No Quick Fix

There's no quick fix. There, I said it! There is no quick fix for the economy. We can't just do a stimulus package here, ship a dollar to this bank or that bank, whatever silly idea our little hearts desire. This isn't something we can get out of by printing more money and hoping that the economy holds together with bobby pins and glue.

It takes years to get into the kind of economic mess we are in. It will likely take the global population of the world at least a decade to pull everyone out.

By the way, I am for letting some of the institutions that have imperiled the economy go down the toilet. I've already seen many abuses of the so called "bailout" funds at AIG and others.

And let's talk about Detroit. I was born in Detroit and I grew up just outside of Detroit. I know just a little bit about auto companies; many of my family members work for them, my family sold products to them and I grew up with "auto brats". Most of the kids I grew up with had parents that were executives in Ford, GM and Chrysler. We went on field trips in my school to the Ford Rouge River plant almost every year. At my high school graduation party my gift bag was from my friend's at General Motors. Most of the people that I graduated with attempted to work for auto companies. My first car was an Chrysler Omni Horizon (which I rebuilt several times with junk parts bought in Detroit Junk Yards near 8 mile road off of Woodward Avenue). Am I an expert? No. Do I have much more experience with American car companies than many or most? Well, yes.

American car companies have been going out of business for almost 35 years. They've been consistently behind the times with some bright exceptions like Lee Iacoca and the K-car and the Ford Taurus. Even with those successes, they let them (the models) linger far too long and tend to fall back on automobile comfort food; big cars with bad milage and mediocre customer service. I can tell you about one of my relatives that has worked for Ford for 40 years and for 30 of them he's been shuffled around, had his hours cut and had his pay fiddled with consistently. He is great at what he does and I can tell you he knows one heck of alot about building cars. Whenever I've asked him about restructuring in Detroit he's told me the same thing: wait until the spotlight is off of the auto companies and everything goes back to business as usual; bad quality, products that are out of touch and executive pay that is inconsistent with performance.

Here's my point: the same guys that have presided over the last 35 years or so of Detroit mess are still there. After years of high gas prices, these people are just figuring that the world might need more fuel efficient automobiles? Or people might be sick of paying the Saudis for oil and want electric cars? Or that Toyota is now bigger than all 3 American car makers combined?

The Detroit Executives are just figuring out now that they need cash, coincidentally at the same time the banks seem to be out of cash?

Here's something to think about when you hear about how we should bail out the auto companies: all American cars get most of their key components from another country. My first car that I mentioned? The 1979 Omni Horizon had a motor by VW. That was almost 30 years ago. And if you are lucky enough to be able to afford a Ford, GM or Chrysler product in this economy, check out where the American car was made. My American car was made in Canada.

Make no mistake, I am for American workers. I am an American worker. But I am not for Auto Executives that make bad decisions consistently over decades and still get a huge paycheck. I don't want to bail out rich people. I want the people that really do the work to keep their jobs. And I can guarantee one thing: auto workers jobs ain't cushy. They aren't easy and they shouldn't be treated with such a lack of respect or honesty. Auto workers should be treated with as much respect and integrity as any Vet coming back from war. These people do hard jobs and shouldn't be at the whim of the "quick fix".

Thus the point of this: there is no quick fix. There's no quick fix for banks that bought mortgage backed securities based on nothing, there's no quick fix for insurance companies that were insuring mortgages based on nothing and there's no quck fix for auto executives that build huge cars and trucks while the price of gas is widely fluctuating and consumers are opting for hybrids, electric cars and product that is reliable and inexpensive. There's no quick fix for greed and stupidity. I am leery of looking at any politician as a potential fix for this. It has to come from the people.

The banks are still trying to make huge amounts of money off of mortgage backed securities and the auto companies are still trying to sell huge lots of SUV's. I just saw a new commercial for the Escalade Hybrid. The theme of the commercial was "game set and match". At $72k plus per car and at 20 MPG on the highway, is this a company that really needs tax dollars?

Marc

The Progressive Argument Against The Bailout

NOTHING in this "bailout" package will lower the price of the gas you have
to put in your car to get to work. NOTHING in this bill will protect you from
losing your home. NOTHING in this bill will give you health insurance...This
bailout's mission is to protect the obscene amount of wealth that has been
accumulated in the last eight years. It's to protect the top shareholders who
own and control corporate America. It's to make sure their yachts and mansions
and "way of life" go uninterrupted while the rest of America suffers and
struggles to pay the bills. Let the rich suffer for once. Let them pay for the
bailout. We are spending 400 million dollars a day on the war in Iraq. Let them
end the war immediately and save us all another half-trillion dollars!

