Tuesday, November 25, 2008

Post No. 68a: Outgoing Bush Administration and Incoming Obama Administration Working Together

The link below will take our readers to an article of interest appearing in today's electronic edition of the New York Times. The article outlines the manner in which President Bush and President-Elect Obama are working together to deal with the economy, in an effort to calm jittery nerves. Our hats are off here to both individuals and their respective administrations. This is the type of common sense collaboration which the American public and the world expect from responsible leaders.

Once again, it shows that doing the right thing is not rocket science.

http://www.nytimes.com/2008/11/25/us/politics/25obama.html?pagewanted=all

12 comments:

  1. When I was young,just out of the Navy, someone asked me to explain the wage price spiral to him.
    I wasn't sure but I thought of it this way: workers push wages up causing the manufacturer to raise prices in order to maintain profits. This, in turn, causes more workers to push for higher wages in order to keep up which, in turn, causes their employers to push up prices. I thought it obvious and wondered why this man, who was going to college did not know it.

    For two years, we have had politicians complain about the economy. We have had the media talk about how bad it is for at least just as long. Yet all economic indicators remained high. Toward the end of the election cycle, the economy did begin to slow worldwide, mostly (it seems) because of credit tightening and a long period of rapidly increasing oil prices. It seems we went from Boom to Bust overnight.

    Well, the election is over and now the politicians are talking about how to get out of it. Even as the oil prices have dropped down to late 2006 levels, even as the credit crunch is abating. The politicians will now take credit for reviving the "worst economic downturn since the Great Depression."

    Excuse me for being a cynic. But if you preach long enough and loud enough about a downturn, there will one appear. Now it seems time to preach long and loud about an upturn and hope one will appear. My prediction; one year and we'll be told how wonderful the economy is.

    ReplyDelete
  2. Doug: Another way of saying it is: According to your faith, so will it be! I agree much ado ab out anything tends to be self-fulfilling, so why not raise a ruckus about how great things are beginning to look as a new administgration brings new "eyes" to the problem?

    ReplyDelete
  3. Dan, I am a cynic, it is my nature to look askance at everything. Makes it tough when I gaze into the mirror, though.

    ReplyDelete
  4. Thanks much for your comment Douglas. There is something to the notion of a psychological component to the economy, and the comfort level of consumers and workers. Some economist recently said that religion and the economy have something in common. They depend on faith.

    ReplyDelete
  5. Dan, thank you for joining us. To you and also to Douglas, out of curiosity, what is your take on why the economic situation here in the United States has so significantly affected other countries around the world? Of course, the marketplace is global in nature these days, and the economies of most countries are interrelated to that of our own. That being said, are the two of you suggesting that the psychological mood swings of leaders and citizens can serve to adversely or positively affect the economies of others?

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  6. While I agree that there is a strong Psychological portion to the present downturn (people expect the economy to worsen, so they cut back spending resulting in a weaker economy), there were a number of other fundamental issues that make this more than a case of doom and gloom.

    First and foremost is credit, or more precisely too much of it. We have become so well-conditioned to accept and use credit for everything imaginable that we fail to notice the cost. Yes, credit has allowed us to grow our economy faster and to get the shiny toys we want sooner, but it's use has also let us seriously indebted. Not only do we continue to pile debt upon debt, but the interest payments sap our financial strength as well.

    On a personal scale, I know a number of people who spend a third of each paycheck making payments on debts. While some of these payments are for "good" debts like mortgages and student loans, a good bit is credit cards and similar debts run up to buy items that are not necessities. Yes, this allowed them to buy big screen TVs or a nicer car than they might otherwise have, but the interest is usually much higher. At the end of the day I would guess the average $1000 flat screen TV costs $1500 to $2000 once you factor in the interest paid. So what did they get for that extra $500 to $1000? A happy banker.

    On a larger scale, we can look at the world's single largest debtor, the United States federal government. With over $10 TRILLION in debt, the interest alone is quickly approaching $500 Billion per year. That is $1,600 for every citizen of the US just spent on interest. I hear people complain about what we are spending in Iraq and Afghanistan and wonder how they would feel to realise that we spent less on those two wars in the last 4 years than we will spend on interest this year alone. I frankly can't see a way for our government to repay. Our politicians do not have the political willpower to come clean and admit that we will need to accept significantly higher taxes and much lower service (lower medicare payments, lower welfare payments, bare minimum infrastructure spending) to pay that debt down.

    I happen to maintain that the $700 Billion bailout for the financial firms had little to do with Congress' desire to save Wall Street, but rather it was an attempt to keep the credit market from tightenning up so far that even the government might find itself unable to find people to continue to loan it money. I doubt anything but a threat like that would have gotten Congress to agree to something so quickly, especially just before a presidential election.

    And that is just one fundamental issue. There is the problems of food production and availability facing many third world countries (something that will likely lead to more warfare and higher prices for us at the grocery store).

    Oil is currently down, but the truth is that most OPEC and many non-OPEC producers fabricate their figures for production capacity and proven reserves, something that'll lead to another sharp increase in prices when the world economy stabilises and starts to grow.

    And there's always the more immediate tensions that the global recession is creating. The rioting in Greece is less about the death of one teenage boy than it is about anger and resentment over the government's policies and the worsening economy there. China has just reported it's first (ever) decrease in exports, something that many suspect will lead to a sharp rise in unemployment as it suddenly finds it cannot produce enough jobs to employ the millions of people being pressured off traditional family farms and in to it's growing cities. The government is trying to avoid having to crack down harshly on the growing anger and resentment in the Chinese population as the economy there weakens.

