Category Archives: Economics

When Wall St. woes hit Main St.

72 Replies

Ever since the TARP rescue for credit markets was first proposed, we've heard and read many times how if credit dries up on Wall Street, it affects us on Main Street. And I've sort of, kind of understood that in the abstract.

But I understood a little better how in could play out when I read this piece this morning in The Wall Street Journal, about what's happening out there to small businesses. I was particularly struck by this anecdote about a business that is strong (for its size) in every other way, but is now in trouble because of the lack of credit. That sort of isolates cause-and-effect in a way that I found illuminating:

Even some small businesses that have seen a rise in demand are
struggling, due to the credit squeeze. In October, the most recent data
available, the Federal Reserve Board reported that 90% of U.S. banks
had tightened lending standards on small businesses in the previous
three months. That hurts young businesses that need to finance growth.

Susan Knapp once sold yellow-pages ads to small businesses, meeting
people who had turned their dreams into companies. It inspired her in
the late 1990s to turn her love of making pear jelly into a side
business. For years, she had collected pears from a Northern California
farm, whipped up batches of jelly and passed it out at holiday time. In
2003, she quit her job and became a full-time entrepreneur, using
credit cards, personal savings and an equity line against her home to
get going.

By 2007, her company, A Perfect Pear, was reporting $700,000 in
sales. She says she is sitting on $100,000 in orders from specialty
stores and grocers who want to buy her jellies and salad dressings. On
the company's Web site, many items are on back order.

And yet Ms. Knapp can't fill those orders: She doesn't have the
money to buy the 300 cases of vinegar and 200 cases of olive oil she
needs to make the products, and she hasn't been able to find funding.

Ms. Knapp, 56, says she has gone from making six figures to not
taking an income. For the first time, she and her husband, a
self-employed chiropractor, are without health insurance. In the past
year-and-a-half she has nearly drained her $190,000 retirement account
to pay for operations and two-part time employees.

NYT sees Columbia as microcosm of economic decline

18 Replies

Don't know how I missed the story in yesterday's New York Times about the job fair in Columbia — headlined "Reeling South Carolina City Is a Snapshot of Economic Woes" — but in case you did, too, here it is. And here's an excerpt:

    As the American economy sinks deeper into one of the more punishing recessions since the Depression, frustration and fear color the national conversation.
    This city in the center of South Carolina is an ideal listening post. According to a range of indicators assembled by Moody’s Economy.com — from job growth to change in household worth — this metropolitan area came closer than any other to being a microcosm of the nation over the last decade.
    This is now an unfortunate distinction. Some 533,000 jobs disappeared from the economy in November, the worst month since 1974. In South Carolina, a government panel is predicting that the state’s unemployment rate could reach 14 percent by the middle of next year….

Alone

14 Replies

Assuming I set it up right, if you send me an e-mail this week, you'll get this:


Welcome to my
special Christmas week AUTOMATED MESSAGE.
 
First, I am
alone in the office this week, and spending all of my time editing and preparing
for publication material left behind by my vacationing colleagues. This is like
doing the work of five jugglers simultaneously, so please bear with
me.
 
If you intend
for your message to be considered for publication as a LETTER TO THE EDITOR,
please resend it to stateeditor@thestate.com.
 
If you are
submitting a potential GUEST COLUMN FOR OUR OP-ED PAGE, please resend it
to Cindi Scoppe at cscoppe@thestate.com. This will
NOT be considered until Ms. Scoppe returns on Dec. 29. All local op-ed
columns for this week have already been selected and
edited. 
 
If you wish
to register a comment that is not for publication in the paper, I urge you to
post it on my blog, http://blogs.thestate.com/bradwarthensblog/.
 
Any messages
requiring a response from me, Brad Warthen: I beg for your patience. I am
extremely unlikely to be able to respond this week. If you MUST have a reply
this week (and we're talking emergency here), leave a phone message at (803)
771-8468, and I will get back to you when I'm able.
 
— Brad
Warthen


The last couple of weeks of the year have always been a high-wire act, even when we had adequate staffing. It's simply the best time for people to TAKE off, and it's when they WANT to take off, so we try to make that happen as much as possible. But these days, even one person being off one day puts us in emergency mode. This is so far beyond that, it defies description.

Which is my way of saying to YOU, don't look for a lot of blogging from ME this week. The only other person in the editorial offices this week is Randle, who handles letters, and as soon as she has prepared enough letters for publication to get me through the week — sometime Tuesday, we hope — she'll be gone, too.

I'm sort of in Chuck Yeager mode — as I climb into the cockpit alone, my last colleague hands me a sawn-off length of broom handle and says, "Just stick 'is in the handle and WANG it down with yer good arm…"

To which I can only say, "Thanks, Buddy…"

Graham’s got it right, too

14 Replies

No sooner had I hit "save" on that last post than I saw this release from Lindsey Graham, which actually came in before the DeMint one:


“I’m disappointed with President Bush’s decision in many respects. 
 
“I do not believe it’s appropriate to use the TARP (Troubled Asset Recovery
Program) funds to bail out the automotive companies.  These funds were supposed
to be used to stabilize financial institutions.  The TARP legislation would
certainly not have passed it we had known it was going to be used for this
purpose. 
 
“The plan announced by the President today will not lead to the necessary
reforms which will make these companies profitable.  The only viable solution is
for them to enter Chapter 11 reorganization. 
 
“There the companies would be able to renegotiate their labor and health
costs to make them competitive in the global marketplace.  It would also allow
the reorganization to be accomplished without political considerations. 
Presidential or congressional restructuring will end up being a political
exercise more so than a business exercise to make these companies profitable. 
 