- Michael Moore

Brooks: What Now?

The only thing now is to try again — to rescue the rescue. There’s no time
to find a brand-new package, so the Congressional plan should go up for another
vote on Thursday, this time with additions that would change its political
prospects. Leaders need to add provisions that would shore up housing prices and
directly help mortgage holders. Martin Feldstein and Lawrence Lindsey both have good proposals of the sort that could lead to a plausible majority coalition.
Loosening deposit insurance rules would also be nice.

I rarely agree with David Brooks, conservative columnist at the Times, but today he gets it right. The "bailout" must include provisions to help average Americans, directly helping mortgage holders. Brooks also clearly acknowledges that the Republicans and McCain are to blame for the demise of the bailout. Let's see what happens today.

Jim

Krugman: The U.S. Is Now A Bannana Republic

So what we now have is non-functional government in the face of a major
crisis, because Congress includes a quorum of crazies and nobody trusts the
White House an inch.As a friend said last night, we’ve become a banana republic
with nukes.

Like I posted recently, we are witnessing the fall of the American empire. This is the final result of almost thirty years of Reaganomics.

Jim

The NY Times Asks: What About The Rest Of Us?

From today's New York Times lead editorial:

Any bailout bill must allow struggling homeowners to modify their mortgages
in bankruptcy court. Mr. Paulson should drop his opposition now. If he won’t,
Congress should insist on the bailout for homeowners.

Except that Congress is almost half Republican and Republicans oppose any plan to allow bankruptcy judges to modify mortgages to help homeowners.

Look out today for what could be a major bloodbath on Wall Street. With Bush's own Republican House members in open revolt against his bailout plan, there is no "agreement" and so we''re back to the real risk that our financial system could collapse Great Depression style. This is what we've come to with the era of Republican sponsored reliance on the market, combined with deregulation. Thank Ronald Reagan, who got the "government is the problem" ball rolling, and the two Bushes, especially Junior, whose tax giveaways to the rich and whose war of choice in Iraq has run the county's debt to record proportions. Meanwhile Americans still continue to support John McCain, according to the most recent polls. They haven't suffered enough, apparently, and want a third Bush term.

What we're seeing may be an American fall of the empire.

Jim

Bush: Dear Leader Finally Speaks

From today's New York Times lead editorial:

It took President Bush until Wednesday night to address the American people
about the nation’s financial crisis, and pretty much all he had to offer was
fear itself. There was no acknowledgement of the shocking failure of government
regulation, or that the country cannot afford more tax cuts for the very wealthy
and budget-busting wars, or that spending at least $700 billion of taxpayers’
money to bail out Wall Street and the banks should be done carefully,
transparently and with oversight by Congress and the courts.

The Times doesn' think much of either McCain's or Obama's leadership in this crisis either, although they're harsher on McCain and his ploy to postpone the debate Friday. It does look like the outrage of the American poeple has put the brakes on any blank check for Wall Street.

Jim

Fiscal Republicans?

$85 Billion to fix AIG?

$620 Billion for Iraq?

$720 Million a day for war in the middle East?

$20 Billion for the auto companies?

Who's going to pay all these bills? Red States, come on, pony up some cash from all those cheap cigarettes and barbecue you eat!

Why am I on the hook for this?

For all of the bailouts:

Bear Stearns

AIG

The auto companies (approximately $20 billion)

I have seen absolutely nothing in writing to indicate the impact of losing these venerable institutions. I haven't seen the hard questions get asked:

Will giving these people huge sums of taxpayer dollars help anything or just prolong the problem?

Why did the CEO's of these companies still get to walk away with millions?

Look, when I go out to eat, at the end of the meal a waiter or waitress brings me a bill and I read it before I pay. Shit, that's just common sense folks. I can't tell you all how many times I've received the wrong bill! The point is, even when I don't have the time to really think about my spending, I still spend at least a couple of minutes reconciling my tab after friggin dinner!

So why do I have to let all of these experts, you know, the people that fought regulation (and still say government sucks) go ahead and write checks from my children's piggy bank? Aren't these the people that didn't ask the hard questions when every financial institution was racking up debt with no way to pay?

