I should start this piece by saying I am a natural pessimist. I like to call myself a realist, but in reality, I am a pessimist. The glass is seldom half full in my world.
It has been through this pessimism, however, that I can play out worse, and worst case scenarios, in order to avoid issues that I will face going forward. Often times, I find this to be a survival instinct that has served me well throughout my life. And it is when I least expect bad things to occur, and haven't prepared for them, that the truly bad things in life have hit me hardest.
With that in mind, I have been attempting to boil down all of the noise coming out about the economy, and separate fact from fiction, genuine prognostication from tired, irrelevant talking points, and figure out where things are going, so I can hop off the train, as it heads for the cliff.
Here's where I have gotten to at this point:
The economic downturn still has a ways to go:
Sorry, Charlie. Like me trying to grow grass in by backyard, green shoots have a tendency to get me excited, for a week or two, before dying out in the hot summer sun, or the snows of November and December. I am afraid a Stimulus package (or perhaps even a second one being discussed), can't really change that very quickly. Here are the other reasons I am pessimistic:
a. Commercial Real Estate--this has started to crater. I have read estimates that this could be a multi year bottoming process. And before you start to call me a pessimist, let me know how that Residential Real Estate collapse, which started in 2007, is doing two years later? Still don't think Commercial Real Estate has a 2-3 year bottoming process inherent in it? Then I have some swampland to sell YOU in Florida...
b. Consumer demand/sentiment--People are not making purchases these days. They are concerned about their jobs. They are concerned about their debt to equity ratios. They are concerned about their mortgages. And who can blame them? Despite news that the savings rate has improved and turned positive over the past year or so, there are more than a few good fiscal savings and spending months before we are out of this consumer debt situation. This could take a decade or so of responsibility on the part of the American Family. Let's hope that the economy can stay afloat in the meantime.
c. Oil and Gas--I'm sorry, did I miss some sort of major oil strike, or find recently? Why are people under the impression that oil will be there for the next number of decades at $50-80 a barrel? And since when did we think that the US Dollar, which is the de facto currency peg for oil, would stay strong, in the midst of a lousy US Economy, debt levels over $10 Trillion, and no sign of strength in the economic leading indicators? Perhaps we need to rethink this strategy, and start to figure out how we can really get our dependence on Foreign oil under control. All options should be on the table...
d. Federal Debt--Speaking of Federal Debt, recent public auctions have gone pretty well...for now. This just can't continue indefinitely, and once it breaks, it will break HARD. I'm not predicting a great depression, but if we can't finance our government, we will be wishing for the economic prosperity of 2008-2009 by this time next year.
e. A broken economic engine--I am wondering what we actually MAKE in this country anymore? Perhaps the only good news about a downturn like this is the fact that labor here may become cheap enough that India, China and Brazil send their outsourcing efforts to the US for a comparative advantage. If we are ever in that situation, you know that America's influence in the world will have long since "jumped the shark".
Wow! Depressed enough? Well, let's not get hysterical. Here's a few things to look for, though, to tell us that we have avoided some of this debacle.
What to look for:
a. Consumer debt improvement--There are monthly measures of consumer debt, and I have been paying attention to these, as a measure of financial strength in the private sector. I care more about this than even the US Government's financial situation, because in the end, the US can always float the bonds necessary to keep itself going. If the US private sector has the wherewithal to buy these bonds, then things can't get too far out of whack. But it does mean that SOMEONE has to have the assets on their books to make the system work...
b. Housing to level off--I am glad to see that housing hasn't continued to be in free fall. However, I don't think people's leverage on housing loans has gotten much better in the past year. And I am hearing about all of the predatory loans, and easing of mortgage restrictions coming back into vogue. If we are ever going to have a recovery, home equity has to be the basis for it. People have to feel like their debt burden is manageable, and the home mortgage is by far the biggest piece of debt for most families.
c. Car sales improvement--another sign of improvement would be at least a levelling off of car sales declines. This has been an indicator of a terrible drop in personal wealth. Cars are being sold at below replacement levels, which may not be a bad thing for the environment, but is a terrible thing for our automakers. Perhaps GM can survive, post-bankruptcy, but I'm skeptical. Anyway, even a modest improvement here would be a tremendously encouraging sign.
d. Economic growth--Job Creation--As a starting point, the rate of job losses has slowed. That's good. But to reach at least parity, we need to see about 100,000 job losses a month. It used to be more, but since no one has actually been HIRING lately, a monthly job loss of 100,000 would probably indicate the tide is turning. Sadly, we are 4-5 times higher than that, and most people who have been unemployed, are not getting rehired.
