Regarding the debt limit.

I looked at actual numbers this week, to see if what I believed squared with the numbers.

What I believed:  That George Bush spend a LOT of money.  Wars (justified, I thought for the most part) and also ridiculous "compassionate" uses of my money, like a freakishly complicated Prescription Drug program for seniors, the now-notorious No Child Left Behind, even steel tariffs.  And TARP.  Lord, don't get me started on TARP.  But I also believed that Barack Obama spent even more.  Mind-blowing amounts on things like Cash for Clunkers, first-time homeowner support, and my very own car company.

I found this:

See the line with the dots?  That is debt limit as a percent of GDP.  Even though GDP was growing over those years, the debt limit was pretty much a stable percent of GDP.  It bumps up in 2008.  That was TARP.

But what happens in 2009 and 2010?  Spending blows up.  There is no end in sight to the spending.

Over and over I heard how this debt limit problem is another Bush issue.  But it simply isn't.  We went from about $5 trillion in 2000 to about $10 trillion in 2008.  That is all Bush.  But we now stand at $14.6 trillion, an increase of $4.6 trillion in only 30 months under Obama.

And now, as our "professional political class" negotiates a new debt limit, our President can only propose tax increases.  They have not offered one spending cut.  Not one.  Do you see that?  Nothing.  I have scoured the news wires and can only find references to tax increases and loophole closures.  In fact, there are only new programs just waiting to be implemented.  Just this week Kathleen Sebelius offered the new guidelines for insurance exchanges.  This proposal will involve the creation of at least fifty new regulatory agencies.  This is only one depressing example.

But it is Saturday night, I've spent all day at the lacrosse fields and it's time to rest and be ready for a full day of it tomorrow.  Sleep well, and let's all take a Sabbath rest from the news tomorrow.

Edited to add:  Of course Victor Davis Hanson says it all better today here.

Here I am...

with a President who apparently thinks he governs a nation of first-graders.

I happen to LIKE peas, and I'd be happy to eat them.  Carrots, too.  And, yes, even broccoli.

He also thinks the other elected members of government are more childish than his own girls:

I wonder...have you ever had a co-worker, much less a boss, speak to or about you in this way?  I have not, and frankly can't imagine a situation where that would happen.  So, is our President trying to get laughs from the press pool (which he does)?  Because there really is no other reason to be so ugly toward his fellow elected officials.

Remember, these are supposed to be three CO-EQUAL branches of government.  Our President might have the bully pulpit but he does not occupy the superior branch of government.

Maybe he is starting to be concerned about the election in 2012.  After all, this just came out today:

Of course, we don't care.  If it isn't concrete and right in front of us, we really won't think about it.  All these numbers, they're really meaningless.  Right, David Axelrod?  Just like a bunch of first-graders.

Oh, and another one of Obama's advisors doesn't think we can be trusted with our own money anyway:

Last week, Energy Secretary Steven Chu made the case for the incandsecent bulb ban last week claiming, “We are taking away a choice that continues to let people waste their own money.”

I don't know about you, but if I choose to waste my own money on a great pair of shoes, or a boat, or LIGHTBULBS THAT ACTUALLY GIVE GOOD LIGHT, I think that is my own business and no one else's.  (Except my husband's, of course.)

A palette-cleanser:

Okay, I'm feeling better now.  We are actually having a lot of fun this summer and I'll share some of that, too.

...Jokers to the [East]

And I continue to be Miss Merry Sunshine...

East:  As the Western world has muddled through the last few years of recession/depression/stagflation, China has been admired for their vitality.  Spectacular growth, and huge investments in infrastructure.  Except that, well, maybe it isn't.

Back in 2009, the Chinese government loosened lending restrictions on banks, with the intention of re-igniting the economy.  It worked!  Kind of.  Local governments took on massive debt, because they could, and embarked on infrastructure building like crazy.  This helped heat up China's GDP.  Of course, other unsavory characters, of whom there are many in the local Chinese governments, also used money to speculate in the stock markets and other business ventures.  Local governments planned on paying the money back mostly by selling off land.  It looked like a sure thing, because China has been in a land-craze for a couple of years now.  However, as more real estate has come on the market to pay back the debts, the price of it is going down.  So local governments are on the hook to banks for billions and billions, and their major source of cash for repayment is drying up.  The banks only recourse will be to go to the Chinese government, which has promised to back up these loans.

