Economist Heidi Shierholz: “There’s never been a pool of missing workers this large”

Posted: January 7, 2011 | Author: | Filed under: jobs, Stock Market, Team Obama, The Great Recession, the villagers, U.S. Economy, U.S. Politics | Tags: , , , , , , , , , , , | 16 Comments

Economics isn’t my area of expertise, but I can read, and the top story at Huffpo right now is pretty disturbing. Author Lila Shapiro spoke to some economists, including Heidi Shierholz, about the December jobs report, which came out today.

Although the unemployment rate fell to 9.4 percent from 9.8 percent in December, bringing the total number of officially unemployed Americans to 14.5 million, only 103,000 jobs were added in December according to the Labor Department’s BLS report — a number significantly lower than expected. (The Wall Street Journal reported that many Wall Street analysts were predicting “at or above 200,000” new jobs.)

The news gets worse: less than half of the drop in unemployment rate can be attributed to new job creation — the other half came from 260,000 Americans who have dropped out of the labor force altogether.

This brings the percentage of Americans who are either employed or actively looking for work down to 64.3 percent, what economist Heidi Shierholz calls “a stunning new low for the recession.”

[….]

“We have now added jobs every single month for a year,” Schierholz said. “So you would think that there would be labor force growth, these missing workers starting to come back in. Not only is that not happening, it’s actually starting to go in the other direction. There’s never been a pool of missing workers this large. It’s not clear to me when they’ll come back.”

That can’t be good, no matter what the White House and CNN try to get us to swallow.

At the Wall Street Journal the reaction to the jobs report doesn’t make things sound much better. One headline reads: Markets Whipsawed After Jobs Report. Here’s the gist:

Investors hoped that the jobs report would confirm expectations that a robust recovery was finally filtering through to long-stagnated labor markets. But after traders positioned aggressively this week on lofty expectations of a strong payrolls figure, the disappointing data had a relatively muted impact.

[….]

The Labor Department reported that the U.S. economy created 103,000 new positions last month, far below market consensus expectations for a 150,000 gain. In November, the economy added 39,000 jobs. The unemployment rate fell sharply to 9.4% from 9.7%.

Sustainable job creation has been elusive in an economy that is still recovering from the 2008 financial crisis. As a result of the troubled job market, analysts think the Federal Reserve is likely to continue full steam ahead with its controversial $600 billion plan to reinflate the economy.

Dakinikat can give us her expert take on this, but as a layperson, I think it’s obvious that the country is on the wrong track and some one needs to light a fire under the President and his incompetent economic advisers.

HEY VILLAGERS! WE NEED JOBS!!!

Saturday Reads

Posted: November 6, 2010 | Author: | Filed under: morning reads | Tags: , | 37 Comments

Good Morning!!!

File this one from The Hill under no surprises!  Sean J Miller’s headline says it all: ‘Hillary voters’ abandon Democrats”. I even voted for a blue dawg congressman to become a blue dawg senator, it did no good whatsoever.  I think when every one was told they didn’t need the votes, a lot of people took them seriously.

The blue-collar voters who supported Hillary Clinton’s 2008 presidential run deserted her party in droves on Tuesday, according to a new poll.

Democrats’ support from white, non-college-educated male voters dropped 12 percent from 2008, according to a survey Greenberg Quinlan Rosner conducted Nov. 2-3 for Democracy Corps and Campaign for America’s Future.

Only 29 percent of blue-collar men support Democrats in 2010, down from 41 percent last cycle, according to the survey of 1,000 2008 voters, of which 897 voted on Tuesday.

“These are gigantic losses,” Democratic pollster Stan Greenberg, whose firm conducted the survey, said on a conference call with reporters Friday.

Greenberg said President Obama and the Democratic leadership failed to articulate a clear economic message.

The process surrounding the healthcare bill, which passed in March, reinforced the perception voters’ had that the Democrats were spending too much time bickering with the GOP, increasing federal spending and listening to lobbyists instead of average people on major legislation.

I’ve been writing about one or another version of it’s the jobs stupid or it’s the economy stupid for about around two years.  You’d have to really be deaf not to understand how folks are hurting for a decent wage and a decent job these days.

