I had to go out today a little after 4:00 PM. It was raining, but not bad enough to require anything other than intermittent wipers. I also happened to forget it was homecoming weekend at UGA. So it is a pretty fair bet to say that the population in town for the weekend is somewhere over 200,000 people. Normally we are around 80,000 with an additional 35,000 illegal aliens.
Having spent the last six or so years driving a minivan and a couple of SUV's, I guess I have become far more used to and comfortable with being in a large vehicle with very large crush zones. It was rather unnerving to be driving in traffic in a small Porsche again.
Normally at 4:00 in the afternoon, I can get from one side of the county to the other in about 20 minutes if I travel straight through town. If I take the interstate grade highway loop that goes around Athens, I could do it in maybe 10. Unfortunately, I had to go to a bank on the other side of town to drop off some additional paperwork regarding our construction on the burned house < aside, the credit market seems to be changing hourly>
At any rate, there isn't really anyway to go to that bank from my house other than the main road through town.
Let me offer my views on rubbernecking.
If you are a visitor from Tennessee and you have no idea where your hotel is and cannot seem to read all the multitudes of signs directing you to the campus- stop slowing down to ask traffic officers on the side of the road how to get to the RV parking lots. Further even with his advice, you seem to go out of your way to ignore his directions, upon which you then guide your 80 foot RV directly into downtown. A place even sub-compact cars have a problem navigating.
If you happen to be yet another Vanderbilt booster in yet another RV, and you SLOW DOWN to see if the RV in front of you got any info from the traffic cop with the blue lights flashing on his cruiser- DON"T slow down to 5 MPH in a 55 MPH zone. And if you happen to be a local yokel from Athens- REALIZE that the people driving the RV's are almost universally clueless as to where they are or where they need to go to begin 24 hours of tailgating. Get out of the way of these leviathans BEFORE they slam on their brakes to ask the cop where they are supposed to be.
If you are too stupid to be aware of the fact that every Fall, we get clueless drivers every couple of weeks, then for the love of God don't slow down just to observe the spectacle of yet another lost RV driver traveling in the opposite direction. This isn't even an event. You should know that they are lost. There are multiple WalMart parking lots available for them to wind up in. If they get hopelessly lost don't worry they will eventually have a safe place to stop, turn the 80 foot beast around, and look at a map.
If you are lucky enough to get past the endless line of RV stalls, and the people slowing down to look at them, then for God's sake please don't become mesmerized by the spectacle of two garbage trucks on main street stopping to pick up garbage. Pay attention to the street lights and keep moving. What should have been a 3 minute drive through downtown took me over 30 minutes because for some reason two garbage trucks picking up garbage in the rain is somehow a novel thing that must be looked at.
Then once that rubbernecking incident was over, I spent the next five miles nearly getting run over by Cadillac Escalades. All the while I was also having to avoid a never ending display of Vandy fans gawking at co-eds and slowing down to honk at each gaggle they passed on the side of the road. ACT like you have seen rain drenched females wearing white t-shirts before. Yes they have nipples under those shirts- and since this is one of the most liberal cities in the nation- most of them are not wearing bras.
What should have taken me maybe 30 minutes took me an hour and 20 minutes.
And almost all of it was due to rubbernecking.
Friday, October 17, 2008
Rubbernecking
Thursday, October 9, 2008
Socialism or?
Hoover indeed felt that the economy was sound. What he also thought was that given enough time, those companies which were unable to function in the market would be replaced by those that could. What he could not forsee, because it had never been possible before in human economics, was the utter collapse and resultant hyper-inflation that occurred in Europe.
Consider, the French and English who had sought to redeem the costs of the war by essentially taxing the only Central Power left when the shooting stopped. Then also consider the nature of the former Austro Hungarian Empire states. It broke into several smaller nations with very weak and primitive economies. All of which had a very limited ability to function outside of the former system. Imperial Russia's collapse had huge shocks as well.
Then if you add to this the fact that rail rolling stock was limited in Europe after the war, the road networks were not sufficient to efficiently move and shift resources effectively, and the naval fleets that had formerly been sufficient to move goods globally in 1914 were now not capabale due to the tonnages sunk after 3 years- you suddenly have a case where the global economy which had been emerging under European Colonialisim was impossible to maintain.
