Where is Adam Smith’s "Invisible Hand? "
1. Thus far, 53,000 babies have become sick, and 4 have died from this product. I imagine that if you are in a country of 1.4 billion, that’s small change. But do we here in America care? Check out the latest on the global milk scandal.
http://www.cnn.com/2008/WORLD/asiapcf/09/24/china.milk/index.html?iref=newssearch
2. By the way, some have suggested that there is a common element which exists between the motives of those behind the Chinese global milk problem and those individuals who led our country into its current financial mess. It might be instructive for us to revisit the ideas of Adam Smith. http://en.wikipedia.org/wiki/Adam_smith; or http://encarta.msn.com/text_761556047___0/Adam_Smith.html
3. Finally, we previously examined the failure of our government to address, three years later, the basic living standards of some of the Louisiana residents ravaged by Katrina. Earlier today, the news reports showed long lines of cars containing Galveston, Galveston Island, and other South Texas residents heading back to their homes. http://www.cnn.com/2008/US/weather/09/24/galveston.ike/index.html?iref=newssearch. Does our country have the political will and economic resources to return these folks back to the status they enjoyed prior to the storm? If so, will any Louisiana residents still be in limbo after the needs of Galveston residents are theoretically addressed?
Just stuff to think about today other than our current financial and economic complications…. You know, maybe we have created a false sense of expectations in this country. When you take people’s money through taxation, they develop expectations about what the government can and should do, and I can guarantee you that the expectations vary in amount and degree.
Showing posts with label American economy. Show all posts
Showing posts with label American economy. Show all posts
Wednesday, September 24, 2008
Tuesday, September 23, 2008
Post No. 45: CEO America by Guest Author "Mark Twain"
CEO America
© 2008, The Institute for Applied Common Sense
Shortly after the election of George W. Bush to the presidency, someone commented that for the first time in American history, we might see a president who would run the country like a corporate CEO.
Few of us appreciated, at the time, the prescience of that statement.
We are now at a tipping point.
We have two, very, very good guys... individuals who make their own party finance people squirm and sit up nights worrying about their own futures... running for president... and, ladies and gentlemen, the game has changed.
When Congress gets done, we, the American taxpayers, will be on the hook for about $1 trillion, to guarantee that the derivatives, sub prime mortgage bundles, and a host of other questionable financial vehicles, we were repeatedly told we were "not sophisticated enough to understand."
(Tell me if I am alone; however, I know very few regular, working class people, who would have tried to pull this B.S. off, at least not in good conscience.)
What this means is that neither candidate will get to do any spending on behalf of his financial backers.
There is not enough difference between these two guys, with respect to the leadership qualities which really matter, to overload a mosquito in flight.
We are forty something days away from an election that will decide the future of our country... and we are being inundated with paid for advertisements debating the meaning of putting lipstick on a pig.Talk about putting lipstick on a pig.
What is more interesting is how the talking heads and spokespeople who engage in this ridiculous banter generate more in annual income than the average American family.
The first question I want to hear answered in the upcoming debates is: "Where would you put your opponent in your cabinet?"
And the second is, "Who would you put in charge of the economy?"
In 1975, car sales fell 50% below 1974 levels.
Sure the Arabs had something to do with it...but the bigger problem was our own federal government's "Seat Belt Interlock Law."
A law that fixed no problem I know of... and I fear without some serious discussion of what has got us into this financial hole, we will see another such idiotic piece of legislation promoted to the public as the solution to the rape Congress is currently debating.
Of course, I could always be wrong... but I am part of the emergency medical staff the local politicians are bragging about... and as best I can tell, they have no intention of paying me for my services... but I’ve got a few creditors out there who want some serious bucks from me... and want them right now... for services rendered to me and my family which were far more pressing and necessary than padding the wallets of some greedy business types.
Go figure....
Yeah, you business types may consider me unsophisticated, but I’m mad at hell… and, for good reason.
© 2008, The Institute for Applied Common Sense
© 2008, The Institute for Applied Common Sense
Shortly after the election of George W. Bush to the presidency, someone commented that for the first time in American history, we might see a president who would run the country like a corporate CEO.
Few of us appreciated, at the time, the prescience of that statement.
We are now at a tipping point.
We have two, very, very good guys... individuals who make their own party finance people squirm and sit up nights worrying about their own futures... running for president... and, ladies and gentlemen, the game has changed.
When Congress gets done, we, the American taxpayers, will be on the hook for about $1 trillion, to guarantee that the derivatives, sub prime mortgage bundles, and a host of other questionable financial vehicles, we were repeatedly told we were "not sophisticated enough to understand."
(Tell me if I am alone; however, I know very few regular, working class people, who would have tried to pull this B.S. off, at least not in good conscience.)
What this means is that neither candidate will get to do any spending on behalf of his financial backers.
There is not enough difference between these two guys, with respect to the leadership qualities which really matter, to overload a mosquito in flight.
We are forty something days away from an election that will decide the future of our country... and we are being inundated with paid for advertisements debating the meaning of putting lipstick on a pig.Talk about putting lipstick on a pig.
What is more interesting is how the talking heads and spokespeople who engage in this ridiculous banter generate more in annual income than the average American family.
The first question I want to hear answered in the upcoming debates is: "Where would you put your opponent in your cabinet?"