The more conservative side of Politico has this headline that’s a grabber too: ‘The ego factor: Can Obama change?’ I guess one of the reasons that I want to quote this some is that it interviews two Louisiana folks; James Carville and Douglas Brinkley.

“Humility is a great quality, and it’s one that people will respect,” said historian Douglas Brinkley, who teaches at Rice University. “Ronald Reagan could be seen as a polarizing presence, but he also knew how to play humble when it was necessary. Where is President Obama’s self-deprecating humor? Kennedy and Reagan could both be very self-deprecating. People liked that.”

“The worst thing that happened to Obama is he’s lost a lot of his aura. Even his friends think he’s thin-skinned and a bit highfalutin,” he said.

It’s the sort of complaint that comes to the fore in background conversations with lawmakers, lobbyists and veterans of previous administrations who interact with Obama’s West Wing staffers: that they’ve created a cult of personality around Obama, having followed their boss on his rapid and improbable ascent to the presidency. Many of these devotees do, indeed, feel that he is the political equivalent of NBA phenom LeBron James. The view is based on a belief that Obama’s outsize political skills and uncommon personal poise make him different than conventional politicians and immune to conventional political laws of gravity.

One Obama insider said it is a view that starts at the top. Having triumphed over an early perception by political insiders and many journalists that he could not defeat front-runner Hillary Clinton, Obama, this person said, frequently invokes the 2008 experience and what he believes was its lesson — always stay the course, don’t be distracted by ephemeral controversies or smart-set importuning for a change of direction.

Some believe this is an admirable instinct carried to a dangerous degree.

“Obama would sort of say, ‘Look, I’m smart. I know what I’m doing. You’ll just have to trust me,’” said Democratic strategist and commentator James Carville. “It was kind of beneath him to explain the reasons behind his actions to people — how TARP really worked, how the stimulus was helping. … You had a lot of signs — New Jersey, Virginia, Scott Brown — but they thought what they were doing was going to turn out all right.”

If you don’t read James K. Galbraith at New Deal 2.0, you really should.  He’s got a great piece up over there that says Obama has to ‘break his devil’s pact with the banks to succeed’.

The original sin of Obama’s presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers. Larry Summers. Timothy Geithner. Ben Bernanke. These men had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama. Their primary goal, instead, was and remains to protect their own past decisions and their own professional futures.

Up to a point, one can defend the decisions taken in September-October 2008 under the stress of a rapidly collapsing financial system. The Bush administration was, by that time, nearly defunct. Panic was in the air, as was political blackmail — with the threat that the October through January months might be irreparably brutal. Stopgaps were needed, they were concocted, and they held the line.

But one cannot defend the actions of Team Obama on taking office. Law, policy and politics all pointed in one direction: turn the systemically dangerous banks over to Sheila Bair and the Federal Deposit Insurance Corporation. Insure the depositors, replace the management, fire the lobbyists, audit the books, prosecute the frauds, and restructure and downsize the institutions. The financial system would have been cleaned up. And the big bankers would have been beaten as a political force.

The job market figures were released yesterday and they definitely had an impact on the financial markets. This is from Bloomberg.

Treasuries fell, with five-year note yields rising for the first time in seven days, while U.S. benchmark equity indexes gained to two-year highs and the dollar strengthened as jobs growth bolstered optimism in the economy

The 5-year Treasury note’s yield rose six basis points to 1.09 percent at 4 p.m. in New York, rebounding from a record low this week. The Standard & Poor’s 500 Index advanced 0.4 percent to 1,225.85, its highest level since Sept. 19, 2008. The Dollar Index, which tracks the U.S. currency against six peers, snapped a three-day drop to climb from its 2010 low. Commodity indexes rose to the highest levels since October 2008 as copper surged to a 28-month high amid a mining strike in Chile.

The jobs market data itself wasn’t great but it certainly wasn’t bad.  Economist Mark Thoma explains the wishy washy view.