Where will we be at year end?
I love playing prognosticator. As my caveat, please note I am NOT an economist, nor do I play one on tv. My predictions should not be relied upon, but are merely meant for scenario testing, and a means for looking back and making fun of my personal naivete 5 months from now. With that in mind, here we go...
1. Unemployment rate--11%, with an underemployed rate close to 20%--I think the factors I mentioned above will end up really hurting us. States won't be able to close budget shortfalls without laying off workers, and those states that can use fiscal stimulus to either keep some existing workers on the payroll, or boost unemployment payments, will do so at the expense of hiring people for "shovel ready projects". As my grandmother would say, "nah good!"
2. Oil--$85/barrel--why so high, in an economic downturn, you ask? Simple. The dollar will continue to weaken. Auctions will start to fail, and the fed will have to consider raising interest rates to entice interest. Another real deflator for the economy.
3. Health Care? Not happening--This will also really hurt, since people are struggling with the existing health care issues we face now. But it will signal a real shift in economic policy from the Dems to the GOP. I think a second stimulus is out, and Obama will have to start to discuss ways to expand tax cuts, or reign in major spending programs. This will NOT help economic expansion short term, but could be a longer term benefit to the perception of US Debt in the broader markets.
4. Major Bankruptcy filing--I would expect at least 1 major bankruptcy. Sadly, if I have to choose, I'd prefer it be General Motors over AIG. Why? If AIG should fail, we will see what true financial pain is. The financial markets could implode with the fall of AIG, and a bailout of obligations will make our hand-ringing about $160M in bonuses look like a pittance.
5. Conflict with North Korea--This may be inevitable. I am wondering how their recent sabre-rattling ends without military confrontation, unless we work out a deal quickly. Obama's got a challenge on his hands here. Can he get out of Afghanistan and Iraq, and escalate with North Korea? Not likely.
How's that for doom and gloom? Fortunately, these things seldom come to pass all at once. However, I'd like to think that putting them on the table can help to identify what to tackle first, and gives us a chance to react to each scenario the right way, rather than in a knee-jerk fashion, or from the gut.
And lord knows, we have an awful lot of work to do here....
Monday, July 13, 2009
Thursday, July 9, 2009
All Eyes on Obama--How's he doing?
The past month or two have marked a clear change in the groupthink of American Politics. We had spent this past Winter and into early Spring recovering from the Bush Administration, the cold winter, the free fall of the stock markets, and the sense of imminent doom and gloom. All issues, from Iraq to the Economy, to the bad weather, were pinned on George Bush, or his boss, Dick Cheney.
But that sense of the world's problems being laid at the feet of the Republican leaders is far into the rear view mirror at this point. And people are starting to see the issues of today squarely in the hands of Barack Obama. And his opinion polls have showed recently, that the bloom is somewhat off the rose.
So let's take a look at the Obama Presidency thus far, and grade the performance, shall we?
