feds are trying to do.
So let's break this down some, shall we:
1. The Federal Government--your neighborhood Insurer--Think of this as your dad, or your well-to-do-uncle, co-signing the mortgage on your first house, or co-signing your first car, when you were younger. Your dad doesn't pay the loan back unless you can't make your payments. Since most of you have been 17 years old, and in this position, it should make you a little queasy to think about the fact that if you missed a payment, you may have gone to that same Dad for the money, and he probably gave it to you, as long as you promised to mow the lawn for the next decade, or so. If you substitute a prominent bank as you, and the federal government as your dad, you pretty much have the situation right. But at this point, we are where we are. So let's go through the specifics:a. Major Bank Insurance--First, the Fed wants to basically insure the debt that the major banks would like to issue, to keep their businesses running. They have committed to doing this for as much as $1.5 TRILLION through June of next year, which sounds sky high, except for the fact that they will only be guaranteeing the bonds in case the institutions go belly up.
b. Citi-specific--Specifically, $306 Billion of this amount is earmarked for Citigroup, which was announced over the weekend.
c. Money Market Security--The fed is also guaranteeing Money Market funds, as if they were Certificate's of Deposits, up to $600 Billion more. They have spent $70B so far.
d. Fannie/Freddie Insurance--The Treasury will cover losses on Mortgage foreclosures, up to $200B. I suppose if it gets higher, we are in a whole NEW heap of trouble...
2. The Federal Government--your friendly Investor--The Feds are also trying to "encourage" the banks to get back to their business--notably by doing the following:
a. We'll "buy" your commercial paper--promising to inject funds into these banks by "buying" Commercial Paper from these banks that may need additional capital. Again, the commitment is $1.6 Trillion. The actual funds spent is far less--only $266 Billion
b. TARP--ie, We'll just GIVE you the money--under the guise of "direct investments into the financial institutions. Hey, they have only given away $330 Billion at this point. We know $85B went to Citigroup and AIG. Where did the rest go, anyway? Do we really need to know what happened to $245B of our money? If you asked that question of your teenage daughter, she would probably throw a fit, and ask you why you didn't just trust her to do the right thing with the money. And that's pretty much what we have heard from Paulson and his side-kick, Neel Kashkari (Hopefully Neel will be more prepared the next time he faces the Congress...). Anyway, in addition to the $330B spent, there's a commitment to spend an additional $370 Billion. But at least the Treasury has to trudge themselves all the way up to Capital Hill to get the money. Oh, and they have to be insulted by about 50 Senators and Congressmen, and then they will just get the money.
c. We'll just "invest" in our OWN Products, so there!--The Feds will also buy an additional $600 Billion in mortgage-backed securities from Fannie, Freddie, and Ginnie Mae (yeah, don't hear much about Ginnie, or their black-sheep cousin, Sallie Mae much. They must feel left out).
3. The Federal Government--your local Lender--when all else fails, it's time to get into the lending act yourself. How hard can this be, right?
a. Term auction facilities--Making $900 Billion available for 1-3 months to other financial institutions. So far, they have lent out $415 Billion of that. Wonder how that's been working out so far? Me too.
b. We'll just lend it ourselves--Another $550B lent right out of the Fed discount window. To you and me? Nah, to the banks. So far $142B has been lent. Yeah, I am curious to know how THAT one is going too.
c. Term Asset Backed Securities Loan Facility (TALF)--TALF? Seriously? It's bad enough we all got to hear about TARP, which basically was them admitting they were throwing a tarp over the corpse that is the current federal banking system. Now we have TALF. A lending facility for investors who are already holding securities backed by consumer and small-business loans. Commitment? $200B.
WHEW! That's a lot of info there. What does it all mean?
It means that there are an awful lot of ways the federal government is trying to rebuild Humpty Dumpty. All the kings horses and all the kings men are trying to put Humpty together again, piece by piece.
Let's see whether they can get there before the automotive industry goes bust. Then we can have this discussion again, about 3 weeks from now.
Anyone got $7 Trillion handy? Wait until we get to Medicare, 2010...
Tuesday, November 25, 2008
Obama Cabinet Picks--What Song would YOU Choose?
If you had to pick a song to describe each Obama Cabinet choice, what would YOU go with? Here's mine:
1. Treasury--Timothy Geithner--"Money for Nothing" (Dire Straits)
It's practically a given that Geithner will continue executing bailouts of major corporations and Pension funds over the next 4 years. The song couldn't be more apropos.
2. Health and Human Services--Tom Daschle--"License to Ill" (Beastie Boys).
"I think you know what time it is, time to get ill..." That just about says it all there.
3. State--Hillary Clinton (as yet unconfirmed...)--"Viva la Vida" (Coldplay)
"I used to rule the world
Seas would rise when I gave the word
Now in the morning I sleep alone
Sweep the streets I used to own..."
"One minute I held the key
Next the walls were closed on me
And I discovered that my castles stand
Upon pillars of salt and pillars of sand..."
4. Justice--Eric Holder--"Breakin the Law" Judas Priest
Any topic that can bring the Attorney General and Judas Priest together can't be all bad...
5. Homeland Security--Janet Napolitano--"Back in the USSR" (Beatles)
This was a tough one. Lots of ways to go. Feeling like Russia could be on the list of concerns here...
6. Commerce--Bill Richardson--"Good times, Bad times" Led Zeppelin
Could have worked for Geithner too. Richardson is going to "have his share" of both during the next 4 years...
Don't like my picks? Put your own up there. If I like it, I'll post a revision tomorrow, along with a new blog thought.
1. Treasury--Timothy Geithner--"Money for Nothing" (Dire Straits)
It's practically a given that Geithner will continue executing bailouts of major corporations and Pension funds over the next 4 years. The song couldn't be more apropos.
2. Health and Human Services--Tom Daschle--"License to Ill" (Beastie Boys).
"I think you know what time it is, time to get ill..." That just about says it all there.
3. State--Hillary Clinton (as yet unconfirmed...)--"Viva la Vida" (Coldplay)
"I used to rule the world
Seas would rise when I gave the word
Now in the morning I sleep alone
Sweep the streets I used to own..."
"One minute I held the key
Next the walls were closed on me
And I discovered that my castles stand
Upon pillars of salt and pillars of sand..."
4. Justice--Eric Holder--"Breakin the Law" Judas Priest
Any topic that can bring the Attorney General and Judas Priest together can't be all bad...
5. Homeland Security--Janet Napolitano--"Back in the USSR" (Beatles)
This was a tough one. Lots of ways to go. Feeling like Russia could be on the list of concerns here...
6. Commerce--Bill Richardson--"Good times, Bad times" Led Zeppelin
Could have worked for Geithner too. Richardson is going to "have his share" of both during the next 4 years...
Don't like my picks? Put your own up there. If I like it, I'll post a revision tomorrow, along with a new blog thought.
Monday, November 24, 2008
An Economic Ray of Sunshine
After yesterday's blog, I wanted to go play in on-coming traffic. But after a night of troubled sleep, the Pragmatic Pundit had a brief chance to think about things to lighten the mood:
#1--Economic help--Help is on the way. The government has announced a plan TODAY to help Citigroup work through its financial woes. Citi may be a bank too big to fail, and it is encouraging that the government has learned its lessons from letting Lehman Brothers fail. They refused to inject about $60B in funds into that bank, and it is going to end up costing $3 Trillion or so in market meltdown. Let's hope the Citi bailout specifically can shore things up. So far, the markets like it today (but it is only 12:30pm. Lots to go today...)
#2--Obama's got the team and mental make up for the job--One thing I think we are learning here is that our President Elect has the temperment and judgement for the job. It's funny how that was the question on this guy that John McCain kept bringing up. Now that we are seeing his approach, the question is, "what would we do WITHOUT Obama stepping into leadership?" He has brought out the most qualified people, from Geithner, to Summers, and has called on all experienced hands to help secure some spot-welds on the framework of our economy.
The announcement of plans to help achieve 2.5 million new jobs is a way to get people excited about working towards a brighter tomorrow, re-building the old infrastructure, in a way that helps us reduce our dependence on foreign energy.
Obama hasn't been perfect so far, but he has certainly struck the right tone with a nation that is on the verge of panic. It is reassuring, and it is hopeful.
#3--Tax relief--One interesting discussion point I am seeing is the possibility of providing the middle class tax cut without raising taxes on the wealthy. Apparently, Obama truly is a pragmatist after all (a kindred spirit!). Make the decisions that are best for the country, with a keen eye on the events on the ground. As I have said here before, it is nice, after 8 years of dogmatic ideology, to see someone who is patient, thoughtful, and can study the issues before making a decision with his head, not his gut.
The tax relief alone could be the motivator the economy needs. Let's hope it comes during the lame duck session of congress, and we don't have to wait until January 20.
#4--Some stocks are cheap--As disconcerting as the recent stock market drops are, there are still sectors of the economy that can do well here. We are going to need to rebuild infrastructure. We are going to need to rebuild our military. We are going to need builders, tools, materials, submarines, planes, etc. Defense companies and building companies should hold their value. They may not shine over the next few years, but they shouldn't crumble either. I can't help poor management, but the fundamentals for success are there.
Also, the lower one goes on the value chain in retail, the more stable the stock could be. Certainly the value retail stores have more chance to be successful in a down market, and should hold their value better. If you don't want to leave the equity market, this could be a place to hide.
I am still keeping a close eye on things, but all is not lost. I do worry about what new bolt out of the blue is coming for us today, whether it be economic or security-related. But we are resilient as a nation, and as individuals. We help our friends and family members, and as the holiday approaches, I think we have a lot to think about and reflect on positively. Sometimes, discussions on these topics around the family dinner table can be places to inspire great ideas. If you have any, please post them here.
#1--Economic help--Help is on the way. The government has announced a plan TODAY to help Citigroup work through its financial woes. Citi may be a bank too big to fail, and it is encouraging that the government has learned its lessons from letting Lehman Brothers fail. They refused to inject about $60B in funds into that bank, and it is going to end up costing $3 Trillion or so in market meltdown. Let's hope the Citi bailout specifically can shore things up. So far, the markets like it today (but it is only 12:30pm. Lots to go today...)
#2--Obama's got the team and mental make up for the job--One thing I think we are learning here is that our President Elect has the temperment and judgement for the job. It's funny how that was the question on this guy that John McCain kept bringing up. Now that we are seeing his approach, the question is, "what would we do WITHOUT Obama stepping into leadership?" He has brought out the most qualified people, from Geithner, to Summers, and has called on all experienced hands to help secure some spot-welds on the framework of our economy.
The announcement of plans to help achieve 2.5 million new jobs is a way to get people excited about working towards a brighter tomorrow, re-building the old infrastructure, in a way that helps us reduce our dependence on foreign energy.
Obama hasn't been perfect so far, but he has certainly struck the right tone with a nation that is on the verge of panic. It is reassuring, and it is hopeful.
#3--Tax relief--One interesting discussion point I am seeing is the possibility of providing the middle class tax cut without raising taxes on the wealthy. Apparently, Obama truly is a pragmatist after all (a kindred spirit!). Make the decisions that are best for the country, with a keen eye on the events on the ground. As I have said here before, it is nice, after 8 years of dogmatic ideology, to see someone who is patient, thoughtful, and can study the issues before making a decision with his head, not his gut.
The tax relief alone could be the motivator the economy needs. Let's hope it comes during the lame duck session of congress, and we don't have to wait until January 20.
#4--Some stocks are cheap--As disconcerting as the recent stock market drops are, there are still sectors of the economy that can do well here. We are going to need to rebuild infrastructure. We are going to need to rebuild our military. We are going to need builders, tools, materials, submarines, planes, etc. Defense companies and building companies should hold their value. They may not shine over the next few years, but they shouldn't crumble either. I can't help poor management, but the fundamentals for success are there.
Also, the lower one goes on the value chain in retail, the more stable the stock could be. Certainly the value retail stores have more chance to be successful in a down market, and should hold their value better. If you don't want to leave the equity market, this could be a place to hide.
I am still keeping a close eye on things, but all is not lost. I do worry about what new bolt out of the blue is coming for us today, whether it be economic or security-related. But we are resilient as a nation, and as individuals. We help our friends and family members, and as the holiday approaches, I think we have a lot to think about and reflect on positively. Sometimes, discussions on these topics around the family dinner table can be places to inspire great ideas. If you have any, please post them here.
Sunday, November 23, 2008
The Great Shrinking Economy
In these economic times, I am reminded of the common refrain from Alfred E. Newman, "what, me worry?" As I look at the economic landscape right now, the Mad Magazine Poster Child's words come back to haunt me. But instead of "what, me worry?", it seems I only hear one word, over and over again..."worry."
We are witnessing some pretty amazing economic events here. We have watched an industry basically disappear before our very eyes (Investment Banking), another major financial services engine beg for government assistance or foreign loan assistance (Life Insurance), and a third major sector of the economy come to a screeching halt (automotive).
The Government is trying to react to the facts on the ground, but the facts on the ground are moving faster than anyone can keep up with. By the time TARP was underway, and the Treasury could even figure out whose bad mortgage-backed securities to buy out, the landscape had changed. By the time AIG got its $40B bailout, it needed three to four times that. The American Car makers are begging for a solution today that may solve today's problems, but the Government is trying to get smart enough, fast enough, to think of every major pot hole in the road to success in the future. It may be just about impossible. I give the Congress points for trying to force GM, Ford, Chrysler, et al, to at least come up with a plan for success before asking for a bailout, though.
