Third Party & Independents Archives

While I’m no fan of Mitt Romney he had a good piece in the NYT op ed today.

He discusses the big elephant, Union wages and benefits that are crippling Detroit. While I defend a unions right to negotiate, it also works the other way. If the Unions expect Detroit to survive, they’ve got to face reality….as do executives.

Posted by: snert at November 19, 2008 12:28 PM

snert, the UAW has made major concessions recently in order to help save the industry, with some wages dropping from $25/hour to $14. The big lead weight of unions now is health care, pensions, and pink slip payouts.

That said, it makes no sense to bailout the industry if the bailout makes paupers of the workers and retirees. This recession was brought on by the financial and credit debacle, but, it will be deepened and sustained by falling consumer demand. Consumer demand in the issue that has to be addressed going forward, and keeping workers employed and at wages that permit continued consumption is essential to economy’s recovery.

The Unions have contributed to the Big 3’s woes, but, they can’t be relegated to the role of scapegoat for some pretty horrible management decisions and strategies ever since the Japanese wave of competition some 40 years ago.

Posted by: David R. Remer at November 19, 2008 01:07 PM

It depends. What have they done with the Energy Department program established by law last year to encourage production of fuel-efficient cars? Does anyone have any information about this?

Posted by: womanmarine at November 19, 2008 01:27 PM

There will be no easy fix.

Merely giving them tens of billions will make everything worse.

How much does the CEO make?

How much does upper managment make?

Why should tax payers try to prop up a company that has been mismanaged for decades?

Let them file bankruptcy.
Perhaps some one else will buy the remains and run it better?

Posted by: d.a.n at November 19, 2008 02:06 PM

Chevy Volt and a $7500 tax credit. http://en.wikipedia.org/wiki/Chevrolet_Volt

Posted by: Rodney Brown at November 19, 2008 02:22 PM

Globalization marches on. The recession is just one more chapter in breaking the back of middle class American to get us ready for a globalized economy. Facilitating globalization Congress worked to bring the US auto industry down through unfair trade agreements and competing US manufacturing against foreign manufacturing. US automakers are not expected to succeed. There first needs to be a dismantling of current wage scales, pensions, etc. Not to advantage the auto industry but to get more American workers in line with the globalized economy. The auto industry will get their bailout and within five years they will be merged up with foreign manufacturers. From Nafta we have “ alter US immigration laws to allow professionals in sixty-seven categories to take jobs anywhere in the three participating nations and relocate themselves and their families anywhere they wish in the three nations. The 111th Congress will readily gain citizenship for the illegals and the auto industry is a good place to employ some of them. If you don’t like taking a few pay cuts then you are free to relocate yourself and family anywhere you wish.

Posted by: Roy Ellis at November 19, 2008 03:15 PM

Obviously the industry has too much capacity. How does bailing them all out change that in any way? All three should make proposals to congress with their changes and their need for assistance. Congress should pick the best proposal and assist only them.

Posted by: Schwamp at November 19, 2008 03:52 PM

Right. What good does it do to give them money to build more gas guzzlers that few people want to buy?

Posted by: d.a.n at November 19, 2008 04:04 PM

Those who don’t want a bailout, choose the recession worsening and elongating and the deficits to increase as a result of ever greater assistance to the unemployed, and newly destitute of those 1 in 10 American employees be put out of work or scaled back to part time.

Those who do want the bailout, seem to be ignoring the radical increases in deficits and debt which are synonymous with very much higher taxes down the road to service the interest and principal on that debt.

Folks, the cost to tax payers and consumers of not bailing keeping them in business (provided a horizon for profitable self sustainability is probable), is vastly greater than the cost of 25 billion dollars borrowing today for the bailout. That fact on economic terms is indisputable and why Congress will bail them out.

This is one of those recurring themes of modern times, in which, solutions are painful and expensive, and doing nothing is 10 times more so. Welcome to the aftermath of Republican rule and unregulated capitalism at its most vigorous.

Posted by: David R. Remer at November 19, 2008 04:40 PM

Roy,

I’ve heard that argument as well, but have not seen hard numbers to demonstrate it. If it’s true, then I’d be all for lining some people up against a wall as traitors.

David,

I agree with your last post. I do think this needs to be a hard nosed bailout bridge loan with drastic changes in both the benefits deals, and wages to bring them in line with foreign non-union companies. Local tax deals need to be looked at on a even field. As far as fair trade, the US has to make something that is marketable in foreign markets, but foreign markets are just not as large as the US market.

The taxpayers need to be made whole. I do not believe that the US simply cannot compete with the Honda’s and Toyota’s. Union workers still average a much higher wage than foreign workers, particularly in benefits and older less productive workers. These workers have to face the reality that a less highly paid job and lower retirement standards are better than bankruptcy and no jobs, and a collapsed retirement benefit. Some recent articles I’ve read show how Honda and Toyota do not over hire, and use slowdowns to increase training and efficiency. That engenders employee loyalty and rewards all stakeholders.

The US market suffers to some degree from a loss of buyer loyalty in the eighties when they WERE making crap. That isn’t true today, but the perception is still there.

We need a Jesse Jones figure. He required hands on management for companies he bailed out in the thirties. Hank Paulson is not that man.

Posted by: snert at November 19, 2008 05:05 PM

David, can we assume that the Dems are going to axe NAFTA and other trade agreements and seal the border? They to have a big stake in globalization. Let’s not borrow $50B from the Chinese for the automakers. Let them proceed to a starvation workforce and merger up with the foreign guys which is what the free traders want.

Posted by: Roy Ellis at November 19, 2008 05:14 PM

Yes, it’s an easy fix. Don’t bail them out, because they intentionally did this right AFTER the financial bailout seeing the government was willing to do it. Why didn’t they come 6 months ago or a year, projected profits and losses aren’t that off when they predict economic stability or a downturn.

So did the big 3, during the last few years of slumping auto sales really not pay attention and say “Maybe we might be in financial trouble”. No they built the same SUVs, and the same vehicles that nobody bought.

Before the government even THINKS about giving them money they need to give a comprehensive list of what they’re going to use that money for and a strict timetable of how they plan to turn their business around. If it involves anything they’ve been doing the last 6 years, deny them the bailout automatically.

Posted by: Jon at November 19, 2008 05:17 PM

And on a side note, I haven’t heard some key points personally from the CEO’s, which means they take permanent pay cuts, and short term pay SUSPENSIONS, to cover the cost of keeping their employees employed. This is what responsible business does, if you are in trouble and in charge of workers, you suck it up, even at a loss of money to yourself to keep the engine running.

Posted by: Jon at November 19, 2008 05:19 PM

Mitt had it all over John McCain on the Auto industry, remember John wanted to retrain them all to do what work at wall-mart or big lots or Tyson chicken . “U.S. auto companies employ nearly a quarter-million workers, and more than 730,000 other people have jobs producing the materials and parts that go into cars. About 1 million on top of that work in dealerships nationwide. If just one of the auto giants were to go belly up, some estimates put U.S. job losses next year as high as 2.5 million.

“If GM is telling us the truth, they go into bankruptcy and you see a cascade like you have never seen,” said Sen. George V. Voinovich, R-Ohio, who was working on one rescue plan Wednesday. “If people want to go home and not do anything, I think that they’re going to have that on their hands.”

Posted by: Rodney Brown at November 19, 2008 05:24 PM

Here is some of Bill Clinton’s handiwork. NAFTA: “Eliminate US duties on imports of vehicles produced in Mexico and Canada, while allowing those nations to keep their local content laws requiring that a certain percentage of any vehicles sold must be made there.
WTO: “That all trade policies and practices of the US are subject to international review by the WTO. That when the EU communities exercise their right to vote they will have a number of votes equal to the number of member states. That the US will have only one vote in WTO proceedings.”
And, we shouldn’t forget that Clinton is the one who brought China into the WTO in 2000. Rattlings I’ve heard are that 60% of Obama’s officiates are Clintonites. I would sum up by saying that the oligarchy is alive and well with both parties providing the best government money can buy.

Posted by: Roy Ellis at November 19, 2008 05:47 PM

Here is what GM has been doing….

Chevy Equinox fuel cell vehicle Was hoping this would be my next vehicle.

Fuel Economy & Alternative Fuels

Pretty sure if you go to the Ford & Chrysler Sites you can find out what they are doing aswell.

Seems funny to me that most people believe GM is only building Hummers & Ford just has the F150.

GM sells under 13 brand names & also provides fleet & commercial vehicles.

Take a look at these cars that GM makes in which we aren’t able to purchase here….some run on natural gas. These ‘European Style’ cars might sell right here at home.
Opel
Anyone in the mood to convert the mileage from kilometers to miles?

Posted by: Dawn at November 19, 2008 06:20 PM

Jon, The auto industry was promised $25B through the Energy Dept. last year to encourage production of alternative energy vehicles. Now they want to use the $25B for operations and are expecting another $25-50B for retooling for the next generation whatever. I think these auto managers realize they have reached the end of their rope. They plan to take the bailout and make them and their employees well before capitulating and merging with the foreign entities. If I look down the road five years I see 80% of autos being assembled in China/India and delivered to the US via the new Mexican/China seaport. As for the taxpayer. We are about to be 25-75B further in debt. That gets us up there to about $70 trillion with a $4 trillion GDP. Spinning tires in the sands of time.

