Wednesday, August 31, 2011

Leading an Economic Recovery – Not Hardly

President Obama is going to give a jobs speech to Congress at some point next week once our elected officials can find a way to stop screwing around with politics before country. I suspect that a major part of the speech will include a proposal to undertake a number of infrastructure initiatives. Given the uncompromising fixed-position driven decision process in vogue in politics today, there will an immediate insistence that before any spending can be agreed to that budget cuts will have to be identified before it could even be considered. So we will see more of the pre-election political posturing and posing that takes precedence over serving the nation’s interests. I am not sure that it will really matter how our politicians finally decide to reach an agreement or impasse, but I am sure of one thing. Not one politician from either party will have done any creative thinking about what the government should do that is any different than what has been tried and attempted in the past. Not one will have demonstrated that they have an idea or a vision that isn’t just another run of the mill version of their party’s standard mantra.

Is it because there aren’t any new or creative approaches to stimulating jobs in the US?
No it’s just that our legislative and executive branches are either incapable or incompetent at developing new ideas and insights into how to affect change in the economy to the benefit of the citizens. When the economy is hurting the country, it is the government that is in the best position to take actions to reduce the harm done and advance the time-frame of a recovery. Economists often cite various actions taken by governments in the past that have either hindered and prolonged a recession or have created a rapid and sustainable recovery. The problem for many economists is that they can’t necessarily identify what will work for the situation that the US is currently in versus what has worked/not worked in previous and different conditions.

Is the reason no politician has presented a new idea of a plan to recovery and job growth because they are following the party’s ideology of what will work; and they can’t find anything insufficient in those views?
Well if this is the reason; then besides being morons, they are relegating their responsibility to the party, they are accepting a following mentality not a leadership mentality, and they are demonstrating their poor judgment and lack of initiative on behalf of their constituents and country.

Now no one would expect every elected politician to be capable of conceiving or working to have a vision developed for aiding the US economy; but not one politician is also hard to understand. Even if only one politician from each state had some aptitude for leading then we should see fifty plans. If one out of a hundred politicians were capable of this challenge then there should be at least five or six proposals. But there are none! Are we back to the ‘there is nothing new under the sun’ vision of leadership? If you meet with 500 people from your state do you think that not one of them might have a good idea for helping the economy recover?  If you picked ten people that you believe are smarter than you, to you think none of them would have an approach to do something that is not the simple, bland and uninspired same-old/same-old things that our best and brightest political leaders are presenting today?
The public is unsure that things will improve. What they lack is leadership; and we have seen no leadership in government, no leadership in our parties, no leadership in our businesses, and no leadership in our society. So we will arrive at the destination that non-leaders can get you to.

Sunday, August 7, 2011

Who Do You Trust? – A Ranking Business

The sky is falling! The sky is falling!

Apparently this is the cool, calm and calculated professional assessment by the keenly knowledgeable financial markets experts of the downgrading of the US’s long-term sovereign credit rating by S&P. So we have heard from every possible source the different assortment of explanations and assessments of this action to make sure that there are plenty of directions and targets on which to place the blame. But here’s an interesting question: What nation do all these experts think is safer and more secure then the US? Is it the UK and Germany? So the rest of the world can turn to them to insure the stability of their own financial stability?
I am not disagreeing that the US’s financial condition is riskier than it has been in a long time, but I am not sure I think that there is any other nation that is less risky. So isn’t the downgrading, justly deserved or not, a relative event? Didn’t the economic future of every other country become a little more risky along with the US’s? So, why is the financial market in such a panic? Because the panic is not a rational behavior, it is well a panic. So who do we trust?

The credit rating agencies, we must be able to trust them. They have nothing to gain by being wrong, and have never failed us in the past. That is if you overlook things like the US’s housing mortgage and collateralized debt catastrophe or the tech bubble or any of the other financial melt-downs of smaller note. I am not saying that they miss such events intentionally, just that they are not showing any signs of being actually better than anyone else.
How about the financial market itself? Oops! Right, they didn’t do too well with the housing crisis, the tech bubble, the savings and loan disasters, unforeseen risks with computerized trading, or ya-da-ya-da-ya-da. Not a trustworthy group there either.

The US Government, now here is a group we can put faith in. Hmmm!  Congress? I think not.  The President/Administration? You can’t be serious. Let’s just move on.
America’s Corporate businesses, now here is a group that we can rely upon. We don’t see CEO and other corporate executive letting us down, taking advantage of their positions, draining enormous sums from the companies’ coffers and leaving ruined wrecks in their wake. Well, maybe sometimes or actually a lot of times.

The answer is you don’t trust. You’re not supposed to trust. What you are supposed to do is pay attention, be responsible, be realistic, and demand value for reward. And there is the heart of the problem. If you don’t act this way, and the politicians you elect don’t act this way; what exactly do you think will happen.
What will happen now is that the American people will be taxed at a higher rate, and so will most of the rest of the world. It isn’t the kind of tax that many American’s are so irrational about, it much worse. It the kind of tax that you don’t have someone to blame for, but you probably will anyway. It’s an increase in the cost of everything. With a US debt at $14 trillion and the downgrading to a double-A rating, if that downgrade were to cost only 0.1% more in interest then the US government is looking at only $14 billion more on that total amount; hardly a nickel per person. But that nickel, it is not the impact that will hurt us; and if it cost a whole 1% more it still is not debilitating. Here is where it’s going to hurt: The cost to business will be higher for their loans, the cost to consumers for credit will be higher, the cost for students for tuition will be higher, and on and on. Some businesses will benefit from this in the immediate view, and it may be impossible to prove that they would have been better off if the downgrade didn’t happen. But you will pay. You will be less well off. And you are also heavily invested in the responsibility for this.

Mostly because the folks that are leading our nation are neither prepared to deal with the complexity of such issues nor are they capable of acting in intelligent, rational or serving the public-interest ways. There is a simple principle here: Don’t go to the butcher for medical advice. Don’t go to the plumber for legal advice, and don’t go to the lawyer for a plumbing problem. Don’t hire a banker to herd your cattle, nor an English teacher to fix your car. Sure you may get lucky and find someone who can actually assist you, but the odds are not in your favor. Oh, yeah. Don’t go to the casinos to invest your retirement funds.
You should start looking for someone who is more intelligent to send to Congress. If you’re lucky they might even be more intelligent than you.