I’ve seen some people calling this a strong report. It’s certainly better than lower job growth numbers, so it could have been worse, but in past recoveries we’ve had job growth of hundreds of thousands, far more that this. So let’s try to put it in perspective. Many people estimate that 7.5 million jobs have been lost since the start of the recession (and some people estimate it’s even more than this). Suppose it takes 100,000 jobs per month to keep up with population growth. I think it’s a bit more than this, but let’s take an estimate that is generous in terms of making up lost ground. With a net gain of 50,000 jobs (rounding from 51,000), how long would it take to reemploy the 7.5 million who need jobs? The answer is (7.5 million)/(50,000) = 150 months = 12.5 years.

Iraqi prisoners were not only abused by Americans but also by the UK.  This is a horrifying report at The Guardian.

Evidence of the alleged systematic and brutal mistreatment of Iraqi prisoners at a secret British military interrogation centre that is being described as “the UK’s Abu Ghraib” emerged yesterday during high court proceedings brought by more than 200 former inmates.

The court was told there was evidence that detainees were starved, deprived of sleep, subjected to sensory deprivation and threatened with execution at the shadowy facilities near Basra operated by the Joint Forces Interrogation Team, or JFIT.

It also received allegations that JFIT’s prisoners were beaten, forced to kneel in stressful positions for up to 30 hours at a time, and that some were subjected to electric shocks. Some of the prisoners say that they were subject to sexual humiliation by women soldiers, while others allege that they were held for days in cells as small as one metre square.

Michael Fordham QC, for the former inmates, said the question needed to be asked: “Is this Britain’s Abu Ghraib?”

I can’t even think up a response to the video or information shared in that article.

Okay, so I’m going to end with another ‘no surprises here’ post.  Ozzy Osbourne is actually a mutant. No really.

A study of the hard-partying rocker revealed he actually has several genetic mutations that may explain how he’s lived so long, scientists say.

Some of them “we’ve never seen before,” said geneticist Nathaniel Pearson, who was part of the team that sequenced Osbourne’s DNA for Massachusetts lab Knome Inc.

“I’ve always said that at the end of the world there will be roaches, Ozzy and Keith Richards,” the Prince of Darkness’ wife Sharon Osbourne said.

“He’s going to outlive us all. That fascinated me – how can his body endure so much.”

The 61-year-old “Black Sabbath” singer is as famous for his colossal intake as he is for his voice. He once said he did LSD every day for two years and he drank booze like water.

No surprisingly, many of the anomalies scientists discovered had to do with how he processes drugs and alcohol.

Ozzy was just here in town for voodoo fest.  I imagine he left DNA samples all over the place if the scientists still are looking for more.  Since it’s still the morning, I’ll treat you to some mellow Ozzy.

So, that’s my contribution today.

What’s on you reading and blogging list?

Shots Fired

Posted: November 4, 2010 | Author: | Filed under: Global Financial Crisis | Tags: , , , | 42 Comments

I figured I better start a series of posts on the frontiers of our third war. You probably won’t be thrilled to hear that the General in charge of the theater is none other than Timothy Geithner.   The other general in the war is Ben Bernanke.  Feeling any better year?

Well,  ready or not, we may be in the very first strategic moves set out to wage a currency war and possibly a trade war.  The two superpowers in the battle are China and the U.S. who seem to be in a fight  to see whose currency can go the lowest.   Paul Krugman has written about this quite abit. Naked Capitalism actually had a superb guest post on the topic today. The Economist front paged the entire topic in mid October.

I’ll quote from one of The Economist’s major articles here.

Behind all the smoke and fury, there are in fact three battles. The biggest one is over China’s unwillingness to allow the yuan to rise more quickly. American and European officials have sounded tougher about the “damaging dynamic” caused by China’s undervalued currency. Last month the House of Representatives passed a law allowing firms to seek tariff protection against countries with undervalued currencies, with a huge bipartisan majority. China’s “unfair” trade practices have become a hot topic in the mid-term elections.

A second flashpoint is the rich world’s monetary policy, particularly the prospect that central banks may soon restart printing money to buy government bonds. The dollar has fallen as financial markets expect the Federal Reserve to act fastest and most boldly. The euro has soared as officials at the European Central Bank show least enthusiasm for such a shift. In China’s eyes (and, sotto voce, those of many other emerging-market governments), quantitative easing creates a gross distortion in the world economy as investors rush elsewhere, especially into emerging economies, in search of higher yields.