Unfortunately, the bigger challenges still lie ahead. What are they?
1. Stock Market--Sorry, folks. The worst isn't over. There are a few terribly powerful forces working against this current market. Here they are:
a. Price to projected earnings--many of these S&P 500 companies still haven't reduced their expected earnings projections for next year. As companies continue to provide the analysts and The Street with numbers, the stock market punishes these companies, one at a time. Look for that trend to continue for a while.
b. Retirees pulling money out--these next 10-15 years will see a seemingly never-ending drive upwards of people retiring, and pulling money out of their 401k's to live out their golden years. Remember, at the most basic level, Stock Markets go up when more people are buying than are selling. This demographic shift is like a permanent brake on the momentum of the upward buying pressure of the market. It can be overcome, but not when there isn't a very attractive reason to jump into stocks.
c. Tax loss harvesters--This is a more short-term phenomenon. Smart investors are pulling money out of the market before the end of the calendar year, in hopes of at least salvaging a tax benefit for holding such lousy-performing stocks until now. See point b above. Selling pressure on the markets results in a lower market.
In all, seeing a Dow Jones at half of what it was at the beginning of the year (6,500 vs. 13,000) wouldn't be a major surprise. It could result in some horrible depression on the part of the Pragmatic Pundit, though.
2. Motor Companies--Sorry, but even a bridge loan of $25B won't last more than a year or so, if the current economy continues. Even if GM is making the best cars out there, and they are world-beaters, a bad economy and the threat of Chapter 7 (Liquidation) hanging over the company like the sword of Damocles, will put enormous pressure on the business to stop the bleeding. I don't know how that can happen, if no credit is available for people to buy these new Chevy Volts for $40k a pop. GM is going to have to be restructured in either Bankruptcy courts, sold off in pieces, or just plain old liquidated. Game over.
Whether the government bails it out or not (and it looks increasingly like it will do so, according to Chuck Schumer today on the Sunday Morning Talk Shows), I am worried that we are using our last tourniquet on a dead man here. Perhaps no amount of $$$ will save them. Along with the disappearing of the auto makers goes the upper mid-west's economy (or whatever is left of it!). Not quite the economic recovery we are looking for, when 1-2% of the Country's employment workforce suddenly finds itself out of a job. That's not just machine shop folks, but parts makers, local industry support, real-estate, and most importantly, car dealerships country wide, who are now without a car supplier. That's a workforce in the hundreds of thousands of small business owners. Scary.
3. Government Pensions--If you thought GM was bad. Wait until you see government workers start to retire in droves here, and begin to draw on their defined benefit pensions, promised to them by State and Local Governments. What do you tell the government worker, at age 65, that they don't have health care, and have to take a 50% haircut on their pension, if they're lucky? Talk about a catastrophe.
4. Medicare Recipients--My worry is that any improvements to the economy the Obama Administration can muster may be absolutely destroyed by one thing--the year 2010. The absolute day of reckoning. The year when Baby Boomers start to file, en masse, for Medicare. This is the time when people will truly start to retire in droves, and you may see an absolute meltdown in the US economy.
Man, that's all enough to make me worry about my family, friends, neighbors, my town, my state and my country. But there is a silver lining to every cloud. I have some thoughts of hope. And I will discuss them...tomorrow. Unfortunately, the word of today is this: WORRY.
We are witnessing some pretty amazing economic events here. We have watched an industry basically disappear before our very eyes (Investment Banking), another major financial services engine beg for government assistance or foreign loan assistance (Life Insurance), and a third major sector of the economy come to a screeching halt (automotive).
The Government is trying to react to the facts on the ground, but the facts on the ground are moving faster than anyone can keep up with. By the time TARP was underway, and the Treasury could even figure out whose bad mortgage-backed securities to buy out, the landscape had changed. By the time AIG got its $40B bailout, it needed three to four times that. The American Car makers are begging for a solution today that may solve today's problems, but the Government is trying to get smart enough, fast enough, to think of every major pot hole in the road to success in the future. It may be just about impossible. I give the Congress points for trying to force GM, Ford, Chrysler, et al, to at least come up with a plan for success before asking for a bailout, though.
Unfortunately, the bigger challenges still lie ahead. What are they?
1. Stock Market--Sorry, folks. The worst isn't over. There are a few terribly powerful forces working against this current market. Here they are:
a. Price to projected earnings--many of these S&P 500 companies still haven't reduced their expected earnings projections for next year. As companies continue to provide the analysts and The Street with numbers, the stock market punishes these companies, one at a time. Look for that trend to continue for a while.
b. Retirees pulling money out--these next 10-15 years will see a seemingly never-ending drive upwards of people retiring, and pulling money out of their 401k's to live out their golden years. Remember, at the most basic level, Stock Markets go up when more people are buying than are selling. This demographic shift is like a permanent brake on the momentum of the upward buying pressure of the market. It can be overcome, but not when there isn't a very attractive reason to jump into stocks.
c. Tax loss harvesters--This is a more short-term phenomenon. Smart investors are pulling money out of the market before the end of the calendar year, in hopes of at least salvaging a tax benefit for holding such lousy-performing stocks until now. See point b above. Selling pressure on the markets results in a lower market.
In all, seeing a Dow Jones at half of what it was at the beginning of the year (6,500 vs. 13,000) wouldn't be a major surprise. It could result in some horrible depression on the part of the Pragmatic Pundit, though.
2. Motor Companies--Sorry, but even a bridge loan of $25B won't last more than a year or so, if the current economy continues. Even if GM is making the best cars out there, and they are world-beaters, a bad economy and the threat of Chapter 7 (Liquidation) hanging over the company like the sword of Damocles, will put enormous pressure on the business to stop the bleeding. I don't know how that can happen, if no credit is available for people to buy these new Chevy Volts for $40k a pop. GM is going to have to be restructured in either Bankruptcy courts, sold off in pieces, or just plain old liquidated. Game over.
Whether the government bails it out or not (and it looks increasingly like it will do so, according to Chuck Schumer today on the Sunday Morning Talk Shows), I am worried that we are using our last tourniquet on a dead man here. Perhaps no amount of $$$ will save them. Along with the disappearing of the auto makers goes the upper mid-west's economy (or whatever is left of it!). Not quite the economic recovery we are looking for, when 1-2% of the Country's employment workforce suddenly finds itself out of a job. That's not just machine shop folks, but parts makers, local industry support, real-estate, and most importantly, car dealerships country wide, who are now without a car supplier. That's a workforce in the hundreds of thousands of small business owners. Scary.
3. Government Pensions--If you thought GM was bad. Wait until you see government workers start to retire in droves here, and begin to draw on their defined benefit pensions, promised to them by State and Local Governments. What do you tell the government worker, at age 65, that they don't have health care, and have to take a 50% haircut on their pension, if they're lucky? Talk about a catastrophe.
4. Medicare Recipients--My worry is that any improvements to the economy the Obama Administration can muster may be absolutely destroyed by one thing--the year 2010. The absolute day of reckoning. The year when Baby Boomers start to file, en masse, for Medicare. This is the time when people will truly start to retire in droves, and you may see an absolute meltdown in the US economy.
Man, that's all enough to make me worry about my family, friends, neighbors, my town, my state and my country. But there is a silver lining to every cloud. I have some thoughts of hope. And I will discuss them...tomorrow. Unfortunately, the word of today is this: WORRY.
Saturday, November 22, 2008
Tips on getting your Economic House in Order
What is it going to take to get out of this economic mess? A LOT. What can you do to help yourself some? Here are a few thoughts:
1. Build your checking account. If you can get away with it, try to get about 3-4 months of savings in some sort of savings vehicle that you can tap easily. Try to get a good return (like an ING Direct account, or something like that), but if you can't it wouldn't be a bad idea to sacrifice return for cash at your fingertips. I have intelligent co-workers who tell me they are starting (for the first time in their lives), to put cash in a safe in their home. That may be a little extreme, but these days, nothing seems too crazy. How do you build the checking account? Here are some thoughts:
-cut down the 401k contribution a few points
-put $$$ in the savings fund before you ever get a chance to spend it.
-don't walk around with much cash, as a dis-incentive
-look for opportunities to earn a few bucks in your spare time. EBay or Craig's list can be a great tool for earning a few bucks, getting rid of things you don't even want (that Cuisinart your grandmother gave you, the CD Disc man you put on the shelf after you got your iPod. The CD's you loaded onto the iPod, for that matter).
2. Start looking at the things you spend money on--I personally have a small Starbucks problem. But the fact is, I have recently discovered that Dunkin' Donuts makes a mean coffee for $1.50, and I don't need to buy the $4.00 Grande Mocha. I may miss the mocha at times, but I like the $10/week I have for other things even better. Food trips tend to be stealth thieves of your money. Do your best to avoid them as often as possible.
3. Keep working hard, and keep your eyes and ears open--the work environment is getting a little tense, and the job market is getting increasingly tough. In my business too. Sometimes the easiest way to keep your job is to let your boss know you want to keep it. If you have a reasonable relationship with your boss, what does it hurt to ask this person flat out, "I want to keep my job. What can I do to make sure that happens?" You may learn the one thing you need to know to keep that income coming in.
4. Build in some basics at home--this does mean some fiscal discipline. It doesn't mean changing to a diet of only ramen noodles, or anything like that. But some of the places to take a look at costs include the following:
-Phone service--calling the phone company about a less expensive service--our phone company had continued to give us additional features (that we didn't really ask for or want), and then charged us for them. Also, our Internet service was being billed at a premium rate, but we weren't in a location even eligible for those rates. It was worth the call to save $20/month.
-Land line--speaking of phones, you may need a land line, to go with your cell phone. But I will bet a number of you don't really use the home phone for anything other than calls from your parents, or telemarketers. If you can just get your parents to trust the darn cellphone, you could probably save another $25-40/month, and just get rid of the home phone.
-Cable--Same as the phone service. You should really take a look at what you watch. Is it really worth the expanded package, if you really never watch the 15 home shopping networks, SPIKE TV, Encore, or ESPN8 (the "OCHO"!)? Could be worth $10-25 a month.
-Insurance--when was the last time you had an insurance agent look at your home, car, or even umbrella policies? Do you really need a $50 deductible on your car? Could be worth a few hundred bucks a year.
-Groceries--If you eat out a lot, do yourself a favor, make a concerted effort to spend two fewer nights a month out at the restaurants or bars. Eat in one or two more times, and spend an hour a week with a local paper to find a good deal or coupons on food you like. It is amazing how cash suddenly appears in your pocket.
It's not exciting stuff, and it won't make you rich. But you can make it more interesting. Challenge yourself to build a 3-6 month expense cushion by Spring. Too aggressive? How about Summer? If you are interested, leave me a note here with some questions, and maybe we can think about further options together.
I want everyone to make it through the next 18 months of tough times, with cash in their pockets, and looking for ways to make their lives better. Any readers thoughts would be appreciated.
1. Build your checking account. If you can get away with it, try to get about 3-4 months of savings in some sort of savings vehicle that you can tap easily. Try to get a good return (like an ING Direct account, or something like that), but if you can't it wouldn't be a bad idea to sacrifice return for cash at your fingertips. I have intelligent co-workers who tell me they are starting (for the first time in their lives), to put cash in a safe in their home. That may be a little extreme, but these days, nothing seems too crazy. How do you build the checking account? Here are some thoughts:
-cut down the 401k contribution a few points
-put $$$ in the savings fund before you ever get a chance to spend it.
-don't walk around with much cash, as a dis-incentive
-look for opportunities to earn a few bucks in your spare time. EBay or Craig's list can be a great tool for earning a few bucks, getting rid of things you don't even want (that Cuisinart your grandmother gave you, the CD Disc man you put on the shelf after you got your iPod. The CD's you loaded onto the iPod, for that matter).
2. Start looking at the things you spend money on--I personally have a small Starbucks problem. But the fact is, I have recently discovered that Dunkin' Donuts makes a mean coffee for $1.50, and I don't need to buy the $4.00 Grande Mocha. I may miss the mocha at times, but I like the $10/week I have for other things even better. Food trips tend to be stealth thieves of your money. Do your best to avoid them as often as possible.
3. Keep working hard, and keep your eyes and ears open--the work environment is getting a little tense, and the job market is getting increasingly tough. In my business too. Sometimes the easiest way to keep your job is to let your boss know you want to keep it. If you have a reasonable relationship with your boss, what does it hurt to ask this person flat out, "I want to keep my job. What can I do to make sure that happens?" You may learn the one thing you need to know to keep that income coming in.
4. Build in some basics at home--this does mean some fiscal discipline. It doesn't mean changing to a diet of only ramen noodles, or anything like that. But some of the places to take a look at costs include the following:
-Phone service--calling the phone company about a less expensive service--our phone company had continued to give us additional features (that we didn't really ask for or want), and then charged us for them. Also, our Internet service was being billed at a premium rate, but we weren't in a location even eligible for those rates. It was worth the call to save $20/month.