NONE of these loans are booked as part of China's debt!  And an offical audit, just completed, may have understated the outstanding local debt by 3.5 trillion yuan.  That would be a 30% increase over the audit's total of 10.5 trillion yuan.  Even the lower number is 27% of China's GDP.  (The comparable number in the U.S. is about 20%.)

What does this mean for us?  Well, we all know that China has been the biggest purchaser of United States bonds.  However, if they have troubles at home and need to cover these delinquent local debts, there won't be nearly as much for them to buy our bonds with!  Financing our bloated, out-of-control government will become more of an issue, driving interest rates up.  Tax rates may go up as well, as our elected officials scramble for additional revenue.  (Unfortunately the scale of our debt dwarfs our ability to repay.)  Finally, the Fed may try a third Quantitative Easing, which entails printing money, then using that money to buy our own bonds, thereby swamping our economy with even more dollars and adding to the inflation.

On the other hand, this guy (who knows a heck of a lot more than I do, maybe), thinks that maybe this won't be such a bad deal for America:

Why does China's debt matter to its central government in Beijing, and why does it matter to Americans and others outside China's borders?
Americans probably wouldn't be hurt that much. Some people worry that if there's a debt bubble that somehow bursts, then China will redeem its large holding of U.S. Treasuries to bail out Chinese banks. That is a possibility. I think that if that were the case, others would snap up those Treasuries. Interest rates may go up a little bit, but probably not by that much.

Don't worry...there's news at home, too.

Clowns to the [West] of Me...

This is the second downer post.  I kept starting it but then it would spin off into too-long-land.  I finally decided to break it up into two posts.

West:  Have you been watching Greece?  Melting like an ice-cube on my deck (98 and sunny today).  The Greek government, feeling rich as they joined the EU, decided to increase the benefits paid to various "deserving" layers of society and bureaucracy.  Check here for some unbelievable examples, including bonuses for showing up at work on time or using computers.  Greeks have always had a culture that didn't emphasize actual work so much.  Once they got to link their currency to the harder-working Germans (and others in Northern Europe), well, why not spend all that?  And then, who's to say we don't make big fat promises to pay later, too, because the money's going to keep rolling on in.

Except that it didn't.  A slowing economy, extra debt from the 2004 Olympics, and ever-increasing payments from the government have come home to roost.  Greece no longer has the money to pay back its loans, in Euros or drachmas or clams or any other form of payment.  So the other countries in the EU are having to figure out how to make Greece settle up on their obligations.  The International Monetary Fund is also in on the negotiations.

Dry, so far, which is why you don't hear too much about it.  But Greece is merely the first tentacle of Leviathan of our economic problems.  Here there are a couple of things to watch for. 

First, not many Greek bonds were sold to American holders, so there is not much at stake in the U.S. should Greece go under.  However, lots of credit-default-swaps WERE sold by American banks on Greek bonds.  Tons, really.  (A CDS is a complicated name for "bond insurance.")  The CDS only pays if the Greeks default on their bonds.  The problem is that the CDS doesn't usually apply to a systemic collapse such as this.  So watch to see who seems to be coming out ahead in the Greek debt negotiations.  A "hard" landing will fall on the Germans, mostly, and also the rest of the EU, but a "soft" landing will mean huge payments from American banks. Payouts from American banks mean less money available to lend, should our recovery ever start.

Second, watch Portugal.  Portugal, while lovely, is not on the same industrial level as Germany, or Spain, or even Greece.  And they've spent like crazy, with Spain financing most of it.  As Portugal stumbles, the EU is not in a position to step in with further assistance.  The contagion has spread to Italy, as well.  Here is the bond yield in Italy.  Remember that higher yields are a reflection of, among other things, higher risk:

You know, I feel very said about the Casey/Caylee Anthony murder trial outcome, but it shouldn't have dominated our news like it did.  The problem is that it is much easier to program trial coverage than to discuss hard things like the economy, especially when it seems so far away.  I get it.  But we should demand more from our news coverage.

A Shop-keeper's-eye View of Regulation

A couple of days ago I read this very interesting post by Amity Shlaes, author of The Forgotten Man.  The post is here, so go read it.

Fascinating reading, and so are the comments.  A few cast doubt on the idea that government can interfere with a small business so much that it becomes a drag on the economy.  I'm pretty sure they have absolutely no idea what they're talking about!

