Con of the Day: “Obama urges patience on stimulus plan”

Posted on July 12, 2009 | Leave a comment

Sunday, July 12, 2009

And so the Associated Press headline read.* The President wants us to be patient. His stimulus plan will work. Just give it time.

Well, first, for it to work he’ll have to actually spend the money, which, for the most part, he hasn’t. As of July 8, only $90 billion of the $787 billion allocated has been spent – or is in “the pipeline” – which leaves a whopping $697 billion unspent.** The patience he’s asking for is with him and his administration for being such slackers, and has nothing to do with the effectiveness of the stimulus package if it had been implemented.

More to the point, what he’s doing is waiting for the economy to recover on its own, as it will, sooner rather than later, by which time he will have spent the stimulus money and take full credit for the recovery – as will the Democrats in Congress.

What a crock.

Suggested reading… “Occam’s Economics: A simple, back-of-the envelope plan to regenerate consumer spending – immediately.” which I posted Thursday morning, July 8.

-wf

*See the AP article on MSNC, “Obama urges patience on stimulus plan”

**The Washington Examiner, July 8, 2009, “First stimulus package spending at glacial pace; Obama wants another?”.


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The US Policy Against Assassination: Where should we draw the line?

Posted on July 11, 2009 | Leave a comment

Saturday, July 11, 2009

As we all know, it is against US policy to assassinate the leaders of foreign governments. My first reaction to this rule has always been positive. Killing anyone is a bad thing, even in self-defense. It may have been justified. It may have been necessary to save your own life, or the lives of family and countrymen, but it’s still a bad thing to have to kill anyone. I say this on moral grounds, intellectually speaking, having never found myself, thank goodness, in the position of having to take someone’s life to protect my own or the lives of others.

Government leaders are high profile people who are relatively easy to kill. Getting away with it is another story, but if you’re motivated and have sufficient resources at your disposable, it’s doable. Doable, maybe, but does it make any sense? Is a practical thing to do? We kill their President, they kill ours. What a mess. There are consequences, short- and long-term repercussions that are often unpredictable and counterproductive to our objectives. Moral issues notwithstanding, assassination is bad politics and no substitute for good foreign policy based on intelligent diplomacy.

So what’s my problem? My problem is that I’m not sure where we should draw the line. On a personal level, if someone threatens you with deadly force, with a loaded gun for example, if they present a “clear and present danger,” well, you have every right to defend yourself. In fact, you have the legal and common sense right to take preemptive action. You do not, in other words, have wait until you’ve been shot at to shoot back.

On a societal level, the police and our military overseas routinely hunt and often kill people who have demonstrated their willingness and ability to take the lives of innocents. A South Carolina serial killer – a lone gunman who was clearly not the leader of a sovereign nation – was himself recently killed in a shootout with a policeman. For similar reasons, our military, acting as our national police force overseas, has killed a good number of Al Qaida leaders and operatives – and is still aggressively looking for Osama bin Laden, dead or alive.

However many his followers, Mr. bin Laden is also not the leader of a sovereign nation. He’s a criminal, a murderer of innocents who routinely and repeatedly demonstrates his disregard for the lives of his followers and enemies alike. In every way I can imagine, bin Laden meets the criteria for a “clear and present danger” deserving of the use of lethal force, if necessary, to stop him. I have no reason to believe that bin Laden, himself, has ever killed anyone. Doesn’t make any difference, does it? Even if he’s never hurt anyone, personally, he’s recruited, trained and commanded his followers who have.

But what would happen if Mr. bin Laden was the not just a criminal on the run, but a head of state, the elected leader or dictator of a sovereign nation? …a head of state using national resources to recruit, train, arm and surreptitiously command followers whose demonstrated purpose is to kill innocent Americans and other nationals, perhaps including his own countrymen? Now what?

Our best, most civilized diplomatic efforts fair to even curtail, let alone stop the carnage. Other nations add their voices, but to no avail. Do we just let Mr. bin Laden hide behind his government title? If, heaven forbid, bin Laden or his counterpart in the Taliban were to seize control of the government of Afghanistan, is that it? Are they safe? Does the mantle of authority, democratically elected or not, somehow suddenly change everything?