-Land line--speaking of phones, you may need a land line, to go with your cell phone. But I will bet a number of you don't really use the home phone for anything other than calls from your parents, or telemarketers. If you can just get your parents to trust the darn cellphone, you could probably save another $25-40/month, and just get rid of the home phone.
-Cable--Same as the phone service. You should really take a look at what you watch. Is it really worth the expanded package, if you really never watch the 15 home shopping networks, SPIKE TV, Encore, or ESPN8 (the "OCHO"!)? Could be worth $10-25 a month.
-Insurance--when was the last time you had an insurance agent look at your home, car, or even umbrella policies? Do you really need a $50 deductible on your car? Could be worth a few hundred bucks a year.
-Groceries--If you eat out a lot, do yourself a favor, make a concerted effort to spend two fewer nights a month out at the restaurants or bars. Eat in one or two more times, and spend an hour a week with a local paper to find a good deal or coupons on food you like. It is amazing how cash suddenly appears in your pocket.
It's not exciting stuff, and it won't make you rich. But you can make it more interesting. Challenge yourself to build a 3-6 month expense cushion by Spring. Too aggressive? How about Summer? If you are interested, leave me a note here with some questions, and maybe we can think about further options together.
I want everyone to make it through the next 18 months of tough times, with cash in their pockets, and looking for ways to make their lives better. Any readers thoughts would be appreciated.
Friday, November 21, 2008
Social Security--A Modest Proposal
In the mode of Jonathan Swift, I have a modest proposal--end Social Security.
What do we really need it for anyway? Here's what we could do...
Get some smart actuarial minds in a room together to figure out the right age, and then make a deal with the American people--end Social Security as of a date and age-certain.
Let's call it 1970. Everyone born on 1/1/70 or later would have to continue to pay into the Social Security coffers at a rate of, say, 4% until the age of 65. With an employer match, the individual burden would be 8%. That's 4.4% less than people pay now. What a great deal right?
Actually, what would happen is that these people would get NOTHING as a result of their payments. The money would go directly to...
Anyone born before 1/1/70. For these people, the payroll tax would remain at 12.4% (6.2% employee, 6.2% employer), and they would continue to receive Social Security benefits for the remainder of their lives. After all, these are the same people who have voted for politicians who have been so fiscally prudent for all of these past 30 years or so.
Both old folks and the young get a victory, right? The under-38 crowd just got a 2.2% tax cut, and preferential treatment in the workplace for the next 10 years (after all, what employer wouldn't prefer to hire someone they had to pay 2.2% less in taxes on?). The over-38 crowd would get Social Security firmed up for them in their hour of need, by releasing all that pesky liability burden that has been building up on all those under-38 whipper-snappers.
But there's more...
We could even let people invest their money in the stock market, so they could get an even better return on their funds! Wouldn't that be great? I haven't checked lately, but this year, for example, people would have returned, what, 25% on their money? Right? The market always goes up at least 10% a year. Sounds like a deal to me. Maybe someone can get back to me with that actual return on the stock market this year. I'll bet it's been fantastic.
And for the poor under 40, well, there are a lot of bootstraps for you to pull yourselves up with. If your spouse has died, and you can't afford to work immediately, and take care of children at the same time, or perhaps you need some assistance to make that work? It would be selfish for you to lean on Social Security. That's not American. After all, if you thought raising the top tax rate 3.6% was socialism, this would represent down right Communism at its worst. What are we running here, a charity?
Let's face it folks, the mark of a well functioning society is one where people don't need Social Security. And for those who may need it--well there are a number of faith-based organizations to help out. Why should I waste my hard-earned money bailing out some people who need some help, when all those fat-cat old folks took so much from the coffers all these years. After all, what did they ever do to make this country great, anyway? What about all those welfare queens, taking tons of money from the government, so they could live in that swanky 2 room apartment downtown, with 6 kids, in the "lap-of-luxury" 300 square foot apartment with no heat? This whole situation is their fault, right?
Since people are living about 10-20 years longer than they did during the 1920's and 30's, we can look forward to the 2030's as a time when people once again are living out on the streets, with no money, and looking for work (with chronic back aches, illness, diabetes, etc). It's nice to see that we can achieve consistency in the US if we REALLY work at it.
If it will keep my taxes low, I am all for it. Quite frankly, I am getting a little tired of all these old folks who just want to ride the government gravy train right into their 90's. They are the ones making it harder for the rest of us...
in the words of David Spade..."I hope you recognize (the sarcasm) because I am laying it on pretty thick, here..."
What do we really need it for anyway? Here's what we could do...
Get some smart actuarial minds in a room together to figure out the right age, and then make a deal with the American people--end Social Security as of a date and age-certain.
Let's call it 1970. Everyone born on 1/1/70 or later would have to continue to pay into the Social Security coffers at a rate of, say, 4% until the age of 65. With an employer match, the individual burden would be 8%. That's 4.4% less than people pay now. What a great deal right?
Actually, what would happen is that these people would get NOTHING as a result of their payments. The money would go directly to...
Anyone born before 1/1/70. For these people, the payroll tax would remain at 12.4% (6.2% employee, 6.2% employer), and they would continue to receive Social Security benefits for the remainder of their lives. After all, these are the same people who have voted for politicians who have been so fiscally prudent for all of these past 30 years or so.
Both old folks and the young get a victory, right? The under-38 crowd just got a 2.2% tax cut, and preferential treatment in the workplace for the next 10 years (after all, what employer wouldn't prefer to hire someone they had to pay 2.2% less in taxes on?). The over-38 crowd would get Social Security firmed up for them in their hour of need, by releasing all that pesky liability burden that has been building up on all those under-38 whipper-snappers.
But there's more...
We could even let people invest their money in the stock market, so they could get an even better return on their funds! Wouldn't that be great? I haven't checked lately, but this year, for example, people would have returned, what, 25% on their money? Right? The market always goes up at least 10% a year. Sounds like a deal to me. Maybe someone can get back to me with that actual return on the stock market this year. I'll bet it's been fantastic.
And for the poor under 40, well, there are a lot of bootstraps for you to pull yourselves up with. If your spouse has died, and you can't afford to work immediately, and take care of children at the same time, or perhaps you need some assistance to make that work? It would be selfish for you to lean on Social Security. That's not American. After all, if you thought raising the top tax rate 3.6% was socialism, this would represent down right Communism at its worst. What are we running here, a charity?
Let's face it folks, the mark of a well functioning society is one where people don't need Social Security. And for those who may need it--well there are a number of faith-based organizations to help out. Why should I waste my hard-earned money bailing out some people who need some help, when all those fat-cat old folks took so much from the coffers all these years. After all, what did they ever do to make this country great, anyway? What about all those welfare queens, taking tons of money from the government, so they could live in that swanky 2 room apartment downtown, with 6 kids, in the "lap-of-luxury" 300 square foot apartment with no heat? This whole situation is their fault, right?
Since people are living about 10-20 years longer than they did during the 1920's and 30's, we can look forward to the 2030's as a time when people once again are living out on the streets, with no money, and looking for work (with chronic back aches, illness, diabetes, etc). It's nice to see that we can achieve consistency in the US if we REALLY work at it.
If it will keep my taxes low, I am all for it. Quite frankly, I am getting a little tired of all these old folks who just want to ride the government gravy train right into their 90's. They are the ones making it harder for the rest of us...
in the words of David Spade..."I hope you recognize (the sarcasm) because I am laying it on pretty thick, here..."
Wednesday, November 19, 2008
Who's making the money?
If you are looking at your balance sheet, you know that your net worth has been dropping like a rock. Your 401(k) has moved past 201(k) status, and is heading towards the 101(k) territory. As I was driving home from work, I asked my friend the same question we have debated during each market downturn since we have known each other--"...so WHO is making all the money?"
In recent market downturns past, it was relatively clear. Balanced budgets, and Internet technology generated strong economic times, with heady stock prices, and good times for all. During the 2001 economic downturn, people still had certain fundamentals on their side--low interest rates, a relatively strong economy, and equity in their houses. So the next wave of money was in leveraging those low interest rates into returns on home equity loans, or REIT's. Then as home prices started to turn, it was the turn of the commodities to start to run up. Gold and Oil prices started to boom, and smart money was still earning a good return. But with the year 2008 came the starting of the Baby Boom retirement wave. The mass exodus of funds from the market place has started, as baby boomers leave the workforce, and take their money and go home.
So where's the smart money now? That's an excellent question. Interest rates are feebly low, home equity is sinking like a stone, gold and oil prices drop daily, and I can't think of a blue chip company that hasn't had a terrible quarter. Even Wal-Mart wouldn't have bragged about this quarter a year or two ago. Tech is going in the tank, and even the gold-standard--General Electric--is down well past bear market territory.
Short sellers may be making money off the troubles of the market, but they aren't going to get rich, long term this way. If they haven't already made their bones, it could be hard to time this market and make money on the shorts without getting squeezed from time to time. They can make some profits, but then where do you put the money? T-bills? CDs? Currency trades?
Sadly, I don't think the equity markets aren't done to the down side. Why? Because smart investors know what time of year it is. Capital Gains Loss harvesting season. Anyone thinking about a tax play is looking for an equity to dump, realize a capital loss, and save on taxes. And why not? Anyone out there think that the market is going to make a sudden and sharp rebound over the next 31 days? No one I know. Smart investors know that they can probably pick up something on the cheap with the cash they get from liquidating their positions. They can probably pick up the same security they sold a month and a day from now, at a lower price, and they will pick up more shares, AND get a tax break. That's a way to make money.
But it's not a strategy to get rich. Why I am worried is that there does not appear to be a ready answer to who's getting rich on this market. And when I can't see it, and no one I know can give me a good answer to the question, I start to worry.
What seems to be happening is that people have realized that they can get by without a $4 cup of Starbucks. Perhaps a $1.50 cup of joe at Dunkin Donuts may be just as good. Perhaps it's time to put the lot into McDonalds, Wal-Mart, and Procter and Gamble stock, and just try to ride this out. After all, people still need cheap food, cheap products, toothpaste, and detergent.
I am probably not smart enough to figure out what to short, so I may put my money into savings, try to keep working hard, live within my means, and continue to look out for who is making the money...
In recent market downturns past, it was relatively clear. Balanced budgets, and Internet technology generated strong economic times, with heady stock prices, and good times for all. During the 2001 economic downturn, people still had certain fundamentals on their side--low interest rates, a relatively strong economy, and equity in their houses. So the next wave of money was in leveraging those low interest rates into returns on home equity loans, or REIT's. Then as home prices started to turn, it was the turn of the commodities to start to run up. Gold and Oil prices started to boom, and smart money was still earning a good return. But with the year 2008 came the starting of the Baby Boom retirement wave. The mass exodus of funds from the market place has started, as baby boomers leave the workforce, and take their money and go home.
So where's the smart money now? That's an excellent question. Interest rates are feebly low, home equity is sinking like a stone, gold and oil prices drop daily, and I can't think of a blue chip company that hasn't had a terrible quarter. Even Wal-Mart wouldn't have bragged about this quarter a year or two ago. Tech is going in the tank, and even the gold-standard--General Electric--is down well past bear market territory.
Short sellers may be making money off the troubles of the market, but they aren't going to get rich, long term this way. If they haven't already made their bones, it could be hard to time this market and make money on the shorts without getting squeezed from time to time. They can make some profits, but then where do you put the money? T-bills? CDs? Currency trades?
Sadly, I don't think the equity markets aren't done to the down side. Why? Because smart investors know what time of year it is. Capital Gains Loss harvesting season. Anyone thinking about a tax play is looking for an equity to dump, realize a capital loss, and save on taxes. And why not? Anyone out there think that the market is going to make a sudden and sharp rebound over the next 31 days? No one I know. Smart investors know that they can probably pick up something on the cheap with the cash they get from liquidating their positions. They can probably pick up the same security they sold a month and a day from now, at a lower price, and they will pick up more shares, AND get a tax break. That's a way to make money.
But it's not a strategy to get rich. Why I am worried is that there does not appear to be a ready answer to who's getting rich on this market. And when I can't see it, and no one I know can give me a good answer to the question, I start to worry.
What seems to be happening is that people have realized that they can get by without a $4 cup of Starbucks. Perhaps a $1.50 cup of joe at Dunkin Donuts may be just as good. Perhaps it's time to put the lot into McDonalds, Wal-Mart, and Procter and Gamble stock, and just try to ride this out. After all, people still need cheap food, cheap products, toothpaste, and detergent.
I am probably not smart enough to figure out what to short, so I may put my money into savings, try to keep working hard, live within my means, and continue to look out for who is making the money...
Tuesday, November 18, 2008
Democrats dump principles for Lieberman
I am saddened, but not surprised, by today's actions taken against Senator Joe Lieberman (I)-CT. The sum total punishment handed down by the Democratic Leadership? He will lose his seat on the Environment and Public Works Committee. This is kind of like handing Rick Wagonner, CEO of General Motors, a $50 parking ticket for running GM into the ground. Are you kidding me?
There is a lot to this story that has not been expressed, and I try to keep things pragmatic. But in this case, I have watched a man go from a respected leader, to a spiteful, bitter back-bencher in the space of about 8-10 years here. And it is sad, because people remember what Joe Lieberman was--a proud man who made decisions based on principle. To see how he has behaved since 2000 is to see a man who feels he has been wronged, and he has behaved in a manner not fit to be a US Senator.