When I started my business I would have never, ever believed how much the government would have their hands in my little business.  My shop was the simplest possible business model:  buy things at one price, sell them at a higher price.  That's it.  So here's what the government, from local all the way to the big Federal Gum-mint, made me do:

I set up as an LLC, which involved a trip to the lawyer and then submitting forms to the Secretary of State in my state.  (1)  I had to also get a sales tax number from the state (2) which allowed me to collect sales tax.  That one took a while.  I submitted a different form to the IRS to get my Federal Taxpayer ID number, sort of like a SSN for corporations.  (3)  Not so bad.

So I needed to open an actual shop.  The space had to be remodeled, and the city had to sign off on the plans.  (4)  And of course I needed a sign, and so that plan also had to be submitted to the city.  (5)  I also needed to get an occupancy permit, the rough equivalent of a business license, from the city.  (6)

Six things, so far.  Not so bad.  But wait!  I needed employees, because I had no plans for doing this on my own.  I had to get a different number from the Department of Labor (7) and then fill out application forms for Unemployment Insurance Payments to start.  (8)  I also had the forms you are familiar with if you've ever had employment:  the Federal form with all the basic info so you can get paid (9) and a state form, again for unemployment insurance (10). 

Okay, up to ten, and I haven't opened my doors yet.  Don't forget...one misstep opens the door for the government to poke their noses around in ALL my business!  A tightrope, for sure.  But let's get started, and sell something!

Once a month, I file and pay my state sales tax (11).  Once a quarter, I file and pay the income tax for my employees--state (12) and federal (13).  Oh, wait, my employees didn't work enough to pay federal income tax.  But there was STILL a form to say that they didn't make enough, so I didn't owe (14).  Social Security withholding was a different form and a different method of payment (15).  And once a year I have to file a property tax statement and pay property taxes on my inventory!  (16)  Did you know that businesses have to pay a tax on their inventory at December 31?! Yeah, me neither. Also at the end of the year are my employees' 1099's (17) and my corporate tax return (18).

While I'm open, the Fire Marshall can come visit and tell me to cover up my back door exit sign.  (No joke, that happened one year.)  (19)  The code enforcers can stop by and tell me to raise or lower my sign and take signs out of my window.  (20)  The Department of Labor will stop and inspect the back storage closet to see that I've posted the mandatory "Know Your Rights" poster for my employees.  (21)

Craziest of all, one month after I sold the shop, the new owner received a notice from the county of an audit that they would perform as of 12/31/10.  WHAT?! They sent a long list of paperwork they needed for the audit, including some information from my personal tax return.  (22)  We got through it but what a pain!

Many, many of these reporting requirements are addressed by having a reliable accountant, which I did.  But that has a cost, the cost of compliance with tax regulation.  And one thing to point out is that I had only part-time employees.  Were I to have full-time employees, we would have to worry about health care in the next couple of years.  I have to say there would be TREMENDOUS incentive to cut everyone back to part-time to avoid the whole issue!

I'm not arguing for or against any of these requirements (well, maybe a little), but there are just so many!  It's a Byzantine process, trying to satisfy each one of the government entities that believe they deserve a piece of my business.  How can anyone doubt that these requirements are a drag on small businesses, and that each layer is another business or two or three that doesn't form, where the owner just decides it's not worth it.

So, is all of this regulation worth keeping some great ideas out of the marketplace?  What have we missed out on?

Spenders and Savers

P broke her piggy bank this week.  This is a very big deal in our house.  Here's the pig:

And here's his impending destruction:

And here's the loot:

She had saved $198.87!  I was shocked and amazed.  To be honest, I don't remember how long she's been saving, but I do know this is her second piggy bank.  She knew immediately what she wanted to buy:

After putting aside $20 for church, she had plenty, and I am delighted to buy her a blue cover for it.

After she got done counting, her younger sister D sat and looked at that pile of cash.  "It's not fair!" she exclaimed. 

"No, it is fair.  It is just persistence and consistency that allowed P to do that," I said.  What an econ lesson right at the table!

"That's right, D.  You just have to put your money right in the bank, as soon as you get it, and then it saves up.  Otherwise it is too easy to spend." That was from P.  Such wisdom at nine!  I wish I could say I taught her that but I didn't.