Given that our government believed in the imminent threat of weapons of mass destruction, was the assassination of Saddam Hussein out of the question just because he was the leader of a sovereign nation? If Kim Jong-il’s North Korea poses a real, clear and present nuclear weapons threat to the United States and our allies in the region, and we believe that he, personally, is the problem, isn’t a preemptive assassination a more rational solution than war? I’m not suggesting it, mind you, just raising the question.

If it was up to me, what would be the fine print in our government’s policy against assassination? I don’t know, and it bothers me that I don’t.

-wf


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Occam’s Economics: A simple, back-of-the-envelope plan to regenerate consumer spending – immediately.

Posted on July 9, 2009 | Leave a comment

Thursday, July 9, 2009

Let’s talk about giving all $697 billion* of the first stimulus plan which has yet to be spent to the 14.7 million** people who are currently unemployed. Com’on. Think about it. I dare you to take this plan seriously.

For the sake of discussion, I’m going to make some gross, simplifying assumptions:

(1) Ignore the substantial unemployment benefits the unemployed are already receiving.

(2) Overlook the fact that, while the unemployment rate is currently 9.5%, 3.5% is typical of a healthy economy. No recovery plan, in other words, needs to push unemployment to 0%.

(3) Pretend the millions of Americans who are still working, but who are under-employed as a result of the recession and whose family incomes are seriously depressed… I’m going to pretend these families are okay. (They’re not.)

These and other issues not elaborated here are obviously important considerations which will need to taken into account, but not right now. I just want you to focus on the core concept.

$697 billion divided by 14.7 million people is an average of $47,415 per person, tax free. I don’t know the pre-recession average annual disposable income of these families, and that could be a problem if it’s higher than $47,415, but I suspect I’m okay. We could, in other words, completely regenerate the consumer spending lost by the recession for a full year in one fell swoop just by giving what’s left of the first stimulus package to the people who need it most.

Simply put, what I’m suggesting is that we’d be better off giving our stimulus dollars to the unemployed whose needs are such that they will not hesitate to spend every dollar we give them. Give the money to them gradually over the next year until the natural process of economic recovery takes over. (We’ll handle the transition between receiving subsidies and returning to employment through a negative income tax to make sure they have a substantial financial incentive to return to work.)

Forget about public works projects and various economic development programs, the nature, duration and location of which may not be the most effective, most timely means of getting people back to work. Let’s ask ourselves, “What can we do that will have the most dramatic and most immediate impact on the economy?”

The simple answer is, give the money to consumers whose incomes have been so depressed (or eliminated altogether) by the recession that their propensity to consume is 100%. For all intents and purposes, they’re going to take every dollar you give them and spend it, immediately. They’re not going save any of it. They’re not even going to use any of it to pay down their credit cards and other debt except to make mortgage and car payments. And they are certainly not going to take months, maybe years to build something with it. They’re going to spend it. All of it. Right now. (This paragraph was excerpted from “A second stimulus package?!” which I posted yesterday.)

What? This is too simple, too straightforward a concept to work? Let me get this straight… We’re in a national economic crisis so severe that the Administration is considering a second round of $300 to $400 billion – more money we don’t have – even while $697 billion of the first emergency stimulus package remains unspent. I think a little simplicity that focuses our attention on the problem we’re trying to solve may be exactly what we need.

Is the idea too pure, too kosher for Congress because it doesn’t have any “pork”? My apologies, but I thought that was one its advantages. Are there implementation issues? Of course, but they’re almost certainly less than the mess we are now realizing with the stimulus funds we’ve spent, and still haven’t spent, so far.

I know it’s not the way Washington usually does things, but sometimes, the simplest, most obvious solution is the one that makes the most sense.

-wf

*The Washington Examiner, July 8, 2009, “First stimulus package spending at glacial pace; Obama wants another?”.

**The Bureau of Labor Statistics, Unemployment Statistics.


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A second stimulus package?!