Posted by: Roy Ellis at November 19, 2008 06:25 PM

David, This time, it may be different, due to numerous pre-existing problems, such as $10.6 Trillion National Debt of already nightmare proportions, $54 Trillion nation-wide debt (or $67 Trillion if the $12.8 Trillion borrowed from Social Security is included, which left Social Security pay-as-you-go, with a 77 Million baby-boomer bubble approaching), rising inflation, and these numerous other deteriorating economic conditions, which have never been worse ever, and/or since the Great Depression.

There is something worse than General Motors (and other companies) filing for bankruptcy, high unemployment, and some failed financial corporations, which is:

• rendering the U.S. currency worthless

… which will make everything much worse, Social Security checks will be worthless, Medicare payments will be worthless, and wages, savings, and pensions will be worthless.

I still don’t understand how we can solve our problem of economic instability caused by massive debt, with more borrowing, creating money out of thin air, debt, and spending.
In fact, that process appears very much like a deteriorating debt pyramid-scheme under severe stress.
And the debt pyramid-scheme appears most likely to collapse when we are unable to borrow or print enough money out of thin air to stop the collapse, since rampant creation of money out of thin air will most likely crash the U.S. Dollar:

www.youtube.com/watch?v=4n3g5lUgkWk&feature=related

With so much pre-existing debt, more borrowing, creating money out of thin air, debt, and rampant spending seems more likely to make things much worse in only a few years (if not sooner), since:

• The interest alone on the near $10 Trillion National Debt in year 2007 was $429 Billion (16% of all $2.7 Trillion in federal tax revenues in year 2007), and the federal government borrowed and created that money (and then some) out of thin air.


• Inflation is actually worse than 5%, if measured by pre-1983 or pre-1998 inflation calculation methods; the calculations were modified to give a larger CPI weighting to items falling in price than items rising in price. As a reslut, there has been a year-over-year error in the reported inflation for decades. This is corroborated when plotting GDP in any previous U.S. Dollar (e.g. whether it is 2005 or 1950 Dollars) adjusted for inflation, which reveals a dip in GDP starting in year 2006 (a dip of that size which has never been seen before since year 1900, if not ever).


• Adequate oversight for all of the massive bail-outs isn’t likely.


• The massive bail-outs treat symptoms without treating the root causes and abuses that have been hammering most Americans for decades (One-Simple-Idea.com/DisparityTrend.htm).


• The National Debt and nation-wide debt ($54-to-$67 Trillion) is possibly so large now, it may be impossible to keep it from growing ever larger. Especially when the federal government is borrowing and creating the money out of thin air to merely pay the $429 Billion in annual interest alone, and the federal government has been deficit spending for 52 consecutive years.


• A few calculations shows that it would take over 150 years to repay the $10.6 Trillion National Debt if we even had the discipline to stop borrowing and createing billions per day, and started paying back enough (about $1.2 Billion per day = $429 Billion interest in year 2007 / 365 days per year) to keep the principal from growing ever larger and out-of-control.


• 9%-to-18% approval ratings for Congress, 95% of which were just re-elected, does not instill much confidence that Congress will now be any less irresponsible, FOR-SALE, corrupt, and incompetent.


• And no one can answer the one simple question:
  Where will the money come from to merely pay the interest on $54-to-$67 Trillion of nation-wide debt (One-Simple-Idea.com/DebtAndMoney.htm#NationWideDebt), much less the money to reduce the current principal debt of $54-to-$67 Trillion (which amounts to about $220K per person) and keep it from growing ever larger, when that money does not yet exist? Especially when now, 80% of the U.S. population owns only 17% (or less; down 20% since year 1976) of all wealth (one-simple-idea.com/DisparityTrend.htm#WealthDistribution), and the wealthies 1% owns 40% of all wealth; a wealth disparity gap that has never been worse since the Great Depression.


• A huge portion of federal revenues are already designated to Social Security and Medicare.

The point is, we may have passed the point in which the debt can ever be serviced without eroding the currency significantly.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at November 19, 2008 06:26 PM

IKE Had a Real Surplus, 1956-1957. http://www.geldpress.com/2008/07/us-budget-reporting-deception/

Posted by: Rodney Brown at November 19, 2008 06:49 PM

I agree with people like Mitt Romney, Let them go into bankruptcy reorganization.

Posted by: KAP at November 19, 2008 06:51 PM

Notice that Ford China is teaming with Chery in producing the Ford Fiesta. The car will be produced in hatch back and sedan versions and expected to hit the US market next year.

SHANGHAI — In July 2007, Tom LaSorda, Chrysler CEO at the time, touted a deal in which Chery Automobile Co. would supply Chrysler LLC with small cars for North America. Today, neither Chrysler nor Chery are commenting on the deal, originally scheduled to start bringing cars to Mexico this year. And a source in China says it looks dead — or at least on the back burner. “I wouldn’t place much hope on it,” says a former Chery executive familiar with the Chrysler deal. “Both companies have their own problems to deal with, and both have run out of money.” —Published:Nov. 19, 2008

GM’s sales rose 18.5 percent last year to over 1 million vehicles in China, the world’s second-largest auto market after the United States. Like other automakers, it is looking to China and other emerging markets to compensate for declining sales in the U.S. and Europe.

GM’s total world sales are up 19 percent in the past decade, with large increases in emerging markets such as China, Russia, India and Brazil. In the third quarter of this year, 61 percent of its sales came from outside North America

Seems they have already conglomerated up. I think Michigan is in their rear view mirror.

Posted by: Roy Ellis at November 19, 2008 06:56 PM

If we have lent $300b to banks to free up the credit why can’t the banks loan the money to the big three. If the banks won’t do it we should quit bailing them out.

Posted by: j2t2 at November 19, 2008 07:47 PM

j2t2, the banks aren’t crazi. They aren’t going to jump into risky ventures in the middle of a recession. They will wait until consumers start spending again. They are using their bail out money to buy their competitors who they find in good shape. The US auto industry is really over a barrel with so much legacy equipment. China might want the Robotics stuff and the rest for scrap iron. I would think China could pop out small alternatives for around $15-16K on the US market. Zip them into the US thru Mexico duty free.

Posted by: Roy Ellis at November 19, 2008 08:10 PM

I received an email that suggest the globalized economy is coming to a town near you. I’ve NO VALIDATION that this information is valid. The idea is to be wary of where you purchase gift cards this Xmas season.

“Stores that informed the Security Exchange of closing plans between October 2008 and January 2009.

Circuit City stores… most recent (? how many)
Ann Taylor- 117 stores nationwide are to be shuttered
Lane Bryant,, Fashion Bug ,and Catherine’s to close 150 stores nationwide
Eddie Bauer to close stores 27 stores and more after January
Cache will close all stores
Talbots closing down all stores
J. Jill closing all stores
GAP closing 85 stores
Footlocker closing 140 stores more to close after January
Wickes Furniture closing down
Levitz closing down remaining stores
Bombay closing remaining stores
Zales closing down 82 stores and 105 after January.
Whitehall closing all stores
Piercing Pagoda closing all stores
Disney closing 98 stores and will close more after January.
Home Depot closing 15 stores 1 in NJ (New Brunswick)
Macys to close 9 stores after January
Linens and Things closing all stores
Movie Galley Closing all stores
Pacific Sunwear closing stores
Pep Boys Closing 33 stores
Sprint/ Nextel closing 133 stores
JC Penney closing a number of stores after January
Ethan Allen closing down 12 stores.
Wilson Leather closing down all stores
Sharper Image closing down all stores
K B Toys closing 356 stores
Loews to close down some stores
Dillard’s to close some stores.
Mervyns to close all stores
Steve & Barry’s will most likely cease operation
Value City to close all stores”

Posted by: Roy Ellis at November 19, 2008 09:10 PM

Circuit city. http://blogs.consumerreports.org/money/2008/11/bankrupt_circui.html?EXTKEY=&EXTKEY=I72RSCB

Posted by: Rodney Brown at November 19, 2008 09:19 PM

“j2t2, the banks aren’t crazi. They aren’t going to jump into risky ventures in the middle of a recession. They will wait until consumers start spending again.”

If the big three’s credit isn’t good enough for the banks that earn their living by extending credit to corporations why would we the taxpayer want to extend money to either party? By buying other banks with taxpayer money it seems to me that would be a signal to stop bailing out the banks. Perhaps the taxpayers via the government should just buy stock in the big three, with the bailout money, while it is so cheap and forget the credit bankers.

Posted by: j2t2 at November 19, 2008 09:26 PM

GM can find plenty of good workers in China. They work 60 hrs per week for $180 per month, no pensions, no healthcare, no perks at all.

Why should we treat UAW workers differently from other workers who have had their jobs shipped overseas.

If all the other outsourcing has been good for our economy, getting rid of the UAW should be fantastic.