The British compensated by sucking as much cash out of Germany as possible and also attempting to turn most of its colonial empire into unit markets, allowing each one to become specialized in goods or resources ideally suited to each colony. France sucked as much cash out of Germany as it could and turned to a brutal resources strip mining of its colonies- especially its North and West African ones. Italy simply imploded early as did the remainder of the Austro Hungarian Empire. Their economies became almost subsistence in nature. Russia withdrawing from the world markets for almost a decade meant that cheap resources suddenly stopped flowing into Eastern Europe and especially Germany.
Europe essentially ground to a halt. In the USA the buying of stocks on margin coupled with the utter exuberance of the nation after it had won a war, emerged almost unscathed, and saddled with a large returning army of very young men who had "seen the world" and were not content to return to the farm lead to an explosion of goods, companies, resources, and markets for all three. While the USA was not a relatively major player in terms of markets world wide before the war, after the war, America was almost over night the leader in almost all technologies and resources. And for a time the world readiliy bought and could afford the goods America was selling.
What brought it to a halt in America was when the Europeans simply collapsed in terms of currency purchasing power. Exports to the former combatants virtually ceased. Countries like Belgium teetered on bankruptcy and began simply exploiting their colonial possessions,
When the export market began collapsing, and the loans that had been made by the United States government to the European Allies ceased being paid, the capital markets in America were unable to absorb the loss of cash from both trade and war debt repayment. With the resultant slow down, the first uncoordinated attempt to keep the American economy running was in the form of margin purchases of stocks and options on goods/resources. It became an issue when the numbers of warehouses with filed capacity neared almost 100%. The excess goods and services on the market, represented by the options to trade bought on margin were now essentially worthless because there was neither doemestic nor international capacity to absorb these goods into the economy.
Hoover was right in that what should have been done was allow the options to buy to result in losses. That would have eventually brought both the commodity price down, as well as result in market set purchase options in the future in line with the actual value and the actual demands for goods in the future. The problem was the money needed to settle the options was huge. Hoover injected funds into the market in order to make availible dollars to cover the difference between the actual money that had been placed on margin options and the actual paper value of the contracts for those options.
Instead what happened was everyone began trying to dump their options and stocks- making the paltry funds Hoover had re;eased utterly useless. It set up the 1929 stock collapse as well as set up the currency runs in the banks.
Hoover was right in believing the only sound solution was one where the existing options sold at losses, the goods and resource production fell to the level the American economy could absorb, and companies unable to financially weather the environment were allowed to collapse of their own accord.
And in the end that is exactly what happened. The alphabet soup of programs, stimulus packages, socialist handouts, and federal government manipulations of all types of markets, not only continued the economic collapse we call the Depression, but it inadvertently extended it.
There was a cabinet meeting I learned about in early 1940 where the topic was actually Germany and Europe. I really don't remember much more than that about the meeting in detail, but one of FDR's advisors made the remark that at the rate they were going it would take a war to get America out of its economic mess because nothing they had done had worked so far.
Point is, much of what FDR tried did not work. Establishment of Social Security, grand projects like Boulder Dam, and the dozens of alphabet soup programs all had had a marginal effect. And he knew it.
With the start of war, FDR was able to instead drop the facade of "doing something" to actually fixing the problem by getting the government out of the economy.
FDR adopted laissez-faire, used the excuse of war time expedience to encourage volunteer efforts, and quietly shut down most of the alphabet soup programs in a matter of months. It was the result of this adoption of Hoover's plans as they had existed in Treasury Secretary Mellon's interpretation of what the government should have been doing beginning in 1929, that the American economy finally started to get going again.
What FDR did- with the exception of keeping Smoot Hawley on the books- was what Hoover had been doing. Hoover was ultimately correct- the government should only keep people from starving but not attempt to jump-start the economy by managed administration and cash injections. Whether Hoover actually believed that government interference would condition Americans to depend on the government is open to debate. But the reality is that the American people did indeed come to depend upon the federal government to a degree that caused the Depression to continue longer than it should have.
