So the bail out plan didn't get passed. You know what? It's a good thing, and I support the legislation. So what if a few more banks fail before a rescue plan is secured. Obviously, American people aren't losing jobs yet (in large numbers) or out of house and home, or they would think something should be done. The majority of Americans are working hard and don't want to save financial markets used by rich people.
When the effects of the crisis hit home, they will. And, at that point will it be too late? No. A $700 billion bail out will affect the financial markets a year from now in the same way, greasen'em. It's just going to be more Wall Street turmoil, and a longer recession until then.
Over the past 10 years Americans haven't seen the benefits of economic growth (the economy has grown but wages have remained flat), so economic growth isn't important to them. Economist's are saying how bad it is, but if people call their representatives (and it's great when people call their representatives) to tell them they don't need it, maybe it's not as bad as the omniscients think. Economists like you to think that they are all knowing and all powerful, but they're not.
Yesterday the stock market dropped more in a single day than it had in recorded history, and today companies in the Boston region are still announcing growth. The Boston Globe reported "Despite turmoil in financial markets, venture capital hasn't completely dried up for the region's promising technology and biotechnology companies. Link Medicine Corp., a Cambridge biotech company, plans to say today that it raised $40 million in additional venture funding to help launch clinical trials for its lead drug". Economically speaking, this is a source of job growth and the source of economic growth in the long run, innovation.
So a few more bankers lose their shirts. That's what the American people want, and the government should realize that the constituents have a collective intelligence. On occasion it is far superior to their own. The U.S. government might be in a much better state of affairs if it listened to the will of the people more often.
Tuesday, September 30, 2008
Friday, September 26, 2008
For the people, By the people
Friends, Family, (Fellow Countrymen),
This fall we are going to move further into economic practice and theory. We might start with the federal $700 billion bail out.
So, what are the tax payers buying? Their own mortgages and repackaged securities holding these mortgages. Why? Because investment firms don't have enough cash. They were expecting monthly paychecks from these mortgages in the form of interest and instead ended up owning foreclosed houses no body wants to buy. The risk taking investors don't have any free cash to lend to people who want to buy those houses. Which means that the financial markets can't sell them to raise cash ... to lend. You get the picture.
Until the big bad federal government steps in and buys these mortgages and mortgage backed securities for a lot less than they're worth (supposedly) and dumps $700 billion into the financial markets, things will be bad. The bankers will go wild though because they have cash and can make loans which lead to interest payments on good loans that are being repaid ... to enable more (hopefully, good) loans. That's the monthly paycheck, and investors can go back to their New York apartments, drinking, sniffing, and smoking parties, with expensive call girls (and all will be right in the world).
In the long run (economists love saying that), there is more money circulating in the economy. The treasury can put $700 billion into the financial industry by just printing more. (The government doesn't have $700 billion laying around. They owe $9 trillion, remember?) Though printing more money is unfortunately the source of inflation. So the average american is going to pay $20,000 for a car rather than $15,000 because the dollar isn't worth as much, in the future, and middle income americans just won't be able to buy the same stuff with their $50,000 a year salary.
That's the long and short of it. Good plan, bad plan. You decide. This is of course a nation 'by the people', so we all should have a say.
Love,
C
This fall we are going to move further into economic practice and theory. We might start with the federal $700 billion bail out.
So, what are the tax payers buying? Their own mortgages and repackaged securities holding these mortgages. Why? Because investment firms don't have enough cash. They were expecting monthly paychecks from these mortgages in the form of interest and instead ended up owning foreclosed houses no body wants to buy. The risk taking investors don't have any free cash to lend to people who want to buy those houses. Which means that the financial markets can't sell them to raise cash ... to lend. You get the picture.
Until the big bad federal government steps in and buys these mortgages and mortgage backed securities for a lot less than they're worth (supposedly) and dumps $700 billion into the financial markets, things will be bad. The bankers will go wild though because they have cash and can make loans which lead to interest payments on good loans that are being repaid ... to enable more (hopefully, good) loans. That's the monthly paycheck, and investors can go back to their New York apartments, drinking, sniffing, and smoking parties, with expensive call girls (and all will be right in the world).
In the long run (economists love saying that), there is more money circulating in the economy. The treasury can put $700 billion into the financial industry by just printing more. (The government doesn't have $700 billion laying around. They owe $9 trillion, remember?) Though printing more money is unfortunately the source of inflation. So the average american is going to pay $20,000 for a car rather than $15,000 because the dollar isn't worth as much, in the future, and middle income americans just won't be able to buy the same stuff with their $50,000 a year salary.