This behavior started in 2004, when his candidacy for President never really got going. "Joe-Mentum" became a disaster (as well as slang for the antithesis of "momentum")--people had started to turn against the war, and Joe was never much of an inspirational force with the party base. Joe thought the nomination should have been his, and he was bitter about not getting the respect and admiration he felt he deserved after being the VP Standard Bearer in 2000.
Since then, Joe has been anything but a party loyalist. His efforts to "reach across the aisle" during the next two years, as part of the "gang of 14" helped to erode any check on President Bush's horrendous policies.
During 2006, the Connecticut Democratic Party, frustrated with Joe's indifference towards them, his votes on Supreme Court Nominees, and his insistence on staying the course in Iraq, voted to put Ned Lamont up for the Democratic nomination for the Senate seat.
Indignant, Joe decided to create his own party, pay some lip service to hearing the real needs of the people of Connecticut, and won on a reputation that people remember of Joe Lieberman, circa 1992.
During the Presidential campaign, Lieberman's support for John McCain was not a shock. The two of them had developed a close friendship. However, the speech he gave at the Republican Convention, and the video footage of Lieberman in the background, nodding approval, as McCain called the Democratic Candidate Barack Obama a "socialist", a "friend of Bill Ayers, domestic terrorist", and the like, should have been beyond the pale.
Clearly Lieberman had gone "all in" on a McCain victory. He was angling for a VP slot with McCain, and, when he didn't get that, was hoping for a Secretary of Defense, or State position in a McCain administration.
But the question in the post-election timeframe here was "what to do with Senator Lieberman once Obama won the election?" Obama himself suggested keeping Lieberman in the Democratic Caucus. This was an easy position for the President Elect to take. After all, the more Democratic votes he had, the easier he could pass his policies. But for the Senate leadership, things were not that easy. Here was a man who had clearly checked out of the party, and was visibly uninterested in any sort of loyalty to a party he felt had betrayed him in the past.
The Senate Leadership had an opportunity to show it could stand up and take to task those who had thumbed their nose at them in the past. The proper response to such behavior was to remove his Chairmanship of the Homeland Security Committee. If Joe didn't like it, good luck getting such a role with the Republicans. We would then see what kind of man he was. Would he run to the GOP, take a back bench role, and vote against his conscience for the next 4 years? Probably not, but given his behavior recently, that was a distinct possibility.
Instead, the Democrats, cowed by this vague notion of a 60 vote filibuster-proof majority (which is the phoniest number in politics today, by the way...) folded like a cheap tent, and let Lieberman have his way, much like a petulant child, unrepentant in his behavior, and trying to cling to some facade of "standing on principle", which is about as phony as a two dollar bill.
I am disappointed in the Democratic Leadership for allowing this to happen. I am disappointed in Lieberman for his overall behavior. I can only hope that one of my previous blogs comes to pass, and Lieberman is put into Obama's Cabinet as Secretary of Homeland Security, and Governor Jodi Rell puts someone like Christopher Shays into the vacated seat.
There is a lot to this story that has not been expressed, and I try to keep things pragmatic. But in this case, I have watched a man go from a respected leader, to a spiteful, bitter back-bencher in the space of about 8-10 years here. And it is sad, because people remember what Joe Lieberman was--a proud man who made decisions based on principle. To see how he has behaved since 2000 is to see a man who feels he has been wronged, and he has behaved in a manner not fit to be a US Senator.
This behavior started in 2004, when his candidacy for President never really got going. "Joe-Mentum" became a disaster (as well as slang for the antithesis of "momentum")--people had started to turn against the war, and Joe was never much of an inspirational force with the party base. Joe thought the nomination should have been his, and he was bitter about not getting the respect and admiration he felt he deserved after being the VP Standard Bearer in 2000.
Since then, Joe has been anything but a party loyalist. His efforts to "reach across the aisle" during the next two years, as part of the "gang of 14" helped to erode any check on President Bush's horrendous policies.
During 2006, the Connecticut Democratic Party, frustrated with Joe's indifference towards them, his votes on Supreme Court Nominees, and his insistence on staying the course in Iraq, voted to put Ned Lamont up for the Democratic nomination for the Senate seat.
Indignant, Joe decided to create his own party, pay some lip service to hearing the real needs of the people of Connecticut, and won on a reputation that people remember of Joe Lieberman, circa 1992.
During the Presidential campaign, Lieberman's support for John McCain was not a shock. The two of them had developed a close friendship. However, the speech he gave at the Republican Convention, and the video footage of Lieberman in the background, nodding approval, as McCain called the Democratic Candidate Barack Obama a "socialist", a "friend of Bill Ayers, domestic terrorist", and the like, should have been beyond the pale.
Clearly Lieberman had gone "all in" on a McCain victory. He was angling for a VP slot with McCain, and, when he didn't get that, was hoping for a Secretary of Defense, or State position in a McCain administration.
But the question in the post-election timeframe here was "what to do with Senator Lieberman once Obama won the election?" Obama himself suggested keeping Lieberman in the Democratic Caucus. This was an easy position for the President Elect to take. After all, the more Democratic votes he had, the easier he could pass his policies. But for the Senate leadership, things were not that easy. Here was a man who had clearly checked out of the party, and was visibly uninterested in any sort of loyalty to a party he felt had betrayed him in the past.
The Senate Leadership had an opportunity to show it could stand up and take to task those who had thumbed their nose at them in the past. The proper response to such behavior was to remove his Chairmanship of the Homeland Security Committee. If Joe didn't like it, good luck getting such a role with the Republicans. We would then see what kind of man he was. Would he run to the GOP, take a back bench role, and vote against his conscience for the next 4 years? Probably not, but given his behavior recently, that was a distinct possibility.
Instead, the Democrats, cowed by this vague notion of a 60 vote filibuster-proof majority (which is the phoniest number in politics today, by the way...) folded like a cheap tent, and let Lieberman have his way, much like a petulant child, unrepentant in his behavior, and trying to cling to some facade of "standing on principle", which is about as phony as a two dollar bill.
I am disappointed in the Democratic Leadership for allowing this to happen. I am disappointed in Lieberman for his overall behavior. I can only hope that one of my previous blogs comes to pass, and Lieberman is put into Obama's Cabinet as Secretary of Homeland Security, and Governor Jodi Rell puts someone like Christopher Shays into the vacated seat.
Sunday, November 16, 2008
The GM Debate could decide some ideology battles
To bail or not to bail...I hope everyone realizes the irony of it all. GM cars and trucks, which are so heavily identified with middle America, are tied to the Rust Belt, which went overwhelmingly for Barack Obama in this last election. However, most "East Coast Elites" wouldn't be caught dead in a Chevy Malibu, and probably couldn't tell you the difference between a Ford standard cab and crew cab pickup. To own a truck, or any car made by GM, Ford or Chrysler is to admit you are "blue collar".
Isn't it ironic that the survival of the GM and Ford brands is predicated on the ability of these companies to make cars that mostly Red-State America will come out and buy? Here's why this is ironic:
The states that voted most heavily Republican (Southern and Plains States) have done so because Brand R represents their philosophy of America. They want the government off their backs. The proposed bailout of General Motors is the ultimate government intervention, in Red-State America's opinion. Here is the big, bad Federal Government coming in, and making decisions as to which companies survive, and how they are run. What's next? Gun rights? Gay rights? It's all daunting to a true-believer.
On the other hand, the same people making this argument are the folks with the most "American pride", and wouldn't be caught dead in a Toyota Tacoma, or a Nissan Hardbody. So the irony here is that if the Federal Government does bail out GM and Ford, and both companies rebound, it will be a victory for Blue State America ideology, and it will have been Red State America that would have made it happen, by buying all of the American Company cars and trucks.
Whether the Feds end up bailing out GM and Ford is the ultimate debate, and here's the breakdown:
It is the first true test of ideology facing the country, post-election. GM has come to Washington saying that it does not have the operating funds to survive to 2009. It is asking for a $25B bailout, to bridge operations until it can sustain itself. The bailout would be a "loan".
The RIGHT says--This is Government intervention at its worst. To bail out GM would invite similar requests from all corners of the economy. GM has run its company into the ground, and doesn't deserve to be rewarded for this behavior with more money, which will surely be wasted. Richard Shelby (R-Sen-Alabama), Tim Pawlenty (R-Gov-Minnesota) and John Kyl (R-Sen-Arizona) were on the talk shows this morning, saying that Chapter 11 (Bankruptcy-Reorganization) was the best way to "save" the company from the costly overhead and labor contracts burdening the company. If GM is to survive, let it file for Chapter 11, and save itself, just like the airlines did a couple of years ago. It can get out of those union contracts, and make itself more competitive once it emerges.
The LEFT says--This isn't a "slippery slope", and that the automotive industry is essential to America. Carl Levin (D-Sen-Michigan), made the argument that the loss of the US Automotive industry would impact 1 in 10 jobs, and would cripple the industrial base of the upper mid-west. Chapter 11 would be a death sentence, for buying a car isn't like hopping on a flight to Sheboygan. You don't have to worry that Delta will go out of business mid-flight. With cars, no one will buy a Buick if they don't think anyone will service it in two years. Their argument is Chapter 11 will turn into Chapter 7 (Liquidation) overnight. Those jobs may move to Toyota, Honda or Nissan, but there is no guarantee that they would stay in the United States. The Left also argues that GM has turned the corner, in its labor contracts, its innovations (see Chevy Volt), and its dependability ratings. It just needs time to get itself corrected, and back "on the road" to profitability.
The stakes here (for once!) are entirely measurable.
Option 1--If the lame duck session of Congress passes a bailout package, and GM Recovers, the Dems have an issue to beat the heck out of the GOP with. The Upper Mid-West is Blue for the next 3 elections, minimum (that includes Ohio, Indiana, Wisconsin, Michigan, Minnesota--68 Electoral Votes, last time I counted...)
Option 2--Congress bails out GM, the company does NOT recover, and the taxpayers revolt against a Congress that wastes our taxpayer money on lost causes such as GM. The upper mid-west craters, and probably turns Red.
Option 3--Congress does NOT bail out GM, and GM dies a painful death, and most of the upper mid-west blames congress, but probably disproportionately Republicans. President Obama spends most of the rest of his Presidency trying to figure out how to implore other Automotive companies to hire workers in the Upper Mid-west. A debacle.
Option 4--Congress does NOT bail out GM, the company dies, and Toyota, Honda, or others pick up most of the slack. Unemployment does tick up, but Conservative philosophy proves to be a winner, and the mid-west continues to be a force for automotive production. The Upper Mid-west goes whole-heartedly Red for a generation.
Sadly, all four options are probably going to end up worse in the short run. We should know how this all plays out in measurable increments over the next 2-4 years. The irony is, though, that the Democrats pushing to save GM, will probably have the least impact on whether GM actually lives.
Isn't it ironic that the survival of the GM and Ford brands is predicated on the ability of these companies to make cars that mostly Red-State America will come out and buy? Here's why this is ironic:
The states that voted most heavily Republican (Southern and Plains States) have done so because Brand R represents their philosophy of America. They want the government off their backs. The proposed bailout of General Motors is the ultimate government intervention, in Red-State America's opinion. Here is the big, bad Federal Government coming in, and making decisions as to which companies survive, and how they are run. What's next? Gun rights? Gay rights? It's all daunting to a true-believer.
On the other hand, the same people making this argument are the folks with the most "American pride", and wouldn't be caught dead in a Toyota Tacoma, or a Nissan Hardbody. So the irony here is that if the Federal Government does bail out GM and Ford, and both companies rebound, it will be a victory for Blue State America ideology, and it will have been Red State America that would have made it happen, by buying all of the American Company cars and trucks.
Whether the Feds end up bailing out GM and Ford is the ultimate debate, and here's the breakdown:
It is the first true test of ideology facing the country, post-election. GM has come to Washington saying that it does not have the operating funds to survive to 2009. It is asking for a $25B bailout, to bridge operations until it can sustain itself. The bailout would be a "loan".
The RIGHT says--This is Government intervention at its worst. To bail out GM would invite similar requests from all corners of the economy. GM has run its company into the ground, and doesn't deserve to be rewarded for this behavior with more money, which will surely be wasted. Richard Shelby (R-Sen-Alabama), Tim Pawlenty (R-Gov-Minnesota) and John Kyl (R-Sen-Arizona) were on the talk shows this morning, saying that Chapter 11 (Bankruptcy-Reorganization) was the best way to "save" the company from the costly overhead and labor contracts burdening the company. If GM is to survive, let it file for Chapter 11, and save itself, just like the airlines did a couple of years ago. It can get out of those union contracts, and make itself more competitive once it emerges.
The LEFT says--This isn't a "slippery slope", and that the automotive industry is essential to America. Carl Levin (D-Sen-Michigan), made the argument that the loss of the US Automotive industry would impact 1 in 10 jobs, and would cripple the industrial base of the upper mid-west. Chapter 11 would be a death sentence, for buying a car isn't like hopping on a flight to Sheboygan. You don't have to worry that Delta will go out of business mid-flight. With cars, no one will buy a Buick if they don't think anyone will service it in two years. Their argument is Chapter 11 will turn into Chapter 7 (Liquidation) overnight. Those jobs may move to Toyota, Honda or Nissan, but there is no guarantee that they would stay in the United States. The Left also argues that GM has turned the corner, in its labor contracts, its innovations (see Chevy Volt), and its dependability ratings. It just needs time to get itself corrected, and back "on the road" to profitability.