Posted by: jlw at November 19, 2008 10:00 PM

So far Paulson has shipped $290B to AIG and five financials. He still has $460B to play with. Congress is afraid when they shut down for the Xmas season Paulson will $pend $pend $pend. Which he is allowed to do if Congress is not in session and he ‘sees’ and emergency. They are trying to get some stop gap legislation passed by Friday, their last day.
The government bailout of Crysler in the 80’s went well and the government made money on the deal, or so they say. This time around is somewhat different. Their business model isn’t working and they seem to have no game plan for Congress. I keep coming back to this; who will buy these new cars? The US consumer is flat on his back. Home equity is gone, credit cards are maxed out, banks afraid to make signature loans. If they can hang on for five years, maybe they could make it. But, in five years the cheap stuff from China will be hitting the shores of Mexico. Dunno!

Posted by: Roy Ellis at November 19, 2008 10:02 PM

So right jlw. Globalization has come to Detroit. We can’t, and should not try to save them. Just another $25B in China’s pocket. We all should take the time to give a fickle finger of fate salute to Regan, Bush 1, Clinton and Bush 2.

Posted by: Roy Ellis at November 19, 2008 10:27 PM

“They are using their bail out money to buy their competitors who they find in good shape.”

The banks that were to big to fail are using the taxpayers borrowed money to grow bigger. Who is worse those that would take the money and buy another bank or those that allow them to do this at the expense of the taxpayer.
Why would we expect the car companies to be any different? Where are the shareholders? Are they not spread around the world? Let them save their investment in the big 3. What would prevent the big 3 from spending this loan in China for new factories and lower wages? These car companies are global companies why can’t they go to China or another country and borrow the money directly? They show no loyalty to this country, why should we bail them out? We as a country are going deeper in debt and only prolonging the agony of this depression we are heading towards.

Posted by: j2t2 at November 20, 2008 12:47 AM

note to d.a.n.:

CPI drops 2.3%, as I read this, we have deflation. Welcome to the next Great Depression.

Posted by: googlumpugus at November 20, 2008 06:49 AM

snert said: “He (Mitt Ronmey) discusses the big elephant, Union wages and benefits that are crippling Detroit.”

Obama is not even sworn in yet and I am already nostalgic for the time when Republicans would call statements like this “class warfare”.

Posted by: RMD at November 20, 2008 09:32 AM

I always thought it would be interesting to base a reality TV show on three generations of unionized, auto maker employees.

You woud have the Grandfather retired living large, the father 30 years in protecting himself, and the son/grandson in and out of jobs at the plant because of layoffs, work stopage, etc.

How would they talk about each other? Would they be angry with each other? Or would they just avoid discussing it.

Posted by: Honest at November 20, 2008 10:19 AM

googlumpugus wrote: note to d.a.n.: CPI drops 2.3%, as I read this, we have deflation. Welcome to the next Great Depression.

False.

We do not have deflation, since we have (overall) positive inflation of 3.7% as of 01-NOV-2008.

Decreasing inflation does not equate to deflation.
Deflation is negative inflation, which has not existed for that last 52 consecutive years.

YEAR ____ INFLATION RATE
02/1/2007__ 3.08%
03/1/2007__ 2.42%
04/1/2007__ 2.78%
05/1/2007__ 2.57%
06/1/2007__ 2.69%
07/1/2007__ 2.69%
08/1/2007__ 2.36%
09/1/2007__ 1.97%
10/1/2007__ 2.76%
11/1/2007__ 3.54%
12/1/2007__ 4.31%
01/1/2007__ 4.08%
02/1/2008__ 4.28%
03/1/2008__ 4.03%
04/1/2008__ 3.98%
05/1/2008__ 3.94%
06/1/2008__ 4.18%
07/1/2008__ 5.02%
08/1/2008__ 5.60%
09/1/2008__ 5.37%
10/1/2008__ 4.94%
11/1/2008__ 3.70% (current positive inflation)

• ____INFLATION RATE_____
• 6.00%|——————————-
• 5.50%|—————————-x-
• 5.00%|—————————x-x
• 4.50%|————————-x—x
• 4.00%|———————xxx—-x
• 3.50%|——————-x———x (3.7% 01-NOV-2008)
• 3.00%|——-x———x————
• 2.50%|—x-x-xxxx x————-
• 2.00%|-x-x———x—————
• 1.50%|x——————————
• 1.00%|——————————-
• 0.50%|——————————-
• 0.00%|_______________________YEAR
• ______2___2___2___2____2
• ______0___0___0___0____0
• ______0___0___0___0____0
• ______6___7___7___8____8
• _____SEP_JAN_JUN_JAN__OCT

There is some deflation of certain things, such as home prices and gasoline prices (which were ridiculously high to begin with) and a few other things, but OVERALL inflation is still positive at 3.7% as of 01-NOV-2008.

Also, the October-2008 CPI-U of 216.6 (1982-84=100) was 3.7% higher than CPI-U of 208.6 in October-2007 (which represents 3.7% postive inflation).
CPI has been increasing every consecutive year for the past 52 years (see below).
Inflation has been positive for every consecutive year for the past 52 years.

YEAR _ JAN ___ FEB __ MAR ___ APR __ MAY ___ JUN __ JUL __ AUG __ SEP __ OCT ___ NOV __ DEC __ AVERAGE
2000 _ 168.8 _ 169.8 _ 171.2 _ 171.3 _ 171.5 _ 172.4 _ 172.8 _ 172.8 _ 173.7 _ 174.0 _ 174.1 _ 174.0 _ 172.2
2001 _ 175.1 _ 175.8 _ 176.2 _ 176.9 _ 177.7 _ 178.0 _ 177.5 _ 177.5 _ 178.3 _ 177.7 _ 177.4 _ 176.7 _ 177.1
2002 _ 177.1 _ 177.8 _ 178.8 _ 179.8 _ 179.8 _ 179.9 _ 180.1 _ 180.7 _ 181.0 _ 181.3 _ 181.3 _ 180.9 _ 179.9
2003 _ 181.7 _ 183.1 _ 184.2 _ 183.8 _ 183.5 _ 183.7 _ 183.9 _ 184.6 _ 185.2 _ 185.0 _ 184.5 _ 184.3 _ 184.0
2004 _ 185.2 _ 186.2 _ 187.4 _ 188.0 _ 189.1 _ 189.7 _ 189.4 _ 189.5 _ 189.9 _ 190.9 _ 191.0 _ 190.3 _ 188.9
2005 _ 190.7 _ 191.8 _ 193.3 _ 194.6 _ 194.4 _ 194.5 _ 195.4 _ 196.4 _ 198.8 _ 199.2 _ 197.6 _ 196.8 _ 195.3
2006 _ 198.3 _ 198.7 _ 199.8 _ 201.5 _ 202.5 _ 202.9 _ 203.5 _ 203.9 _ 202.9 _ 201.8 _ 201.5 _ 201.8 _ 201.6
2007 _ 202.4 _ 203.5 _ 205.5 _ 206.7 _ 207.9 _ 208.4 _ 208.3 _ 207.9 _ 208.5 _ 208.9 _ 210.2 _ 210.0 _ 207.3
2008 _ 211.1 _ 211.7 _ 213.5 _ 214.8 _ 216.6 _ 218.8 _ 220.0 _ 219.1 _ 218.8 _ 216.6

Interestingly, the federal government has also been deficit spending every consecutive year for the past 52 years.

The Inflation Rate percetage is calculated from CPI-U as (216.6% as of 31-OCT-2008 - 208.9% as of 31-OCT-2007) / 208.9% = 3.7% inflation.

• ______________________ CPI _____________________________
• 230 |————————————————————————-
• 220 |————————————————————————x (average about 216 for 2008)
• 210 |———————————————————————-x-
• 200 |——————————————————————-x—-
• 190 |—————————————————————-x——-
• 180 |————————————————————-x———-
• 170 |———————————————————-x————-
• 160 |——————————————————x-:—————
• 150 |————————————————-x——:—————
• 140 |———————————————-x———:—————
• 130 |——————————————-x————:—————
• 120 |—————————————-x—————:—————
• 110 |————————————x——————-:—————
• 100 |———————————x:———————:—————
• 090 |——————————-x-:———————:—————
• 080 |——————————x—:———————:—————
• 070 |—————————x——:———————:—————
• 060 |————————x———:———————:—————
• 050 |——————x—————:———————:—————
• 040 |———-xxx——————-:———————:—————
• 030 |xxx——————————:———————:—————
• 020 |———————————-:———————:—————
• 010 |———————————-:———————:—————
• 000 |———————————-+———————+—————
• ____1——1——1——1——1—1-1——1——1—1-2——2—2
• ____9——9——9——9——9—9-9——9——9—9-0——0—0
• ____6——6——7——7——8—8-8——9——9—9-0——0—0
• ____0——5——0——5——0—3-5——0——5—8-0——5—8

Also, the current measurement of inflation is questionable anyway, since the CPI calculations were modified in year 1983 and 1998 which suspiciously increased the CPI weighting for items falling in price, but decreased the CPI weighting for items increasing in price.