And the second is, "Who would you put in charge of the economy?"
In 1975, car sales fell 50% below 1974 levels.
Sure the Arabs had something to do with it...but the bigger problem was our own federal government's "Seat Belt Interlock Law."
A law that fixed no problem I know of... and I fear without some serious discussion of what has got us into this financial hole, we will see another such idiotic piece of legislation promoted to the public as the solution to the rape Congress is currently debating.
Of course, I could always be wrong... but I am part of the emergency medical staff the local politicians are bragging about... and as best I can tell, they have no intention of paying me for my services... but I’ve got a few creditors out there who want some serious bucks from me... and want them right now... for services rendered to me and my family which were far more pressing and necessary than padding the wallets of some greedy business types.
Go figure....
Yeah, you business types may consider me unsophisticated, but I’m mad at hell… and, for good reason.
© 2008, The Institute for Applied Common Sense
Post 44b: Anxious in America by Thomas Friedman
This is a reprint of an op-ed piece by Thomas Friedman originally published on June 29, 2008
Copyright 2008, The New York Times
June 29, 2008
Op-Ed Columnist
Anxious in America
By THOMAS L. FRIEDMAN
Just a few months ago, the consensus view was that Barack Obama would need to choose a hard-core national-security type as his vice presidential running mate to compensate for his lack of foreign policy experience and that John McCain would need a running mate who was young and sprightly to compensate for his age. Come August, though, I predict both men will be looking for a financial wizard as their running mates to help them steer America out of what could become a serious economic tailspin.
I do not believe nation-building in Iraq is going to be the issue come November — whether things get better there or worse. If they get better, we’ll ignore Iraq more; if they get worse, the next president will be under pressure to get out quicker. I think nation-building in America is going to be the issue.
It’s the state of America now that is the most gripping source of anxiety for Americans, not Al Qaeda or Iraq. Anyone who thinks they are going to win this election playing the Iraq or the terrorism card — one way or another — is, in my view, seriously deluded. Things have changed.
Up to now, the economic crisis we’ve been in has been largely a credit crisis in the capital markets, while consumer spending has kept reasonably steady, as have manufacturing and exports. But with banks still reluctant to lend even to healthy businesses, fuel and food prices soaring and home prices declining, this is starting to affect consumers, shrinking their wallets and crimping spending. Unemployment is already creeping up and manufacturing creeping down.
The straws in the wind are hard to ignore: If you visit any car dealership in America today you will see row after row of unsold S.U.V.’s. And if you own a gas guzzler already, good luck. On Thursday, The Palm Beach Post ran an article on your S.U.V. options: “Continue to spend upward of $100 for a fill-up. Sell or trade in the vehicle for a fraction of the original cost. Or hold out and park the truck in the driveway for occasional use in hopes the market will turn around.” Just be glad you don’t own a bus. Montgomery County, Md., where I live, just announced that more children were going to have to walk to school next year to save money on bus fuel.
On top of it all, our bank crisis is not over. Two weeks ago, Goldman Sachs analysts said that U.S. banks may need another $65 billion to cover more write-downs of bad mortgage-related instruments and potential new losses if consumer loans start to buckle. Since President Bush came to office, our national savings have gone from 6 percent of gross domestic product to 1 percent, and consumer debt has climbed from $8 trillion to $14 trillion.
My fellow Americans: We are a country in debt and in decline — not terminal, not irreversible, but in decline. Our political system seems incapable of producing long-range answers to big problems or big opportunities. We are the ones who need a better-functioning democracy — more than the Iraqis and Afghans. We are the ones in need of nation-building. It is our political system that is not working.
I continue to be appalled at the gap between what is clearly going to be the next great global industry — renewable energy and clean power — and the inability of Congress and the administration to put in place the bold policies we need to ensure that America leads that industry.
“America and its political leaders, after two decades of failing to come together to solve big problems, seem to have lost faith in their ability to do so,” Wall Street Journal columnist Gerald Seib noted last week. “A political system that expects failure doesn’t try very hard to produce anything else.”
We used to try harder and do better. After Sputnik, we came together as a nation and responded with a technology, infrastructure and education surge, notes Robert Hormats, vice chairman of Goldman Sachs International. After the 1973 oil crisis, we came together and made dramatic improvements in energy efficiency. After Social Security became imperiled in the early 1980s, we came together and fixed it for that moment. “But today,” added Hormats, “the political system seems incapable of producing a critical mass to support any kind of serious long-term reform.”
If the old saying — that “as General Motors goes, so goes America” — is true, then folks, we’re in a lot of trouble. General Motors’s stock-market value now stands at just $6.47 billion, compared with Toyota’s $162.6 billion. On top of it, G.M. shares sank to a 34-year low last week.
That’s us. We’re at a 34-year low. And digging out of this hole is what the next election has to be about and is going to be about — even if it is interrupted by a terrorist attack or an outbreak of war or peace in Iraq. We need nation-building at home, and we cannot wait another year to get started. Vote for the candidate who you think will do that best. Nothing else matters.