Isn't it interesting that D's first response was "Not fair!"  It's to be expected from a child of seven.  Then I reminded her how she had saved up $15, and then SHE decided to buy herself a new pair of shoes.  (Shoes that she is very proud of, might I add.)  So she got a new pair of shoes from the Gap, and her sister did without while she saved for a Kindle.  (Unbeknownst to me.  Do I even live in this house?!)  And after a little reflection, D was okay with that.  She will NEVER save up for a Kindle, but I'm pretty sure she's got lots of great shoes in her future.

How often do we hear this in the news?  It's not fair, that he works hard and makes a lot of money.  It's not fair that she was careful with her choice of college, didn't take lots of loans, and now can enjoy no Sallie Mae payments!  It's not fair that they saved their money, put 20% down on a house, and got a conventional mortgage.  It's not fair, it's not fair, it's not fair.  The little exchange at my kitchen table put it all in perspective:  a bunch of children who have never been taught to defer pleasure grow up to be adults who look for "fairness," equality of outcome, rather than equality of opportunity.  Food for thought as we strive to raise good kids into better adults.

"The harder I work, the luckier I get."--Samuel Goldwyn

Summer Reading: Thomas Sowell

One of the lovely benefits of selling the shop is that I get to read, at least a little.  This is my summertime reading right now:

I am a political junkie but lately feel like I've reached the end of my knowledge on some things.  I am looking for a firm foundation in basic principles.  My husband read this book about a year ago and highly recommended it.  It is exactly what it says, a primer on economics, meant to be used as I am, or even as a college-level textbook.  (Light reading!)

I've just completed the first part, a section on Prices and Markets. Here are some quotes from the book that I've highlighted during my reading:

Life does not ask us what we want.  It presents us with options.  Economics is one of the ways of trying to make the most of these options.

(Discussing profits and losses)...losses are equally important for the efficiency of the economy, because losses tell producers what to stop producing.

Knowledge is the most scarce of all resources.

(In discussing fluctuating price levels) However, the fact that water seeks its own level does not mean that the Atlantic Ociean has a smooth, glassy surface.  Waves and tides are among the ways in which water seeks its own level.  (In other words, just because prices fluctuate doesn't mean the prices are wrong or the markets bad.)

People tend to do more for their own benefit than the benefit of others.

And one of my favorites so far:

Economic policies need to be analyzed in terms of the incentives they create, rather than the hopes that inspired them.

That last one is crucial.  Way too many programs are started with the best of intentions ("hopes") but create incentives that actually work against the original purposes.

I wish I could list all of the very interesting things I've read about:  price supports for food in ancient Rome; rent control all over the world; the evolution of the grocery industry in America.  This is good food for thought.

Here is the first in a set of videos with Dr. Sowell.  It is a nice change of pace to see a person interviewed in a calm, intelligent way, with no "gotcha" moments.  If you've never heard him, this is worth a watch:

I'm also well aware of Dr. Sowell's conservative political leanings.  So far, though, his conservatism looks to me to be rooted in his rational view of economics, rather than having his political views give flower to his economic ideas.  I'll be looking for something other views soon, just to round out my education.  Suggestions welcome!

How to Create a Job

It occurs to me that I have more first-hand experience creating jobs than the President.  There seems to be some confusion about where jobs come from.  I would like to explain where private-sector jobs come from.

First, where they DON'T come from:  piles of money just sitting around with nothing to do.  Unselfish rich people do not look at the poor unwashed, have mercy, and throw money at them.

Now, where they do come from:  A person has an idea for making more money, some sort of good or service they want to provide.  The sole purpose may not be to make money, but making money--really, creating WEALTH--where there was none previously is the basic building block.  Now, the person may be able to execute the idea all by himself, for example a shopkeeper who works alone in the shop all day long.  But what if the shop gets so busy that customers leave, unhappy that the shopkeeper can't wait on him?  Or what if the shop grows because it is so popular and the shopkeeper is doing a great job?  Both are good problems to have!  Eventually, the shopkeeper may realize that he needs to hire someone so that his vision of his shop can be realized.  The hiring of an assistant will help the shop to sell even more, thereby increasing revenue, or it may free the shopkeeper to have more time off or to start a new venture.

That's the important point right there--the hiring of an employee makes sense ONLY if the shopkeeper realizes a benefit.  Actually, it is the only reason to hire an employee, ever.  And if an employee ceases to return a worthwhile benefit to the company, then the job should not exist.  This isn't because employers are mean; it's because eventually an employee like this, or many, will kill the company.