• _____________ INFLATION RATES (as of OCT-2008)___________


• 16.0% |———————————————————-


• 15.5% |——————————————————-3-


• 15.0% |——————————————————-33


• 14.5% |——————————————————-33


• 14.0% |——————————————————-33


• 13.5% |——————————————————3-3


• 13.0% |——————————————————3-3 (13.2%)


• 12.5% |——————————————————3—


• 12.0% |——————————————————3—


• 11.5% |——————————-3——————-3—-


• 11.0% |——————————3-333—————3—-


• 10.5% |—————————-3——-3————-3—-


• 10.0% |3————-3———33———3——-33-3——


• 09.5% |-3———-3 3——3————-3—33—3—-8-


• 09.0% |—3——-3—-3333—————-3-3———88


• 08.5% |—-3—-3——————————3————88


• 08.0% |——333——————————————-8-8 (7.8%)


• 07.5% |——————————-8——————-8—-


• 07.0% |——————————8-888—————8—-


• 06.5% |—————————-8——-8————-8—-


• 06.0% |8————-8———88———8——-88-8——


• 05.5% |-8———-8 8——8————-8—88—8—-c-


• 05.0% |—8——-8—-8888—————-8-8———cc


• 04.5% |—-8—-8——————-c———8————cc


• 04.0% |c—-888——————-c-ccc—————-c-c


• 03.5% |-c————————-c——-c—————c-c (3.7% current method)


• 03.0% |—c———-c———cc———c————-c—-


• 02.5% |—c———c-c——c————-c——cc-c——


• 02.0% |—-c——c—-cccc—————-c-cc—c——-


• 01.5% |——c—c——————————c—————


• 01.0% |——-cc————————————————


• 00.5% |———————————————————-


• 00.0% |———————————————————-


• _______2——2——2——2——2——2——2——2—O


• _______0——0——0——0——0——0——0——0—C


• _______0——0——0——0——0——0——0——0—T


• _______1——2——3——4——5——6——7——8—


• WHERE:


• 3=Pre-1983 Inflation measurement method


• 9=Pre-1998 Inflation measurement method


• c=Current Inflation measurement method

Inflation as of 31-OCT-2008 is 13.2% based on the pre-1983 inflation measurement method (instead of the 3.7% based on the current measurement method).
Inflation as of 31-OCT-2008 is 7.8% based on the pre-1998 inflation measurement method.

Thus, it is erroneous to say there is deflation, because there is still positive inflation (if smaller than the previous month).
More accurately, there is a decrease in the inflation from 4.94% on 1-OCT-2008 to 3.7% on 1-NOV-2008.

• ____INFLATION RATE_____
• 6.00%|——————————-
• 5.50%|x——————————
• 5.00%|x——————————
• 4.50%|x————————-x— (4.28% average for year 2008)
• 4.00%|x————————-x—
• 3.50%|-x————x———-x—
• 3.00%|—xx-xx—x-x——xx—-
• 2.50%|——x—x-x-x-xxx——-
• 2.00%|———-x-x-x-x———-
• 1.50%|————x—-x————
• 1.00%|——————————-
• 0.50%|——————————-
• 0.00%|_______________________YEAR
• ______1111111111222222222
• ______9999999999000000000
• ______9999999999000000000
• ______0123456789012345678

Also, if inflation remains at 3.7% for NOV and DEC-2008, the average inflation for year 2008 will be higher at 4.28% than any of the previous 18 years (since year 1990).
So, that most certainly is NOT deflation.

googlumpugus wrote: note to d.a.n.: Welcome to the next Great Depression.

Depressions are not always deflationary.

There are three types of Depressions:

• (1)Deflationary


• (2) Hyperinflationary


• (3) Extremes of both inflation and deflation for certain goods, services, and resources.

Both deflation and inflationm erode value, and we currently have BOTH on certain things, but overall inflation is still positive at 3.7%.

Deflation is bad, because people can’t the as high a price for the goods they produced as they previously received (i.e. their assets are declining in value).
Deflation is bad, because if bought (or borrowed money) to buy an asset for $100K that can now only be sold for $50K, you are upside-down on that asset (or loan).
Deflation is good if you have a lot of cash, but bad if you have a lot of assets, and very bad if you have a lot of debt.

Inflation is bad, because people can’t get the as much goods at the price they previous paid (i.e. their incomes and savings are shrinking in value).
Inflation is bad, because if you earn $50K and inflation is 15.6% (as it is today, based on the pre-1983 inflation measurement method), that $50K becomes worth only $42.2K in one year.
Inflation is good if you have a lot of debt, but only if you are able to keep-up with the debt payments and interest, which is usually a problem when unemployment rates are high.

Either way, inflation and deflation are economically destabilizing, and lead to more unemployment, foreclosures, homelessness, poverty, starvation, crime, pain, and misery.

The problem is that the federal government and the Federal Reserve have perpetuated incessant positive inflation for every consecutive year for the last 52 years (since year 1956), due to rampant creation of new money out of thin air. To make matters worse, the federal government and nation have been non-stop borrowing for many decades, and as a result, nation-wide debt has been growing many times larger than GDP since year 1956:

• $55.0T |—————————————-D (Debt=$54T)


• $52.5T |—————————————-D


• $50.0T |—————————————-D


• $47.5T |—————————————-D


• $45.0T |—————————————D-


• $42.5T |—————————————D-


• $40.0T |—————————————D-


• $37.5T |————————————-D—


• $35.0T |————————————D—-


• $32.5T |———————————-D——


• $30.0T |———————————D——-


• $27.5T |——————————-D———


• $25.0T |——————————D———-


• $22.5T |—————————-D————


• $20.0T |—————————D————-


• $17.5T |————————-D—————


• $15.0T |————————D—————-


• $12.5T |———————D——————G (GDP=$13.9T year 2007)


• $10.0T |—————-D—————G
——-

• $07.5T |———-D————G
—————-

• $05.0T |-D——-G
——————————

• $02.5T |-G
—————————————

• $00.0T +(1956)————————- (2008)YEAR

And that does not include the $12.8 Trillion borrowed and spent from Social Security, leaving it pay-as-you-go, with a 77 Million baby-boomer bubble starting to draw entitlement benfits (over 13,175 new recipients per day).

And the federal National Debt ($10.6 Trillion as of NOV-2008) is up from 30% of GDP in 1975 to 76% of GDP today (NOV-2008).

• 085% |———————


• 080% |———————


• 075% |——————x- ($10.6T Debt = 76% of $13.9T GDP)


• 070% |————-x-x—


• 065% |————xx-x—


• 060% |———-x—x—-


• 055% |———x———-


• 050% |——-x————


• 045% |——x————-


• 040% |—-x—————


• 035% |—x—————-


• 030% |xx——————


• 025% |———————


• 020% |———————


• 000% |————————-YEAR


• _____ 1 1 1 1 1 2 2 2


• _____ 9 9 9 9 9 0 0 0


• _____ 7 8 8 9 9 0 0 1


• _____ 5 0 5 0 5 0 5 0

So much debt is crushing when 80% of the U.S. population only owns 17% of all wealth, and 1% of the wealthiest own 40% of all wealth.

Some may call this a recession, and some may call it something else, but either way, we are in a deep hole, and there are dozens of major economic conditions which have never been worse ever, and/or since the Great Depression, and there will be no easy or quick fixes.

What we need now is extraordinary fiscal and moral responsibility, and what are the chances of that when voters give Congress dismal 9%-to-18% approval ratings, but reward Congress with 95% re-election rates?

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at November 20, 2008 10:21 AM

CORRECTION: Deflation is bad, because people can’t the as charge as high of a price for the goods they produced as they previously received (i.e. their assets are declining in value).

Posted by: d.a.n at November 20, 2008 10:25 AM

Rich people,can find great deals.

Posted by: Inewcombe at November 20, 2008 11:02 AM

Roy Ellis,

Your comments contain very valid and important points. But, they all seem to ignore 2 major facts.

1) foreign mfrs. sales have dropped dramatically as well, which means they have abundant under-utilization of capacity. Why would they buy the Big 3’s facilities in this credit crunched market when cash balances on balance sheets are premium when they can take market share by revving up their own capital utilization instead of going into debt to buy the Big 3’s facilities? The fact is, there are no buyers for a bankrupt GM, Ford, or Chrysler, and the research shows, such bankruptcy would destroy as much as 80% of currently anticipated purchases of their vehicles. A buy out by a another corporation is NOT in the cards.

Second. Does America want to trade oil dependency for manufacturing and transportation dependency? Does America want foreigners building our military transportation as well as consumer transportation. That is akin to a monopoly, when your customer has no alternative but to buy a foreign product. America needs to salvage and rebuild its manufacturing base, not give it away for 20 cents on the dollar by allowing the Big 3 to bankrupt and disappear from American manufacturing altogether.

The Steel industry was in this position decades ago. We resolved to keep steel manufacturing in this country even though there was no short term prospect for its profitability. Today, our steel manufacturing is profitable, though small, but, also absolutely reliable in terms of quality for essential aerospace and other vital national security interests.

Posted by: David R. Remer at November 20, 2008 11:02 AM

The world is a big game of Monopoly. China has more hotels than everyone else, so all the money is funneling there as we go around. We get by cause they lend it back so the game can continue.

In Monopoly, there is no way to reverse the tide - although there are no militaries in Monopoly.