Copyright 2008, The New York Times
Copyright 2008, The New York Times
June 29, 2008
Op-Ed Columnist
Anxious in America
By THOMAS L. FRIEDMAN
Just a few months ago, the consensus view was that Barack Obama would need to choose a hard-core national-security type as his vice presidential running mate to compensate for his lack of foreign policy experience and that John McCain would need a running mate who was young and sprightly to compensate for his age. Come August, though, I predict both men will be looking for a financial wizard as their running mates to help them steer America out of what could become a serious economic tailspin.
I do not believe nation-building in Iraq is going to be the issue come November — whether things get better there or worse. If they get better, we’ll ignore Iraq more; if they get worse, the next president will be under pressure to get out quicker. I think nation-building in America is going to be the issue.
It’s the state of America now that is the most gripping source of anxiety for Americans, not Al Qaeda or Iraq. Anyone who thinks they are going to win this election playing the Iraq or the terrorism card — one way or another — is, in my view, seriously deluded. Things have changed.
Up to now, the economic crisis we’ve been in has been largely a credit crisis in the capital markets, while consumer spending has kept reasonably steady, as have manufacturing and exports. But with banks still reluctant to lend even to healthy businesses, fuel and food prices soaring and home prices declining, this is starting to affect consumers, shrinking their wallets and crimping spending. Unemployment is already creeping up and manufacturing creeping down.
The straws in the wind are hard to ignore: If you visit any car dealership in America today you will see row after row of unsold S.U.V.’s. And if you own a gas guzzler already, good luck. On Thursday, The Palm Beach Post ran an article on your S.U.V. options: “Continue to spend upward of $100 for a fill-up. Sell or trade in the vehicle for a fraction of the original cost. Or hold out and park the truck in the driveway for occasional use in hopes the market will turn around.” Just be glad you don’t own a bus. Montgomery County, Md., where I live, just announced that more children were going to have to walk to school next year to save money on bus fuel.
On top of it all, our bank crisis is not over. Two weeks ago, Goldman Sachs analysts said that U.S. banks may need another $65 billion to cover more write-downs of bad mortgage-related instruments and potential new losses if consumer loans start to buckle. Since President Bush came to office, our national savings have gone from 6 percent of gross domestic product to 1 percent, and consumer debt has climbed from $8 trillion to $14 trillion.
My fellow Americans: We are a country in debt and in decline — not terminal, not irreversible, but in decline. Our political system seems incapable of producing long-range answers to big problems or big opportunities. We are the ones who need a better-functioning democracy — more than the Iraqis and Afghans. We are the ones in need of nation-building. It is our political system that is not working.
I continue to be appalled at the gap between what is clearly going to be the next great global industry — renewable energy and clean power — and the inability of Congress and the administration to put in place the bold policies we need to ensure that America leads that industry.
“America and its political leaders, after two decades of failing to come together to solve big problems, seem to have lost faith in their ability to do so,” Wall Street Journal columnist Gerald Seib noted last week. “A political system that expects failure doesn’t try very hard to produce anything else.”
We used to try harder and do better. After Sputnik, we came together as a nation and responded with a technology, infrastructure and education surge, notes Robert Hormats, vice chairman of Goldman Sachs International. After the 1973 oil crisis, we came together and made dramatic improvements in energy efficiency. After Social Security became imperiled in the early 1980s, we came together and fixed it for that moment. “But today,” added Hormats, “the political system seems incapable of producing a critical mass to support any kind of serious long-term reform.”
If the old saying — that “as General Motors goes, so goes America” — is true, then folks, we’re in a lot of trouble. General Motors’s stock-market value now stands at just $6.47 billion, compared with Toyota’s $162.6 billion. On top of it, G.M. shares sank to a 34-year low last week.
That’s us. We’re at a 34-year low. And digging out of this hole is what the next election has to be about and is going to be about — even if it is interrupted by a terrorist attack or an outbreak of war or peace in Iraq. We need nation-building at home, and we cannot wait another year to get started. Vote for the candidate who you think will do that best. Nothing else matters.
Copyright 2008, The New York Times
Post No. 44a: An Argument for Further Deliberation about Our Financial Situation
Copyright 2008 The New York Times Company
September 22, 2008
Op-Ed Columnist
Cash for Trash
By PAUL KRUGMAN
Some skeptics are calling Henry Paulson’s $700 billion rescue plan for the U.S. financial system “cash for trash.” Others are calling the proposed legislation the Authorization for Use of Financial Force, after the Authorization for Use of Military Force, the infamous bill that gave the Bush administration the green light to invade Iraq.
There’s justice in the gibes. Everyone agrees that something major must be done. But Mr. Paulson is demanding extraordinary power for himself — and for his successor — to deploy taxpayers’ money on behalf of a plan that, as far as I can see, doesn’t make sense.
Some are saying that we should simply trust Mr. Paulson, because he’s a smart guy who knows what he’s doing. But that’s only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half — a period during which Mr. Paulson repeatedly declared the financial crisis “contained,” and then offered a series of unsuccessful fixes — justifies the belief that he knows what he’s doing? He’s making it up as he goes along, just like the rest of us.
So let’s try to think this through for ourselves. I have a four-step view of the financial crisis:
1. The bursting of the housing bubble has led to a surge in defaults and foreclosures, which in turn has led to a plunge in the prices of mortgage-backed securities — assets whose value ultimately comes from mortgage payments.