Posted on July 8, 2009 | Leave a comment

Wednesday, July 8, 2009

Yes, it’s true. Without having spent the entire first stimulus package or having any evidence that what has been spent has had any real effect worth the trouble, the Obama Administration is considering a second package of perhaps as much as $300 to $400 billion.

Recovery from a serious downturn in the economy takes time. Downward phases of business cycles are part of a natural process through which the economy makes adjustments that were long overdue. It’s a process the government can tweak a bit, if they’re really good at it, and mess up if they’re not, but it’s not something it can control to the extent the Obama Administration has in mind. We need to let it happen, and do everything we can to protect the spending of consumers whose incomes have been adversely affected.

Unfortunately, impatience is the hallmark of the Obama Presidency. He couldn’t wait to run for President, and he can’t wait to check off his campaign’s list of objectives for an Obama government. Healthcare reform? Pass some legislation, regardless of whether or not it makes sense. Check. Recession? Throw a trillion or so at the problem. Who cares if we can afford it. Check! His superficial air of calm and control notwithstanding, he needs to spend more time thinking, and maybe less time making speeches, before wasting billions of dollars that can be deployed much more effectively, and spending us into oblivion in the process.

Let’s say I have a billion dollars to spend to help the economy recover. What’s the most effective use of those funds? What will have the most dramatic and most immediate impact on the economy? The simple answer is, give it to consumers whose incomes have been so depressed (or eliminated altogether) by the recession that they’re not even buying the essentials they need to support their families. These are the people, and there are unfortunately many millions of them, whose propensity to consume is 100%. They’re going to take every dollar you give them and spend it, immediately. They’re not going save any of it. They’re not even going to use any of it to pay down their credit cards and other debt except to make mortgage and car payments. And they are certainly not going to take months, maybe years to build something with it. They’re going to spend it. All of it. Right now.

In fact, before we consider a second round of spending money we don’t have on less effective stimulus programs, maybe Congress could redirect the balance of the first round that we haven’t spent to families who will put those dollars to work without further delay.

Suggested reading… “Occam’s Economics: A simple, back-of-the envelope plan to regenerate consumer spending – immedately.” which I posted Thursday morning, July 8.

-wf


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Michael Jackson: Is anybody really this popular?

Posted on July 7, 2009 | 1 comment

Tuesday, July 7, 2009

Of course not. Michael Jackson’s remarkable talents and popularity as a pop star notwithstanding, his celebrity since his death, culminating with today’s memorial service at the Staples Center in Los Angeles, is all about the media – with the music industry deserving honorable mention for the huge profits which those who have a financial interest in the Jackson legacy stand to earn.

Make no mistake about it. A billion people world-wide did not call the television and other media and demand wall-to-wall coverage of Michael Jackson since he died. Just the opposite.

People are watching TV all the time, myself included. It’s the Muzak, if you know what I’m talking about, the ambient sound of our times. Something interesting happens, and we perk up and pay attention. That whatever’s happening involves good music with which many of us can identify, not to mention a free concert, makes it all that more compelling. The more weird, sometimes, the better. (Are they really going to bring Michael Jackson’s coffin to the Staples Center?) But if we didn’t have a TV on in the background, if we had anything better to do or that required our undivided attention… Well, it’s only TV, and we can catch the highlights later on the news, and buy the CD if we’re really interested.

Just because some marketing company puts your face or product up on a really big sign at Times Square doesn’t mean that the thousands and thousands of people a day who walked or drove by came there to see it.

Yes, I find it annoying when otherwise world class interviewers like Matt Lauer and others talk about the Michael Jackson phenomenon as if it were real, as if it would exist independently of the extraordinary coverage the media is giving it. The media helped elect Barack Obama, and is certainly doing more than it should to create the Legend of Michael Jackson. I wonder who or what they have in store for us next?

In an industry where relatively few people are in charge of so much coverage, and in which even fewer set the pace for the others, is there reason to be concerned about our view of the events they broadcast, not to mention the ones they don’t?