Posted by: Schwamp at November 20, 2008 12:12 PM

David, I suggested that the big 3 are already globalized with an international footprint. They are just fishing for a few $bil from the government to help them shut down their legacy plants in Detroit. The Chinese would buy the robotics and the rest for scrap iron. Does America want foreigners building our warfighting materials? Depends of who America is? The oligarchy wants that very much a la the supertanker refueler contract and they do run the show. I think the oligarchy has only turned down one or two of the hundreds of foreign sovereignty purchases done over the last 15 years. And that’s because of public outrage over the selling of seaport management/security and attempts about purchasing airport transportation authority, etc. I’m sure you are aware of the push to grant 35 year leases to foreign entities, Spain and Australia being the latests, for interstate highways to be used as toll roads. One such deal, in Illinois I believe, gives a Spanish firm rights to control the development of properties along a 157 mile long by 20 mile wide stretch of interstate. Australia has a similar deal going in Texas. With a split legislature the public could complain loudly about some issue and have some impact like on immigration and the supertanker contract. Now we can only sit back and watch it happen. With the 111th there is no room for debate or public outcry. The overriding ideology of the oligarchy is that if all the worlds economies are mixed and mingled together then there is little chance of war or collusion to make bad. Give a whit for the US Constitution. From NAFTA we have: “Eliminate sovereign immunity as a defense.” “Create judicial panels that that would consist of trade experts appointed by the governments, work outside each country’s judicial system, operate in secret, and have the authority to impose fines aon any of the three governments, while no appeal of the decisions could be taken to national courts, including the US Supreme Court.”
From WTO we have: “To subject all US federal, state and local laws and practices that affect trade to international review by WTO.” That’s why the WTO shows up in court in your small town when the community protests against a big box store. “To allow any WTO member to challenge any federal, state, or local law as trade-impeding.” That’s why Brazil/WTO is suing the US (taxpayer) for $4B over cotton subsidies to US farmers.” “That the proceedings of WTO judicial panels will be kept secret. All documents used shall remain secret. Opinions in the final report shall be secret. Votes of panelists shall be secret. No appeal procedure exists outside the WTO.” “That the WTO is empowered to enforce its ruling by imposing fines on the US until the nation complies, deny nation trading rights and authorize cross retaliation on any US export, thereby allowing fines to be collected from any industry even those not involved in the trade dispute.” Since the founding of the WTO the US has been named a defendant in far more cases than any other nation. In 2007 Deputy USTR Robert Lighthizer testified before the House Ways and Means Trade Subcommittee that the WTO had rules agains the US in forty of forty-seven cases forcing the US to change its laws and administrative rules. Thank you for all that Bill Clinton and the current batch of Clintonites who are now Obaminites. Secrecy is the archenemy of democracy, but hey, who cares! Got a paycheck, I’m happy!

Otherwise, we have the government we deserve.

Posted by: Roy Ellis at November 20, 2008 12:18 PM

d.a.n.,

I stand corrected. You are right, I read a poorly written article and assumed it to be correct.

I’m still looking for a 5000 DOW by years end and deflation by march.

Posted by: googlumpugus at November 20, 2008 12:55 PM

I get your drift Schwamp, and let’s hope it never comes to that. I assume the oligarchy has factored that into their globalized economy equation. They seem to be willing to walk to the brink with Russia and China. China has over 3000 front agencies collecting intelligence in this country. Likewise, the only way they will do business with a US outfit is with a complete transfer of technology to China as part of the deal. It is known at this time that China has cornered the market on a unique magnetic material used in JDAM bomb targeting. It’s an insidious game they play. For instance they don’t hire lobbyist like most countries. Instead they work through institutions like Goldman Sachs (a special China relationship), Bank of America, Blackstone and Citigroup. Through Goldman Sachs/Bush you have Josh Bolton, Henry Paulson, and Robert Zoellick making China policy. Through Goldman Sachs/Clinton you have Robert Rubin as Sec. Treas.and now chair of Citicorps Exec. Committee and economic adviser to Dem party. The once House majority leader Gephardt worked for Sachs. Council on Foreign Relations Peter Petersen of Blackstone and his Institute for International Economics, the most influential trade policy think tank in the US. These folks help to bring it all to China. Other facilitators include former Sec of State Henry Kissinger and Alex Haig, former Amb. to China James Sasser and former National Sec Advisors Brent Scowcroft and Sandy Berger. The Chinese embassy sends staff to monitor think tank sessions, congressional hearings and public briefings. Just their presence helps people to know what to say and think. Like when the Bush admin was asked to intercede in China’s manipulation of currency scam the largest US corporations operating in China stepped up to swat it down.
Thus China is able to operate behind the scenes to accomplish its goals.
From Pat Choate’s Dangerous Business: “Even if all foreign direct investment were stopped, even if the Chinese currency were adjusted to its real value; even if US and European-type health, safety, and environmental measures were imposed; even if China stopped its direct and tax subsidies; and even if all piracy and counterfeiting were eliminated, China would still have an absolute economic advantage because of the high efficiencies derived from clustering its production, the low cost of its labor, and government subsidies.”
Of course our unfair trade laws with China do not help. US exports are taxed twice when the are exported to China under a value added tax system that unfairly removes VAT taxes when Chinese goods are exported to the US. It is true that this country has never negotiated a favorable trade agreement. Trade has been used to influence foreign policy or used as a tool for foreign aid.
I find it perplexing that China can ship food ingredients tainted with melamine and who knows what else, into this country with lip service by the FDA while the US citizen can’t purchase pharmaceuticals outide the US because they are UNSAFE. Really WOW’s me!

Posted by: Roy Ellis at November 20, 2008 01:40 PM

Roy replied: “The Chinese would buy the robotics and the rest for scrap iron.”

Which would result in 100’s of thousands if not a million Americans suddenly becoming unemployed. Add that cost of unemployment insurance, federal aid to retrain and school those workers, food stamps, and of course the additions to Medicare since they would have no health insurance, and the cost to American tax payers easily surpasses the $25 billion being asked for bridge loan until the economy’s consumerism begins to grow again.

All your references to foreign ownership of American assets refer to Republican and Bush policies enacted these last 8 or so years. That is all about to change. I agree with every word you said on this topic. But, that is not going to be the case going forward by all accounts coming from the Obama camp and Democratic chairs of the Congressional Committees I watch on C-Span.

It is important not to project into the future the actions of the past 8 years of our government. It is a false projection in oh, so many, many ways. These toll roads for example, will be ended by the Democratic Congress and Obama administration for the most part or, at least modified to reflect American ownership and free passage for commuters from home to work, if they survive at all.

Texas won’t be getting any federal highway dollars if they pursue toll roads under the Obama administration. Remember Obama’s 50 state campaign strategy? Texas will be targeted for a Democratic victory in 2012, and that will require halting those toll roads Bush and Perry were so fond of from Mexico to Canada.

You are just flat mistaken to equate the Clinton administration on domestic policy with the coming Obama administration. They will be radically different in many ways, not the least of which will be their approach on trade agreements. Clinton was willing to lower our standards to foreign standards. Obama will be insisting foriegn trade partners elevate their standards to approximate ours. That is a diametrically opposed approach, Roy. One which should not be ignored as readily as you seem to.

Posted by: David R. Remer at November 20, 2008 02:01 PM

goo, I will take a bet the Dow is not even close to 5000, but hovering around 8000 give or take 75 points by year’s end. With recovery in sight by the investors at 2009’s year end, the Dow may drop briefly, for a day or a couple to below 6000, but, will then rapidly recover in as short a time to the 7250 to 8000 range.

What you seem to be missing are two crucial factors going forward. Pent up consumer demand reaching a frustration threshhold and then coming out both at Christmas and in the 2nd quarter of 09. And second, the earnings to price ratio for most American businesses are at lows now, not seen since the 1980’s and early 1990’s.

Yes, there will be deflation next year. No question. But, that in turn is going to create incredible consumer incentives to begin consuming again next Summer, especially if oil prices remain below the $70 to $80 dollar range.

I would add a third, another consumer stimulus package, but, that is premature at this point. It could take many forms, and some would not be nearly as effective as others, so, I will abstain from adding that consideration for the time being.

Posted by: David R. Remer at November 20, 2008 02:10 PM

d.a.n, in the shorter term, interest rates will reflect risk and borrowing capability. Right now and for the short term, the U.S. will remain the low risk place for foreigners to lend. By short term, I mean for at least the next several years.

Therefore, in the short term with falling world wide interest rates, our debt is not the problem it portended to be just 18 months ago. In the longer term, especially after 2017, the debt and interest become vastly more problematic as the U.S. attempts to heap on vastly more debt to pay its Soc. Sec. and Medicare/Medicaid obligations.

Presumably, reforms in these areas will have taken place by then. That is at least the announced intent of Obama administration according to Rahm Emanuel yesterday in a live interview. And given the mandate for reform and change, such reforms will not be the political 3rd rail they have been in the past. We will get reforms. How effective they will be in addressing unfunded mandates remains another question only the passage of time will answer.

Posted by: David R. Remer at November 20, 2008 02:17 PM

David,
What your market prognosticating is missing is that price to earnings ratios may appear low now but when profit numbers for the quarter beginning in October come in it’s all out the window because most of those ratios will be negative.