“If we continue down this road, I expect this will be the first of many
government payments to the Big 3 automotive companies.”

Needless to say, I also agree with Graham. I'd like to see a little more indignation from him on this, though.

This is a bad situation we're in, folks. A lame-duck president takes it upon himself to throw $17.4 billion of money that was NOT appropriated for this purpose down a hole (and yes, I think the sudden failure of the Detroit Three is a bad thing to be avoided, but the whole managed bankruptcy thing sounded like a less bad option to me), and the only people who disagree with what he did is members of his party, and they're too loyal to get outraged about it. The Democrats love this, so they won't have a critical word to say.

And I'm too sick and eager to go home and hit the sack to get into it. Again, I recommend the Will column coming up on Sunday — he gives him both barrels.

DeMint’s right about Bush bailout

2 Replies

Just saw this release from Jim DeMint about Bush's unilateral $17.4 billion bailout of Detroit:

“This decision is
disappointing. While the bailout may provide a short-term boost to three
companies, it will not force them to fundamentally improve their operations and
become competitive in the long-term. This decision, I am sad to say, runs
counter the interests of American taxpayers, American consumers and the American
auto industry,” said Senator DeMint.

“I also believe this action is
unconstitutional. The Executive Branch must have the consent of Congress to
appropriate taxpayer funds. Yet the bailout legislation passed earlier this year
does not permit the Administration to use taxpayer money in this way, and
Congress rejected the auto bailout when it was brought up for a vote last
week.”…

The senator and I are not on the same page when it comes to other "bailouts" — we definitely disagree about the Obama infrastructure thing — but we're on the same side on this one. All of his libertarian populist rhetoric aside, this IS a constitutionally objectionable action. As I wrote in this editorial earlier this week, the president "takes too much upon himself."

And the thing is, nobody's going to stop the president from doing this — certainly not the Congress. George Will will have an interesting piece about that on our Sunday pages.

Some actual GOOD news about the U.S. auto industry

6 Replies

I'm not up to posting a lot of commentary on it, but I didn't want to let the day pass without noting this positive development, from an Energy Party point of view:

Fourteen U.S. technology companies are joining forces and seeking $1
billion in federal aid to build a plant to make advanced batteries for
electric cars, in a bid to catch up to Asian rivals that are far ahead
of the U.S.

The effort, the latest pitch from corporate America to inject
federal dollars into a project, is similar to an alliance that two
decades ago helped the U.S. computer-chip industry restore its
competitiveness. Participants include 3M Corp. and Johnson Controls Inc.

Many experts believe battery technology and manufacturing capacity
could become as strategically important as oil is today. Auto makers,
including General Motors Corp. and Ford Motor
Co., say they plan to roll out plug-in electric cars by 2010. But the
U.S. has limited capacity to make the lithium-ion batteries those cars
will need. Asian producers such as Panasonic Corp. dominate the car-battery field.

About time we got off our duffs on this. That could be a decent thing to spend federal dollars on, rather than more of the same…

Now we’re REALLY in trouble: The WSJ quotes ME on the economy

34 Replies

Just this morning, after taking two days off, I pondered my three-day growth, and the overused disposable razor by the sink (I really need to buy some more this weekend), and thought this would be a perfect time to grow the beard back, just in time for Christmas. But then I thought it might confuse the twins as to who I was, and no amount of convenience was worth that.

So I shaved, and then came in to work, to find that my boss, Publisher Henry Haitz, had e-mailed me a story from The Wall Street Journal, which started like this:

Growth Area: Beards on Laid-Off Executives
Released From Staid Offices, More Men Free Their Facial Hair; the Professorial Look vs. ZZ Top

By CHRISTINA BINKLEY
    Call it the face of freedom.
    After Jorge Hendrickson lost his job at a Manhattan hedge fund three weeks ago, he stopped shaving. "I’ve shaved for so long, and it’s nice to be able to look at the positive side" of losing a job, says Mr. Hendrickson, 24. "I’m changing my lifestyle while I can."…

This, of course, is not the kind of message you want to receive from your boss after taking a couple of days off (and almost deciding to grow your beard back), on the same day you read that David Stanton — the only person at WIS I could name, a guy who went to work there the same year I joined The State — has been unceremoniously laid off.

But then I saw Henry’s note at the top of the e-mail, which read "Assuming you saw this in wsj yesterday, 4th para from the bottom….." Here was the graf to which he directed me:

Ben Bernanke’s furry jawline gives the Fed chairman the look of a trustworthy intellectual. But Brad Warthen, editorial page editor for The State, a Columbia S.C., newspaper, recently pondered what would happen if Mr. Bernanke were to shave. "Could this be the bold stroke that is needed to jolt the economy back to where it should be?" Mr. Warthen posited in his blog.

So now you know the economy is really, really in trouble. The collapse of credit markets, the swan dive of the Detroit Three automakers, the apparent refusal of consumers to spend on Christmas, on and on –all that was just preliminaries.

It has now come to this: The venerable Wall Street Journal quoting my meanderings about what the Fed chairman’s facial hair might mean in terms of the world economy’s future direction. Sure, Bernanke is from South Carolina — from the Pee Dee in fact, just like me — and that gives me special insight, but still…

The time has come to curl up into a ball and pull the blanket over your head. It’s the only rational response…

Blinded by ideology

39 Replies

Just to show you the difference from an UnParty approach and an ideological one, take a look at The Wall Street Journal‘s editorial on the Detroit bailout, and compare it to ours.