It’s difficult, sometimes, to keep things in perspective – and next to impossible to know much about what the media isn’t covering, however important.

-wf


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Double Fake

Posted on July 6, 2009 | 2 comments

Short Fiction for Guests of the WordFeeder
Monday, June 6, 2009

“Com’on, com’on.” Eleanor was the last of Jane’s friends to leave for the elevator, the others having given up more easily. “We’ll share some wings, the boring kind you like that won’t make your head sweat, pretend to be laughing at each other while we scope out guys pretending to be laughing at each other, watch American Idol on the big screen, and walk…” She stopped, Jane’s negatively shaking head having finally made its point.

“Thanks,” Jane smiled back at her, not wanting to rule out a rain check, “but I’ve got stuff to do. Lots of stuff.”

“Yeh,” Eleanor nodded, her eyes twinkling in the process, “I know all about ‘stuff.’ See you tomorrow,” and she ran off to the “bong” of the elevator doors opening.

“Thanks for your help!” Jane shouted after her, to which Eleanor responded by waving her right arm, but without turning around.

True, Jane really didn’t like getting home late without enough time to do things around her small apartment before she went to bed. But this wasn’t about the droll evening routine of an entry level program analyst on the 23rd floor in carrel #2308. No. Tonight was all about Steve.

Meanwhile, back at the elevators, and the one in particular into which all five of Jane’s friends were squeezing themselves, their over-sized purse-bags and briefcases…

“Ewww,’ Rona whispered way too loud, turning as she got on to avoid making eye contact with the two loose-tied young men in the back.

“Ladies,” one of them named “John” greeted them politely, his eyes focused on Eleanor’s as she looked up and then away before any of her friends noticed as the doors closed behind her.

Steve – carrel #3116 and fellow-resident in the small apartment building where Jane lived – was 6’ 1” with dark brown hair that fell wherever it pleased and blue green eyes, but his friendly good looks and melt-in-your-mouth smile weren’t the point. It was the way the sound of his voice made her feel that gave Jane the resolve she needed.

Despite her best efforts, she’d never been able to get his attention. Not really. Sure, there was the occasional lunch in the company cafeteria, with others at the table. And they would take the subway and walk together on their way home now and then, window shopping for pastries along the way. They would talk, taking longer than they would have going home alone, but never long enough. “Tonight would be different,” so said the determination on her face as she packed quickly, leaving the work she would normally take with her behind. Tonight she had a plan.

Steve, who had been working late every day for the past two weeks on a special project, was a closet American Idol fan according to an unidentified, but trustworthy source. He’d get home late this evening, order takeout to eat while he watched American Idol, and then do his laundry, which he always did on Wednesdays, later that evening. Problem: Tonight, Steve would arrive at his apartment, turn on the evening news as usual, only to find that his TV and Internet wouldn’t be working. (She’d have to do something very nice – maybe some concert tickets? – for her cousin, Randy, twice removed, who worked for the local cable company.)

Quick to adapt, Steve would go down to the laundry room at 7:40 PM, enough time to stuff his darks in one machine, his underwear and towels in another, and call “#1 Son” before 8. The place would be empty, all the usuals being glued to their sets, watching the show from the comfort of pillowed sofas and over-stuffed chairs. Steve would just have to settle for the small screen that hung off the wall above the change machine.

The layout in this particular laundry room is important. First of all, it was small. “Cozy” is more like it. There were four washing machines, top loaders, two backing up to the other two, up against the wall on the right when you came into the room. Exposed pipes overhead, but who cares about that? Two dryers were side by side up against the back wall. And there was a folding table along the wall on the left. In the corner, between the folding table and dryers, there were two plastic chairs facing the TV which, as you know, hung above the change machine, diagonally across the room, in the corner next to the door. It was a metal door, mostly frosted glass, that took forever to close by itself, picking up just barely enough momentum toward the end to “thunk” shut all the way.

Jane arrived at 7:50, carrying a large plastic laundry basket, and smaller round one on top with delicate items she’d wash separately. “Hey, Steve,” she pretended to be surprised to see him, which she wasn’t of course, but then was surprised to see him standing up suddenly as if he had been bending over and she had interrupted something.