Posted by: Schwamp at November 20, 2008 03:15 PM

Schwamp, you don’t understand the markets. Investors are pricing those earnings statements in already. The markets are forward looking, not rear view mirror drivers.

But, the markets are down this far primarily because of lack of clarity as to when a turnaround will be forthcoming. Valuations are way below what earnings will be next year if the economy bottom is reached in the first quarter.

Investors responded positively to many of Paulson’s remarks today, the notable exception was to a larger regulatory environment. But, when he explained that the regulatory additions would be aimed at transparency and accountability, the market rebounded.

Which highlights that you have two kinds of investors. Those trading minute to minute, and those trading long term. Those trading long term constitute the vast majority of traders, and they have already capitulated. This volatility is in response to day traders.

The instant some clarity, ie. some consensus is reached that the economy will bottom 6 months out, the longer term traders will come roaring back into the markets. One would be a fool not to be putting money into the markets at today’s closing levels if one is a long term trader.

I just put 82% in stocks, 8% in bonds, and 10% in fixed. Now I can sit back and relax. Doesn’t matter what losses today’s investment incur, they will recoup those small losses and harvest enormous returns when the long term traders come roaring back fearing missing the uptrend. And this will occur around 6 months BEFORE the economy actually sees stabilization or signs of a turnaround.

Whether that is tomorrow, or next month, or the end of the 2009 first quarter, doesn’t matter. I told 401K investors, right here at WB to start paring they allocations in stocks back in the Fall of 2006. Those who followed that advice, and then again got out of stocks back in the Fall of 2007, would be poised to make a killing in the markets by jumping increasingly back in today and on dips in the next month or two.

The markets are only unpredictable if one is intent on day trading. But, the long term trends in the markets give ample signals of what is forthcoming, as my article in 2006 regarding the property values and their consequences, demonstrated.

Posted by: David R. Remer at November 20, 2008 04:09 PM

Sorry to hear you are overweight in stocks David. The long term investors (of which I am unfortunately one of) have been conditioned like pavlovian dogs to believe that markets always go up long term - and they have not capitulated at all. We have been trained this way to provide some cushion for the sharks exiting the market opon the period of reckoning. I always knew this day would come - and I still don’t act, paralyzed by the absence of a financial maturity that would allow cutting ones losses, capitulated in the sense that all optimism has been lost.

When almost everyone believes something, the opposite is probably true.

Posted by: Schwamp at November 20, 2008 04:27 PM

David: Big 3 Auto: Should they be rescued?

No. Unfortunately, some geniuses had the bright idea that the financial industry, at least some of it, deserved to be rescued. So, the administration that professed to be, and was believed by many voters to in fact be, laissez faire and savage free-marketers engineered the biggest and most costly US federal intervention in the history of the universe. It’s not surprising that the auto industry now comes along wanting help. And it’s impossible for the Bush administration to make the case on a basis of consistency that the financial industry deserved a bail-out but the auto industry, or any other industry having hard times now or in the near future, does not.

So, I say “No” in answer to your original question. I’ve already let my elected representatives know, just as I did when I opposed the financial industry bail-out. I doubt it will do any good but at least I tried.

Posted by: EJN at November 20, 2008 04:43 PM

Obama is also going to end the reign of the lobbyist influence peddling in Washington. Obama is not going to pick people with conflicts of interest like Tom Daschle for his cabinet.

Obama is going to do things so much differently that you will think you are living in ANOTHER WORLD.

Roy Ellis: I am not anti-union.

How many UAW members and their supporters have illegal immigrants either working for them or are dependent on services provided by illegal immigrants? Illegal immigration is a major part of the power structures golobalization plans.

How many of the big unions went on strike to try and prevent the government from assisting companies in relocation their manufacturing facilities to China?

With the exception of a few major manufacturing corporations and their union represented workers, much of the damage to our manufacturing base has been accomplished. The time to fight this was 15 years ago, not know when about the only ones left to protect are these big corporations and their big unions.

“We all should take the time to give a fickle finger of fate salute to Reagan, Bush 1, Clinton and Bush 2.”

We will soon be adding another president to that list.

Posted by: jlw at November 20, 2008 04:44 PM

I think your right jlw. I’m archiving David’s post (that the democrats are here to save us) away for reference in about a year. Yes, a president doesn’t drive the oligarchy agenda, it’s the other way around. I’m for true worker’s unions but it irks me that members can’t rid themselves of some of the archaic rules they put up with. Just as it irks me that the voters want change instead of reform.

Posted by: Roy Ellis at November 20, 2008 05:05 PM

Roy, voters do want reform, some want this reform, some want that reform, some want the opposite reform, etc. etc.

That is why the founding fathers created a republic and not a direct democracy, so that order and direction could potentially be followed despite the lack of consensus amongst the electorate. They voted for change as well, and they got it.

Whether it is the change that improves their lot after 4 years or not, remains to be seen. But, I think Obama’s re-election chances are very good if he sticks to the reforms and changes he has promised and alluded to. There simply isn’t a better beginning for a president than a recession, provided that it improves over his term in office. Almost all of our recessions have improved two years out from onset, save for the 1930’s and previous ones.

Posted by: David R. Remer at November 20, 2008 05:42 PM

jlw, putting words into Obama’s mouth and electing yourself spokesperson for the Obama administration, are you? Interesting.

You set expectations so high that a dictator could not fulfill them if they were his own.

Try taking Obama’s actual words and holding him to that standard, instead of your fantasized version of your ideals for what should happen according to jlw.

If after 4 years, the direction of the country has changed, the recession is behind us and we are experiencing modest economic growth again, and terrorism is being fought, and we have but a symbolic compliment stationed in Iraq, and the Afghanistan front has improved, and Iran has no nuclear weapons, and the growth of deficit spending and debt has abated from current levels, —- I trust you will recant your words above as misguided and misspoken, as any objective person would.

Posted by: David R. Remer at November 20, 2008 05:48 PM

EJN, I don’t agree with a lot of your position, but, I hold your action in very high regard reflective of an intelligent and responsible person for having contacted your representatives to make your views known.

It takes a certain amount of moxy to act even though one’s hopes for that act virtually non-existent. That is to be respected as it speaks to a sense of responsibility even in the face of perceived futility.

Our government would work better if all our politicians heard from vastly more of us on the issues they are dealing with.

Contrary to popular belief though, our politicians usually do have a whole lot more pertinent information about the issues they face in legislation than we the voters do, in general.

If the outcome works for the people, the people will instantly forget that the means to achieve those outcomes were opposed to their own convictions on the matter, once upon a time.

If the Congress and Obama succeed in improving the lot of Americans generally, the people will swear they supported their efforts all along. Welcome to sociology 101 and the group think phenomenon which lies at the heart of American politics.

Posted by: David R. Remer at November 20, 2008 05:59 PM

Schwamp said: “When almost everyone believes something, the opposite is probably true.”

That is usually true of investor markets at their turning points.

Posted by: David R. Remer at November 20, 2008 06:01 PM

Roy, I am glad you are archiving my posts, and not your interpretation of them. For there is a chasm between the two as evidenced by your last comment on this topic.

The Democrats are not here to save us. The Democrats are here to recapture and hold power. That is ALWAYS the foremost priority of any political party.

Obama however, has time and again demonstrated in his campaign that he is no traditional Democrat and is not following a Democratically held ideology. His campaign was based on what would work with a pragmatism that proved itself. If he governs in the same manner, Democrats will have lost a president, in part, and the American people will found a great one.

Do not confuse my support for Obama as wholesale support for the Democratic Party. My support for the Democratic Party would have to be earned, and except for Clinton’s and blue dog’s bending to fiscal conservative principles in his second term, there is not much in the Democrat’s past 35 years to recommend their competence at governing for the nation’s future.

Posted by: David R. Remer at November 20, 2008 06:11 PM

David,

I sincerely hope you are right. I suspect, if I’m honest, that 5000 by years end is overly pessimistic, but not unrealistic by the end or middle of 2009. I think this number is more in line with a real bottom. Perhaps 6000. I’ll split the difference and go with 5500. I’m not really convinced of your prognostications for 2009. I’m seeing bad signals worldwide that suggest something deeper than the usual recession.

Unfortunately, I don’t think anyone, including Obama has a handle on this problem, yet.

Posted by: googlumpugus at November 20, 2008 07:58 PM

goo, I agree, no one has a crystal ball on the future that works 100%. That said, all that is happening here is a deleveraging of inflated debt and assets. Nothing more.

The losses incurred to a great degree can’t be more than the irrational over valuation that previously occurred. I say to a great degree, because that is certainly not true of employment numbers, and unemployment numbers in excess of 10% would have other domino effect consequences.

But, given the liklihood that unemployment will not exceed 10%, there is a stop loss at that point, as bankruptcies, mergers, and breakups occur as part of the deleveraging process. Everyone will be a bit poorer or less wealthy, but, those with jobs will still make a living and continue consuming and provide backbone to our economy.

China is likely to continue growing right through all of this at 7 to 8 percent. India at a lesser rate, but growth nonetheless. Europe will be tagging behind us by 6 months to a year in getting their economies stimulated again.