    ReplyDelete
  7. Robert: Very nicely done piece. We strongly suspect that we know who you are, since the analysis is consistent with your temperament and personality. All of the points which you raised are solid ones, and it would be very difficult for one to dispute them.

    This blog is associated with our motivational speaking concept which examines the analytical and hard-wired human thought process, and how they bear on personal responsibility. Your analysis has personal responsibility running throughout it.

    We believe that when confronted with a problem, if one incorrectly identifies the sources underlying or factors contributing to the problem, one will probably not be able to effectively address the problem. Pointing to the wrong causes, simply because they advance our interests or allow us to abdicate responsibility, are doomed to fail.

    Thanks for your very insightful analysis.

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  8. By the way, you know what is happening today? Today, the electoral colleges in the respective states meet in their respective state capitols and vote for President of the United States.

    ReplyDelete
  9. There is a fundamental question, which we posed to the pro-choice faction, which bears on personal responsibility and has nothing to do with religion or government. No one has chosen to address it.

    If one reads the many articles concerning the analysis used in Roe v. Wade, one will note that there is quite a bit of controversy regarding the Courts use of the Privacy Clause in order to raise this right to an abortion to Constitutional status. From our perspective, they did what they chose to do to accomplish their goal. However, that still does not address the issue of "choice."

    Didn't the man and woman have "choices," in fact many of them, available to them BEFORE engaging in the act. Isn't abstinence a choice? Isn't no sex throughout one's life a choice? Why does the "pro-choice" crowd make it a choice, or women in command of their bodies issue? Women, except those raped in a criminal event, always have command or control, and choices related to their bodies? Why call if "pro-choice," and why not something like "optimal parenting environment," which makes it more about the potential child and less about the potential parent?

    Pro-life arguably has "conceptual punch." Pro-choice, at least to us, lacks it, and arguably hurts the argument.

    What say thee?

    ReplyDelete
  10. By the way, you know what is happening today? Today, the electoral colleges in the respective states meet in their respective state capitols and vote for President of the United States.

    ReplyDelete
  11. While I agree that there is a strong Psychological portion to the present downturn (people expect the economy to worsen, so they cut back spending resulting in a weaker economy), there were a number of other fundamental issues that make this more than a case of doom and gloom.

    First and foremost is credit, or more precisely too much of it. We have become so well-conditioned to accept and use credit for everything imaginable that we fail to notice the cost. Yes, credit has allowed us to grow our economy faster and to get the shiny toys we want sooner, but it's use has also let us seriously indebted. Not only do we continue to pile debt upon debt, but the interest payments sap our financial strength as well.

    On a personal scale, I know a number of people who spend a third of each paycheck making payments on debts. While some of these payments are for "good" debts like mortgages and student loans, a good bit is credit cards and similar debts run up to buy items that are not necessities. Yes, this allowed them to buy big screen TVs or a nicer car than they might otherwise have, but the interest is usually much higher. At the end of the day I would guess the average $1000 flat screen TV costs $1500 to $2000 once you factor in the interest paid. So what did they get for that extra $500 to $1000? A happy banker.

    On a larger scale, we can look at the world's single largest debtor, the United States federal government. With over $10 TRILLION in debt, the interest alone is quickly approaching $500 Billion per year. That is $1,600 for every citizen of the US just spent on interest. I hear people complain about what we are spending in Iraq and Afghanistan and wonder how they would feel to realise that we spent less on those two wars in the last 4 years than we will spend on interest this year alone. I frankly can't see a way for our government to repay. Our politicians do not have the political willpower to come clean and admit that we will need to accept significantly higher taxes and much lower service (lower medicare payments, lower welfare payments, bare minimum infrastructure spending) to pay that debt down.

    I happen to maintain that the $700 Billion bailout for the financial firms had little to do with Congress' desire to save Wall Street, but rather it was an attempt to keep the credit market from tightenning up so far that even the government might find itself unable to find people to continue to loan it money. I doubt anything but a threat like that would have gotten Congress to agree to something so quickly, especially just before a presidential election.

    And that is just one fundamental issue. There is the problems of food production and availability facing many third world countries (something that will likely lead to more warfare and higher prices for us at the grocery store).

    Oil is currently down, but the truth is that most OPEC and many non-OPEC producers fabricate their figures for production capacity and proven reserves, something that'll lead to another sharp increase in prices when the world economy stabilises and starts to grow.

    And there's always the more immediate tensions that the global recession is creating. The rioting in Greece is less about the death of one teenage boy than it is about anger and resentment over the government's policies and the worsening economy there. China has just reported it's first (ever) decrease in exports, something that many suspect will lead to a sharp rise in unemployment as it suddenly finds it cannot produce enough jobs to employ the millions of people being pressured off traditional family farms and in to it's growing cities. The government is trying to avoid having to crack down harshly on the growing anger and resentment in the Chinese population as the economy there weakens.

    ReplyDelete
  12. Doug: Another way of saying it is: According to your faith, so will it be! I agree much ado ab out anything tends to be self-fulfilling, so why not raise a ruckus about how great things are beginning to look as a new administgration brings new "eyes" to the problem?

    ReplyDelete

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