A third area of contention comes from how the developing countries respond to these capital flows. Rather than let their exchange rates soar, many governments have intervened to buy foreign currency, or imposed taxes on foreign capital inflows. Brazil recently doubled a tax on foreign purchases of its domestic debt. This week Thailand announced a new 15% withholding tax for foreign investors in its bonds.

Currencies are actually  my research area and I’m preparing for a series of papers and presentations on the ASEAN+3 area and the GCC area.  China is one of the +3.  The U.S. dollar is the peg for the GCC because of the influence of Saudi Arabia.  Every one has a stake in this including the European Union.    Anyway, let’s just say this is part of my thing and it’s a complex thing so I’m going to do a series of short posts on this to get every one more or less situated.

This is a quick introduction because I’m going to have to start with what’s happening tomorrow.   This situation is likely to be on the meeting table for APEC Forum starting tomorrow in Japan.  ( That’s the Asian-Pacific Economic Cooperative.)   Geithner’s trying to get the region to shrink their current account imbalances with the U.S. The current accounts are the accounting mechanisms for an open economy that deal with foreign trade.  They are bookkeeping entities where trade payments from exports and imports for goods and services as well as a few other things like any incomes made by citizens who work or invest in other countries are tallied.   The things that most international economists are interested in are the flows of imports and exports (the stuff and services) and the flows of capital (money, plant and equipment for businesses) between countries.  Of course, all this exchange and investing happens with the currency of the country.  It is the country’s medium of exchange.

As you know, the United States is the biggest customer in the world and we buy a lot of things from other countries.  That means we need their currencies to transact business there.  This also means the amount of their money floating around the world and the amount of our money floating around the world is important for trading or exchange of goods and services.  It’s also important because if you don’t buy, you invest, and if you invest, your currency goes into a financial market and earns interest. If that doesn’t happen you sell the currency for another one at the going exchange rate. The market for currencies also influences the levels of interest rates in the world among a few other things.  And, of course, the keepers of the currency–the Central Banks of a country are involved–hence our FED.  So, Bernanke watches exchange rates, amount of money floating around and  interest rates while Tim Geithner’s folks set up terms of trade between countries.  Terms of trade can include free, open markets or things like tariffs, quotas, and capital controls.  These things get set up in trade treaties and are usually negotiated frequently.  All of this stuff determines whether a country will outsource your job some place else and will fund a business someplace else instead of your town. It also determines what you can buy at your favorite store.

So,  what’s up with Geithner?

Geithner aims to use a Nov. 5-6 meeting of Asia-Pacific Economic Cooperation forum counterparts in Kyoto, Japan, to press his case for current-account deficit or surplus targets of less than 4 percent of gross domestic product. The proposal is also on the agenda for a Group of 20 summit in Seoul next week.

The U.S. has cited a glut of Asian savings for helping spark the credit crisis earlier this decade, while Asian officials now counter it’s the American central bank’s liquidity injections that are warping global capital flows. Geithner’s initiative is undermined by complexity in calibrating current accounts and a failure of similar efforts in the past.

“We have the outline routine of an impressive-looking agreement that literally changes nothing,” said Steven Englander, Citigroup’s head of Group of 10 currency strategy in New York. “Nevertheless in the short term investors are likely to be more impressed by the indications that U.S. and China are reconciled than by the underlying content of the reconciliation.”

Geithner’s plan was in part designed to broaden discussions beyond China’s exchange-rate policy, blamed by U.S. lawmakers and companies for keeping the yuan artificially low in a subsidy for local exporters. China may be open to the idea, a central bank adviser indicated last week.

And, what’s up with Brazil, the country that fired the opening salvo in this edition of Currency Wars? Well, according to that link at the FT, it seems that the word is not happy with Timothy Geithner.

Brazilian officials from the president down have slammed the Federal Reserve’s decision to depress US interest rates by buying billions of dollars of government bonds, warning that it could lead to retaliatory measures.
“It’s no use throwing dollars out of a helicopter,” Guido Mantega, the finance minister, said on Thursday. “The only result is to devalue the dollar to achieve greater competitiveness on international markets.”