Both of us are against the bailout. So we agree, right? Not quite. It seems that the one thing that bugs the WSJ the most about the deal is the possibility that maybe, just maybe, it might force Detroit to make sensible cars for a change. And that, to the libertarian extremists at the Journal, would be like taking the country to Room 101 — in other words, it would be the worst thing in the world:

It’s also becoming increasingly clear that the real goal of Democrats isn’t to save jobs per se, but to tell Detroit what cars to make and how to make them. The goal is to turn GM and the rest into Big Green Machines that will stop making SUVs and trucks and start making small cars that run on something other than carbon fuel. If consumers don’t want to drive them, well, the next step will be to impose subsidies or penalties and taxes to coerce them to do so. Giving the federal government an equity stake could also lead to protectionism, as the politicians attempt to shield Detroit’s mismanaged assets from competition by citing the interests of the UAW, the environment, or some other "social" good that has nothing to do with making cars Americans will want to drive.

Here’s what’s wrong with that — or one of the things wrong with it: As I’ve made clear, I’m against the bailout. But if there IS a bailout, provisions requiring Detroit to build cars that move us toward energy independence and maybe, just maybe, reduce greenhouse gases would be a GOOD thing about deal, not a bad one.

Moreover, if we the taxpayers are putting up the money — which, we shouldn’t, but if we are — we have EVERY RIGHT in the universe to demand that Detroit make whatever kinds cars we demand. If we want them all to be purple and green two-tone three-wheelers that run on moonbeams, that by God is the kind of cars the recipients of OUR money ought to get. If the market demands some other kind of car, then the car companies that aren’t taking our frickin’ money can make them.

Of course, I also believe — as the founder of the Energy Party — that there would be absolutely nothing wrong with making it illegal to sell those idiotic land yachts that Americans have been driving for the past decade or so. SUVs are contrary to the national interest — strategically and environmentally — and I am utterly unmoved by anyone’s argument that they should be allowed to help fund the next bin Laden to come out of Saudi Arabia’s madrassas just because — and this infantile "reason" is offensive to me in the extreme — they WANT to.

Of course, the God-given right to fund petrodictators — helping Mahmoud buy the Bomb, for instance — while at the same time destroying the planet, for no better reason than some moronic desire to loom over the rest of traffic in a vehicle that can carry 8 times as many people as it ever actually carries, is of SUPREME IMPORTANCE to the editors of the WSJ. Nothing is more sacred. One gets the impression that if someone came up with a foolproof plan to capture bin Laden, neutralize the Taliban, stabilize Pakistan, turn our economy around 180 degrees, end man-made global climate change and make everyone in America a millionaire (without the currency losing value, mind you), the WSJ would be against it if it also included a requirement that CAFE standards rise.

Detroit bailout editorial

6 Replies

Here’s the editorial I wrote for today’s paper about the Detroit bailout deal Congress and the White House have been working away on so busily this week:

The more we hear,
the worse Detroit
bailout sounds

CONGRESS IN RECENT days has made two things plain with regard to the Detroit Three automakers (still known as the “Big Three,” although they no longer dominate the marketplace):

• It is determined to do something, and to do it right away.
• It doesn’t really know what to do.

A couple of days ago, the plan seemed simple enough: Give automakers $15 billion or so — instead of the $34 billion they’d asked for — just to delay the inevitable until March. That approach was at least plainly and obviously unappealing. Essentially, we’d be throwing $15 billion into a hole, and accomplishing nothing other than kicking the can down the road.

In the last couple of days, as Democrats negotiate with the White House to try to shape a deal that enough Senate Republicans will vote for — realizing that some Republicans will never go for it — the “plan” has gotten more complicated. Note that we put “plan” in quotation marks, because this seems a dubious application of the word. “Plan” suggests coherence; it implies that we know where we are going. What was shaping up as this editorial was written seemed undeserving of the term.

Oh, but it would all be guided by a “car czar” to be named later — by George W. Bush, who will be out of office next month. House Speaker Nancy Pelosi has hinted that the czar would not need to be replaced once Barack Obama is president, thereby leading to speculation that the czar would be someone the president-elect had agreed to, we sorta kinda hope.

Presumably all this would be spelled out more specifically by the time Congress actually votes on it, possibly today (or possibly as hastily as last night; that was unclear as of this writing), but a sober period of reflection before the government takes a huge stake in a collapsing industry seemed not to be part of the “plan.”

Here’s an interesting sidenote: Even as the management at General Motors — management that we are assured by the board would not change, because the board doesn’t think it needs to change — eagerly awaited (temporary) salvation, Ford Motor Co. announced that it would not seek short-term federal aid, because it doesn’t face the same “near-term liquidity issue” as G.M. and Chrysler. That actually makes Ford sound like a better investment than any company that wants a bailout.

We understand that a collapse of the erstwhile Big Three would have a terrible effect on real people and real businesses throughout this country. But we also know — this has been more than amply demonstrated — that the Detroit automakers and the United Auto Workers have been locked in a mutual death embrace for some time, operating under contracts that make it impossible to thrive. Meanwhile, we’ve seen foreign carmakers operate here in South Carolina and elsewhere across the South, producing good jobs and weathering the current economic downturn better than the U.S.-based companies.

We wish we were confident that Washington had a coherent vision of how to turn the U.S. auto industry around, making it profitable and putting American automakers back out in the vanguard of innovation, making the cars that we will want (and the planet will need) tomorrow. That would be worth investing in.

But we view with suspicion any deal that spends our money to keep the U.S. auto industry going on its present course, especially when said deal is worked out in a rush between a lame-duck Congress and president.