For example, in America unemployment was still over 15% in 1941 and the GNP was pretty flat still in spite of Lend Lease. FDR's economic plans were Keynsian and followed a model of executive administration of the economy. In Germany, the model was decidedly non-Keynsian and placed government in a role of hands off but supervisory administration of the economy.
1932 was the height of the World Depression. In 1936 the Germans were performing at or above the economic levels of 1928 with an unemployment rate of around 6%.
Under FDR, the Depression lasted another 6 years. In 1939 America's economic indicators were at or near the 1928 levels, with a 17% unemployment rate. It would not be until the end of the first quarter of 1942 that the American economy would universally exceed the 1928 levels and drop unemployment under 10%.
The difference? FDR installed socialist stimulus economic models. Hitler didn't install any stimulus packages based on socialism. He allowed the bad companies to collapse, allowed the market to regulate itself, and limit government intervention into industries and corporations only to the extent that undue replication of goods or services was not an artificial drag on export and import exchange.
In short, once the Germans stopped acting like socialists and Keynsians, the economy recovered.
That was what I was pointing out. Obama is pushing hard for Keynsian style stimulus. McCain isn't.
One method historically has worked, one has worked better when the economy is tanking.
The economy is tanking. Therefore the candidate you should support is the one who is advocating the plan which has a better track record of lifting an economy out of collapse.
Real easy decision.
Vote for the Keynsian plan= really bad economy.
Vote for the non-Keynsian plan= bad economy followed by an actual recover in a much shorter period of time.
Using FDR as an example- once he dropped Keynsian directed economy, it took about 16 months to recover fully.
The choice however is yours.
Tuesday, October 7, 2008
McCain's Economic press release
Well McCain's press release is as clear as it can be.
He supports NAFTA, CAFTA, and free trade agreements. He supports cutting the draconian tax rate on corporations and investments. Dropping the estate tax rate to 15% vs Obama's proposed 55%. Allowing for the reality that most small businesses and farms at time of transfer currently run afoul of the Estate tax when the original owners die.
Things like proposing an alternative tax system which is more in line with the means and methods employed by the leading economies of the world. Encouraging R&D with a targeted credit available to any company that is researching new innovations and products. Making healthcare portable and available without considerations to pre-existing impairments. Removing the red tape that prevents private companies from building nuclear power plants. Removing the impediments to companies being able to actually drill for oil and minerals on federal leases they hold.Streamlining the current hodgepodge of laws, regulations and tax credits that have not allowed the alternative energy market to be fully developed.
And that is just the surface. In all cases McCain is stating that government inefficiency is preventing a free market from providing for the economic needs of the American consumer and the companies that could potentially provide the goods and services that would answer the requirements of an expanding economy.
To a very large degree, what McCain is advocating is drawn from presidents as diverse as Carter to GWB. Namely, a free market, and a role of federal government that is a steward of fairness in the market. Not a case as in Obama's plan where the federal government becomes the administrator of the economy.
McCain is calling for a free market solution. By its very nature, that would make him an advocate for capitalism.
Obama's Economy- Socialist or ?
Enact a Windfall Profits Tax to Provide a $1,000 Emergency Energy Rebate to American Families:
Why is this tax being considered? It ammounts to taking the legal profits away from companies that had no expectation that they would be denied or even be compelled to pay a tax for making a wise business choice. Instead their profits will now be devoted to providing a $1000 a year public entitlement.
Provide $50 billion to Jumpstart the Economy and Prevent 1 Million Americans from Losing Their Jobs:
This would create a $1 billion fund for each state to essentially provide funds for government public works. Instead of promoting fiscal responsibility at the state level due to budget balancing, Obama instead intends to use the Federal government's ability to create debt funded payments to provide social programs which would otherwise not be funded or would be funded at the level each state's economy is capable of funding.