At a joint press conference with president-elect Dilma Rousseff, outgoing president Luiz Inácio Lula da Silva said on Wednesday he would travel to the G20 summit in Seoul with Ms Rousseff, ready to take “all the necessary measures to not allow our currency to become overvalued” and to “fight for Brazil’s interests”. “They’ll have to face two of us this time!” he said.

Brazil and others are not happy with the Quantitative Easing 2 we talked about earlier today.  This is because it’s an attempt to stimulate the economy and it will cause there to be more dollars floating around the world.  Any one with a first semester class in economics should know that an increased supply means falling prices.  The price of money is on one hand, interest rates and in the open economy, it is also the exchange rate.  This means that U.S. goods will become cheap and every one else’s will look relatively more expensive.  U.S. folks should import less and be able to sell more abroad as exports.  If you’re trying to grow your economy on the back of the U.S. consumer’s appetite for stuff, that will now be more difficult.

Okay, so I’m reaching MABlue’s limit for me blathering on too long.  The links I gave you are pretty wonky and long.  I just wanted to bring up the topic and get you up to speed because this is THE NEXT big THING.  I’m going to try to keep up with what’s going on with the meeting and let you know more about the topic.

If all else fails, you can consider this a way to your good night’s sleep.

Congratulations! You’re an Investment Banker!

Posted: October 15, 2008 | Author: | Filed under: Equity Markets, U.S. Economy, Uncategorized | Tags: , | 1 Comment

Now what? 

Well, I suggest you start looking at the terms and conditions of our new portfolio and clients.  Right now, it’s $250 billion that you and I share with all the other U.S. Tax Payers.  So far, about $125 billion dollars has been divvied up among the major banks. In return for that investment, we get preferred stocks and warrants for common stock.   There are some sweeteners for us and a few for them.  This is the first of the plans that are supposed to ‘inject’ money into banks and ‘unfreeze’ the credit markets.  The release of similar plans by the Europeans on Monday gave us that huge bounce on Monday.  (Remember the one I thought could be a dead cat bounce and possibly is?)

The European plan also provided the structure for the terms of this deal as well as the impetus to move on it.

So, what goodies do our financial intermediaries get from the deal?

1)  The US will guarantee new debt issued by banks for three years. This means any bank that lends to another doesn’t have worry about getting it back.  That also means that they don’t have to hold a large amount in reserve for potential loan losses so it should expand consumer lending.

2)  The Fed will become the buyer of last resort for commercial paper.  This means if a bank is lending to a business in the short run to help it with its working capital needs for things like buying inventory or bridge loans to cover day-to-day business expenses, and the business defaults, the Fed will buy the commercial paper from the bank.  The bank will not suffer the loss.  This is again decreases default risk and means the banks don’t have to worry about upping their reserves for potential loan loses or holding back loans to businesses that may have less than stellar ratings.  A good example of businesses with less than stellar ratings are Ford, GM, and a lot of the airline companies.

3) The FDIC will offer an unlimited guarantee on bank deposits that are not interest bearing.  Since several European banks did this, this is a response to stop the possible flow of business checking accounts and payroll accounts to foreign banks.  There may be some consumer accounts, campaign, or non-profit checking accounts that get protection here also but it is primarily geared to businesses.

What do we get?

1) Bank Equity:  The government will get preferred shares and warrants for common stock with an expectation of a ‘reasonable’ return.   This means that the government gets first shot at any profits and dividends earned by the bank holding company.  No dividends can be given to common stock holders without first paying preferred stock holders.  Preferred stock also has priority in terms of ownership of any assets liquidated in a bankruptcy.  Most preferred stock does not come with voting rights.  A warrant is a security that allows the holder to purchase a share of common stock in that bank holding company at a specified price.  This price is usually higher than the current market price of the common stock. Some warrants stay attached to the preferred stock and basically serve to increase the yield on that stock.  Others can be detached and sold on the side.