Take another civics quiz — please

19 Replies

Remember the civics quiz from several months back? You know the one I aced, relatively speaking? (Disclaimer: I’m one of those people who test well. I’ve always sort of identified with Woody Allen’s quip in "Love and Death," when another character said "God is testing us!" and Woody said "If He’s gonna test us, why doesn’t He give us a written?" Some folks say testing well is not a true indication of knowledge or intelligence, but what do they know? And how are they going to prove that they know it? End of disclaimer.)

Well, the same people who drafted the last one also drafted this one, which is shorter, and easier, than the last one. Here’s my score:

You answered 32 out of 33 correctly — 96.97 %

Average score for this quiz during December: 75.0%
Average score: 75.0%

You can take the quiz as often as you like, however, your score will only count once toward the monthly average.

If you have any comments or questions about the quiz, please email americancivicliteracy@isi.org.

You can consult the following table to see how citizens and elected officials scored on each question.

Which one did I miss? The very last question, as follows:

33)   If taxes equal government spending, then:
A. government debt is zero
B. printing money no longer causes inflation
C. government is not helping anybody
D. tax per person equals government spending per person
E. tax loopholes and special-interest spending are absent

Actually, all of those answers seemed a little bit OFF to me; and I just chose the one that seemed the LEAST off. I was wrong.

If you follow the link to the table above, you’ll learn that the general public scored higher than elected officials did. Big shock, huh? And which question did both groups get wrong the most? The one about the "wall of separation" between church and state, of course. That’s just a testament to the success of certain people in propagating ignorance on that topic.

Anyway, take the test — and ‘fess up as to how you did.

Paul Krugman vs. Mark Sanford

30 Replies

Someone brought this to our attention via e-mail. It seems that one of my least favorite syndicated columnists, Paul Krugman, had a few words to say about my least favorite current governor.

Mr. Krugman, you’ll recall, won the Nobel Prize for economics this year. My beef with him is that he doesn’t stick to economics, and his political commentary reads like something written by a member of the College Democrats, it’s so sophomorically  partisan. But note that in THIS case, he is talking about what he knows — economics. (Now watch — Lee will ‘splain to us that he’s the economics expert, and the guy who just won the Nobel for it doesn’t know squat.)

This is from the MSNBC program "1600 Pennsylvania Avenue" on Tuesday:

GREGORY: To this point, Paul, this is Governor Mark Sanford in the course of the meeting today from South Carolina, taking on this idea of the efficacy of a stimulus package. Listen to him.

(BEGIN VIDEO CLIP)

GOV. MARK SANFORD (R), SOUTH CAROLINA: We’ve been told for a long number of months that this stimulus, that stimulus, this stimulus, that stimulus would opportunity the economy around, and it hasn’t. The ultimate stimulus package for the United States of America is the entrepreneur with a dream working on the project of tomorrow. The ultimate stimulus package is, again, that market-based economy, rather than a political economy wherein people come as simple plaintiffs to Washington, D.C., for yet more money.

(END VIDEO CLIP)

GREGORY: Paul, reaction to that?

KRUGMAN: You know, that’s catastrophic. If that become the way the decisions are made, that’s real know-nothing economics. That’s just saying, oh, you know, we’re going to-the reason that this market-based-total faith in the free market didn’t work is that we didn’t do it enough. We have a lot of experience here. We have the 1930s. We have Japan in the ’90s. And we do know that government spending helps when you’re in a big problem-when you’re in a deep slump of this kind. It’s, in fact, about the only thing we have to keep us from being in something that would look more like the Great Depression than we want to contemplate. This is a time that the private sector is pulling back. The private sector is pulling back because consumers are nervous, because the financial system is a mess. There’s a huge hole in the economy. Government has to fill it, or we’re going to look at double-digit unemployment.

Retail watch: How’s business, as of this Cyber Monday?

8 Replies

Just a few minutes ago, I was reading a piece at the WSJ site that attempts to get a handle on how retail sales went across the country on Black Friday, and over the weekend. (Short version: Better than expected, but a lot of that was the loss-leader items on Friday, and once folks bought those up, sales slowed.)

That’s a hard thing to get a grip on. But it occurs to me that it would be interesting to enlist you blog readers in a reporting effort. And what better time to do it than on Cyber Monday? We know that one piece of the economic crisis is the reduction in consumer confidence — and, more substantially, in consumer spending. Hank Paulson a couple of weeks back starting emphasizing that at the expense of bailing out Wall Street.

Everyone expects this holiday season to be a bummer for the consumer economy, so let’s see if we can gauge, through our own experiences, how that’s going.

I’ll kick it off with some of my own purely anecdotal observations:

  • I started thinking about this weekend before last. It was the weekend after Circuit City had filed for bankruptcy and Best Buy had "sent a shiver through the retail and financial markets Wednesday as it
    sharply reduced its profit forecast due to plummeting sales." I was at Best Buy — the new one near Lexington — picking up my first Chrismas gift of the season. It was about 6 or 6:30 p.m. on a Sunday. I didn’t have to wait in line, so it occurred to me to ask the clerk whether they had been busy earlier in the weekend. He said they had. But you couldn’t tell by me. We also went to Lowe’s (the one closer to I-26) to pick up a couple of things and to look at charcoal grills, and I pointed out one to the wife that I would like very much to have.
  • On Thanksgiving, my kids who were in town and I were over at my parents house, and after dinner there was a good bit of looking through the ads in that day’s paper and discussion about who planned to shop Friday and who did not (I did not, since I had to work), which I’m sure would have pleased the folks down in advertising. One of my daughters, evidently shopping for things Dad might want, kept pointing things out in a neutral sort of way and asking what I thought. One idea stuck with me, and I later mentioned it to my wife (I didn’t want my daughter spending that kind of money on me). It was a loss-leader "door-buster" USB turntable — you know, a thing for turning all my old vinyl albums into MP3s — at J.C. Penney. It was $78.88, I think. Unfortunately, by the time I found the ad again and showed it my wife, I realized it was bit late for a "door-buster" price. Anyway, I’m worried that talking about that may have put the grill out of her mind, which would be a tactical error on my part.
  • Then we went back to Alice’s and had another Thanksgiving dinner that couldn’t be beat… no wait; wrong story… (But I did get to hear that part on the radio later that evening.)
  • Yesterday, the wife and I did a full-bore Harbison run starting around 3:30 p.m., and I’m sorry to report it was way easier than it would have been if retail were booming. (It WAS raining, of course.) We went to Verizon first, because she had left her phone charger in Memphis, where she had visited her Dad for Thanksgiving. We had perhaps the shortest wait I’ve ever had there — not even long enough to browse. We then hit the mall itself, and there were large swaths of parking lot empty. It was bustling, but not Christmas-season bustling. Long line at Starbucks, but that’s always the case at that Starbucks. My wife stopped at several kids-clothing shops looking for Christmas outfits for the twins, which struck me as impractical, but anything in the name of boosting the economy. She was disappointed not to find more bargains, except at Sears, where she made a purchase. Hot Topic didn’t have the thing my youngest daughter had specifically requested, but the clerk (who may have set a Midlands record for body piercings on the face alone) suggested we look on-line. We then went to Ross, Marshall’s, T.J. Maxx (all places where at least one of my daughters likes to shop), Best Buy (where I found a Sony USB turntable was $164, but that’s not why I was there), Publix, and home.
  • At home, I spent a good bit of time trying to find the item we couldn’t get at Hot Topic. I found it at the chain’s Web site, but then spent a bunch of time trying to find something my daughter might like just as much, but which I would not find as objectionable. Most of what I found, unfortunately, was in the UK rather than here at home, and I wasn’t sure how to negotiate pounds when I have dollars in my debit card account.

Anyway, that’s for starters. What do y’all have to contribute? I’d particularly like to hear from our own resident retailer, James D. McCallister. In fact, I might check to see whether he can get that item I’ve been searching the Web for…

An exchange about macroeconomics

13 Replies

Here’s an e-mail exchange from today, unadorned. Perhaps y’all will take an interest in the discussion:

From: Kathryn Fenner
Sent: Wednesday, November 26, 2008 9:26 AM
To: Warthen, Brad – External Email
Subject: a suggestion

Brad–
    Upon reading Peter Brown’s comment (the old ‘it’s my money’ whine) in Adam Beam’s excellent front page piece in today’s paper on the possibility of federal "bailout" money coming to Columbia as "investments," I wondered if it might not be helpful for some of your readers if you did a simple primer on Keynesian macroeconomic theory (since Friedman is generally considered discredited outside the Governor’s circle). Maybe if people understood that, instead of directly taxing us, the federal government can print money, which, if it pays for certain things like wages, can actually create wealth (increase the pie) rather than taking money from your pocket, everyone might calm down a bit. Or at least some people might….
    A lot of us educated in South Carolina public schools–even the fairly good ones (Aiken) missed out on economics–I only happened to take macroeconomics as an English major at Carolina b/c a friend recommended the professor teaching the honors section (Martin). I would have taken another social science for my requirement for sure otherwise. I also only happened to take an excellent course on the history of the New Deal because it was taught by an excellent professor (John Scott Wilson), whom I had studied under for another course.

Kathryn
—
Kathryn Braun Fenner
Attorney at Law

On Wed, Nov 26, 2008 at 11:36 AM, Warthen, Brad wrote:
    We touched on economics in my senior year, at Radford HS in Honolulu. You know how we did that? We played a game over the course of several days, in which we were supposed to be marooned on a desert island, and we had to make decisions about how to spend our time. Most time was spent obtaining food, but we could also budget time away from food-gathering to make tools to save time, etc. Scads of fun, much like such computer games of latter days such as Sim City — only we did it on paper.
     That was about it.
    We also read The Autobiography of Malcolm X, which Barack Obama ALSO read in high school in Hawaii, and found inspirational. Our teacher for that class was Mrs. Nakamura, so we were way multicultural.
     That’s about it. I know what Keynesian economics is in this context, very roughly — it’s like, spending to stimulate the economy, right? — but I would not presume to set myself up as an expert. Oh, I know one other thing — his middle name was Maynard, like Maynard G. Krebs, whom you are probably too young to remember.