The stakes here (for once!) are entirely measurable.
Option 1--If the lame duck session of Congress passes a bailout package, and GM Recovers, the Dems have an issue to beat the heck out of the GOP with. The Upper Mid-West is Blue for the next 3 elections, minimum (that includes Ohio, Indiana, Wisconsin, Michigan, Minnesota--68 Electoral Votes, last time I counted...)
Option 2--Congress bails out GM, the company does NOT recover, and the taxpayers revolt against a Congress that wastes our taxpayer money on lost causes such as GM. The upper mid-west craters, and probably turns Red.
Option 3--Congress does NOT bail out GM, and GM dies a painful death, and most of the upper mid-west blames congress, but probably disproportionately Republicans. President Obama spends most of the rest of his Presidency trying to figure out how to implore other Automotive companies to hire workers in the Upper Mid-west. A debacle.
Option 4--Congress does NOT bail out GM, the company dies, and Toyota, Honda, or others pick up most of the slack. Unemployment does tick up, but Conservative philosophy proves to be a winner, and the mid-west continues to be a force for automotive production. The Upper Mid-west goes whole-heartedly Red for a generation.
Sadly, all four options are probably going to end up worse in the short run. We should know how this all plays out in measurable increments over the next 2-4 years. The irony is, though, that the Democrats pushing to save GM, will probably have the least impact on whether GM actually lives.
Election 2008--Can Republicans learn?
There is a notion I keep hearing from my Conservative friends--this notion that this election was a fluke, or evidence that the country still desperately wants to elect a Conservative to the White House to reflect their views. There just haven't been the right candidates.
Let's take a more sober look back, and even jot down a few notes here. C'mon Brand R--this is for your own good:
#1--"Why was the election so close, if Obama is really so much better?" -- The truth is, the election wasn't close, and as results come in, it has proven to be even more of a blowout each day. Early returns, and absentee ballots have been slow to be counted (see Alaska!), but as each new set of numbers arrive, the lead grows. As of this morning, Obama's totals were over 8.4 million votes more than John McCain. That translates into a 6.75% victory (head to head, not even counting third parties). Get real, folks. That is Bush-over-Dukakis territory. Or Clinton-over-Dole. Remember Bush didn't exactly blow out John Kerry (50.7 to 49.3), and didn't even win the popular vote against Al Gore.
#2--"The Congress came back to the Republicans because people want divided government"--Sorry. Not quite. Democrats picked up 6 seats in the Senate, and will most likely get 7, and could even get 9. The House was a 23 seat pickup. I don't know that you can pin a 56-58 seat pick up in the House, and 13-16 seat pick up in the Senate from 2004, squarely on Mark Foley. Or Larry Craig, or even David Vitter, for that matter. Take your head out of the sand, folks. A 57-60 seat Senate is pretty much a filibuster-proof majority. There are enough liberal Republicans (Olympia Snowe and Susan Collins come to mind just now) to help make the difference on certain issues. Ye got creamed, here.
#3--"This is still a center-right nation"--Sorry guys, but the New England Patriots can't claim to be the Champions of the NFL just because they had a better record than the New York Giants. The Giants won the Super Bowl, and can claim the title. Just because more people call themselves Conservative than Liberal in this country, to a pollster, doesn't mean the country is Center-right. Do you know what proves where the country is? Elections. Take a close look. Where do the Conservatives still hold a majority? Governorships? House? Senate? States? Nope. The Supreme Court? They may keep it, but they will lose their opportunity to get that last judge to really enact the positions of the Conservative philosophy. So it will remain basically tied, at best, for Conservatives. Stevens, Ginsberg, and Souter will all be replaced by more Liberal Justices. Sorry. Elections do matter. If this were truly a Center-right nation, people would have voted for Center-Right candidates. They didn't.
#4--"If we just return to Conservative principles on Government, we should be fine". This could be debated. However, I will make one point to you. It is going to be hard for the same people who have led this country to where we are today, to make the case that they are the agents for change. The people of America have looked at this current group of GOP leaders who have just asked America "who you gonna believe, me or your lyin' eyes", and decided they believe their own eyes. How do John Boehner, Mitch McConnell, or other Republican national figures make the case that NOW they have seen the light, and things will be different THIS TIME. Until the GOP has new leadership at the top of their house, they will continue to be seen as the party that wrought this mess upon the American people, rightly or wrongly.
Sorry, guys. Like the Democrats had to learn in 2004, it's time to take your medicine, make a better pitch to the whole country (the Northeast, Northwest, and Mid-west included) that you intend to lead as a party of ideas and improvements, not divisiveness and entitlement. That Liberal establishment that you rail against? It went out with Lyndon Johnson. Anyone under the age of 45 doesn't know of any establishment other than the Republican establishment in Washington, from Reagan to Bush.
The problem for Brand R, is that every 2 years, fewer people remember the Vietnam War, and are swayed by the culture wars, and more people remember the economic, social, foreign relations, and economic disasters that this Presidency has left us with. Going back to core beliefs may sound good, and feel good, but if this party can't shift the paradigm, they could be stuck in the wilderness for a while.
Let's take a more sober look back, and even jot down a few notes here. C'mon Brand R--this is for your own good:
#1--"Why was the election so close, if Obama is really so much better?" -- The truth is, the election wasn't close, and as results come in, it has proven to be even more of a blowout each day. Early returns, and absentee ballots have been slow to be counted (see Alaska!), but as each new set of numbers arrive, the lead grows. As of this morning, Obama's totals were over 8.4 million votes more than John McCain. That translates into a 6.75% victory (head to head, not even counting third parties). Get real, folks. That is Bush-over-Dukakis territory. Or Clinton-over-Dole. Remember Bush didn't exactly blow out John Kerry (50.7 to 49.3), and didn't even win the popular vote against Al Gore.
#2--"The Congress came back to the Republicans because people want divided government"--Sorry. Not quite. Democrats picked up 6 seats in the Senate, and will most likely get 7, and could even get 9. The House was a 23 seat pickup. I don't know that you can pin a 56-58 seat pick up in the House, and 13-16 seat pick up in the Senate from 2004, squarely on Mark Foley. Or Larry Craig, or even David Vitter, for that matter. Take your head out of the sand, folks. A 57-60 seat Senate is pretty much a filibuster-proof majority. There are enough liberal Republicans (Olympia Snowe and Susan Collins come to mind just now) to help make the difference on certain issues. Ye got creamed, here.
#3--"This is still a center-right nation"--Sorry guys, but the New England Patriots can't claim to be the Champions of the NFL just because they had a better record than the New York Giants. The Giants won the Super Bowl, and can claim the title. Just because more people call themselves Conservative than Liberal in this country, to a pollster, doesn't mean the country is Center-right. Do you know what proves where the country is? Elections. Take a close look. Where do the Conservatives still hold a majority? Governorships? House? Senate? States? Nope. The Supreme Court? They may keep it, but they will lose their opportunity to get that last judge to really enact the positions of the Conservative philosophy. So it will remain basically tied, at best, for Conservatives. Stevens, Ginsberg, and Souter will all be replaced by more Liberal Justices. Sorry. Elections do matter. If this were truly a Center-right nation, people would have voted for Center-Right candidates. They didn't.
#4--"If we just return to Conservative principles on Government, we should be fine". This could be debated. However, I will make one point to you. It is going to be hard for the same people who have led this country to where we are today, to make the case that they are the agents for change. The people of America have looked at this current group of GOP leaders who have just asked America "who you gonna believe, me or your lyin' eyes", and decided they believe their own eyes. How do John Boehner, Mitch McConnell, or other Republican national figures make the case that NOW they have seen the light, and things will be different THIS TIME. Until the GOP has new leadership at the top of their house, they will continue to be seen as the party that wrought this mess upon the American people, rightly or wrongly.
Sorry, guys. Like the Democrats had to learn in 2004, it's time to take your medicine, make a better pitch to the whole country (the Northeast, Northwest, and Mid-west included) that you intend to lead as a party of ideas and improvements, not divisiveness and entitlement. That Liberal establishment that you rail against? It went out with Lyndon Johnson. Anyone under the age of 45 doesn't know of any establishment other than the Republican establishment in Washington, from Reagan to Bush.
The problem for Brand R, is that every 2 years, fewer people remember the Vietnam War, and are swayed by the culture wars, and more people remember the economic, social, foreign relations, and economic disasters that this Presidency has left us with. Going back to core beliefs may sound good, and feel good, but if this party can't shift the paradigm, they could be stuck in the wilderness for a while.
Saturday, November 15, 2008
Cabinet of Choice--If I were Obama...
The buzz today is all about who President Elect Obama will have into his cabinet. The term "team of rivals" has been in the news lately, referring to Doris Kearns Goodwin's line about how President Abraham Lincoln brought into his Cabinet all of the Presidential hopefuls that he had vanquished in the election of 1860.
It appears that the President Elect is more interested in the notion of having the best in his Cabinet, including the concept of the "team of rivals". Here's a listing of the Cabinet positions he has to fill. I will be the first to admit, I don't have a good candidate for each position, but for the ones that are familiar to the American population, here are some choices that I think could be winners (I put my favorites in BOLD):
Cabinet Roles
Agriculture; Interior; Commerce Justice
Defense; Labor; Education
State; Energy; Transportation
Health and Human Services ; Treasury
Homeland Security ; Veterans Affairs
Housing and Urban Development
Candidates:
Commerce--Obama has a former Secretary of Commerce on his transition team--Robert Reich. I don't know if this is the right kind of pick, but I'd love to see someone like David Plouffe in this role. If Plouffe would take it. He was Obama's economic advisor during the campaign, and was highly regarded for his common-sense policies. Plouffe is not a Conservative, but is pragmatic in his decision-making (something this blog is a big fan of!), and receives high marks from both sides of the aisle.
Defense--I have a number of options, but I will list the top three here.
#1--Bob Gates--he has proven to be a Republican in the Bush 41 mold, one with a realist view of the world. The question is, would he serve in a Democratic administration?
#2--Chuck Hagel, Retired Senator, NE--This would be a concession to the Republican Party, although Hagel has proven to be an anti-war Senator, and one who has battled bitterly with the Republican Party over this issue. Hagel did go to Asia with Obama this Summer, and is well respected in this area. His name will come up here again.
#3--Colin Powell--This is where he really belongs. His contacts are all here, and he gets this department better than any other. This would be a natural fit--if he would agree to public service again.
Health and Human Services--there is really only one choice in my mind here--Hillary Clinton. She is an excellent candidate for State as well, and this blog may prove to have a shelf life of about 6 hours, if she is announced as Secretary of State today. If she isn't, however, this is a natural fit for her. Health Care is her passion. She can take a leadership role on this, and not have to fight Senator Kennedy and others for credit. She has learned how to move a bill through Congress, and this role would give her all she needs to achieve one of her life's goals.
Energy--I think Al Gore will be involved, but would probably not take a Cabinet post. One interesting option here, though, could be John McCain. You read that right. McCain has ideas about energy, and many of them are positive for the country at large. The biggest question for him would be if he were willing to take a position in an Obama administration.
Homeland Security--I have two or three interesting people in mind here:
#1--Joe Lieberman, Senator, CT--Joe is thrashing around in the Senate, and is a pariah in both parties at this point. He could prove to be a strong ally in this role, and could be a constructive force in protecting America.
#2--John McCain, Senator, AZ--If he would consider the role, he also would be a force for good here. He can appreciate the balance between individual freedoms and protection of the citizens of the USA.
#3--Bill Richardson, Governor, NM--I think Bill would be more interested in a role like State, but he has earned a place in the Cabinet, and this would be the kind of high-profile role that a person like Bill would relish. Also, he has a history of getting things done, which would be a refreshing change for this department (see Katrina...)
Housing and Urban Development--Here's a pick that could stir up some trouble. What about a guy like Franklin Raines? It would probably get the right HOWLING objection, but the ex-leader of Fannie Mae has a good understanding of the issues with the housing crisis, and could work with the Treasury on ways to stop the bleeding in the Mortgage market, through new ideas in housing. Any better ideas would be appreciated here.
Justice--A couple of names come to mind here:
#1-- Andrew Cuomo, AG for the State of NY. He has earned some chops with his recent bird-dogging of AIG and other TARP funds recipients to be sure they are using their loans wisely.
#2--Janet Napolitano, Arizona Governor, could make sense as well. She is a former US Attorney, and would bring credibility to an office that has been badly damaged during the prior administration.
State--This is the coveted position. Lots of options:
#1--Hillary Clinton, Senator, NY--She has been rumored to have been offered the post. She could be the right choice. Most would applaud the pick.
#2--John Kerry, Senator, MA--He has earned it, and wants it.
#3--Bill Richardson, Governor, NM--He has also earned it, and wants it.
#4--Richard Lugar, Senator, IN--He would be a fine olive branch pick to the GOP. Would he work in a Democratic Administration? Probably.