Provide Middle Class Americans Tax Relief
Under his plan 37 million people will cease to pay any income taxes. And additionally create a tax system where banking records and transaction records will be centralized to an extent where taxpayers will receive individualized pre filled out tax forms. If the taxpayer has formerly filled 1040 long forms with extensive itemized deductions and economic exchanges that include depreciation, small business sole proprietorships, or charitable deductions they will essentially red flag themselves for audits if they choose to fill out the tax forms with their own data. It is very interesting that the people most likely to file such returns are also more likely to be Republican. It also is interesting that Obama's plans for the tax code as pertains to individuals will most likely benefit low income Democrats. Manipulating the tax code to benefit primarily those who back you at the ballot is suspect.
Fight for Fair Trade:
Since when is fair trade with other nation states defined by placing the worker in the trading partner's own economy as most important? A trade agreement is about removing artificial barriers to free and open markets. Further, since when is a trade agreement based upon artificial restrictions on environment? Wise market choices would be those agreements which allow for another nation to realize that if it wants to sell goods to the USA consumer market, "green practices & sustainability" are the only way that they will be able to enjoy significant market penetration. The opposition to the Central American Free Trade Agreement is a strong case in point against the logic of what a trade agreement should be under their interpretation. CAFTA would indeed create a neutral tariff free economic zone with open markets. Their interpretation of what fair trade is would be more in line with a centralized planning based on social goals. Namely workers should be treated across all boarders as economically equal and protected and the resources consumed by them in the process of creating goods should be determined on grounds of ecology.
Amend the North American Free Trade Agreement:
One of the few highlights of the Clinton administration was NAFTA, and with few exceptions, its enactment has exceeded even the most pessimistic predictions on its impact to the three nations. In short it has benefitted all three nations, and in the case of the United States it has greatly increased income based upon goods, services, transport, and investments in almost all industries that come under NFTA. It is therefor puzzling as to why Obama plans to amend this treaty to prevent a supposed decline to our collective economic security. Hats off to Bill for getting this one right.
Improve Transition Assistance:
In this day and age, most human resource managers and people employed in the various state departments of labor freely advise people that two things are required of all workers in this day and age. First, all workers must realize that technology innovation will now occur at such a fast pace that almost all workers will be forced to transition between multiple jobs and skill sets in their productive lifetime. The second is that all workers should realize that continuing professional education and continuing trade skills education is a fact of life. A wise individual will realize that technology will more than likely impact their career over their lifetime and failing to keep current in terms of education applicable to their careers will make them less of an asset to any company. What they propose is a creation of a continuing education entitlement funded by and directed by the government.
End Tax Breaks for Companies that Send Jobs Overseas
This one is truly laughable in the face of the reality that we live in an increasingly globalized economy. Further, American companies that have international and multinational footprints simply cannot just employ American citizens. Consider things such as Apple, IBM, CISCO, GM, Exxon Mobile, GE, CNN, Coca Cola, Pepsi, or any other well known company that is based in the USA. Because of globalization and free trade, our companies are expanding and growing irrespective of boarders. Free Trade makes this possible, and the fact is that often the American workers find that the old jobs that get shipped away from the physical confines of the USA tend to be replaced with better jobs that require less physical labor and pay higher salaries to those who take on these new roles. To enact a trade barrier in the form of issuing federal contracts based upon the citizenship of the workers of a company will instantly put most American multinationals into the "Do Not Apply" column when it comes to attempting to bid on a contract.
Reward Companies that Support American Workers:
In a further affront to open and free trade, Obama wants to enact legislation that would subsidize a system where companies would be favored with tax breaks. All they have to do is use the tax to subsidize their employment of American citizens instead of basing their employment needs on the market conditions. All they need do is stay incorporated in America, pay a federally approved wage rate, provide a retirement package, provide healthcare, and subsidize the pay of military personnel.
There are just a few examples of what Obama proposes. And all of them are a direct form of Federalized administration of the economy to achieve social agendas.
Deploying broadband, Public-Private Business incubators, EFCA and its dropping of the secret ballot, denying a company's right to replace striking workers, low income mortgage credits beyond what is already provided to everyone, federalizing credit scoring, even fundamentally changing consumer credit are all examples of a socialist based economic plan.
There is no other way to define what he is proposing. It is indeed socialism.
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