From: Kathryn Fenner
Sent: Wednesday, November 26, 2008 12:43 PM
To: Warthen, Brad – Internal Email
Subject: Re: a suggestion
    Dobie Gillis was in syndication and played in the afternoons when I got home from school, man. Maynard went on to be Gilligan, a vastly inferior show. I’m only six years younger than you, not that your face gives that away (what is it,  a portrait in the attic? Some secret Hawaiian face cream? I mean from reading your columns, you got plenty of sun playing outdoors in the tropics and subtropics)
    The game you played was more about microeconomics, which most people probably grasp more intuitively–it’s our household economy, our business. The mess we are in now calls for macroeconomic solutions, which no one in the MSM seems to spell out in a nice graphic for the newbies–how when the government prints money, you get inflation, but you also can get jobs and spending money and ripples through the economy (bottom up works a lot faster–not stimulus in your pocket that you save or pay off credit cards, but jobs for the unemployed who buy groceries and other necessities and thus get the ball rolling again in terms of generating transactions that not only support a civilized lifestyle (as opposed to homelessness or Harvest Hope) but taxable income to repay the "printed money."
    Whatever happened to the notion of "from those to whom much is given…."?  Rotary is such a great example of the fulfillment of the expectations by the fortunate, but some of the bloggers and Peter Brown and Sanford and his cronies (Joel Sawyer’s letter was way off base) need to step to the plate. Dennis Hiltner said something to me the other day that drew Socialist me up short, "The employers who depend on workers who depend on bus transit should pay them enough to afford the true cost." I sputtered, but then I thought, "Surely Palmetto Health could take $10 per shift from the MDs and give it to the custodial staff?" I guess that’s redistributionist, huh?

Gee, I don’t even want to talk with Geithner…

16 Replies

Geithner

Just got this e-mail:

Hi
there,
My name is Jen
Parsons, I’m with Ketchum PR.
I wanted to see if
you’re doing any profiles on Tim Geithner.  We work with
Keith Bergelt, the CEO of Open Invention Network, and
he worked with Geithner in the early 90’s while they were in Tokyo.  Keith can
offer some good insight into Geithner’s work style, career ambition,
etc.
Let me know if you’d
like to chat with Keith.

Thanks,
Jen

Now, that’s service for you. Unfortunately, I don’t even know what I’d ask Geithner himself if I were to have a few minutes of his time. For me, the broad, high-altitude overview Obama provided today regarding economic policy was way more detail than I need.

So no, I don’t need to talk to somebody who just used to work with Geithner.

When I receive a shotgun release like that, especially on Thanksgiving week — when we tend to be more shorthanded even than the skeleton crew we normally have, and I’m cranking as hard as I can with routine, boring tasks that you do NOT want to hear about, just getting the pages out, without even thinking about interviewing or writing, even about subjects I know something about, much less the new Treasury secretary, I find myself wondering whether people who send out releases like that have the slightest idea what’s going on out here in newspaperland. The answer comes quickly: Probably not.

Sorry about the length of that sentence. I didn’t have time to write short ones.

 

Pass Colombian free trade pact

6 Replies

Hey, don’t just go by me on the need to pass the Colombian Free Trade Agreement. Listen to The New York Times, which said this week:

We believe that the trade pact would be good for America’s economy
and workers. Rejecting it would send a dismal message to allies the
world over that the United States is an unreliable partner and, despite
all that it preaches, does not really believe in opening markets to
trade. There is no more time to waste. If the lame-duck Congress does
not approve the trade pact this year, prospects would dim considerably
since it would lose the cover of the rule (formerly known as fast
track) that provides for an up-or-down, no-amendment vote.

Because
of trade preferences granted as part of the war on drugs, most
Colombian exports already are exempt from United States tariffs. The
new agreement would benefit American companies that now have to pay
high tariffs on exports to Colombia.

It also would strengthen
bonds with an important ally in a volatile corner of South America —
that also is the main source of cocaine shipped into this country and
where the United States has very few friends these days.

As for those of you who say you don’t care what the NYT says, this post isn’t aimed at you. It’s aimed at people a lot more likely to care what the Gray Lady says — Democrats in Congress (and Barack Obama), who have against all reason opposed this agreement.

Should we let Detroit go under?

24 Replies

You know, I’m leaning more and more that way. If we let GM et al. go bankrupt, something would take their place, and that something would be geared more to making the cars that the world actually wants with a more reasonable production cost.

A lot of things are pushing me that way, such as:

  • The George Will piece I ran today, which effectively painted the former Big Three and UAW as wedded to failure, and wanting us to subsidize it.
  • The consideration that here in the South we have an example of what is likely to replace Detroit, and it’s certainly a lot more attractive than what we’re being asked to prop up.

This time, Mark Sanford has a point:

Gov. Mark Sanford of South Carolina recently wondered whether BMW
would have ever built its plant in Spartanburg if the government had
been handing out money to its rivals, and Rep. Lynn Westmoreland of
Georgia voiced similar concerns about the state’s Kia plant, which
could bring 2,500 jobs to his rural district.

"Let’s face it, who would want to come over here and put their
investment into this country if they knew the government was going to
be subsidizing their competitors?" he said. "It’s just not right. It
just goes against the grain of the free-enterprise system."

It’s too bad he reacts that way to EVERYTHING that involves government action. If he’d only say this stuff when it actually makes sense, people would listen to him more. And this time, it makes sense.

Of course, if it were only good for South Carolina and bad for the country, I don’t think I’d support what he’s saying (at least, I hope not). But the fact is that increasingly, I don’t think propping up the disastrous business model of Detroit is in the country’s, or the planet’s, interests.

That said, Ben Stein gives me pause, warning that a GM bankruptcy would be bad for national security (Shades of "Engine Charlie" Wilson and his notion of "what’s good for the country"). Bueller? Bueller?

But what do y’all think? Bueller?

We’re lining up for soup

9 Replies

Soupline

Maybe it’s not the 1930s yet. I haven’t seen more people than usual lining up for free soup.

But apparently, a lot more of us are buying soup, the cheaper the better:

According to a November survey of Wal Mart stores focusing on canned foods by
Longbow Research analyst Alton Stump, the canned soup category is gaining
momentum, and within the category, Cambell’s Soup (CPB) is
gaining share against rival Progresso, made by General Mills (GIS)
as consumers look for less expensive meal
alternatives.