I don’t see any world wide depression scenarios in any of this. If China were to refuse to float our federal deficits, that would be a nightmare scenario. But, there is no evidence of that or similar events occurring in the foreseeable future. And lacking anything like that, it is very likely that in the 3rd quarter of 09 everyone will begin to breath a sigh of relief that worst is behind us.

The key going forward is insuring that we never walk to the edge of this precipice again. Hank Paulson’s speech today, which I know Obama would agree with in terms of prophylactic measures, are spot on. Implementation may be tedious and difficult at times, but, the direction and scope of transparency and accountability Paulson spoke of today, were spot on.

Posted by: David R. Remer at November 20, 2008 08:19 PM

David Remer: Who’s words are these

” I am running to tell the lobbyists in Washington that their days of setting the agenda are over. They have not funded my campaign. They won’t work in my Whitehouse.”

Another campaign promise bites the dust.

Those who have hired the lobbyists paid cold hard cash to get this new Congress elected and they are going to set some of the agenda and they will write much of the policies. If necessary, veto’s will be overridden. I don’t think it will be that necessary. I expect Obama will be a team player.

“If after 4 years…….and debt has abated from current levels”

If the things you listed were to occure, I’m sure many people will be jumping for joy because the statis quo is back on course. But that is a far cry from the fundamental change that Obama alluded to in the campaign. Therefor, I anticipate that there will be no reason for me to recant my words or my opinion of Obama.

It seems to me that you have lowered your expectations from nothing less than a revolutionary presidency to a competent president.

Posted by: jlw at November 21, 2008 01:37 AM

Obama’s transition team is also soliciting donations for the costs associated with the transition and inauguration so the corporate lobbyist won’t be involved in the funding. It is essential that the lobbyist are weaned off the members of Congress and the president. Perhaps a donation would help to start the ball rolling towards a lobbyist negated DC. We can’t just sit by and complain because if we do the void will be filled by the lobbyist and their money. Obama is just 1 man he can’t do it by himself.

Posted by: j2t2 at November 21, 2008 02:48 AM

Lobbying is in pitch fever right now. Folks trying to get their dibs in with the new administration and congresspersons. On the tube last evening was a lobbyist (one of hundreds) attending a fundraiser by John Dingel to help the campaign funds of the newly elected. This lobbyist said he was giving $5k to several of the newbies. Legisltor’s will never divest themselves of lobby money. Moneyed interest has plagued the Republic throughout our history. One way to remove money influence from politics is through a new 3rd party with a different attitude about politics. A party that targets reform of government such as abolishing corporate personhood and money is free speech laws. Reorganizes the Federal Election Commission and mandates that all donations come through the FEC for distribution to candidates. Sounds real easy.
I’ve put up a website that promotes such a party, www.demreps.com

Posted by: Roy Ellis at November 21, 2008 09:38 AM

jlw, your comment is jaundiced. You keep telling us how bad you want things to get, rather than providing facts and patience to see what Obama actually does.

I think it is best to remain hopeful, communicate my expectations to Obama and my representatives, and hold them accountable if they disappoint.

To condemn them before they are even in office is a dead giveaway that one hopes they fail, and therefore, hopes the nation fails as well, simply to satisfy one’s own prejudices. That is hardly rational, nor productive, nor in keeping with the founding principles of striving for a more perfect union.

If enough others act as your comment models, there will be a self-fulfilling prophecy failure for yourself and everyone else in this country. Think about it. That would not be in your own self-interest. Let alone enlightened self interest as Adam Smith indicated would be necessary for a democratic society to work.

Posted by: David R. Remer at November 21, 2008 12:50 PM

Same ole lame argument we’ve been hearing for 40 years David. Just wait, things will get better. This new administration will do it. It’s not Obama, or the demreps or the House or Congress. It’s a broke system, a failed government. We were once a Republic. Today we are governed as a corpocracy or an oligarchy. You shouldn’t believe me. Let me start out with Albert.

“The pursuit of truth and beauty is a sphere of activity in which we are permitted to remain children all of our lives.”—Albert Einstein

And: (Gist) To observe a failed experiment and repeat the same expecting different results is stupid. Albert E.

From Thomas: “If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.” Thomas Jefferson

“Thomas Jefferson: The spirit of the times may alter, will alter. Our rulers will become corrupt, our people careless… We must crush in its birth the aristocracy of our moneyed corporations, which dare already to bid defiance to the laws of our country.”

James Madison: We are free today substantially, but the day will come when our Republic will be an impossibility. It will be an impossibility because wealth will be concentrated in the hands of a few. … when the wealth of the nation will be in the hands of a few, then we must rely upon the wisdom of the best elements in the country to readjust the laws of the nation to the changed conditions.”

“President Abraham Lincoln (1864): I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country… corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”

Teddy Roosevelt: “To destroy this invisible government, to befoul the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day.”

“President Franklin Delano Roosevelt: The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That is, in essence, fascism….ownership of government by an individual, by a group, or by any other controlling power. Among us today a concentration of private power without equal in history is growing.”

“Idaho Republican Senator William E. Borah (1926): Money has come to be the moving power in American politics. Some years ago, politicians got into the habit of seeking contributions from men of great wealth…. It was inevitable, if the large sums were to be given, that large sums would have to be returned in some way. Hence, money and politicians joined forces, and money has its say in shaping legislation and in administering the laws of the country. It is a fearful national evil and will in the end, if not controlled, destroy the government of the people and substitute, therefore, a government of the few—-the few who have sufficient money with which to buy the government.”

Of course there are hundreds of others. And these guys weren’t dummies. Robert Kennedy, while not a statesman, was less eloquent but quite succinct in stating that: The Republicans are 95% corrupt and the democrats are 75% corrupt.”

I’ve been keeping score and right now its We the People, 0 and the 35,000 registered lobbyist, 7.62 x 10 to the 6th. We the People need help in the context of reform. Let’s bring back the Jacksonian era, maybe Ted Turner in a duel with Henry Kissinger. Our young folks would have a reason to get involved in politics. Abolish Corporate Personhood and Money is Free Speech, implement a flat tax, have the FEC receive and distribute all campaign donations, limit the campaign period to six months, hold primaries on the same day, and yes, even purchase your pharmaceuticals from foreign markets. Etc. Etc.
Check out REFORM at www.demreps.com

Posted by: Roy Ellis at November 21, 2008 03:02 PM

Roy said: “Same ole lame argument we’ve been hearing for 40 years David. Just wait, things will get better.”

Sorry, your life has not improved. I was born in 1950, and we were poor inner city folks. By the time I was 14, Dad was working at Ford Motor Co. and Mom was raising 7 kids, and we had a car, a home, a backyard, healthy food, and good Christmases.

I struggled through working full time and going to college full and part time. I was REALLY poor after graduating from college and in debt. But, in just 10 years, I was married, had a home, two cars, a travel trailer, and savings.

So, yeah, for a couple hundred million Americans things did get better. Of course not all things got better, but a great many did. Race relations got incredibly better over that time span. Middle Class savings via 401K’s, pensions, etc. grew by leaps and bounds. There were no more world wars, and the threat of nuclear attack upon our nation subsided.

And while an awful lot got mismanaged over the last 8 years, even moreso, than usual, there is absolutely no question that Democrats are going to attempt to get many of the things wrong, right. That is there meal ticket to reelection. If Obama proves to be as competent a president as he was a campaigner, Democrats would do well to follow his lead on most issues. And things just might, on net, actually get better, as they did from 1945 through 2001 for nearly all Americans.

You can’t permit your personal frustrations to blind your comments to real history, Roy. America improved enormously from WWII to the present. We are nowhere near repeating the great Depression in the next 4 years. That will only come if entitlement and tax reforms are not handled appropriately and quickly, before the deficits hit from entitlements around 2017.

There is much reason and rational basis for hope, Roy. And it feels better and allows one to go about one’s life more productively, as well. Which is good for oneself, one’s family, one’s community, and one’s nation. Try a win-win attitude for a while, you might just find optimism also carries self-fulfilling prophecy, as well.

Posted by: David R. Remer at November 21, 2008 03:21 PM

Hello again. We enjoyed our week vacation in Rome and even in the off-season there were a tremendous number of tourist from all over the world spending lots of money. Occasionally I agree with Remer and his note above is one of those times.

Good times and bad times never last and opportunities continue to abound in this country and around the world. We can choose to laugh or cry but the choice still remains ours. American’s remain a good and ambitious people capable of achieving nearly anything they can imagine and believe.

Whenever I travel overseas I always look forward to coming back to the land and people I love.

Posted by: Jim M at November 21, 2008 04:18 PM

David Remer: Your attack of my motives is total hogwash.

The point that I am making is that for a man who porclaimed himself a great agent of change, going to go to Washington and clean out the special interests, offer the American people something akin to a new New Deal, filling your Whitehouse with Washington insiders beholden to special interests is not an audacious start and may not bode well for the future.

If you remember, I am not the one who proclaimed Obama a revolutionary. If his supporters take a wait and see attitude, He will probably be swayed by the inside the beltway power structure.

If those who believed all of Obama’s retorical politicing don’t keep the pressure on him constantly then in four years you will probably be saying, at least he was better than Bush so I am going to vote to reelect him. That’s hardly revolutionary.