Since creating a job means hiring an actual person and forming a relationship with a person, most employers take this very seriously.  They realize they are dealing with another person's livelihood, security and stability.  So unless they are very sure of future demand for their good or service, an employer won't hire someone.  Everyone else may work a little harder, even the sole shopkeeper who works longer hours.

In my case, I decided that I could not open my shop unless I had some part-time help.  So employing people was part of my model all along.  Creating a couple of jobs was required if I was going to even open the shop.  But I didn't do it out of the sheer goodness of my heart.  It was to fulfill the ultimate goal of making enough money to pay the kids' tuition.  I wanted to make a profit. I haven't hired more people, as fun as it would be, because that gets in the way of making more profit.

So the next time you hear any government official or journalist discussing the jobs that aren't being created, I hope you think about this post.  Jobs don't just appear because someone is feeling generous.  Those are the worst kind of "make-work" jobs.  REAL jobs create real wealth, both for the employee and the employer.  They are the only ones that are a true benefit to the economy, and an employer can't be bullied into creating them.  They only come from hope and determination and an atmosphere willing to recognize and reward risk.

Upside down and Inside out

Did you ever look at the news at just think, "What the hell is going on?"  (Sorry about the cursing...I don't use it that often but it is good for when you need that extra emphasis.)  That was my day yesterday, like a nightmare, but now I can't seem to wake up.  I was actually YELLING at poor DH yesterday over the idiocy going on right now, both locally and nationally, even internationally.  The yelling didn't last, by the way; we both started laughing and then poured another glass of wine.  Anyway...

Read this article.  Seriously.  No, I mean NOW.  (And then come back!)  Atlas Shrugged, way back when I read it, was the longest novel I had ever read, 1,064 pages.  It was powerful, the kind of book that really makes you look around at things in a new way.  Stephen Moore has perfectly captured what is going on right now and shows how it lines up with the novel.  Good Lord, he is right.

Locally, our school board made Drudge a couple of days ago, which you know must mean something utterly ridiculous must have happened.  It did.  Not only do they want to make the teachers give back their 2.5% raise, the superintendent also wants to send out an additional property tax (retroactive) to all of us property owners.  We just passed a SPLOST here, for an extra 1% sales tax, not that I voted for it.  And back in July all of the incompetent I mean incumbent school board members were reelected without a whiff of a budget problem.  Something is truly rotten there.  I can look at this like a purely financial issue since I don't have kids in the system and it makes me so mad!  They have wasted so much money on real estate speculation and a bloated county administrative staff that it is hardly a surprise that problems are showing up now.

Nationally, oh, so much.  Obama wants to spend a TRILLION dollars getting us out of the poor economic conditions we're in.  What in the world makes in seem like taking the money from me and you, giving it to the government, and then having the government disburse the money to worthy projects is a better, more productive way to stimulate the economy than just letting all of us keep more of our money and using it as we see fit?  The U.S. Conference of Mayors is salivating...they have a 1557 page list of "shovel ready" projects!  Here is a partial list of those worthy projects...I swear I could not make this up if I tried.  Well, maybe, but take a look:

$35 million for the Music Hall of Fame in Florissant, Mo.; $35 million for the Scottsdale Museum of the West in Arizona and $20 million for the Virginia Key Beach Museum in Miami, Fla.

This is brilliant...we are in debt, so let's spend more.  I think I'll try that here at home, because there are these shoes I've been eyeing...

The porn industry wants a bailout.  Rich.  These people should be embarrassed to be associated with this business.  Instead they are bold enough to ask for your money and mine to save their sick business.  I think they won't get the money, but they have the nerve to ask!

Charlie Rangel's ethics investigation was supposed to be done by January 3.  Nancy Pelosi had promised!  But now it has been delayed.  Even better, thanks to Pelosi's rule changes, Rangel looks likely to not only continue serving "honorably" but also as the chair of the Ways and Means Committee for as long as he wants.  This is truly the fox guarding the henhouse.  What is wrong with the Republicans??  Why aren't they out in front of cameras talking about these things all the time?