“Hi.” He seemed flush, blushing in fact. “I… I was just…”

“Wait,” Jane decided to leverage the awkwardness of the moment in her favor. “Let me guess,” she said, doing nothing to hold back her giggling. “Thinking you’d be alone down here, you decided to wash the jeans you were wearing with your other clothes. …How’m I doin’ so far’?”

“Pretty much right on the money,” Steve smiled, trying to maintain his cool, pushing his balled up jeans into the suds and dropping the lid – “Bammm!” – of the machine he was hiding behind. “Maybe, I’ll just stay here for a while.”

Putting her regular laundry in the one washer, Jane dumped the smaller basket in the other machine, looking up at Steve deliberately every chance she had, her lips unable to keep her nervous smiling under control. Taking one obviously deep breath, Jane put the small basket down on the black and white checked vinyl tile floor. Standing up, she reached with both hands behind and under her white “I know, I’m hard to believe.” t-shirt, her eyes looking right at Steve’s. Neither of them was smiling just now. Unhooking it in the back, in one smooth, carefully rehearsed move, she took off her bra under her t-shirt and put it in the open machine in front of her, lowering the lid slowly and carefully to hold the moment as long as she could.

Neither of them noticed that American Idol was well underway on the TV in the corner.

Reaching for the cell phone he’d put next to his wallet and keys on the short wall that separated the washing machines, he held it up, and then looked up before scrolling to the number he needed. “You like Chinese?” he asked Jane. And the rest of the night was, as they say, “history.”

Early the next morning, a few minutes before they had to be at their desks, in the last stairwell before the roof of their office building, Eleanor was just lowering herself off her toes, pulling her mouth down and away from John’s who still hadn’t opened his eyes, his hands just inside her jacket, under the back of the soft blue faux silk camisole she was wearing. “So,” he asked, making an effort to regain his composure,” how was last night for Jane?”

“Pretty spectacular. She was almost incoherent when she called after he left this morning. …And my $20?” she reminded him as if he’d forgotten.

“No sweat.” He pulled the folded bill out of his shirt pocket where he’d had it waiting for her. “Steve said getting her to take off her bra like that was worth every penny.”

“Thanks!” Eleanor snapped the $20 from him, finally stepping back a few inches. “And to think I ever doubted him when Steve first asked for our help. …Com’on,” she said, poking him in the stomach right through his tie. “We need to get to work.”

-wf

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Missing the Point: Breaking Up Firms “TBTF”

Posted on July 6, 2009 | Leave a comment

Monday, July 6, 2009

The Obama Administration has decided that “Big Business,” large financial services companies in particular, cannot be allowed to become “TBTF.” I didn’t make that up. In a world in love with text messaging, it stands for “Too Big To Fail.” Once again, our new President and his Administration have demonstrated their lack of respect for the power and intelligence of our capitalist system, and of our government’s relationship to it.

On the face of it, it seems to make sense. Never let a company become so large such that we, the people, have no choice but to bail it out when it gets in trouble. Unfortunately, it’s a reasonable assertion based on an unreasonable assumption by President Obama that is fiscally irresponsible and dangerously off base for a number of reasons.

Simply put, the assumption he’s making is that the economy is not capable of taking care of its own – the flip side of which is “Government knows best.” Not just any government, mind you. He’s not, for example, allowing that the Bush Administration would know what it was doing under similar circumstances. No. President Obama is talking about himself and his Administration which is one of the huge problems with his strategy. Its effectiveness depends upon who’s in charge.

“Well obviously the economy is not capable of managing itself,” so the President would argue, pointing to excessive risk-taking which helped initiate the current recession. Fine, but that doesn’t mean the solution is to take control of that economy. A much more effective and far less expensive approach is provide the minimum degree of regulation necessary prevent a reoccurrence of the bad behavior. AIG, for example, is an insurance company. Why don’t the same rules apply to insuring investments as to more mundane coverage such as home, auto and life insurance? Why, for another example, aren’t hedge funds regulated like banks? In fact, it’s arguable that the economy would ultimately learn its lesson and self-impose the same and even more severe controls on its own.