2. These financial losses have left many financial institutions with too little capital — too few assets compared with their debt. This problem is especially severe because everyone took on so much debt during the bubble years.
3. Because financial institutions have too little capital relative to their debt, they haven’t been able or willing to provide the credit the economy needs.
4. Financial institutions have been trying to pay down their debt by selling assets, including those mortgage-backed securities, but this drives asset prices down and makes their financial position even worse. This vicious circle is what some call the “paradox of deleveraging.”
The Paulson plan calls for the federal government to buy up $700 billion worth of troubled assets, mainly mortgage-backed securities. How does this resolve the crisis?
Well, it might — might — break the vicious circle of deleveraging, step 4 in my capsule description. Even that isn’t clear: the prices of many assets, not just those the Treasury proposes to buy, are under pressure. And even if the vicious circle is limited, the financial system will still be crippled by inadequate capital.
Or rather, it will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense. Did I mention that I’m not happy with this plan?
The logic of the crisis seems to call for an intervention, not at step 4, but at step 2: the financial system needs more capital. And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.
That’s what happened in the savings and loan crisis: the feds took over ownership of the bad banks, not just their bad assets. It’s also what happened with Fannie and Freddie. (And by the way, that rescue has done what it was supposed to. Mortgage interest rates have come down sharply since the federal takeover.)
But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.
I’m aware that Congress is under enormous pressure to agree to the Paulson plan in the next few days, with at most a few modifications that make it slightly less bad. Basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.
But I’d urge Congress to pause for a minute, take a deep breath, and try to seriously rework the structure of the plan, making it a plan that addresses the real problem. Don’t let yourself be railroaded — if this plan goes through in anything like its current form, we’ll all be very sorry in the not-too-distant future.
Copyright 2008 The New York Times Company
September 22, 2008
Op-Ed Columnist
Cash for Trash
By PAUL KRUGMAN
Some skeptics are calling Henry Paulson’s $700 billion rescue plan for the U.S. financial system “cash for trash.” Others are calling the proposed legislation the Authorization for Use of Financial Force, after the Authorization for Use of Military Force, the infamous bill that gave the Bush administration the green light to invade Iraq.
There’s justice in the gibes. Everyone agrees that something major must be done. But Mr. Paulson is demanding extraordinary power for himself — and for his successor — to deploy taxpayers’ money on behalf of a plan that, as far as I can see, doesn’t make sense.
Some are saying that we should simply trust Mr. Paulson, because he’s a smart guy who knows what he’s doing. But that’s only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half — a period during which Mr. Paulson repeatedly declared the financial crisis “contained,” and then offered a series of unsuccessful fixes — justifies the belief that he knows what he’s doing? He’s making it up as he goes along, just like the rest of us.
So let’s try to think this through for ourselves. I have a four-step view of the financial crisis:
1. The bursting of the housing bubble has led to a surge in defaults and foreclosures, which in turn has led to a plunge in the prices of mortgage-backed securities — assets whose value ultimately comes from mortgage payments.
2. These financial losses have left many financial institutions with too little capital — too few assets compared with their debt. This problem is especially severe because everyone took on so much debt during the bubble years.
3. Because financial institutions have too little capital relative to their debt, they haven’t been able or willing to provide the credit the economy needs.
4. Financial institutions have been trying to pay down their debt by selling assets, including those mortgage-backed securities, but this drives asset prices down and makes their financial position even worse. This vicious circle is what some call the “paradox of deleveraging.”
The Paulson plan calls for the federal government to buy up $700 billion worth of troubled assets, mainly mortgage-backed securities. How does this resolve the crisis?
Well, it might — might — break the vicious circle of deleveraging, step 4 in my capsule description. Even that isn’t clear: the prices of many assets, not just those the Treasury proposes to buy, are under pressure. And even if the vicious circle is limited, the financial system will still be crippled by inadequate capital.
Or rather, it will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense. Did I mention that I’m not happy with this plan?
The logic of the crisis seems to call for an intervention, not at step 4, but at step 2: the financial system needs more capital. And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.
That’s what happened in the savings and loan crisis: the feds took over ownership of the bad banks, not just their bad assets. It’s also what happened with Fannie and Freddie. (And by the way, that rescue has done what it was supposed to. Mortgage interest rates have come down sharply since the federal takeover.)
But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.
I’m aware that Congress is under enormous pressure to agree to the Paulson plan in the next few days, with at most a few modifications that make it slightly less bad. Basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.
But I’d urge Congress to pause for a minute, take a deep breath, and try to seriously rework the structure of the plan, making it a plan that addresses the real problem. Don’t let yourself be railroaded — if this plan goes through in anything like its current form, we’ll all be very sorry in the not-too-distant future.
Copyright 2008 The New York Times Company
Monday, September 22, 2008
Post No. 44: At What Price Dumbing Down?
© The Institute for Applied Common Sense
One of the somewhat overlooked ironies of this campaign year is that a black man, who was born outside of this country and the product of a broken home, and who managed to beat the odds and become a reasonably well educated public servant after attending two Ivy League institutions, is currently being framed as an “elitist” in our society.
That this should occur should cause us all to pause.
Last spring I managed to get myself involved is scoring reading and writing competencies for some of the prospective graduates of one of our state institutions.