I don’t have to defend Obama. I did not vote for him. I voted for change. Everytime he fullfills a campaign promise I will acknowledge it. Every time he violates a campaign promise I will shove it in the face of his supporters. He has already violated a campaign promise, no lobbyists in my Whitehouse.

I abhore the the possibility of a depression but, I will not argue that we as a nation are not deserving of it. We elect the same old politicians, bought by special interests and rather than challange them to do things right, we adopt a wait and see attitude.

Posted by: jlw at November 21, 2008 04:22 PM

David, you make it seem like there is something evil in wanting reform of government. Looking at Wiki I see there has been 61 different political parties in American history. My proposed party would make 62. Thomas said that if we went twenty years without a revolution something was bad wrong with us. I’ve had a pretty good life, certainly not a bitter one. I can now sit back and flog the keyboard and tend the Revolution. In other words, I get a paycheck but I’m still not content with the system. I really like the idea of one person, one vote. I like to strive for fairness in all things. Consider the WTO rule where the US gets one vote and each EU country gets one vote. What is that? Is the EU is or is it not? According to Joel, in Delusional Democracy, the number of lobbyist went from 16342 in 00 to 34785 in 05. While my vote gets counted I’m not sure it counts. Here is a quote from Joel’s book by Jason Miller (2005): “Sadly, the notion of “of the people, by the people, and for the people” is in its final throes. A corrupt, plutocratic government “of the rich, and for the rich” sucks the marrow, leaving the rest of America to hungrily gnaw the bones. Bearing a striking resemblance to the feudal lords of the Middle Ages, America’s plutocrats plunder and hoard the wealth of the land while their serfs fight over the remaining scraps.”
Obviously I am not by myself in harboring such feelings. Now I’m not proposing to throw the money changers out of the Temple or even trying to throw the ivy leaguers out of Wall St. But I do want one person, one vote. In the simplest terms, if I feel like I am being treated fairly I’m happy. I’m not.

Jim M, Welcome back to the war.
jlw, you are so right on!

Posted by: Roy Ellis at November 21, 2008 06:29 PM

Again, Roy, you describe what is and has been, without leaving room for the possibility of improvement.

I support the rise of an independent party, but, without any illusions that such a party will, by definition, become subservient to the same master as all previous parties, power.

The change that must take place has to occur within the voters themselves. Changes in parties will never unseat their master objective. Only the voters can do that. And if they learn to unseat power routinely, those that replace incumbents will have no political career unless they serve the people and voters, as well.

That is the lesson of democracy and the vote, that is the admonition of T. Jefferson, that is the source of hope for the future.

With that many lobbyists, it would be virtually impossible to fill an administration with competent public servants, none of whom have any ties to lobbying. Have a little faith in this candidate whose presidency and reelection rests on his dealing with the lobbying vampire in D.C.

You have nothing to lose in pressing Obama to live up to his promises. You have a lot to lose by condemning his administration before he has even taken office. That self-fulfilling prophecy thing, you know.

Posted by: David R. Remer at November 21, 2008 06:47 PM

jlw, see my comment above to Roy as my reply to your comment.

Posted by: David R. Remer at November 21, 2008 06:48 PM

Jim M, the promise that was America at its founding remains the greatest promise ever made amongst people toward humanity. That promise, with an unyielding effort to realize it, is the greatness of America.

To form a more perfect union in which people may exercise certain unalienable rights, such as living their life at they choose and pursue, provided such pursuits do not threaten that more perfect union of co-existence, states, and nation.

Posted by: David R. Remer at November 21, 2008 06:58 PM

Jim M wrote: “Good times and bad times never last and opportunities continue to abound in this country and around the world. We can choose to laugh or cry but the choice still remains ours.”
Some truth there but not totally. We have run a negative trade deficit every year since 1973. That is in the past. How does it look looking into the future? I can’t see in the next 50 years where we might have a positive trade figure. Before we could expect a positive figure China would have to be paying 1B low skilled workers an average of $20/hr. And, then there is India with another 1B. Make that 100 years. Your last sentence is spot on; I am laughing and crying. I guess it depends on the benchmark in time you are considering. Someone said the auto union workers should sign on for about $8/hr. When is the last time an autoworker was paid 8 bucks/hr? Probably back in the 50’s. And you recall that a 1950 dollar is now worth 10 cents. So, an $8 wage would be worth something like 75 cents/hr in the 50’s. David, when your dad worked at Ford was he making more than 75 cents an hour? And now we are talking globalization wages!! About what the oligarchy has in mind.

From jlw we have: “David Remer: Who’s words are these
” I am running to tell the lobbyists in Washington that their days of setting the agenda are over. They have not funded my campaign. They won’t work in my Whitehouse.”

Now we hear that Obama is backing off on his primary promise to renegotiate NAFTA.

David you wrote: “To form a more perfect union in which people may exercise certain unalienable rights, such as living their life at they choose and pursue, provided such pursuits do not threaten that more perfect union of co-existence, states, and nation. “
I heard this evening that Obama ‘may’ be amenable to the NorthAmerican Union. In my opinion that tends to threaten the more perfect union. Do you believe that subverting our laws to WTO rules/regulations tends to threaten that more perfect union?

They tell us if we don’t pay attention to history we tend to repeat it. And if you are on a runaway train going 100mph downhill with no brakes, you might want to try and guess what’s around the next curve.

I had just as soon we forget this Obama/Bush crap and get on with the Revolution.

Posted by: Roy Ellis at November 21, 2008 09:51 PM

Though I’m still against a bail-out in any form, it’s encouraging that this time Congress is demanding a plan from the beggars before agreeing to cut them a check, as opposed to the way they acted with the financial system bail-out.

That might have something to do with the way the financial bail-out request was presented by the Bushies: either give us the money or the whole contraption called the US economy goes down in a matter of days if not hours.

Note how a) the whole contraption didn’t go down even though the money wasn’t immediately forthcoming and b) Paulson has abandoned the original plan and is just making things up as he goes along, making no apparent headway against the crisis.

The stupidity and incompetence of the financial system bail-out must not be reprised in any succeeding bail-outs such as that proposed for the Big 3 automakers.

Posted by: EJN at November 22, 2008 09:48 AM

EJN, I agree about taking the time to require a well thought out plan for insuring the taxpayer’s dollars will 1) achieve the intended objective, and 2) be assured at least a reasonable chance of being repaid.

As for the financial bailout, the US and world economy would be vastly worse off today had Congress not come forward with an infusion into the financial sector. The psychological effect of announcing the 700 billion economic stabilization act cannot be overlooked or diminished.

I agree, that money could have been targeted and structured more effectively, but, also remember, that it was a compromise bill in order to get passed.

And it must not be forgotten that the Congressional plan was joined at the hip with the Federal Reserve’s infusions of liquidity and rate adjustments.

I am not disagreeing with you that the $700 billion was not well targeted or structured, but, that could only occur in an authoritarian society where one person decides and avoids the pitfalls of consensus and compromise.

If folks want democracy, they have to accept its weaknesses along with its strengths, and work diligently to improve both.

Posted by: David R. Remer at November 22, 2008 10:25 AM

EJN, I don’t believe for a minute that stupidity and incompetence is driving the train. Highly educated and knowledgeable people are. And every penny of the bailout will find the pigeon hole it was destined for. Looking back, it was Goldman Sachs that served as the financial instrument to bring China on line. Half the Bush admin came from Sachs and will probably return there. I would expect Sachs to end up with at least half of the bailout funds.
Heard this morning that GM is the largest seller of cars in the China market with a plant employing about 20,000 people and looking to expand. I think they want the bailout to shutter their legacy plants, take care of worker pensions, severance and the like. Kind of hard to offer up a plan like that to Congress.

Posted by: Roy Ellis at November 22, 2008 10:29 AM

Can you say Buick in chinese That’s the hot ticket For GM and some other of their Line There.

Posted by: Rodney Brown at November 22, 2008 11:37 AM

googlumpugus wrote: d.a.n., I stand corrected. You are right, I read a poorly written article and assumed it to be correct. I’m still looking for a 5000 DOW by years end and deflation by March [year 2009].

Maybe. The DOW has already closed as low as 7552 on 20-NOV-2008 (the lowest level in 5 years).

However, overall deflation for the next year or so doesn’t seem likely due to several inflationary pressures.
While the debate about approaching inflation and deflation continues, there is also the possibility of BOTH.
Currently, we have a mixture of BOTH inflation (food, electricity, health care, etc.) and deflation (homes, gasoline, etc.).
Demand for many non-essentials are likely to experience deflationary prices (e.g. homes due to 10,000 foreclosures per day, gasoline due to less driving, restaurants, higher-end/higher-quality products for which lower-cost products can subsititute, etc.).
Demand for essentials are likely to experience inflationary prices (e.g. food, electricity, health care, pharmaceuticals, etc.).

Overall inflation is likely to continue to be positive for the next year or so, due to the following:

• (1) The massive $10.7 Trillion National Debt is creating ENORMOUS pressure to continue to borrow, create more money out of thin air, spending, bail-outs, stimulus checks, extend unemployment benefits, pork-barrel, corporate welfare, subsidies, etc., etc., etc. (hence, increasing inflation); after all, what