The preferred stock that will be issued in this plan will pay special dividends.  At first, it will be at a 5% interest rate that will increase to 9% after five years.  The warrants will be worth 15% of the face value of the preferred stock. (The basic reason for the warrants is that if the stock goes up, the government can exercise the warrant, get the stock from the bank holding company, sell it on the market, and realize a profit.  These profits then go to the Treasury to pay down the Federal Deficit and offset the cost of the program.)

2)  Restrictions on Executive compensation for those institutions that sell shares to the government.  These restrictions include a clawback provision and a ban on golden parachutes as long as the Treasury holds equity issued under this program.

Clawback provisions are written in a way that the government can recover performance-based compensations to CEOs and other executives in the bank to the extent they later determine that performance goals were not actually achieved.  You have to write the specifics into the contract but usually it can be due to a restatement of financial results as well as some other reasons.  The restatement of the financial results usually has to be significant.  It can also kick in if there are determined to be some kind of misconduct. 

Gold parachutes are guaranteed severance compensation packages that  will executives receive if control of a company changes hands that results in a management shift.

Who do we own to date:

$25 billion:  Citigroup, JPMorgan Chase, Bank of America (parent now of Merrill Lynch), Wells Fargo (parent now of Wachovia)

$10 billion: Goldman Sachs, Morgan Stanley

Others with less than that:  Bank of New York, State Street and thousands of yet unannounced little guys.

Other issues:  At this time, the banks will not be asked to eliminate dividends.  CEOs are not required to resign.  All of the banks signed the agreement and entered into the deal so there would not be any stigma based on who needed the program and who did not.  We’ve basically just semi-nationalized the banking system in the U.S. 

Okay, so now we’re all investment bankers.  What I want to know is when do we get our bonus checks?

Just Survive …

Posted: October 12, 2008 | Author: | Filed under: U.S. Economy | Tags: , , , | 2 Comments

I’ve really wanted to talk about the financial crisis more.  It’s been hard to write about because things on the ground are changing so quickly. The deal right now is just to survive the entire thing. Times are odd and the odd are getting odder.

The oddest of the the odds is that there are more than just one economic positions being borrowed from Hillary’s plan by BOTH the surviving presidential contenders.  Both of these guys are completely clueless on the economy and it’s really showing. They are like little boys in a class room cheating off that one little girl with glasses that has all the answers.

This week,  Senator McCain became the liberal by suggesting a plan similar to Hillary’s suggestion of some kind of HOLC like the one that bought up bad mortgages during the depression.    Everything he’s been suggesting is so populist that I keep pinching myself to see if I’m actually awake. The Sunday morning talk shows were filled up with democratic talking heads trying to explain that buying folks’ homes at their underwater positions and renegotiating them is going to help banks more than the home owner.  This program is basically a re-tooled Roosevelt New Deal idea that is geared specifically to folks living in their homes, not the speculators. If you were all for the banks, the agency would bail out ALL mortgages, not just firsts for home owners. As a progressive, I have to say, for Democrats to be taking a stand against this position JUST because McCain introduced  into the debate and Obama just says no, is a little, well, odd, to me.

Another odder than odd policy suggestion is Obama’s idea to let judges work out families’ mortgage problems in bankruptcy court.  This is probably a good long term solution, but wouldn’t it be nice to stop these families from showing up in the bankruptcy court?  I’m actually wondering if prevention of a problem is something a lawyer can even wrap their brains around.  I mean, they make money from exacerbating problems once they’ve gotten huge in a court case, not from problem prevention so is this why he’s stumping for this at a time when short term solutions are required?  Even my first year economic students couldn’t figure out why you’d want to let the bankruptcy court work the foreclosures out.  Why not try to prevent the foreclosures? 

The next thing is the Pelosi hint at yet another stimulus package.  Just about any one ought to realize now that the first one really didn’t do much but hold the recession off a few months and make folks think of other things.  While it’s a nice thing to get $600 in the mail, the government can’t control what that money gets spent on.  It’s one thing if you take the money and buy something American, but most folks either use it to pay down debt which is not the least bit stimulatory or they go buy something that stimulates the Chinese economy. Unless you create a no buying at Walmart rule, this is nothing but another make them feel better while we figure out what to do plan.