Seriously?  You want to put a 70-year-old guy into a position for which he has only tangential experience, as Chief of Staff for Clinton, into one of the most important positions in the whole country?  Panetta as CIA chief is flat-out scary.  Transitions are high times for attacks, and I want a professional spook or ambassador in that position, not some high-level manager.  And look at the intelligence decisions made during the Clinton years:  the first World Trade bombing in 1993, the U.S.S. Cole bombing, the explosion of Al-Qeada (no pun intended).  This is a bad pick, and worse yet it is dangerous to all of us.

This was such a cheerful post!  Hopefully I'll find some good new to share later.

Government Intervention

The story I'm going to tell you is a little "inside baseball," but it's important for a couple of reasons:  its a small but powerful example of the power of unaccountable government; it illustrates the havoc an arrogant organization can wreak; its another instance of government telling private business what to do.  On with my tale...

DH makes parts that move water, specifically all kinds of plastic jets, filters, drains, for pools, spas, tubs and, significantly, the portable spa industry.  (That's what you probably think of as a "hot tub."  Cue wonky 70s music.)  Their parts are subject to regulation by the Consumer Product Safety Commission and to standards promulgated by industry.  (Loads of money gets spent at various testing labs proving the parts' safety.)  

A couple of years ago, James Baker's granddaughter Virginia was tragically killed in a spa accident.  Her hair became entangled in the drain of the outdoor spa that was attached to the swimming pool, and she drowned despite several men trying to pull her out.  This led to the Virginia Graeme Baker Act, which strengthened requirements for drains in all of these types of pools and spas.  The CPSC mandated this without an understanding of the different flow rates and designs of pools vs. hot tubs vs. in-ground spas.  (Incidentally, the drain of the pool where little Virginia drowned was incorrectly installed in the first place.)

The industry association APSA immediately saw the problem...applying pool requirements to a portable spa would be impossible.  There is virtually no way to comply.  Additionally, compliance doesn't actually make the portable spas safer!  Every single spa, including those sitting on showroom floors, must comply with the new standard.  That's unheard of in product safety for something that big.  Hot tub manufacturers are looking at their warehouses and seeing a bunch of unsellable merchandise.  And it can't be made sellable because there are no parts available to retrofit the spas with.  No part manufacturer can pass the tests.

So, hot tub companies have hired lobbyists (natch) and everyone is holding their breath...the requirements go into effect today.  There are no parts that satisfy the requirement.  

The CPSC is well aware of this situation...they've been told since the law came out.  Why won't they change the regulation?  They don't want to admit they've made a mistake.  The CPSC doesn't want to even give the impression of making things less safe.  Instead, they prefer to put an entire industry out of business.  The problem is that this industry is small, too small for a bailout.  No one will notice if a bunch of $50 million or $100 million companies go out of business.  As I write this I am so angry--powerful bureaucrats who have no sense of scale, fearful only of looking bad while an entire industry looks on and holds its breath.

How can we possibly believe that turning anything over to this entity is a good thing?  We want them to run mortgage houses, car companies, health insurance?  Really?  For that matter, why would we even want this mindset involved in our children's education?  

If the story changes, and it probably will quickly, I'll keep you posted.  Meanwhile, I hold my breath, too.

Poverty Watch

I can't believe this article.  It's a NYT bit about how moms are giving up their shopping to buy Christmas for their kids.  You really need to visit the article to see the picture, but the mother quoted here actually says:

“I want her to be able to look back,” Ms. Hunt declared, “and say, ‘Even though they were tough times, my mom was still able to give me stuff.’ ”

Yep, you were able to giver her a WHOLE BUNCH of plastic junk while looking like a martyr for the whole world to see.  Good Lord.

Look.  I have kids, so I have about eighteen million little plastic pieces of stuff, everything from Legos to Polly Pockets, around the house.  This year we are cutting back, and I have cut back for myself, too.  But, ick.  I haven't made a big deal about it and you sure won't find me grinning like that with a big bunch of plastic stuff.  Why not an article about doing things at Christmas, establishing some sort of new Christmas Day traditions of doing something together, rather than show the self-satisfied martyr-mom of some pampered preschooler?  Oh, wait, then no one will blog about it.  Nevermind...thanks, NYT!

More Bailout stuff

I started this blog with the intent of writing about school but the world keeps getting in the way. 

First, did you see that about AmEx yesterday?  The Fed fast-tracked their bank application specifically so they could take part in the bailout.  They don't have mortgages!  That $700 billion is because of mortgages...that's what we were told.  And the bailout is extending to student loans, cars...This is not right.  All I can think to do is write to Congress.  