When companies fail to produce sufficient profits to justify their existence, the economy – not the government – will force them to morph into something that operates more profitably in the markets they serve. Behavior that produced losses will be shunned in favor of new business models that work. Unproductive components will be liquidated. Inadequate management will be replaced. It is, in fact, an ongoing process for the best managed firms which initiate such adaptive changes on their own and in advance of their problems getting out of control. Poorly managed companies, on the other hand, don’t understand or care, and end up having their lunch handed to them through a natural, albeit sometimes painful process.

These are things the economy does every day, at remarkable speed all things considered, all by itself – until government becomes impatient. Unfortunately, more often than not, severe government intervention either postpones the inevitable and/or alters the behavior of certain firms and markets in ways which are less desirable than what a more natural process would have suggested – wasting billions, even trillions in the process.

Is there nothing the federal government should do to help protect our economy in the event that an AIG, General Motors or Citibank fails? Of course there is: Provide support for related companies and, most importantly, for consumers whose livelihoods will be adversely affected. Helping them maintain their levels of consumption will not only serve humanitarian objectives, it will help prevent the downturn from becoming too severe. Beyond that, government domestic economic policy should manage the money supply within the limits of reasonably defined powers, and guard free enterprise against monopoly and other factors interfering with competitive market behavior.

What the government should not be doing is telling business how it should behave. There’s a difference, a not at all subtle and highly material difference between “assistance” and “control.” It’s a critical distinction President Obama doesn’t seem to appreciate. It’s one thing to help someone cross the street. It’s another thing altogether to tell them which street to cross and which direction to go once they get to the other side.

To be sure, there are those in the current Administration and Congress who would argue that the costs of helping affected consumers and small businesses greatly exceed the costs of bailing out and/or dictating the behavior of certain companies, but it’s an argument that has no merit. It’s factually incorrect as can be proven by considering how bailout monies might have been more quickly and effectively deployed through programs to protect consumers. As an effective and fiscally responsible means of stimulating the economy, the Obama strategy of intervention is counter-intuitive and just plain bad business.

Unfortunately, President Obama doesn’t seem to be able to help himself. He needs to get it out of his head that government is bigger and smarter than the economy. His is an arrogance born of naïveté which he has got to get over, for our stake of course, but, to play to his ego, if he has any hope of being remembered as a good, let alone great President.

At this rate, and if the Republicans can get their act together, he’ll be lucky to be re-elected.

-wf


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Question of the Day: The Secret Service

Posted on July 5, 2009 | Leave a comment

Sunday, July 5, 2009

If the Secret Service were really doing its job, would we know it exists?

-wf


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Sarah Palin: The double standard strikes again.

Posted on July 3, 2009 | 2 comments

Friday, July 3, 2009

The sound of her voice had barely faded before some media pundits were criticizing Sarah Palin for resigning as Governor to, let’s all agree, run for President. “The nerve of her cheating the people of Alaska by not even finishing her first term in that office,” was the gist of what some of them are saying.

I, for one, will leave it up to the people of Alaska to draw their own conclusions and speak for themselves. I certainly don’t pretend to know what they’re thinking.

In the meantime, will someone please remind these same critics that Governor Palin will have served longer as Governor – and accomplished a great deal more in the process – when she resigns than Senator Barack Obama had served before he started running in earnest for President.

At least Governor Palin has the integrity and class not to impose her campaign for higher office on the people of Alaska by giving them less than the 100% of her time they deserve and for which they elected her.

I don’t know yet if I would ever vote for Sarah Palin to be President, but I certainly want to encourage her to run.

-wf


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Note to soon-to-be ex-Governor Mark Sanford:

Posted on July 1, 2009 | Leave a comment

Wednesday, July 1, 2009

Just because someone asks you a question doesn’t mean you have to answer it. Please be quiet. You’re interrupting wall-to-wall Michael Jackson coverage.

Thank you.

-wf


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