According to the survey, volumes in the soup
category expanded at a rate of 10% annually in November, up from the 7%
to 8% gains registered so far during most of 2008.  “The category volume boost
of late resulted in part from an apparent shift in consumer demand towards
takehome food items, which benefited soup in particular as a less-expensive meal
alternative,”  Mr. Stump said.

That’s from a relief from an outfit known as Longbow Research.

How Detroit got to where it is now

23 Replies

Make_suvs

Earlier today I wrote an editorial for tomorrow’s paper that warns against being too eager to give Detroit the means to keep doing what it’s been doing, as some in Congress seem to want to do.

My reading prior to writing that led to my post about cheap gas, and in responding to a comment on that, I was reminded of something Tom Friedman wrote the other day:

O.K., now that I have all that off my chest, what do we do? I am as
terrified as anyone of the domino effect on industry and workers if
G.M. were to collapse. But if we are going to use taxpayer money to
rescue Detroit, then it should be done along the lines proposed in The
Wall Street Journal on Monday by Paul Ingrassia, a former Detroit
bureau chief for that paper.

“In return for any direct government
aid,” he wrote, “the board and the management [of G.M.] should go.
Shareholders should lose their paltry remaining equity. And a
government-appointed receiver — someone hard-nosed and nonpolitical —
should have broad power to revamp G.M. with a viable business plan and
return it to a private operation as soon as possible. That will mean
tearing up existing contracts with unions, dealers and suppliers,
closing some operations and selling others and downsizing the company
… Giving G.M. a blank check — which the company and the United Auto
Workers union badly want, and which Washington will be tempted to grant
— would be an enormous mistake.”

That, in turn, reminded me of something else Paul Ingrassia wrote recently, and that’s what this post is about. Basically, I wanted to recommend his primer, "How Detroit Drove Into a Ditch," which is a nice reminder of everything the Detroit Three (formerly the "Big Three") and the UAW did to mess up the auto industry in this country.

Energy Party’s worst nightmare: gas at $1.87

38 Replies

You may think it’s the Republicans who were the big losers last week, but you’d be wrong. It was the Energy Party.

I realized how awful things were last night as I passed the gas stations on the way home. Hess was at $1.879.

Folks, that’s the same as less than 30 cents a gallon back when I started driving in 1968. Which is less than we were paying then. And when I think of the 1968 Buick LeSabre I used to drive (before I bought my Vega, which was really a mistake), and the mileage it got, it sends a chill to the heart.

Even I, Energy Party stalwart that I am, thought about stopping to buy some of that cheap gas, even though I had plenty in my tank.

So now everybody’s going to start buying SUVs again (which of course will create upward pressure on the gas price, but we never learn), and Obama’s going to make sure we don’t drill in Utah or wherever, and Congress wants to bail out Detroit (or perhaps we should say, it wants to bail out the UAW), whether it gets its act together or not.

As The New York Times noted on Election Day,

Just a few weeks ago, the Big Three American automakers convinced
Congress to give them $25 billion in cheap loans to retool their plants
to make fuel-efficient cars. Then, with nary a blush, the Ford Motor
Company introduced the new star in its line: the 2009, 3-ton,
16-miles-per-gallon, F-150 pickup.

Lord help us, because we won’t help ourselves.

Just to review, here’s what we should do, and are not going to do:

  • Impose a tax increase to get the pump price of gasoline back closer to $4, so the money stays in this country, and demand is curtailed, thereby driving down world prices, thereby putting more money in our national coffers for hydrogen research, developing electric cars, paying for the War on Terror, credit bailouts, a National Health Plan, and all the other stuff we can’t actually afford now.
  • Produce more of our oil domestically, whether it’s off-shore, in Utah, in Alaska, wherever — for as long as we continue to need the stuff, which will be for quite a while.
  • Put all the resources we can muster into an Apollo/Manhattan Project to make our need for oil a thing of the past ASAP. How will we pay for it? I just told you.
  • Use "stimulus" funds to build mass transit, nuclear plants and other critical energy infrastructure, rather than throwing the money to the winds the way we did with the earlier stimulus program.
  • Do all the other stuff in the Energy Party Manifesto.

There. I said my piece. Nobody’s listening, but at least somebody said it.

The creeping sense of letdown

26 Replies

This feeling has been creeping up on me in recent weeks, and it’s just emerged into my consciousness in the last days. I hesitated to mention it, and it seems particularly inappropriate given the fact that people are turning out in droves to vote, but…

The election has been a real letdown for me. And I didn’t expect that.

Remember back in January, when I said that if our two endorsees for the major party nominations both made it to the November ballot, it would be a win-win proposition for the country? Well, I did say it, and I meant it. But somehow, between then and now, my enthusiasm has just dissipated, like air slowly but steadily leaking from a balloon.

Part of this is just due to the fact that I was never going to enjoy the general election campaign as much as I did the primaries, nor would I appreciate these two candidates as much as party standard-bearers. They were SO much more appealing as insurgents — McCain running and prevailing against all the diehard GOPpers, over their vehement protests, and doing it even after his candidacy was declared dead. Obama running as the alternative to continuing the vicious, pointless partisanship of the Clinton-Bush years. But the climax of this drama seems to have occurred when they triumphed over their parties’ orthodoxies. Nothing has seemed that fun or that inspiring since then.