Economy: Green shoots not really blossoming...yet. Stimulus seems to be sputtering. But the economic picture was clear to everyone (seemingly) except the administration. Did Obama really think that passing a Stimulus Bill would stop 700,000 people a month from losing their jobs, at the drop of a hat? Anyone in business for more than 5 years knows these things take more time, and even recoveries take time to develop. At this point, his grade on the economy is hovering at around a D, but he should take some solace in the fact that if unemployment has turned the corner by the end of the year, that grade should move up in a hurry. That's a BIG IF right now. I was willing to let the Bush tax cuts work their magic, and I am willing to see if the Obama stimulus package can also work some magic. I'm not holding my breath, though. Current Grade--D
Organization: It took Obama a few tries to get the people he wanted into place. This isn't uncommon for administrations, but it does look disorganized, and reflects the fact that this is a man who is trying to put an administration in place faster than any of his predecessors ever had. Those points, however, don't change the facts on the ground. Obama has learned from this experience, and we'll see if he continues to improve in this space. Current Grade--C+
Diplomacy: The President can give a speech. That was clear in Cairo, in Chicago, in Washington, and almost anywhere in between. He's also enamored with the notion of an inclusive Cabinet, he's kept his word (er, for the most part) on pulling out of Iraq, and has done a lot to help calm world tensions with America. About the only thing he has struggled with is the idea that he's not quite the charmer on a personal level that Bill Clinton was. Bush 41 had a good handle on how to play the international game. So did Reagan, and so did Bill Clinton. Obama has shown good signs of improving on this front, but overall, this has been a surprising strength of his administration. Current Grade--A-
Courage: What I've been such a big fan of is the fact that Obama has taken on a lot of large topics. The TOUGH topics. Environment. Energy. Fiscal Spending. Defense. Health Care. Immigration is on the agenda. These are topics that are so big because they have been kicked down the road for so long. It's been since the 1960's that many of these issues were last truly debated. Reagan took on Social Security in the early 1980's, Clinton's Health Care initiative was over before it began in 1993, Bush 43 tried to take on Immigration somewhat a few years ago, but other than that, none of these issues has been seriously debated in this nation. I'm not sure Obama will win the legislation he wants on many, or perhaps even ANY of these debates, but he's certainly willing to fight for each of them. And that's a change from many of our recent government leaders. So on the Big Issues, I give him an A for Effort.
Ironically, he has NOT pushed some of the more liberal social agendas. Notably, Gay rights, Affirmative Action, even Abortion or Gun control--these all seem to be basically off the table. The upcoming Supreme Court nominations (and there WILL be more in the next 2-3 years) may change some or all of this, but for now, he's shown very little willingness to take on these topics. For that, he receives a C- for courage on the social agenda.
Achievement: I have never seen any President move more of his agenda in 6 months with a fewer bumps in the road. Grade to date--A-. But we'll see if he can move his biggest ticket items--Energy, Environment, Health Care. This grade is definitely incomplete.
Overall: I have to give President Obama a B- at this stage for all that he has done, and all that he has attempted to do. That being said, the biggest issues left to be determined (Health Care, Economy, Iran, North Korea) are STILL incomplete.
One thing that can't be mentioned here anymore, however, is the "mess" that some think he was saddled with. The time for blaming Bush's actions have come and gone. It's time to focus on President Obama's decisions, and start to figure out if we are headed in the right direction. So we'll keep an eye on how things are shaping up...
But that sense of the world's problems being laid at the feet of the Republican leaders is far into the rear view mirror at this point. And people are starting to see the issues of today squarely in the hands of Barack Obama. And his opinion polls have showed recently, that the bloom is somewhat off the rose.
So let's take a look at the Obama Presidency thus far, and grade the performance, shall we?
Economy: Green shoots not really blossoming...yet. Stimulus seems to be sputtering. But the economic picture was clear to everyone (seemingly) except the administration. Did Obama really think that passing a Stimulus Bill would stop 700,000 people a month from losing their jobs, at the drop of a hat? Anyone in business for more than 5 years knows these things take more time, and even recoveries take time to develop. At this point, his grade on the economy is hovering at around a D, but he should take some solace in the fact that if unemployment has turned the corner by the end of the year, that grade should move up in a hurry. That's a BIG IF right now. I was willing to let the Bush tax cuts work their magic, and I am willing to see if the Obama stimulus package can also work some magic. I'm not holding my breath, though. Current Grade--D
Organization: It took Obama a few tries to get the people he wanted into place. This isn't uncommon for administrations, but it does look disorganized, and reflects the fact that this is a man who is trying to put an administration in place faster than any of his predecessors ever had. Those points, however, don't change the facts on the ground. Obama has learned from this experience, and we'll see if he continues to improve in this space. Current Grade--C+
Diplomacy: The President can give a speech. That was clear in Cairo, in Chicago, in Washington, and almost anywhere in between. He's also enamored with the notion of an inclusive Cabinet, he's kept his word (er, for the most part) on pulling out of Iraq, and has done a lot to help calm world tensions with America. About the only thing he has struggled with is the idea that he's not quite the charmer on a personal level that Bill Clinton was. Bush 41 had a good handle on how to play the international game. So did Reagan, and so did Bill Clinton. Obama has shown good signs of improving on this front, but overall, this has been a surprising strength of his administration. Current Grade--A-
Courage: What I've been such a big fan of is the fact that Obama has taken on a lot of large topics. The TOUGH topics. Environment. Energy. Fiscal Spending. Defense. Health Care. Immigration is on the agenda. These are topics that are so big because they have been kicked down the road for so long. It's been since the 1960's that many of these issues were last truly debated. Reagan took on Social Security in the early 1980's, Clinton's Health Care initiative was over before it began in 1993, Bush 43 tried to take on Immigration somewhat a few years ago, but other than that, none of these issues has been seriously debated in this nation. I'm not sure Obama will win the legislation he wants on many, or perhaps even ANY of these debates, but he's certainly willing to fight for each of them. And that's a change from many of our recent government leaders. So on the Big Issues, I give him an A for Effort.