The state wide results just came in reflecting an, on average, 2% decrease in reading comprehension, and a 17% increase in writing communication.
Not surprisingly, the schools that scored worst are challenging the test.
Even less surprisingly, I will be spending the last half of October explaining my scoring.
My guess is that this anomaly can be explained by the Internet.
Computers have got kids writing, seriously, earlier than ever before in history... but to paraphrase Mr. Gossage (http://adage.com/century/people023.html), they write about what interests them.
If we continue to dumb down and politically correct our text books, year after year, to revise the content to match whatever we consider to be the prevailing political winds... we shouldn't be surprised if our children choose to read that which seems to be of more immediate, personal, value.
And the more we chose to force our teachers to keep to the politically correct curriculum of the day, the less opportunity these mostly right headed people will have to inspire and challenge their students...absent which we are well and truly screwed.
Advertising is not a bad example of what has gone wrong with our culture.
There is nothing more expensive in the marketing business than a failed campaign. But agency holding companies have gotten into bed with client purchasing departments, often offering to provide their services for free, and earned back their 20 - 30% margins by eliminating the people who actually do the work... not to mention any semblance of a training program
The result is often a single ad that offends nobody world wide... mostly because it is so innocuous nobody world wide notices it...supported by intergalactic media buys.... The Olympics come to mind...that cost nothing to negotiate... can be promoted as being available at some fictional discount only because of the agency's "massive media clout," and get bought on the discount rather than their effectiveness.
All of which we do under the umbrella of branding...and we ought to be ashamed of ourselves.
This is not the way people buy stuff.
Jim Jordan [http://en.wikipedia.org/wiki/James_Jordan_(publicist)], a giant in the marketing field, once said. "It's not creative unless it sells."
Bill Bernbach (http://en.wikipedia.org/wiki/William_Bernbach), also a giant, said, "It won't sell unless it's creative."
They were both right.
The problem is the people who now run their agencies got their jobs by buying things cheap... and that's what they talk to the client about when they sit down for their quarterly "state of the account dinners."
Unfortunately, expressing any of the above in front of current agency and client management can produce chronic underemployment.
More unfortunately, if somebody doesn't stand up pretty quick, we are on our way to becoming a supplier of natural resources to countries that have mastered the art of adding value.
In the immortal words of Jimmy Williams, "When you stop taking pride in what you make, you have hitched your star to a wagon."
Which I believe is Mr. Friedman's (http://en.wikipedia.org/wiki/Thomas_Friedman) point as well, in his discussion of innovation, global competition, and the future position of the United States. (http://theviewfromoutsidemytinywindow.blogspot.com/2008/09/post-no-41b-television-worth-viewing.html.)
At the end of the day, it really is all about creativity and innovation…. It’s what ultimately sells.
Always has, always will.
© The Institute for Applied Common Sense
One of the somewhat overlooked ironies of this campaign year is that a black man, who was born outside of this country and the product of a broken home, and who managed to beat the odds and become a reasonably well educated public servant after attending two Ivy League institutions, is currently being framed as an “elitist” in our society.
That this should occur should cause us all to pause.
Last spring I managed to get myself involved is scoring reading and writing competencies for some of the prospective graduates of one of our state institutions.
The state wide results just came in reflecting an, on average, 2% decrease in reading comprehension, and a 17% increase in writing communication.
Not surprisingly, the schools that scored worst are challenging the test.
Even less surprisingly, I will be spending the last half of October explaining my scoring.
My guess is that this anomaly can be explained by the Internet.
Computers have got kids writing, seriously, earlier than ever before in history... but to paraphrase Mr. Gossage (http://adage.com/century/people023.html), they write about what interests them.
If we continue to dumb down and politically correct our text books, year after year, to revise the content to match whatever we consider to be the prevailing political winds... we shouldn't be surprised if our children choose to read that which seems to be of more immediate, personal, value.
And the more we chose to force our teachers to keep to the politically correct curriculum of the day, the less opportunity these mostly right headed people will have to inspire and challenge their students...absent which we are well and truly screwed.
Advertising is not a bad example of what has gone wrong with our culture.
There is nothing more expensive in the marketing business than a failed campaign. But agency holding companies have gotten into bed with client purchasing departments, often offering to provide their services for free, and earned back their 20 - 30% margins by eliminating the people who actually do the work... not to mention any semblance of a training program
The result is often a single ad that offends nobody world wide... mostly because it is so innocuous nobody world wide notices it...supported by intergalactic media buys.... The Olympics come to mind...that cost nothing to negotiate... can be promoted as being available at some fictional discount only because of the agency's "massive media clout," and get bought on the discount rather than their effectiveness.
All of which we do under the umbrella of branding...and we ought to be ashamed of ourselves.
This is not the way people buy stuff.
Jim Jordan [http://en.wikipedia.org/wiki/James_Jordan_(publicist)], a giant in the marketing field, once said. "It's not creative unless it sells."
Bill Bernbach (http://en.wikipedia.org/wiki/William_Bernbach), also a giant, said, "It won't sell unless it's creative."
They were both right.
The problem is the people who now run their agencies got their jobs by buying things cheap... and that's what they talk to the client about when they sit down for their quarterly "state of the account dinners."
Unfortunately, expressing any of the above in front of current agency and client management can produce chronic underemployment.