And then, we have this whole "too big to fail" mentality.  I heard someone say on the radio (I think it might have been on FoxNews Sunday) that Obama would be good for "big business."  This is a fundamental misunderstanding of how the economic engine of the United States works, and it's dangerously like the FDR's administration view of a three-legged stool of the economy.  They looked at the US as having big government, big business, and big labor. What's missing?  Right.  The little guy.  And it drove us deeper into the Depression even as the rest of the world was recovering.  (See Amity Shlaes' The Forgotten Man for much, much more.)

Yes, I'm speaking a little out of self-interest.  DH is self-employed, and over the years has grown his company to employ a bunch of people.  This is how wealth is generated in this country.  And as his customers fail, because they are too little to save, his unsecured loans (in the form of items shipped with payment terms) to the customers become bad loans.  But we're too little, too.  Too little to save, but not too little to pay for the bailout of the big guys.  I can't believe we're still dealing with a Republican administration (is it really RINO?).  And I shudder to think what we'll be dealing with in a year.

I have questions

And I haven't seen them addressed anywhere, not during the campaign or after.  So I'm just going to lay them out here:

1. Is it good public policy to have your entire electorate pay taxes?  If so, why?  If not, why not?  I'm trying to figure out how it is healthy to have 35-40% of the electorate outside of the income tax system.
2. Why is home-ownership favored so heavily over renting?  Is there something intrinsically better about owning?  Or is it that the type of people who traditionally buy houses are "better" for a community?  And that leads to the question...why should the government incentivize any sort of living arrangement, renting or ownership?
3. Let's assume that cheap-and-easy credit made the run-up in housing prices possible, at least in part. And, this run-up in value has been bad in the long run, because it turns out to be kind of bubbly.  (Okay, really bubbly.)  Now consider the price of a university education, where price increases have been running roughly double inflation.  Is cheap credit to blame for the price inflation there?  Does the availability of credit diminish the price sensitivity to any particular asset, because it defers the pain?  And does it also diminish the relative value of a college degree?  I'm thinking yes, but I want to know what other people think.

I'm serious about these questions.  If you don't normally comment, I wish you would here.  I'd really like to start a dialogue about these things.  Thanks!

UPDATE:  Instalanche!  My first.  Welcome, take a look around, and thanks for the comments!

Read this

Important reading...I'm actually a day late on this article by the esteemed Arthur Laffer.  (Ever heard of the Laffer curve?  THAT Laffer.) So many quotable lines in there about the economy, and it gives a great historical perspective. In my opinion McCain's tax plans aren't great, but Obama's are terrible. Laffer does an effective job of explaining how neither plan is looked on favorably by the markets, and why that is.

Sorry to be depressing...hopefully I'll come across another entertaining video to share.

Therapy and the Economy

Hmmm. The Atlanta Journal-Constitution has this article on their front page today, about how many people are seeking therapy in light of all economic turmoil these days.  I had wondered if this might happen, even in an anecdotal fashion. 

I know things had gotten too high, but I really worry about people like my parents and my in-laws, both of whom are retired and counting on stocks and pensions to pay out.  They did everything "right," working hard and saving their money, planning for the future.  Responsible people, the kind of people who form the backbone of the economy. And now their money, or a lot of it, has evaporated, simply disappeared with absolutely no trace. They're left wondering what else will happen, how things will ever improve.  I wonder the same thing.

I think, for my part, these hard economic times would be easier to take if it seemed like the parties who created this mess were going to be held responsible in any way. As it is, the heads of Fannie and Freddie, Lehman and Bear Stearns, Wachovia, WaMu, and AIG, their compatriots in Congress and the SEC, none of them will lose anything.  And that is not right. I get that life isn't fair, but this is also not just, and seems to go against the very Rule of Law that was always held so sacred when I took American History.  

Freakonomics wrote about this a few days ago, and there is a lot to their idea:  People are willing to lose a little themselves if they know that those who caused so many problems will be punished.  They aren't willing to accept minimal losses if it means the perpetrators get off scot-free. If McCain would just take a look at this, to get a handle on the anger that is out here in elector-land, and come up with a plan that concentrates on making the perps pay (even with their time in jail), I know it would help him.

And then we can all line up for anger-management therapy.  But AFTER the bad guys pay.