No, no, no. I have some questions before we continue this bailout. I have a distinct feeling that this isn't a bailout, it's a corporate handout. I haven't seen one single piece of legitimate justification from the GAO (General Accounting Office) detailing what kind of multiplier effect these so called bailouts have or will have. We have seen no justification from anyone anywhere.

And by the way, the government let Lehman Brothers die a painful death this week and they still owe $613 billion (yes, with a b). Who's coming up with that money? What is the impact on the government budget of writing these huge checks? How do I know the money will be spent appropriately? Lest we forget we seem to be trusting the people that just drove their own car into a wall!

By the way, everyone is asking how this massive meltdown could happen. I think it isn't as simple as pointing at a weak executive branch or a flacid congress. But I think asking questions of our congressman is a start. Maybe they should be pushing a little less cash at the Middle East and spending a little more time here at home watching the cookie jar.

By the way Mr. Congressman, who's going to bail the poor shlubs like me out? See, I have this problem, it's called "personal responsibility". I am responsible for what I do: if I drive too fast, I get a ticket. If I spend too much, I run out of money. If I don't work, I don't have money. If I borrow money, I'm supposed to pay it back. Maybe it's time to stop dodging hard questions and take responsibility for your actions.

Marc

The End Of The American Empire?

“This might be the beginning of the end of the American empire,” Economist Nouriel Roubini quoted in an article in the New York Times magazine. Roubini predicted the bust of the housing bubble and the recent failure of a major financial house, which turned out to be Bear-Sterns. He now thinks that our entire financial system is in jeopardy and will have to be bailed out at a cost of trillions. He believes we are in a recession that will be the worst since the great depression. Is he right? We'll know soon.

PHOTO: Nikko in the kitchen

We Are A Country In Debt And Decline...

Thomas Friedman in today's New York Times:

My fellow Americans: We are a country in debt and in decline — not terminal, not
irreversible, but in decline. Our political system seems incapable of producing
long-range answers to big problems or big opportunities. We are the ones who
need a better-functioning democracy — more than the Iraqis and Afghans. We are
the ones in need of nation-building. It is our political system that is not
working.

Friedman's advice: vote for the presidential candidate who you think can reverse the decline. Who is that?

Jim

Krugman On Obama's Economic Stimulus Plan

New York Times columnist and noted economist Paul Krugman has the following to say about Barak Obama's response to the current economic crisis in the making:

"...on Sunday Mr. Obama came out with a real stimulus plan. As was the
case with his health care plan, which fell short of universal coverage, his
stimulus proposal is similar to those of the other Democratic candidates, but
tilted to the right.
For example, the Obama plan appears to contain none of the alternative
energy initiatives that are in both the Edwards and Clinton proposals, and
emphasizes across-the-board tax cuts over both aid to the hardest-hit families
and help for state and local governments. I know that Mr. Obama’s supporters hate to
hear this, but he really is less progressive than his rivals on matters of
domestic policy."

Krugman has been a consistent critic of Obama. In particular, Krugman is critical of Obama's health care plan, which does not cover all Americans, and critical of his plan to preserve Social Security. Krugman time and time again notes how Obama uses the rhetoric of the right in argument for his programs.

Jim

The Economy Is Broken And It Will Be Tough To Fix

Fall seems to have arrived all at once last week. The change of the seasons, marked by the colors of the leaves on the trees in Fairmount Park, exploded upon us finally, and all at once seemingly. I suppose that the unusually warm weather in October is responsible for this. In any event it was a joy to walk and take photographs around Thanksgiving. The rains today will no doubt knock off the majority of the colorful leaves that were so pretty just last week.

If the economy is so good then why are Americans pessimistic about it when they are asked? Paul Krugman, writing in today's New York Times, thinks that the good times enjoyed by the wealthy are simply not trickling down to the masses. Workers' salaries are not keeping up with inflation. This, combined with the worsening health care situation, is why we are not feeling good about the economy. Krugman thinks this will be tough to fix no matter who is elected the next president:

The next president won’t be able to deliver another era of good times unless
he or she manages to tackle the longer-term trends that underlie today’s
economic disappointment: a collapsing health care system and inexorably rising
inequality.

Of course, the Iraq debacle is also part of the problem. We spend enough on that war to fix health care, I believe. By the way, the recent reports that "The Surge" is working should not make us feel good about an illegal war that should never have been started in the first place. It ought to end now by the start of a full withdrawal of American troops. It's about oil, and we should address the oil problem responsibly and not by invading other countries.

Jim