Tuesday, September 23, 2008

Who's to blame

Well being human is to blame. I started as a stockbroker in the 1970's. Then there were stockbrokers, who acted as agents, and also as investment bankers, essentially raising money for corporations. Other than for the brief of moments, these firms didn't risk its capital. That slowly morphed into the highly-leveraged institutions of the recent past. The concept of "placing bets" as, I think, Goldman or maybe Solomon Bros. started to do a couple decades ago for competitive purposes really was in my view the start to today's "crisis". But adding private equity and the government pretty well blurred the regulatory framework. Regulation -- and lawmaking in general -- became a series of knee-jerk reactions with campain contributions and elections being foremost in politicians' minds, rather than actually solving problems. And we are here today. With any luck, the $800 billion "bailout" will lead to reducing the size, scope and cost of government. It isn't the free enterprise system or capitalism at fault; it's the reaction by politicians and the media to useful, and healthy contractions. You can't have gain without pain from time-to-time. If everyone knew that, individuals would borrow less, save for a "rainy day" and breeze through the ups and downs of life. Good luck that!

Wednesday, September 3, 2008

Bush's good economic record.

This is taken liberally from an article in the Wall Street Journal ("Bush Has a Good Economic Record" - WSJ, September 3, 2008 P. A 23)

I was amazed reading this, but here's a synopsis for those who care about "issues".

U. S. economic output is higher than most advanced economies since 2000 (including estimated 2008) 2.2% a year; 19% larger than Clinton's and against 14% (France), 13% (Japan) and 8% (Italy and Germany).

U. S. personal household consumption (citizens and "illegals" combined) second only to Luxemburg out of 146 countries. U. S. average: $32,000 ( UK, Canada, France and Italy all under $25,000; China $1700.)

84.7% of U. S. population is covered by health insurance (2007), up by 3.6 million from 2006 and 2008 was up another 1 million from 2007. Healthcare -- the highest number per capita in the world -- was 9% of GDP similar to Germany and France. Our uninsured can go to ERs unless they don't have the education or desire to do so.

The richest 20% of Americans had a 45.8% share of total income similar to UK and Israel, and below 65 other countries. Some of this income stuff (the low or "unfair" part) is from 10 million more immigrants from '95 to '05.

Business investment over Bush's term has been the highest in history at over $8,000 per capita vs. under $5,000 in both Germany and UK.

Bush's unemployment rate averaged 4.7% compared to Clinton's 5.2% and the Euro zone's 8.3%.

U. S. general debt interest payments = 2% of GDP vs. 3.2% while Clinton was in office and 2.7% in Euro zone.

Finally, the cost of the wars in Iraq and Afghanistan has bumped up defense spending to 4.1% of GDP from 3.8% in '95.

In seeing these figures, the economy under Bush has done pretty well. 2008's housing collapse looks to be a lot less devastating than the media and Democrats portray; commodities prices and falling; the was in Iraq is winding down.

McCain's economic policies are designed to continue this success.

Continued low taxes

However, Obama will sidetrack it:
Huge subsidies for "alternative energy" - defined as not oil and gas, natural gas, coal or nuclear ($150 billion).
Bailouts for the auto makers ($50 billion)
Increase taxes on small business owners, the successful, the dead, investors (capital gains and dividends) who represent about half the population, oil companies,
Reduce the taxpayer base by 15 million households and GIVE them someething like $648 million over ten years.
And, of course, because Obama must raise something like $20 million a week, while McCain has taken public financing, he will be promising many special interests a lot.
Speaking of which, his two mainstay funders, union leaders and trial lawyers tend to take expansion money and new-job money from corporations. Job losses occur, further endangering our economy.

So a good question to ask Obama, "Does government have to do everything?"

Tuesday, September 2, 2008

The Danger of Union Power

In today's newspapers (September 2, 2008) -- the Seattle Times and Wall Street Journal -- were a number of articles highlighting the danger of union power.

"No school in Bellevue as teachers go on strike". (Front page, Tuesday, September 2, 2008, Seattle Times.) The article adds: "Although the Bellevue teachers are among the highest paid in the state..." What the schoool district offered would have raised the salaries by 6.6%. And "Bellevue, which is among the most highly-regarded districts in the state..." apparently has a curriculum which, although highly successful, doesn't allow teacher deviation. But who cares if the students learn?

And speaking of the teachers union, in Los Angeles the school district is one of the worst in the nation (high-school graduation rate: 66%, of which only 55% enroll in college or JC; of sixth graders, only 31% tested above minimum proficiency in math and 33% in English). The mayor tried to change the system but was thwarted by, yes!, state courts. He's trying again with a different approach. One unrelenting and unchanging roadblocki is a 320-page teachers unioin contract.

And back here in Boeing country, the machinists union want to strike Boeing and delay the launch of the Dreamliner and potentially cost Boeing $100,000,000 of revenue; an 11% -- $34,000, to an average of $75,000 with overtime -- increase is not enough.

Sen. Obama -- running in lockstep to the unions wants to make it easy for unions to force unionization. That should be enough to vote for McCain. Do we want freedom or to become clones to France and Italy, former economic engines, now has beens.

And back here in Seattle, a developer wanted to develop the 10 acre parcel siting the present Goodwill organization. A "community coalition" was formed by a Viet man. Three years later after the "coalition" now numbering 30 disparate groups was taken over by Puget Sound SAGE a special interest union organization, the developer agreed to pay off the extortion threatened by the "coalition" in exchange for it not fighting in court or before the City Council. The project now might open in 2012 -- a mere 12 years. But part of the original group might form to oppose it since they didn't get their way -- the unions took over and got the developer to pay union wages and benefits, allow for union organizing of the little retailers and force unionization of the grocery retailer. Also the developer is "contributing" $200,000 here and $600,000 there, 200 low-income housing units, cheap rent to some nonprofits, $200,000 for traffic study, and so on. All will bring higher prices to the poor people of the neighborhood. The Mafia couldn't have scored so great.

And finally back to Seattle. "Coalition talks reach deal on Goodwill site" When a developer announced plans for a large transformation of the Goodwill property on South Dearborn Street, a "community coalition" formed to extort what it could from the developer.