Sunday, October 31, 2010

Both political parties need to reevaluate their positions

First the Republican's: It will be interesting to see some meaningful proposals for addressing our dismal GDP growth and high unemployment.  If they think they have a winning strategy by simply continuing to attack the president, I think they are in for a rude awakening in 2 years.  I'd like to hear some serious proposals addressing increasing the demand in this country for goods and services, stopping the continued decline of our global competitiveness, and the improvement of our public education system (which is dreadful).  I increasingly see the Republicans as the party that could care less about the growing gap in wealth and ownership in this country.

Now the Democrats:  If the Democrats do not organize themselves and improve their message, they will continue to lose seats.  Why don't they explain that the public AND the government cannot de-leverage at the same time? (Which the republicans don't want to acknowledge!) Why don't they explain that public and private debt are not equivalent?  Why don't they show the factual charts from the 30's and 40's that show the relationship between Debt and Debt per GDP? (which would be VERY helpful in explaining our current predicament).  Why don't they explain the importance of Debt per GDP?  All these can be explained in terms simple enough for the "average Joe" to understand.

Our current government and the state of our politics is really pathetic.

I won't even address the Tea Bag party - to the extent that it's a single entity.  They claim to be constitutionalists but they need leadership that has, at least, read the document (and maybe the Jefferson/Adams letters!).

Obama really, really, needs to distance himself from the big banks

For what it's worth, my unscientific and non-statistically-valid poll of independents in my area (mostly at work) indicates that they are very disappointed with Obama's handling of the banks. My read on this is that he's much too concerned about hurting the banks than he is about the continuing suffering of homeowners.  Yes, there are homeowners that overreached what they could afford.  But, there are many, many others that are simply caught up in the crisis. They need to be the focus of assistance, not the banks.  If Obama doesn't stop listening to wall street's cries of the risks of "lower productivity of the financial system" (and, God forbid, bonuses that are not 7 figures), he is ensuring that he'll be a one term president.

Hell, maybe that's what he wants.  I wouldn't want his job.

Sunday, September 19, 2010

It's all connected

I'm concerned when I hear smart people like Powell talk about the need for jobs and the need to cut the deficit (in the same sentence).
I'll explain why.  Let's consider the main Economic challenges facing the country.  They can be categorized as follows: securitization (banking), the housing market, unemployment, lack of meaningful growth (GDP), fear of deficits.  Yes, there are others that I could list, but these are the crux of our current problems.
They are all interconnected!  Securitization of mortgages will not be fixed until the housing market is fixed.  The housing market will not be fixed until people can afford to pay their mortgages, meaning not until unemployment is fixed.  Unemployment will not be fixed until industries see demand for goods and services. Demand for goods and services must be provided (or stimulated by) the public sector, since the private sector and the consumer are broke.  THE DEFICIT WILL INCREASE AS A PERCENT OF GDP IF GDP DOES NOT START TO GROW - WE CAN'T CUT ENOUGH GOVERNMENT SPENDING TO LOWER THE DEFICT OTHERWISE!  AND, GDP WILL NOT GROW WITHOUT MORE STIMULUS OR SOME EFFECTIVE QUANTATIVE EASING. AFTER GDP AND EMPLOYMENT ARE ON THE RISE IS THE TIME TO CUT GOVERNMENT SPENDING - NOT BEFORE!!!!  And, I'll be the first in line to support those cuts.
We simply need a jump start for demand.  Stimulus and QE will NOT instate a permanent dependence on government.  Stimulus will allow companies to create jobs, those employed people will spend. Their spending represents DEMAND that will create more jobs and enable more people to buy... IT MULTIPLIES!  I don't understand why I'm not hearing this message from the administration!  Wouldn't that help people's EXPECTATIONS of growth?
We need to challenge the thinking of people who call for lower unemployment AND lower deficits in the near term. In the absence of something or someone magically creating demand for goods and services, the government is going to need to do the job.  (And, we can learn from Japan's mistakes over the past 17 years - maybe that's another post).

Back to Blogging

Well I'm back to blogging.  I stopped a year ago to focus on a new baby and an increasing work load.  However, I'd like to share some thoughts on our Economic situation and politics