Treasury--There are really two options here. The question is, "who would WANT this role?":
#1--Tim Geithner--President of the NY Fed--Tim has been viewed as a highly respected individual, and someone who would be instantly credible, overseeing Neel Kashkari and his application of TARP funds. (by the way, Neel got a fine introduction to the Congress yesterday. It was hideous. The Congressmen took turns carving him into pieces. One even called him a "chump".)
#2--Larry Summers--ex-Treasury Secretary--Summers is the most respected candidate, and would be the better choice, from the Pragmatic Pundit's perspective. If Geithner could continue in his role, and Summers could take the Treasury post, we would get a better result.
Veterans Affairs--There are a few good options here:
#1--Chuck Hagel--This could be a fine post for a man who has been very concerned about veterans affairs.
#2--Jim Webb--This could be a fine appointment for a man who has served Veterans and the military most of his life.
#3--John McCain--If he'd accept the role, he would also be a fine candidate for this position. I will give a fourth option:
#4--Jack Reed, Senator RI--Sen. Reed is also a veteran, and someone well respected, both by Obama and the Washington apparatus.
There are the Pragmatic Pundit's picks. Let's see if we get any right...
It appears that the President Elect is more interested in the notion of having the best in his Cabinet, including the concept of the "team of rivals". Here's a listing of the Cabinet positions he has to fill. I will be the first to admit, I don't have a good candidate for each position, but for the ones that are familiar to the American population, here are some choices that I think could be winners (I put my favorites in BOLD):
Cabinet Roles
Agriculture; Interior; Commerce Justice
Defense; Labor; Education
State; Energy; Transportation
Health and Human Services ; Treasury
Homeland Security ; Veterans Affairs
Housing and Urban Development
Candidates:
Commerce--Obama has a former Secretary of Commerce on his transition team--Robert Reich. I don't know if this is the right kind of pick, but I'd love to see someone like David Plouffe in this role. If Plouffe would take it. He was Obama's economic advisor during the campaign, and was highly regarded for his common-sense policies. Plouffe is not a Conservative, but is pragmatic in his decision-making (something this blog is a big fan of!), and receives high marks from both sides of the aisle.
Defense--I have a number of options, but I will list the top three here.
#1--Bob Gates--he has proven to be a Republican in the Bush 41 mold, one with a realist view of the world. The question is, would he serve in a Democratic administration?
#2--Chuck Hagel, Retired Senator, NE--This would be a concession to the Republican Party, although Hagel has proven to be an anti-war Senator, and one who has battled bitterly with the Republican Party over this issue. Hagel did go to Asia with Obama this Summer, and is well respected in this area. His name will come up here again.
#3--Colin Powell--This is where he really belongs. His contacts are all here, and he gets this department better than any other. This would be a natural fit--if he would agree to public service again.
Health and Human Services--there is really only one choice in my mind here--Hillary Clinton. She is an excellent candidate for State as well, and this blog may prove to have a shelf life of about 6 hours, if she is announced as Secretary of State today. If she isn't, however, this is a natural fit for her. Health Care is her passion. She can take a leadership role on this, and not have to fight Senator Kennedy and others for credit. She has learned how to move a bill through Congress, and this role would give her all she needs to achieve one of her life's goals.
Energy--I think Al Gore will be involved, but would probably not take a Cabinet post. One interesting option here, though, could be John McCain. You read that right. McCain has ideas about energy, and many of them are positive for the country at large. The biggest question for him would be if he were willing to take a position in an Obama administration.
Homeland Security--I have two or three interesting people in mind here:
#1--Joe Lieberman, Senator, CT--Joe is thrashing around in the Senate, and is a pariah in both parties at this point. He could prove to be a strong ally in this role, and could be a constructive force in protecting America.
#2--John McCain, Senator, AZ--If he would consider the role, he also would be a force for good here. He can appreciate the balance between individual freedoms and protection of the citizens of the USA.
#3--Bill Richardson, Governor, NM--I think Bill would be more interested in a role like State, but he has earned a place in the Cabinet, and this would be the kind of high-profile role that a person like Bill would relish. Also, he has a history of getting things done, which would be a refreshing change for this department (see Katrina...)
Housing and Urban Development--Here's a pick that could stir up some trouble. What about a guy like Franklin Raines? It would probably get the right HOWLING objection, but the ex-leader of Fannie Mae has a good understanding of the issues with the housing crisis, and could work with the Treasury on ways to stop the bleeding in the Mortgage market, through new ideas in housing. Any better ideas would be appreciated here.
Justice--A couple of names come to mind here:
#1-- Andrew Cuomo, AG for the State of NY. He has earned some chops with his recent bird-dogging of AIG and other TARP funds recipients to be sure they are using their loans wisely.
#2--Janet Napolitano, Arizona Governor, could make sense as well. She is a former US Attorney, and would bring credibility to an office that has been badly damaged during the prior administration.
State--This is the coveted position. Lots of options:
#1--Hillary Clinton, Senator, NY--She has been rumored to have been offered the post. She could be the right choice. Most would applaud the pick.
#2--John Kerry, Senator, MA--He has earned it, and wants it.
#3--Bill Richardson, Governor, NM--He has also earned it, and wants it.
#4--Richard Lugar, Senator, IN--He would be a fine olive branch pick to the GOP. Would he work in a Democratic Administration? Probably.
Treasury--There are really two options here. The question is, "who would WANT this role?":
#1--Tim Geithner--President of the NY Fed--Tim has been viewed as a highly respected individual, and someone who would be instantly credible, overseeing Neel Kashkari and his application of TARP funds. (by the way, Neel got a fine introduction to the Congress yesterday. It was hideous. The Congressmen took turns carving him into pieces. One even called him a "chump".)
#2--Larry Summers--ex-Treasury Secretary--Summers is the most respected candidate, and would be the better choice, from the Pragmatic Pundit's perspective. If Geithner could continue in his role, and Summers could take the Treasury post, we would get a better result.
Veterans Affairs--There are a few good options here:
#1--Chuck Hagel--This could be a fine post for a man who has been very concerned about veterans affairs.
#2--Jim Webb--This could be a fine appointment for a man who has served Veterans and the military most of his life.
#3--John McCain--If he'd accept the role, he would also be a fine candidate for this position. I will give a fourth option:
#4--Jack Reed, Senator RI--Sen. Reed is also a veteran, and someone well respected, both by Obama and the Washington apparatus.
There are the Pragmatic Pundit's picks. Let's see if we get any right...
Thursday, November 13, 2008
2010--What is Success?
After feeling good yesterday, the (brand new) Pragmatic Pundit is feeling less rosy today. Could be partly due to the lousy weather, and dark days of this time of year. But it could also be the new rash of issues that face us currently. Honestly, is there a part of our every day lives that isn't at the brink of disaster?
Economy--We just found out we lost more jobs this past week than any time in 7 years, and unemployment predictions over the next twelve months are expected to go up to 7.5%
Deficits--over $200B in October ALONE!!!
Health care--47 million uninsured. Medicare costs rising precipitously.
Automobiles--GM looking for a bail out, or it may not be able to continue operations through 2008
Pakistan--not happy with our silent war, or the missiles we have been dropping on their northwest border areas.
Iran--tested surface to surface missiles, which could reach southeastern Europe.
Russia--moving their "defense shield" into Kaliningrad (which is kind of a strange appendix to Mother Russia, nestled between the Baltics and Poland, but I digress)
Energy--with gas prices down, and funding drying up, even T. Boone Pickens is pulling out of his windmill initiatives. Don't hear much from ole T. Boone these days, do ye?
State and Local Budgets--out of funds, and risking defaults on future pension liabilities. If you think GM is bad...
TARP--just where exactly did the first $250B of funds go? Where the heck is our savior Hank Paulson on this? For that matter, where the heck is his boss, George W. Bush?
Okay, enough griping. What's it going to take to be successful on this? What can even be done?
This is a massively challenging effort, but to my way of thinking, there is one theme, in two parts.
RENEWABLE ENERGY--
1a. Domestic jobs
1b. Foreign leverage
If we as a nation can figure this out, and not lose our nerve in the face of tough economic times, we can pull this off. But here's what may need to happen:
Step 1--State and Local Governments--we stop the next round of TARP (Congress actually has veto power over the next $200-300B of funds). Put those amounts into State and Local works programs that are already drawn up, and ready to roll. Get people working again! It may sound a little socialist, but I think people will be happy to have jobs and cashflow again.
Step 2--Automobiles--Give TOYOTA the $25B in money, but in the form of tax breaks, and force them to take on GM and Ford brands (Chevy, Cadillac, Ford Trucks), and corresponding workers. Immediately place a CAFE standard of 40 MPG, and force all new cars to be hybrid, plug in, or some alternative, renewable fuel base by 2015. 6-7 years ought to do it. We put a man on the moon 9 years after Kennedy demanded it. I keep hearing that Americans are the best workers in the world. Time to show up.
Step 3--Take the third round of TARP funds, and put them into updating the electric grid, and funding wind and solar projects. Clean Coal should be researched, but develop wind, solar, and LNG first. Get oil out of the picture. Keep the drilling for additional oil for our reserves, and slower developing technologies. People will still need oil, but let's make it a passion to get ourselves off of oil.
Step 4--International leverage--discussions with Russia, Iran and Pakistan (and Venezuela) are already on different terms than 4 months ago. Why? Because these countries, for the most part, are not awash in US petrodollars. At less than $60/Barrel, Oil dollars are not flowing into Iran and Russia like before. It's time to have a more substantive economic discussion with these countries. That can only happen when we are not the light man on the teeter totter.
Who knows, it may surprise even President Obama what kind of concessions countries are willing to make, when they don't have the USA funding their governments through petrodollars.
To be honest with you, if our government can help, and we can make this picture start to become a reality in two years, I will be amazed. But I would love it. Imagine a world where we are no longer visiting Saudi Arabia, begging them to increase their oil output? Who knows, we may even develop a technology or two along the way that we can sell to them...
We've been known as innovators in the past.
Economy--We just found out we lost more jobs this past week than any time in 7 years, and unemployment predictions over the next twelve months are expected to go up to 7.5%
Deficits--over $200B in October ALONE!!!
Health care--47 million uninsured. Medicare costs rising precipitously.
Automobiles--GM looking for a bail out, or it may not be able to continue operations through 2008
Pakistan--not happy with our silent war, or the missiles we have been dropping on their northwest border areas.
Iran--tested surface to surface missiles, which could reach southeastern Europe.
Russia--moving their "defense shield" into Kaliningrad (which is kind of a strange appendix to Mother Russia, nestled between the Baltics and Poland, but I digress)
Energy--with gas prices down, and funding drying up, even T. Boone Pickens is pulling out of his windmill initiatives. Don't hear much from ole T. Boone these days, do ye?
State and Local Budgets--out of funds, and risking defaults on future pension liabilities. If you think GM is bad...
TARP--just where exactly did the first $250B of funds go? Where the heck is our savior Hank Paulson on this? For that matter, where the heck is his boss, George W. Bush?
Okay, enough griping. What's it going to take to be successful on this? What can even be done?
This is a massively challenging effort, but to my way of thinking, there is one theme, in two parts.
RENEWABLE ENERGY--
1a. Domestic jobs
1b. Foreign leverage
If we as a nation can figure this out, and not lose our nerve in the face of tough economic times, we can pull this off. But here's what may need to happen:
Step 1--State and Local Governments--we stop the next round of TARP (Congress actually has veto power over the next $200-300B of funds). Put those amounts into State and Local works programs that are already drawn up, and ready to roll. Get people working again! It may sound a little socialist, but I think people will be happy to have jobs and cashflow again.
Step 2--Automobiles--Give TOYOTA the $25B in money, but in the form of tax breaks, and force them to take on GM and Ford brands (Chevy, Cadillac, Ford Trucks), and corresponding workers. Immediately place a CAFE standard of 40 MPG, and force all new cars to be hybrid, plug in, or some alternative, renewable fuel base by 2015. 6-7 years ought to do it. We put a man on the moon 9 years after Kennedy demanded it. I keep hearing that Americans are the best workers in the world. Time to show up.
Step 3--Take the third round of TARP funds, and put them into updating the electric grid, and funding wind and solar projects. Clean Coal should be researched, but develop wind, solar, and LNG first. Get oil out of the picture. Keep the drilling for additional oil for our reserves, and slower developing technologies. People will still need oil, but let's make it a passion to get ourselves off of oil.
Step 4--International leverage--discussions with Russia, Iran and Pakistan (and Venezuela) are already on different terms than 4 months ago. Why? Because these countries, for the most part, are not awash in US petrodollars. At less than $60/Barrel, Oil dollars are not flowing into Iran and Russia like before. It's time to have a more substantive economic discussion with these countries. That can only happen when we are not the light man on the teeter totter.
Who knows, it may surprise even President Obama what kind of concessions countries are willing to make, when they don't have the USA funding their governments through petrodollars.
To be honest with you, if our government can help, and we can make this picture start to become a reality in two years, I will be amazed. But I would love it. Imagine a world where we are no longer visiting Saudi Arabia, begging them to increase their oil output? Who knows, we may even develop a technology or two along the way that we can sell to them...
We've been known as innovators in the past.
Wednesday, November 12, 2008
Can YOU make it through an economic downturn?