McCain picking Sarah Palin to please the base was bad, but Obama leading the charge of the crowd pretending that John McCain was some sort of incarnation of George W. Bush was, if anything, worse. All of it was dispiriting. I first noted that during the Democratic Convention; and while there were moments in McCain’s acceptance speech where he was almost the guy he needed to be to keep me applauding, he fell short of the mark.

Beyond those factors, three things contributed to my present political ennui:

  1. McCain utterly failing to put his best foot — or even his second-best foot — forward. Every time he opened his mouth, I kept hoping he would explain clearly, in a way undecided voters couldn’t miss, why he was the guy. I still thought he was the guy myself, but it would have been nice if he had helped others see it. It’s like he was going through the motions ever since he upstaged himself with the Palin selection. This is a weird and unfair thing to say, but… you know those appearances he did on SNL Saturday and Monday nights? He was game, and I give him that, but… he just fell flat. It wasn’t funny. No, he’s not a professional comedian, but he can be funny — one moment when he was his old self, but I think too few people saw it, was at the Alfred E. Smith dinner. He was hilarious. His timing, and his feel for his audience was impeccable. But the SNL appearances were a letdown. Blame the writing if you will, but it was sort of symbolic to me of the way he generally failed to connect throughout the fall. Sometimes you click; sometimes you don’t. Yeah, I know that seems stupid, but what I’m trying to say is that he no more clicked as a presidential candidate during these weeks than he did on SNL. If you don’t know what I mean, go back and watch the debates. He was saying the right things, but not clicking. As I mentioned in a previous post, our endorsement was about his record, not about what we saw in the campaign. I’d endorse him again given the chance, but next time I would hope he’d help himself out more.
  2. That shouldn’t have mattered given the "win-win" situation I had predicted back in January. With one guy faltering, that left us with Obama. But I found myself less and less enchanted with him as the campaign wore on. He, unlike McCain, never missed a step. He was on his game at every moment of every day, with a steadiness and discipline that seemed superhuman. That wasn’t the problem. The one real up-side I saw to the future, contemplating the future with a President Obama, was that he has consistently shown such stellar abilities with the intangibles of leadership, from his general unflappability to his rhetorical talents. The problem was that I started paying more attention to what he actually had to say about some issues, and started doing so in a more critical fashion, as I pondered our upcoming endorsement. And, as I’ve said in recent days, I got really, really disturbed about some of the things he said, because they were SO off-the-shelf, liberal Democratic dogmatic. (Ironically, the debates had a big impact on me here — even as I was disappointed at McCain’s political skills on those occasions, I became more and more disturbed by precisely what Obama was saying so smoothly.) Before, I had just accepted that he and I wouldn’t agree on abortion, for instance — something I had to accept in backing Joe Lieberman or practically any other Democrat. But then I started peeling the layers, and each new layer worried me more. First, his lack of concern for the moral value of the unborn seemed to go beyond most Democrats, and I just started fully noticing that near the end. Then there was his unwillingness to consider judicial candidates who didn’t agree with him on the issue. Then there was his equating the nebulous "right to privacy" with the right to free speech. Then there was his utter dismissal of the rights or duties of the political branches to decide such issues with that "state referendums" nonsense. Then I saw similar patterns on free trade, and there was a disturbing willingness to be doctrinaire on Big Labor’s agenda, not a transformative figure at all. Combine that with the inevitability of bigger Democratic majorities, and instead of a post-partisan president, you’ve got textbook Democrat, and that set us up for more partisan warfare in the coming years, not less.
  3. Finally, there was the staggering economic news of the last couple of months. On a pure electoral plane, this as much as anything is what has delivered the election to Obama. But I gotta tell you, I sure wish I could be as sanguine as the Obamaniacs are about his ability to lead us through this. Don’t get me wrong; I don’t think McCain could, either. It’s just that I have seen little to make me think Obama has a better idea of how to approach this. I wasn’t kidding when I said, several weeks back, that what we need is another FDR. And neither of these guys fills the bill, the way I see it. This factor has done as much as anything else to grind down my enthusiasm, day after day. Did you see the lead story in The Wall Street Journal today? That’s our reality, folks. I really, really hope that the Obama supporters are right and I’m wrong, and he WILL have what it takes to lead us to turn back the tide. But I remain worried.

Maybe I’m just tired. Maybe this is just physical exhaustion. Maybe it’s the wild ride of the past two years, all the excitement — all the fun we’ve had here on the blog, for that matter, with page views now essentially double the year before. And so on pure adrenaline, I’m due for a letdown. But I think it’s more than that.

In the last few weeks, I’ve said a bunch of times that I looked forward to this being over. But I just realized today that I won’t feel that way at all. Instead, I fear, the letdown will be complete rather than merely imminent, and I’ve just come to realize that. No, not because "my guy" lost the presidential election. It’s more because I thought it was win-win, and then I realized that it wasn’t, and that whoever won, we were going to have a mess that we still have to get through. The economy will still be a mess. We’ll still have the same problems with Iran, Russia, Venezuela, Iraq, Afghanistan, Pakistan, China… and ourselves. We won’t even be poised to solve our health care crisis, because even with a bigger Democratic majority and a liberal Democrat in the White House, no one will say "single-payer." The irony of that is palpable to me. (We’ll get the BAD stuff of liberal Democratic ideology — the activist judges, the intimidation of unwilling workers into unions, trade isolationism, and the like — without a National Health Plan. Sheesh.)

Basically, I realized fully, on an emotional level, that neither McCain nor Obama was going to deliver us from all that. And once the election is over, we no longer have the luxury of pretending that they might do so. So I think that’s why I’m down.

Sorry to rain on the parade. Y’all go ahead and have a nice time, though …