More unfortunately, if somebody doesn't stand up pretty quick, we are on our way to becoming a supplier of natural resources to countries that have mastered the art of adding value.
In the immortal words of Jimmy Williams, "When you stop taking pride in what you make, you have hitched your star to a wagon."
Which I believe is Mr. Friedman's (http://en.wikipedia.org/wiki/Thomas_Friedman) point as well, in his discussion of innovation, global competition, and the future position of the United States. (http://theviewfromoutsidemytinywindow.blogspot.com/2008/09/post-no-41b-television-worth-viewing.html.)
At the end of the day, it really is all about creativity and innovation…. It’s what ultimately sells.
Always has, always will.
© The Institute for Applied Common Sense
Sunday, September 21, 2008
Post No. 43a: Special Edition of CBS 60 Minutes: Both Presidential Candidates
Special edition. Interviews of both McCain and OBama. 7:30 pm Eastern. Check your local listings for other time zones.
Wednesday, September 10, 2008
Post 41c: Article of Interest from Forbes.com
Adviser Soapbox
Professional Bailout No. Six
Ron Rowland, All Star Fund Trader 09.08.08, 2:49 PM ET
Austin, Texas -
Monday brought a sense of deja vu in the markets. How many financial sector bailouts can we have in one year? Quite a few, apparently. Six times in the last 13 months, the game has changed or appeared to change due to political intervention in the markets. Let's review:
August 2007: The Federal Reserve makes emergency cut in the discount rate
December 2007: Fed announces creation of special lending privileges for banks
January 2008: Another emergency 75 basis point rate cut
March 2008: Bear Stearns bailout
July 2008: First Fannie/Freddie rescue attempt
September 2008: Another Fannie/Freddie rescue attempt
The latest action effectively brings Fannie Mae and Freddie Mac under governmental control. Existing shareholders in these institutions are not, to our surprise, being totally wiped out--yet. There is still plenty of time for that to happen.
There is an even bigger loser in this transaction: anyone who owns U.S. Treasury bonds. Interest rates spiked higher, leaving the principal value of government debt sharply lower than it was last week. This is perfectly logical. Having just taken on the massive obligations of Fannie and Freddie, the Treasury's own credit rating had to take a hit. There are no free lunches.
In the big picture, the government's goal is clear: drive down mortgage rates and, more important, convince bankers to actually lend money to people who want to buy houses. Wholesale mortgage rates dropped dramatically Monday morning, so by that standard we have to say the bailout is doing what it is supposed to do. Whether the new liquidity will trickle down to individual borrowers is not yet clear.
Will the sixth bailout be the charm? The record of the last year is not very encouraging. Each action brought a market rally, but the rallies have been getting progressively weaker and shorter each time. As noted above, there are no free lunches. Risk cannot be eliminated, but it can be moved around. What is happening now is that the losses in the mortgage market are being transferred to what may be the only larger fixed-income sector: U.S. Treasury securities.
Since other kinds of bonds take their cue from the Treasury market, the bottom line is that interest rates on all kinds of debt will rise so that those who lost money in mortgage debt can be saved from loss. Is this a good thing? Maybe. But whatever it is, it is not capitalism. It is not what happens when markets are allowed to operate freely and without interference.
In a free market economy, people bear the cost of their own decisions, for better or worse. With that principle out the window, who will be next? This precedent is now in place: If an industry proves that its continued functioning is crucial to the economy and its failure will bring widespread pain, it is entitled to be saved from its otherwise inevitable demise by the collective action of society. The automobile industry is already making noise along these lines. Other applicants will no doubt follow.
For now, stocks are rallying around the globe. Monday morning's opening surge faded with remarkable alacrity, though, suggesting that at least a few investors remain skeptical. We count ourselves among them.
Professional Bailout No. Six
Ron Rowland, All Star Fund Trader 09.08.08, 2:49 PM ET
Austin, Texas -
Monday brought a sense of deja vu in the markets. How many financial sector bailouts can we have in one year? Quite a few, apparently. Six times in the last 13 months, the game has changed or appeared to change due to political intervention in the markets. Let's review:
August 2007: The Federal Reserve makes emergency cut in the discount rate
December 2007: Fed announces creation of special lending privileges for banks
January 2008: Another emergency 75 basis point rate cut
March 2008: Bear Stearns bailout
July 2008: First Fannie/Freddie rescue attempt
September 2008: Another Fannie/Freddie rescue attempt
The latest action effectively brings Fannie Mae and Freddie Mac under governmental control. Existing shareholders in these institutions are not, to our surprise, being totally wiped out--yet. There is still plenty of time for that to happen.
There is an even bigger loser in this transaction: anyone who owns U.S. Treasury bonds. Interest rates spiked higher, leaving the principal value of government debt sharply lower than it was last week. This is perfectly logical. Having just taken on the massive obligations of Fannie and Freddie, the Treasury's own credit rating had to take a hit. There are no free lunches.
In the big picture, the government's goal is clear: drive down mortgage rates and, more important, convince bankers to actually lend money to people who want to buy houses. Wholesale mortgage rates dropped dramatically Monday morning, so by that standard we have to say the bailout is doing what it is supposed to do. Whether the new liquidity will trickle down to individual borrowers is not yet clear.