Ironically, he has NOT pushed some of the more liberal social agendas. Notably, Gay rights, Affirmative Action, even Abortion or Gun control--these all seem to be basically off the table. The upcoming Supreme Court nominations (and there WILL be more in the next 2-3 years) may change some or all of this, but for now, he's shown very little willingness to take on these topics. For that, he receives a C- for courage on the social agenda.
Achievement: I have never seen any President move more of his agenda in 6 months with a fewer bumps in the road. Grade to date--A-. But we'll see if he can move his biggest ticket items--Energy, Environment, Health Care. This grade is definitely incomplete.
Overall: I have to give President Obama a B- at this stage for all that he has done, and all that he has attempted to do. That being said, the biggest issues left to be determined (Health Care, Economy, Iran, North Korea) are STILL incomplete.
One thing that can't be mentioned here anymore, however, is the "mess" that some think he was saddled with. The time for blaming Bush's actions have come and gone. It's time to focus on President Obama's decisions, and start to figure out if we are headed in the right direction. So we'll keep an eye on how things are shaping up...
Tuesday, July 7, 2009
Sarah Palin--Presidential Candidate (2008-2009)
I can only hope that my eulogy of Sarah Palin's Presidential aspirations mark a true end to the life of the notion that is "Sarah Palin--President of the United States of America".
What's truly remarkable, however, is the following:
a. How close we came to that reality.
b. That there are still 1 in 4 Americans who believe this is a good idea.
I think in some ways, the election (TWICE!) of President George W. Bush provided a control in the experiment of electing a "regular Joe" to the White House. Ya know? Someone you'd want to have a beer with? A regular "Joe Six-pack?" Someone who clears brush from his Texas Ranch, when he's not busy running oil companies, or professional baseball teams. A real Guy's guy!
We learned what electing an incurious, C-, underachiever, shallow thinker can lead to. And it isn't what Bush himself did that was so troubling. It was what he allowed to happen on his watch, with the people he trusted to make decisions that were really his to make.
I lay this out not just to jab at Bush, but to show what we would have had in store for us in a Palin administration. Another incurious, talking point memorizer who wanted the power to be "the decider", without having to actually study the issues, and take responsibility. Someone who would cloak themselves in the flag of "Ronald Reagan", while appealing to the hot button issue of the day (Abortion? Immigration? Whatever you got today...). A delegator of responsibility and blame, but a glory hog. We all know people like this.
And the more we have seen of Ms. Palin, the worse it gets. The rambling, incoherent speeches. The personal sense of greatness and destiny that comes from...just where exactly? This is a person who has capitalized on a sharp tongue, a good handle on pushing people's hot buttons, and adversaries underestimating her toughness. That can get people of determination a great distance. In Palin's case, it got her to the Governor's mansion in Alaska. However, there comes a time in all careers that there has to be some substance, or the house of cards will come crashing down. We saw this with George Bush. America isn't ready, at this point, to go for round two. Especially not with someone who lacks the pedigree of two generations of Leadership (Grandpa Bush was a Senator from CT, and daddy Bush was...well...just known as "forty one").