 Economists have shown empirically with both the Ford and Bush rebates, that rebates are not the way to stimulate the economy because they don’t have the desired results.  They usually just exacerbate the debt and make folks feel a little better.  They are not game changers.  You need underlying changes to the tax codes to do that or you need the government doing spending on something that might have a chance at creating jobs–like building roads.  This is another Obama suggestion. The problem with infrastructure spending at this point is that it takes a long time to get through the system.  It is needed, but how long will it take to get the program going?  Infrastructure improvements are an important part of both short run economic stimulus and long run economic growth, but it’s a little late to start suggesting these things now that we’re in a full blown financial crisis and down turn in the real economy.  They’d have to be coming OUT of the hopper right now to do any real good; not going into the hopper some time ‘soon’.  Again, this is a preventative type of action once you see things are slowing down.  It wouldn’t be soon enough at this point.  This again leads me to believe that Obama doesn’t seem to grok the concept of preventative and when it’s useful. I was suggesting this a YEAR ago as a way of preventing a recession and slowing job loss when it does happen.  It’s a little futile now.  Hillary was suggesting this a year ago too.  That and her green jobs initiative were great suggestions for the situation at that time.

Which brings me to another odder than odd.  Senator Obama is now wanting some kind of tax credit to home owners for higher energy costs.  What I’m waiting to hear is how this is different from just giving every one a tax holiday from gas taxes except you have to wait until the beginning of the year to file for it.  Again, every time you talk about a one time deal, even if it is a tax thing, every one knows it’s a one time deal and it doesn’t really change their behavior.  Any stimulus that comes from it tends to be very short-lived.  Plus, by the time any tax credits would take effect it will be the spring.  Not one economist will probably stick their head out to say what kind of things will be needed by then.  It doesn’t make sense to try to do that now.

Right now, Henry Paulson is the most important man in Washington.  It’s not the President and it’s not these two candidates.  The second most important man is Ben Bernanke.  Again, odder than odd because neither of these men are elected and both of these men may have very short tenures at the helm. However, I’m just hoping Dubya takes some time off at the ranch.  I know I can’t wish that one for every one up for election right now, but I really would like it.   It is in the hands of Paulson and Bernanke until January.  I’m okay with that because Paulson, btw, is not what the Republicans or the Democrats spin would make him to be. 

Paulson has always been odd for both a Wall Street and Washington insider.  Paulson is a man that grew up on a farm in Illinois and got into Dartmouth the old fashioned way–good grades.  He wasn’t a legacy of any one unlike our current crop of candidates AND the president.  His nickname is “the Hammer” because he’s seen as relentless.  He is also a devout Christian Scientist who does not drink or smoke and goes back to Illinois on the weekends. He did this even when he was on Wall Street.  He lacks ideology and has been criticized by the right of being selling out free-market principles  and on the left for bailing out his Wall Street buddies.  I always consider being criticized by both sides a good thing in a public servant, but then that’s me.

Now we seen a joint effort from G-7 countries to contain the contagion.  Almost all of these plans have to do some with some kind of nationalization of banks.   This includes McCain’s suggestion to get the taxpayer ownership which oddly enough was snuck into the bailout package, unknown to many.  I’m wondering where THAT came from.  Perhaps we’ll find some one taking the credit for that soon, but it seems it might actually be some one like Republican Senator Arlen Specter.  Again, odd, odd and odder.

Meanwhile, my strategy and tactics are just to survive with my job and my loans paid down. I’m also trying to put a little money aside in the bank.   I’m trying not to look at my 401k plan because it’s telling me that I will die at the podium at this point.  I haven’t changed anything about it except all my new contributions are going into bonds.  That’s my suggestion to every one right now, don’t panic, we’ve been here before, we just don’t know how long it’s going to last.  I actually do have faith in Paulson and Bernanke but not so much in ANYONE running for election right now.  Right now,  McCain is sounding like the Roosevelt liberal right now and Obama is sounding very moderate so turning to politics for economics signals right now just has me checking my hands to determine which is left and which is right.  I still know which way up and down are and that we’re in for more downs than ups for awhile.  Other than that, I have NO idea what to say other than it’s an odd time right now and the odd are just getting odder.

Bottom line:  Just try to survive.

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