Will the sixth bailout be the charm? The record of the last year is not very encouraging. Each action brought a market rally, but the rallies have been getting progressively weaker and shorter each time. As noted above, there are no free lunches. Risk cannot be eliminated, but it can be moved around. What is happening now is that the losses in the mortgage market are being transferred to what may be the only larger fixed-income sector: U.S. Treasury securities.
Since other kinds of bonds take their cue from the Treasury market, the bottom line is that interest rates on all kinds of debt will rise so that those who lost money in mortgage debt can be saved from loss. Is this a good thing? Maybe. But whatever it is, it is not capitalism. It is not what happens when markets are allowed to operate freely and without interference.
In a free market economy, people bear the cost of their own decisions, for better or worse. With that principle out the window, who will be next? This precedent is now in place: If an industry proves that its continued functioning is crucial to the economy and its failure will bring widespread pain, it is entitled to be saved from its otherwise inevitable demise by the collective action of society. The automobile industry is already making noise along these lines. Other applicants will no doubt follow.
For now, stocks are rallying around the globe. Monday morning's opening surge faded with remarkable alacrity, though, suggesting that at least a few investors remain skeptical. We count ourselves among them.
Tuesday, September 2, 2008
Post No. 39b: And So You Thought That America Only Had to Worry About China's Ability to Make Things
Article of Interest from the New York Times:
August 31, 2008
Op-Ed Columnist
Postcard From South China
By THOMAS L. FRIEDMAN
Guangzhou, China
I had the pleasure the other day of visiting the delightfully named Zhuhai Guohua Wonderful Wind Power Exploitation Co. in Zhuhai, on the southern coast of China. It’s a good news/bad news story.
Op-Ed Columnist
Postcard From South China
By THOMAS L. FRIEDMAN
Guangzhou, China
I had the pleasure the other day of visiting the delightfully named Zhuhai Guohua Wonderful Wind Power Exploitation Co. in Zhuhai, on the southern coast of China. It’s a good news/bad news story.
The good news was that the Chinese engineers showed me their control room, which has a giant glass window that looks out onto their 21 wind turbines that crown the peaks of a nearby mountain. “How nice,” I thought. “China’s really starting to go green.”
But as my eye drifted just to the left of that mountain, I saw Macau, with its rising skyline of casino skyscrapers. The Venetian Hotel in Macau alone has some 870 gaming tables and 3,400 slot machines. So, I did a quick calculation and figured that those 21 wind turbines together might power the Venetian’s army of one-armed bandits for a few hours of green gambling.
That dichotomy runs through a lot of what is going on here in Guangdong Province, where 30 years ago China began its economic opening. You’re starting to see the emergence of Chinese clean-tech companies — I also visited a solar panel start-up — and real environmental awareness among officials and students. But the momentum of this region’s growth, the sheer land-of-the-giants scale of the buildings, makes the renewable energy here literally a drop in the bucket.
As a result, there is a dawning awareness that if China is to break its own addiction to oil, it will take a much more fundamental shift from the growth model that powered its first 30 years.
That model was based on two linked ideas: 1) energy was inexhaustible, inexpensive and benign; and 2) China could count on raising its living standards by forever being the world’s low-cost manufacturing workshop, based on cheap energy.
In recent years, though, fossil-fuel energy has become expensive, exhaustible and toxic, and rising wages — to some extent because of rising environmental considerations and social security requirements — have meant that the workshops of southern China are no longer the low-cost producers in Asia. Vietnam and Western China now beckon.
The only way forward, say officials, is for China to gradually develop a cleaner, knowledge-based, service/finance economy. It has to move from “made in China” to “designed in China” to “imagined in China.”
In short, the economy here has to become greener and smarter. (Sound familiar?)
In 1992, China’s coastal economic powerhouses hit a similar wall when they found they could not grow further without the government loosening travel restrictions to attract workers from all over China. So, more personal freedom to move around China was unleashed then. Now, these same provinces need to allow more “mind movement” to get to the next level.
The problem for the ruling Communist Party is this: China can’t have a greener society without empowering citizens to become watchdogs and allowing them to sue local businesses and governments that pollute, and it can’t have a more knowledge-intensive innovation society without a freer flow of information and experimentation.
What surprised me is how much the party is thinking about all this. I actually came here at the invitation of Wang Yang, the Communist Party secretary, i.e. the boss of Guangdong Province. He had read one of my books on globalization in Chinese.
Wang is also a member of the Politburo in Beijing and is considered one of the most innovative thinkers in China’s leadership today. He has been given room to experiment and has begun advocating something he calls “mind liberation” — primarily an effort to change the culture of his bureaucracy and open it up to new ways of thinking. Right now he is focused on trying to shift dirty, low-wage manufacturing out of Guangzhou to the countryside, where jobs are still scarce.
And he is trying to attract clean industries and services to the city. His goal, he said, was a more “low-carbon economy.”
“Please put it in your column that Party Secretary Wang Yang welcomes [Western] clean energy technology companies to come to Guangdong Province and use it as a laboratory to develop their products,” he told me. “We will be most willing to participate in the innovation and provide the services they need.”