I know I usually try to find pithy things to discuss from a political point of view. But daily news about TARP, the Auto Bailouts, and pending State and Local Government collapses (which will be the subject of an imminent blog, to be sure) are all getting me down. So here's some uplifting ways to think about the economic downturn.
In fact, you may look back on recessions as the best economic times of your career. Why? Because economic downturns force some behavioral changes. And if you can hang onto your job, you may even find that some things work to your advantage.
Some things to brighten your mood during gloomy economic times:
1. Checked the pump prices lately?--Definitely lower. My weekly fillups went from $42.90 to $23.50. It's been nice to get close to $20 back each week. My commute still stinks, but I won't complain about the cash back. I am glad my wife talked me into a car that gets 30 mpg...
2. Checked the mortgage rates lately?--6% for a 30 year fixed mortgage isn't bad. And it's been going down. Since we just bought a house, but I don't close for a month, I have been waiting each day to see if the rate goes down more. Every day, I save about $15/month on my payments, by holding out. By the way, going with a mortgage broker, and getting a rate lock has been super. Every few days I have him lock in at a lower rate.
3. Checked your food prices lately?--I bought a gallon of milk for under $4. Also, I noticed these weird things that save me like $10 a week at the grocery store. Coupons! They only cost about $1.50 for a local paper. I can even read about what's happening in my town. I am not too interested in local news, but when I am not busy reading the NY Times and WSJournal on line, it's been interesting finding out who got arrested that week from my old high school.
4. Checked the sales advertisements lately?--Lots of things on sale. Christmas is coming up. My wife and I agreed--no gifts for each other over $10. I may not have a wife if I don't break that promise. But I expect her to keep her word. Still, I have noticed a lot of things are on sale. I'd like to spend about 20% less this year on Christmas, and make sure I get nothing from my wife and kids (since I probably bought my own gifts anyway. My gift to myself is having more $$$$ in the bank!).
Some things to keep expenses in line:
1. Put some savings away before you cash your paycheck--can't spend what you never see...
2. Eat in more--honestly, I haven't missed the Cheesecake Factory. I don't miss the extra two inches on my waistline either.
3. Hunt down a sale, already--as I mentioned above, it hasn't been too tough to look at the ads in the paper for cheap stuff I want.
4. Eat a little less, run a little more...--nuff said.
It can all be done, and it really isn't as painful as watching GM get bailed out. You can even make a game out of it. Just try to keep a cushion of funds saved for expenses. If you can't manage that, send me a comment here and we can think about other savings opportunities together.
In fact, you may look back on recessions as the best economic times of your career. Why? Because economic downturns force some behavioral changes. And if you can hang onto your job, you may even find that some things work to your advantage.
Some things to brighten your mood during gloomy economic times:
1. Checked the pump prices lately?--Definitely lower. My weekly fillups went from $42.90 to $23.50. It's been nice to get close to $20 back each week. My commute still stinks, but I won't complain about the cash back. I am glad my wife talked me into a car that gets 30 mpg...
2. Checked the mortgage rates lately?--6% for a 30 year fixed mortgage isn't bad. And it's been going down. Since we just bought a house, but I don't close for a month, I have been waiting each day to see if the rate goes down more. Every day, I save about $15/month on my payments, by holding out. By the way, going with a mortgage broker, and getting a rate lock has been super. Every few days I have him lock in at a lower rate.
3. Checked your food prices lately?--I bought a gallon of milk for under $4. Also, I noticed these weird things that save me like $10 a week at the grocery store. Coupons! They only cost about $1.50 for a local paper. I can even read about what's happening in my town. I am not too interested in local news, but when I am not busy reading the NY Times and WSJournal on line, it's been interesting finding out who got arrested that week from my old high school.
4. Checked the sales advertisements lately?--Lots of things on sale. Christmas is coming up. My wife and I agreed--no gifts for each other over $10. I may not have a wife if I don't break that promise. But I expect her to keep her word. Still, I have noticed a lot of things are on sale. I'd like to spend about 20% less this year on Christmas, and make sure I get nothing from my wife and kids (since I probably bought my own gifts anyway. My gift to myself is having more $$$$ in the bank!).
Some things to keep expenses in line:
1. Put some savings away before you cash your paycheck--can't spend what you never see...
2. Eat in more--honestly, I haven't missed the Cheesecake Factory. I don't miss the extra two inches on my waistline either.
3. Hunt down a sale, already--as I mentioned above, it hasn't been too tough to look at the ads in the paper for cheap stuff I want.
4. Eat a little less, run a little more...--nuff said.
It can all be done, and it really isn't as painful as watching GM get bailed out. You can even make a game out of it. Just try to keep a cushion of funds saved for expenses. If you can't manage that, send me a comment here and we can think about other savings opportunities together.
Tuesday, November 11, 2008
Future of the Republican Party--JEB BUSH
Let's be clear here--a bad term for Barack Obama would put a Republican in the White House. But Republicans have experimented with someone that wasn't really "one of them". In a sense, they made the deal that they thought would put them in the White House--sold their souls a little--in the hopes of stemming the Democrat tide. It didn't work.
In any case, there are a lot of names being batted around for 2012. I will go through some big names, some dark horses, and then the only choice that really makes sense at this point.
Big Names:
1. Sarah Palin--44, Alaska Governor
Pros:
- has a national campaign under her belt
- an indomitable spirit
- has a tremendous following/can speak to "the base"
- Lack of intellectual curiosity
- Polarizing positions
- the "Dan Quayle" effect
In the end, Conservatives LOVE Palin, but I think they worry too much that she can't win. She could prove to be a lot more substantive in the next 4 years, and will promise to be at least in the mix. In the end, there are more substantive candidates who WILL run in 2012, and they will embarrass her, if she isn't careful.
2. Mitt Romney--61, Former Mass Governor
Pros:
- Articulate
- Conservative positions
- Experienced/Economic bona fides
- "East Coast Elite"
- "Mormon" stigma in the base
- Has flip-flopped on major social issues
Conclusion: Top Tier--2nd or 3rd place
In the end, Romney has the bona fides to be the candidate of choice. The problem he faces is two fold. First, I am not sure the GOP trusts a Massachusetts Republican, who used to be pro-choice, pro-gay rights. Second, Mitt has some foot-in-mouth issues, and isn't the number one choice of any part of the multi-factioned Republican Party. Economic Conservatives may prefer Newt or Jindhal. Social Conservatives will prefer Palin. Wall Street Republicans--are there any left?
3. Mike Huckabee--53, Former Arkansas GovernorPros:
- Conservative Darling--notably Social Conservative issues
- Experience as Governor
Cons:
- Foreign Policy Credentials
- Too Conservative
Conclusion: Top Tier--Also Ran
In the end, Huckabee has the same issue that Romney has. He's not the favorite of any faction of the Republican Party. He will continue to struggle to raise money. The one chance he has, though, is using his new television platform to figure out how to communicate his message to someplace other than the South. In the end, I don't think he can win.
4. Newt Gingrich--65, Former Speaker of the HousePros:
- Smart, notably on Economics
- Conservative
- Ambitious
Cons:
- Polarizing
- Infidelities
- Age (69 in 2012)
Conclusion: Excellent chance...but...
It will be tough to find someone more ambitious and intelligent than Newt. Certainly, he is still lauded in Conservative Economic circles, as well as Social Conservative circles, as someone who has embraced the Conservative platform. His recent admissions on infidelities, along with his polarizing nature in the House, though, could be his downfall. In the end, 2012 is Newt's last chance. He will be 69, and we have seen what the media does to septuagenarians campaigning for President (see Dole, McCain...). But, he won't be the Conservative darling. Someone else will be.
Dark Horses:1. Tim Pawlenty--48, Governor Minnesota
Pros:
- Salt of the earth
- Interviews well
- Experience as Governor
Cons
- No "base"
- No real excitement
Conclusion: Quick exit
Not much going for him, other than some name recognition. Not really looked at with excitement by any faction of the GOP.
2. Mitch Daniels
Pros:
- Conservative bona fides
- Experience as Governor
Cons:
- Name recognition
Conclusion: Quick Exit
Same issues as Pawlenty.
3. Bobby Jindal--37, Governor Louisiana
Pros:
- Well versed in policy
- Likeable
- Youth
Cons:
- Name recognition
- Too young
- Position as a faction favorite?
Conclusion: Early exit, but a VP choice?
It will be tough for Jindal to make the case for President at 41. However, it's been done before (see Obama, Kennedy, Teddy Roosevelt). He's got the kind of policy chops that Sarah Palin wishes for, and has both legislative and executive experience. Barring any incidents, this is definitely a future star in the party.The Obvious Choice:
Jeb Bush--55, Former Florida Governor
Pros:
- Executive experience
- National Credentials
- Party Values
Cons:
- The Bush name
Conclusion: In the end, this is a popular ex-Governor of a huge state. One with national credentials, and much more of his father's pragmatism than his older brother. If there is anyone who can truly lead a Republican Party that is in the wilderness, it is Jeb Bush. The only drawback is the last name. I think in the end, the Republican Party would look upon Jeb as comfort food, and someone who can unite the factions of the party.
Monday, November 10, 2008
GM--Do we "TARP" it?
Every day seems to bring a new economic challenge facing our new government in transition.
Today's burning bag of poop is the auto industry. In addition to the $25B appropriated for the big 3 automakers, GM is now asking for an additional $25B (no strings attached), to keep the company afloat.
As I was driving to work this morning, I got some opinions from two very different sources--the local gas station owner, and one of the smartest Quant Management professionals I know. I won't get into specifics, but both had very strong opinions on whether such a loan makes sense.
Interestingly, one friend said that we should just let GM fail. It was just throwing good money after bad. The other friend said that GM should get the funds, figure out a way to pass off the pension liability, and keep itself viable. I agree with the second friend, but I will lay out a few other thoughts here...
My opinion is that using the funds that have been tagged for the TARP program (Troubled Asset Relief Program) could give GM the time it needs to figure out how to rejuvenate the business. But I really think that strings MUST be attached to that money. Here's what I think has to happen:
1. Get rid of at least 4-5 of the automobile lines. There is no reason for GM to have 8 car companies, with 8 R&D groups, and design teams. Sell off anything that is worth a buck.
2. Force the company to build at least 40% of their cars as hybrid, electric or LNG powered autos. If they cannot get the percentage up to that amount in a relatively short period of time (say 4 years...), the repayment terms of the loan get prohibitive.
3. Buy out the pension liability--This is going to suck for retirees beyond belief. But to make a viable auto industry, the auto unions made bad deals for years, which have hampered the American car companies for too long. Time to pay the piper. Give DB Pension holders a cash buy out, and it isn't going to be dollar for dollar. Make it happen.
If this works, it could be the model for more industries in this situation. Because if you think GM is the last company to face this situation, you've been living in an alternative universe. Wait until state and local governments start having to face pension liabilities they can't afford.
I will try to get a few more thoughts out this week on the economic reality that President Elect Obama will be facing. It is hideous, and it gets uglier each day...
Today's burning bag of poop is the auto industry. In addition to the $25B appropriated for the big 3 automakers, GM is now asking for an additional $25B (no strings attached), to keep the company afloat.
As I was driving to work this morning, I got some opinions from two very different sources--the local gas station owner, and one of the smartest Quant Management professionals I know. I won't get into specifics, but both had very strong opinions on whether such a loan makes sense.
Interestingly, one friend said that we should just let GM fail. It was just throwing good money after bad. The other friend said that GM should get the funds, figure out a way to pass off the pension liability, and keep itself viable. I agree with the second friend, but I will lay out a few other thoughts here...
My opinion is that using the funds that have been tagged for the TARP program (Troubled Asset Relief Program) could give GM the time it needs to figure out how to rejuvenate the business. But I really think that strings MUST be attached to that money. Here's what I think has to happen:
1. Get rid of at least 4-5 of the automobile lines. There is no reason for GM to have 8 car companies, with 8 R&D groups, and design teams. Sell off anything that is worth a buck.
2. Force the company to build at least 40% of their cars as hybrid, electric or LNG powered autos. If they cannot get the percentage up to that amount in a relatively short period of time (say 4 years...), the repayment terms of the loan get prohibitive.
3. Buy out the pension liability--This is going to suck for retirees beyond belief. But to make a viable auto industry, the auto unions made bad deals for years, which have hampered the American car companies for too long. Time to pay the piper. Give DB Pension holders a cash buy out, and it isn't going to be dollar for dollar. Make it happen.
If this works, it could be the model for more industries in this situation. Because if you think GM is the last company to face this situation, you've been living in an alternative universe. Wait until state and local governments start having to face pension liabilities they can't afford.
I will try to get a few more thoughts out this week on the economic reality that President Elect Obama will be facing. It is hideous, and it gets uglier each day...
Saturday, November 8, 2008
So Obama won--What now?
Now that the election is over (aside from calling Missouri, and some Senate runoffs or recounts), what now?
As people are busy focusing on Obama's cabinet, and other things, it looks to me like there are two agendas President-Elect Obama must begin to address immediately:
Issue #1--Economic Stimulus--The effects of the credit crunch is now undeniable. It just took about a month longer than I had anticipated. The trip from wall street to main street is a short one, after all. Banks don't lend money-> Credit Freezes -> Companies sales start to drop as credit purchases represent such a large percentage of overall sales and commerce -> Companies start to lose liquidity to do things like...make payroll ->Companies cut workers after cutting everything else. We're there, and it isn't over yet. So...what do we do about it?