In this case, Palin's initial charm has worn out, and all that is left is a bitter shell of a person who has played offense for the first 44 years of her life in the political and social world, and has grown tired of a year of playing defense (defending her policy positions, defending her behavior, etc). In politics, even the best in the game don't always get to have the ball. Only talk radio hosts and bloggers get that right! The rest of them do have to be able to defend themselves, and have the deft touch, the knowledge and instincts to side step a few cow pies here and there.
I watched the soon to be former Alaskan Governor babble incoherently about how quitting her role was the only way to show that she wasn't a quitter, or perhaps the only way to justify drawing a salary, or something like that. There were references to dead fish, full court presses, and other such nonsense that was actually interrupted by the sound of...well...I think it may have been geese? When she finally finished her ramblings, there was the sound of about 10 people clapping. I could only think how sad the whole affair seemed. Sad, yet compelling to watch. After all, was I watching the death of Presidential aspirations here?
I can only hope so...
What's truly remarkable, however, is the following:
a. How close we came to that reality.
b. That there are still 1 in 4 Americans who believe this is a good idea.
I think in some ways, the election (TWICE!) of President George W. Bush provided a control in the experiment of electing a "regular Joe" to the White House. Ya know? Someone you'd want to have a beer with? A regular "Joe Six-pack?" Someone who clears brush from his Texas Ranch, when he's not busy running oil companies, or professional baseball teams. A real Guy's guy!
We learned what electing an incurious, C-, underachiever, shallow thinker can lead to. And it isn't what Bush himself did that was so troubling. It was what he allowed to happen on his watch, with the people he trusted to make decisions that were really his to make.
I lay this out not just to jab at Bush, but to show what we would have had in store for us in a Palin administration. Another incurious, talking point memorizer who wanted the power to be "the decider", without having to actually study the issues, and take responsibility. Someone who would cloak themselves in the flag of "Ronald Reagan", while appealing to the hot button issue of the day (Abortion? Immigration? Whatever you got today...). A delegator of responsibility and blame, but a glory hog. We all know people like this.
And the more we have seen of Ms. Palin, the worse it gets. The rambling, incoherent speeches. The personal sense of greatness and destiny that comes from...just where exactly? This is a person who has capitalized on a sharp tongue, a good handle on pushing people's hot buttons, and adversaries underestimating her toughness. That can get people of determination a great distance. In Palin's case, it got her to the Governor's mansion in Alaska. However, there comes a time in all careers that there has to be some substance, or the house of cards will come crashing down. We saw this with George Bush. America isn't ready, at this point, to go for round two. Especially not with someone who lacks the pedigree of two generations of Leadership (Grandpa Bush was a Senator from CT, and daddy Bush was...well...just known as "forty one").
In this case, Palin's initial charm has worn out, and all that is left is a bitter shell of a person who has played offense for the first 44 years of her life in the political and social world, and has grown tired of a year of playing defense (defending her policy positions, defending her behavior, etc). In politics, even the best in the game don't always get to have the ball. Only talk radio hosts and bloggers get that right! The rest of them do have to be able to defend themselves, and have the deft touch, the knowledge and instincts to side step a few cow pies here and there.
I watched the soon to be former Alaskan Governor babble incoherently about how quitting her role was the only way to show that she wasn't a quitter, or perhaps the only way to justify drawing a salary, or something like that. There were references to dead fish, full court presses, and other such nonsense that was actually interrupted by the sound of...well...I think it may have been geese? When she finally finished her ramblings, there was the sound of about 10 people clapping. I could only think how sad the whole affair seemed. Sad, yet compelling to watch. After all, was I watching the death of Presidential aspirations here?
I can only hope so...
Monday, July 6, 2009
Robert McNamara's place in history
Just a blogging guest looking to get the Pragmatic Pundit's interpretation on Robert McNamara...
If you ask anyone over the age of 40, they may likely tell you the McNamara was a war criminal. If you ask anyone over 60, and they will tell you that the escalation in Vietnam was part of a bigger picture, and that we had not choice to escalate. Looking to read something on this.
If you ask anyone over the age of 40, they may likely tell you the McNamara was a war criminal. If you ask anyone over 60, and they will tell you that the escalation in Vietnam was part of a bigger picture, and that we had not choice to escalate. Looking to read something on this.
Subscribe to:
Posts (Atom)
Posts