So my postcard from Guangzhou would read like this: “Dear Mom and Dad, this place is so much more interesting than it looks from abroad. I met wind and solar companies eager for Western investment and Chinese college students who were organizing a boycott of an Indonesian paper company for despoiling their forest. An ‘Institute of Civil Society’ has quietly opened at the local Sun Yat-sen University. The Communist Party is trying to break the old mold without breaking its hold. It’s quite a drama. Can’t wait to come back next summer and see how they’re doing ...”
Thursday, July 17, 2008
Post 27c: And You Thought That YOU Were Concerned About Things Here in the States
We spend far too much time on this blog discussing serious subjects, without an accompanying balance of humour. (Clue.) We are not sure of the source of this piece, and to fend off the lawyers, we acknowledge that we did not generate this piece, and it appears that it is in the public domain for copyright purposes. However, we thought that it might generate a smile on an otherwise drab day.
Message from the Queen of England
To the citizens of the United States of America from Her Sovereign Majesty Queen Elizabeth II:
To the citizens of the United States of America from Her Sovereign Majesty Queen Elizabeth II:
In light of your failure in recent years to nominate competent candidates for President of the USA and thus to govern yourselves, we hereby give notice of the revocation of your independence, effective immediately.
Her Sovereign Majesty Queen Elizabeth II will resume monarchical duties over all states, commonwealths, and territories (except Kansas, which she does not fancy).
Your new Prime Minister, Gordon Brown, will appoint a Governor for America without the need for further elections.
Congress and the Senate will be disbanded.
A questionnaire may be circulated next year to determine whether any of you noticed.
To aid in the transition to a British Crown Dependency, the following rules are introduced with immediate effect:
(You should look up 'revocation' in the Oxford English Dictionary.)
1. Then look up aluminum, and check the pronunciation guide. You will be amazed at just how incorrectly you have been pronouncing it.
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2. The letter 'U' will be reinstated in words such as 'colour', 'favour', 'labour' and 'neighbour.' Likewise, you will learn to spell 'doughnut' without skipping half the letters, and the suffix '-ize' will be replaced by the suffix '-ise'. Generally, you will be expected to raise your vocabulary to acceptable levels. (Look up 'vocabulary').
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3. Using the same twenty-seven words interspersed with filler noises such as 'like' and 'you know' is an unacceptable and inefficient form of communication. There is no such thing as US English. We will let M*crosoft know on your behalf. The M*crosoft spell-checker will be adjusted to take into account the reinstated letter 'u' and the elimination of -ize.
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4. July 4th will no longer be celebrated as a holiday.
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5. You will learn to resolve personal issues without using guns, lawyers, or therapists. The fact that you need so many lawyers and therapists shows that you're not quite ready to be independent. Guns should only be used for shooting grouse. If you can't sort things out without suing someone or speaking to a therapist then you're not ready to shoot grouse.
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6. Therefore, you will no longer be allowed to own or carry anything more dangerous than a vegetable peeler. Although a permit will be required if you wish to carry a vegetable peeler in public.
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7. All intersections will be replaced with roundabouts, and you will start driving on the left side with immediate effect. At the same time, you will go metric with immediate effect and without the benefit of conversion tables. Both roundabouts and metrication will help you understand the British sense of humour.
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8. The Former USA will adopt UK prices on petrol (which you have been calling gasoline) of roughly $10/US gallon. Get used to it.
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9. You will learn to make real chips. Those things you call French fries are not real chips, and those things you insist on calling potato chips are properly called crisps. Real chips are thick cut, fried in animal fat, and dressed not with catsup but with vinegar.
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10. The cold tasteless stuff you insist on calling beer is not actually beer at all. Henceforth, only proper British Bitter will be referred to as beer, and European brews of known and accepted provenance will be referred to as Lager. South African beer is also acceptable as they are pound for pound the greatest sporting Nation on earth and it can only be due to the beer. They are also part of British Commonwealth - see what it did for them. American brands will be referred to as Near-Frozen Gnat's Urine, so that all can be sold without risk of further confusion.
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11. Hollywood will be required occasionally to cast English actors as good guys. Hollywood will also be required to cast English actors to play English characters. Watching Andie MacDowell attempt English dialogue in Four Weddings and a Funeral was an experience akin to having one's ears removed with a cheese grater.
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12. You will cease playing American football. There is only one kind of proper football; you call it soccer. Those of you brave enough will, in time, be allowed to play rugby (which has some similarities to American football, but does not involve stopping for a rest every twenty seconds or wearing full Kevlar body Armour like a bunch of nancies). Don't try Rugby - the South Africans and Kiwis will thrash you, like they regularly thrash us.
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13. Further, you will stop playing baseball. It is not reasonable to host an event called the World Series for a game which is not played outside of America. Since only 2.1% of you are aware there is a world beyond your borders, your error is understandable. You will learn cricket, and we will let you face the South Africans first to take the sting out of their deliveries.
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14. You must tell us who killed JFK. It's been driving us mad.
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15. An internal revenue agent (i.e. tax collector) from Her Majesty's Government will be with you shortly to ensure the acquisition of all monies due (backdated to 1776).
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16. Daily Tea Time begins promptly at 4 pm with proper cups, with saucers, and never mugs, with high quality biscuits (cookies) and cakes; plus strawberries (with cream) when in season.
God Save the Queen!
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