Obama mentioned a stimulus package he would like to see passed in a lame duck session (ie, before the end of 2008). If not then, during January/February of '09. But my question is, "what is the stimulus package?" Tax rebates did nothing to really stimulate the economy. Here's what I suggest for a stimulus package:
Stimulus Package:
1. Public Works Program--fund the Roads, Bridges, Broadband, Trains, Tunnels, programs. Get people working. Get people a paycheck they don't have to worry about being outsourced. As part of this program, make sure an update to the electricity grid is being addressed. And make sure all sources can be included (wind, solar, tidal, nuclear, LNG, oil too).
2. State and Local Government Funding--Provide state and local governments the chance to update transportation vehicles to fuel efficient vehicles. That would achieve two issues in one--help reduce reliance on oil, and help our car manufacturers.
3. Provide an immediate tax rebate on all cars with a fuel efficiency of 40 MPG or higher, or Hybrid cars. Make it competitive--say $5k and up. We want people to actually buy these cars...
4. Public Transportation tax detectability credit of up to say, $500. If you are going to drive a Hummer into the city each day to work, you won't be punished. You just won't be rewarded. Money talks.
5. Tax incentives to energy companies--get these technologies that work, scaled up and working. Provide a benchmark for viability of these energy sources (wind, solar, hydrogen cars, switch grass, whatever...) and once companies hit that benchmark, reward them with a two-year tax holiday. Do the same for big auto--give them the incentive they need to produce the cars they need to, in order to survive--put 20% of hybrid, electric, or non-oil cars on the road, and make them cost competitive, and fuel efficient, and receive a 2-5 year tax holiday.
Issue #2--Environment--
As you noticed, I started to think about ideas for Environmental policies above. Most have to do with tax incentives. But additionally, we should be thinking about how each new building is built, how each new house is built, and make sure there are building codes to ensure a more energy efficient design.
Additionally, we must think about how to lead the world in reducing CO2 emissions. I don't have the answers here, but to say that we won't do it because the Chinese or the Indians won't is a cop out. And it should end. If we figure it all out, we position ourselves to lead the world, not only morally (as well as put ourselves in a position to apply pressure to these other countries), but economically, as other countries become increasingly desperate for scarce resources such as oil, water and arable land.
Obama can get there, because most of the Congress wants to act on this too. Don't get greedy--much of this I have discussed here may not be immediately achievable. Get what you can.
Other issues to think about in the first 100 days:
3. Iraq--Figure out how to take a somewhat stable situation, and draw down slowly. I think the Iraqis are in a position where any new leader who is discussing withdrawal is going to be met favorably. You can work out some time with this group to do a draw down slowly, and start to focus on Afghanistan and Pakistan. Think about economic incentives for all three countries as a sign of good faith, and a way to win the hearts and minds of the population.
Remember that, when dealing with Iran. The environmental policies Obama enacts can help him in these negotiations, as America ends its dependence on oil. Take away your opponent's leverage, and your position is vastly improved. You can move from defense to offense.
4. Russia--You are going to need to develop a plan to deal with Russia. This is going to be difficult. Put Dick Lugar into the cabinet, along with getting some advice from Jim Baker, and whomever else has some Russian expertise, and develop a plan. This is why you have Joe Biden around too. Don't let it linger...
5. Health Care--
Unfortunately, this is the plan that will have to wait until later in the year. It is a bigger fight for the Congress, and can't be easily solved. If points 1-4 above work out, Obama will win his health plan in a cake walk. If not, it is probably dead on arrival.
If Obama REALLY wants to be successful with it? Give Hillary Clinton the stage to get this passed. The best leaders often recognize the efforts of others in success.
That's my point of view for next steps. Go make this happen, Barack.
As people are busy focusing on Obama's cabinet, and other things, it looks to me like there are two agendas President-Elect Obama must begin to address immediately:
Issue #1--Economic Stimulus--The effects of the credit crunch is now undeniable. It just took about a month longer than I had anticipated. The trip from wall street to main street is a short one, after all. Banks don't lend money-> Credit Freezes -> Companies sales start to drop as credit purchases represent such a large percentage of overall sales and commerce -> Companies start to lose liquidity to do things like...make payroll ->Companies cut workers after cutting everything else. We're there, and it isn't over yet. So...what do we do about it?
Obama mentioned a stimulus package he would like to see passed in a lame duck session (ie, before the end of 2008). If not then, during January/February of '09. But my question is, "what is the stimulus package?" Tax rebates did nothing to really stimulate the economy. Here's what I suggest for a stimulus package:
Stimulus Package:
1. Public Works Program--fund the Roads, Bridges, Broadband, Trains, Tunnels, programs. Get people working. Get people a paycheck they don't have to worry about being outsourced. As part of this program, make sure an update to the electricity grid is being addressed. And make sure all sources can be included (wind, solar, tidal, nuclear, LNG, oil too).
2. State and Local Government Funding--Provide state and local governments the chance to update transportation vehicles to fuel efficient vehicles. That would achieve two issues in one--help reduce reliance on oil, and help our car manufacturers.
3. Provide an immediate tax rebate on all cars with a fuel efficiency of 40 MPG or higher, or Hybrid cars. Make it competitive--say $5k and up. We want people to actually buy these cars...
4. Public Transportation tax detectability credit of up to say, $500. If you are going to drive a Hummer into the city each day to work, you won't be punished. You just won't be rewarded. Money talks.
5. Tax incentives to energy companies--get these technologies that work, scaled up and working. Provide a benchmark for viability of these energy sources (wind, solar, hydrogen cars, switch grass, whatever...) and once companies hit that benchmark, reward them with a two-year tax holiday. Do the same for big auto--give them the incentive they need to produce the cars they need to, in order to survive--put 20% of hybrid, electric, or non-oil cars on the road, and make them cost competitive, and fuel efficient, and receive a 2-5 year tax holiday.
Issue #2--Environment--
As you noticed, I started to think about ideas for Environmental policies above. Most have to do with tax incentives. But additionally, we should be thinking about how each new building is built, how each new house is built, and make sure there are building codes to ensure a more energy efficient design.
Additionally, we must think about how to lead the world in reducing CO2 emissions. I don't have the answers here, but to say that we won't do it because the Chinese or the Indians won't is a cop out. And it should end. If we figure it all out, we position ourselves to lead the world, not only morally (as well as put ourselves in a position to apply pressure to these other countries), but economically, as other countries become increasingly desperate for scarce resources such as oil, water and arable land.
Obama can get there, because most of the Congress wants to act on this too. Don't get greedy--much of this I have discussed here may not be immediately achievable. Get what you can.
Other issues to think about in the first 100 days:
3. Iraq--Figure out how to take a somewhat stable situation, and draw down slowly. I think the Iraqis are in a position where any new leader who is discussing withdrawal is going to be met favorably. You can work out some time with this group to do a draw down slowly, and start to focus on Afghanistan and Pakistan. Think about economic incentives for all three countries as a sign of good faith, and a way to win the hearts and minds of the population.
Remember that, when dealing with Iran. The environmental policies Obama enacts can help him in these negotiations, as America ends its dependence on oil. Take away your opponent's leverage, and your position is vastly improved. You can move from defense to offense.
4. Russia--You are going to need to develop a plan to deal with Russia. This is going to be difficult. Put Dick Lugar into the cabinet, along with getting some advice from Jim Baker, and whomever else has some Russian expertise, and develop a plan. This is why you have Joe Biden around too. Don't let it linger...
5. Health Care--
Unfortunately, this is the plan that will have to wait until later in the year. It is a bigger fight for the Congress, and can't be easily solved. If points 1-4 above work out, Obama will win his health plan in a cake walk. If not, it is probably dead on arrival.
If Obama REALLY wants to be successful with it? Give Hillary Clinton the stage to get this passed. The best leaders often recognize the efforts of others in success.
That's my point of view for next steps. Go make this happen, Barack.
Friday, November 7, 2008
Palin--Irreverent or Irrelevant?
11/7--Here we are three days after the election, and the news about the McCain campaign is hitting us in the face. And it's brutal.
Losing Election campaigns are always tough--second guessing, back-stabbing, in-fighting--all of this comes to the surface, as the campaign insiders start to see their future viability vanish if they can't scapegoat someone or something other than their own missteps.
But I can't figure out what to think of the revelations about Sarah Palin since Tuesday night. I almost wanted to wait another day to work on this blog, just to see what happnens today. But here's what we've seen so far:
1. Concession--It has been reported that Sarah Palin was poised to give a concession speech with John McCain on Tuesday night. Something Campaign Manager Steve Schmidt put a stop to at the last moment--once he realized that was her plan. I don't know if the fact that the confrontation spilled out into the public square is more or less harmful than the fact that Sarah Palin thought it was her place to give a concession speech in the first place. Either way, the situation looked bad--for McCain and for Palin. It's relatively inconsequential as to who may have actually done the right thing.
2. Clothing gate: chapter 2---Honestly, do we need to hear MORE about this? The woman bought more clothes than she probably should have. We know that. It isn't a deal breaker with most people, and it is probably something that could be overlooked going forward. But it won't be forgotten if the campaign staffers keep bringing up comments about how she continually shopped for clothes, and had staffers put the bills on their credit cards. For the sake of the party, someone in the Republican brass should put a leash on some of these campaign staffers, and stop the madness. Again, this does nothing but hurt the Grand Old Party.
3. Name calling--Campaign officials calling her derogatory names, and claiming that she was a hick from Wasilla. Not helping much...
4. Baseline knowledge--I don't know if it is true, but if it is, the thought of a President Palin would be troubling. Campaign aides are saying that Palin didn't understand the fact that Africa was a continent, not a country, couldn't name the countries in the North American Free Trade Act (NAFTA), and had to be walked through the Middle East region, and conflict on a map, presumably to make it clear. If true, this is damaging to her, and to the GOP, for putting someone in line to be President, with a shocking lack of world understanding.
In the end, none of this will affect the current administration or the news cycles a month from now. But there is talk that Sarah Palin could appoint herself as Senator, if Ted Stevens ends up winning his Senate re-election bid, and has to step down due to Senate rules. Or she can run against Lisa Murkowski in two years. Either way, Senator Palin has a better shot at the Presidency, or leadership within the GOP ranks than Governor Palin. If she goes back to Alaska and remains Governor, I think any quest for higher office could be a pipe dream (no pun inteneded...). All of these things are damaging to a reputation, and the way to overcome these, is to show, on a national stage, that you are better than this. The Governor platform won't allow that to happen. The Senate could. We will see if Sarah Palin remains irreverant, or becomes irrelevant over the next few years.
Losing Election campaigns are always tough--second guessing, back-stabbing, in-fighting--all of this comes to the surface, as the campaign insiders start to see their future viability vanish if they can't scapegoat someone or something other than their own missteps.
But I can't figure out what to think of the revelations about Sarah Palin since Tuesday night. I almost wanted to wait another day to work on this blog, just to see what happnens today. But here's what we've seen so far:
1. Concession--It has been reported that Sarah Palin was poised to give a concession speech with John McCain on Tuesday night. Something Campaign Manager Steve Schmidt put a stop to at the last moment--once he realized that was her plan. I don't know if the fact that the confrontation spilled out into the public square is more or less harmful than the fact that Sarah Palin thought it was her place to give a concession speech in the first place. Either way, the situation looked bad--for McCain and for Palin. It's relatively inconsequential as to who may have actually done the right thing.
2. Clothing gate: chapter 2---Honestly, do we need to hear MORE about this? The woman bought more clothes than she probably should have. We know that. It isn't a deal breaker with most people, and it is probably something that could be overlooked going forward. But it won't be forgotten if the campaign staffers keep bringing up comments about how she continually shopped for clothes, and had staffers put the bills on their credit cards. For the sake of the party, someone in the Republican brass should put a leash on some of these campaign staffers, and stop the madness. Again, this does nothing but hurt the Grand Old Party.
3. Name calling--Campaign officials calling her derogatory names, and claiming that she was a hick from Wasilla. Not helping much...
4. Baseline knowledge--I don't know if it is true, but if it is, the thought of a President Palin would be troubling. Campaign aides are saying that Palin didn't understand the fact that Africa was a continent, not a country, couldn't name the countries in the North American Free Trade Act (NAFTA), and had to be walked through the Middle East region, and conflict on a map, presumably to make it clear. If true, this is damaging to her, and to the GOP, for putting someone in line to be President, with a shocking lack of world understanding.
In the end, none of this will affect the current administration or the news cycles a month from now. But there is talk that Sarah Palin could appoint herself as Senator, if Ted Stevens ends up winning his Senate re-election bid, and has to step down due to Senate rules. Or she can run against Lisa Murkowski in two years. Either way, Senator Palin has a better shot at the Presidency, or leadership within the GOP ranks than Governor Palin. If she goes back to Alaska and remains Governor, I think any quest for higher office could be a pipe dream (no pun inteneded...). All of these things are damaging to a reputation, and the way to overcome these, is to show, on a national stage, that you are better than this. The Governor platform won't allow that to happen. The Senate could. We will see if Sarah Palin remains irreverant, or becomes irrelevant over the next few years.
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