That's the long and short of it. Good plan, bad plan. You decide. This is of course a nation 'by the people', so we all should have a say.
Love,
C
Tuesday, September 23, 2008
An Ugly Old Icon
Last night Michael Flaherty of Boston City Council held a public hearing where, for the first time, the Boston Redevelopment Authority (BRA) was forced to hear public opinion. The deaf ears of Director John Palmieri and Director of planning Kairos Shen, on some level, finally heard the public. They realized the needs of the people should have been taken into consideration before planning the move of City Hall.
The BRA was tasked with studying the benefits and costs of moving Boston City Hall from it's current location to the South Boston waterfront in December 2006. Although Director Palmieri admits that he does not know how much has been spent studying the move, $800,000 has been set aside this year to study it further.
Overwhelmingly the public showed up last night, during early evening work hours and into the night, to speak against it. The BRA directors, arguing they were only in the preliminary phases of planning the move, might have realized it shouldn't be moved.
Though, Mayor Menino is the one truly responsible for the communication breakdown. Years ago the mayor unilaterally commissioned a study on moving City Hall. The tasking was executively decided without public consent or warning. Instead, the eight priorities Menino promised for his fourth term administration included: closing the achievement gap, reducing violent crime, increasing workforce housing, ensuring excellent customer service, creating new jobs, narrowing health disparities, increasing diversity in government, and growing revenue. It did not included the relocation of City Hall, while the BRA undertook the project as directed.
Councilman Flaherty was concerned during the hearing that the lack of public involvement during the BRA's initial study enabled the unwarranted and wasteful use of resources. The BRA never surveyed the constituency regarding their needs from City Hall including the importance of it's location. Then Director Shen admitted that no consideration was made in relocating City Hall to area's other than the South Boston Waterfront.
These planning errors were illuminated during the hearing, thanks to members of the Boston City Council. The authority was advised that public involvement needs to be required in the planning processes, and was reminded that ownership of the City Hall building is held by the public.
The people who showed up to this hearing took time out of their busy schedules to participate in the democratic process and deserve thanks too. This time it made a difference.
The BRA was tasked with studying the benefits and costs of moving Boston City Hall from it's current location to the South Boston waterfront in December 2006. Although Director Palmieri admits that he does not know how much has been spent studying the move, $800,000 has been set aside this year to study it further.
Overwhelmingly the public showed up last night, during early evening work hours and into the night, to speak against it. The BRA directors, arguing they were only in the preliminary phases of planning the move, might have realized it shouldn't be moved.
Though, Mayor Menino is the one truly responsible for the communication breakdown. Years ago the mayor unilaterally commissioned a study on moving City Hall. The tasking was executively decided without public consent or warning. Instead, the eight priorities Menino promised for his fourth term administration included: closing the achievement gap, reducing violent crime, increasing workforce housing, ensuring excellent customer service, creating new jobs, narrowing health disparities, increasing diversity in government, and growing revenue. It did not included the relocation of City Hall, while the BRA undertook the project as directed.
Councilman Flaherty was concerned during the hearing that the lack of public involvement during the BRA's initial study enabled the unwarranted and wasteful use of resources. The BRA never surveyed the constituency regarding their needs from City Hall including the importance of it's location. Then Director Shen admitted that no consideration was made in relocating City Hall to area's other than the South Boston Waterfront.
These planning errors were illuminated during the hearing, thanks to members of the Boston City Council. The authority was advised that public involvement needs to be required in the planning processes, and was reminded that ownership of the City Hall building is held by the public.
The people who showed up to this hearing took time out of their busy schedules to participate in the democratic process and deserve thanks too. This time it made a difference.
Thursday, September 11, 2008
Exports and Unions
The United Steel Workers union rejected a three year contract with Boeing and on Saturday, September 20th shut down lucrative assembly plants. Boeing reported a $4.1 billion profit last year and the people who worked to create that profit want a piece of it.
Opposition of union authority cite the drag that higher wages, pensions, and health care benefits force upon corporate competitiveness. Peter Morici, an international business professor at Robert H. Smith School of Business at the University of Maryland, says "This is a good example of why manufacturing is leaving the country". But is this true?
Boeing makes 30 percent of their plane's parts but buys the remaining 70 percent from outside suppliers around the globe, from Japan to the U.S. According to the company it was closer to 50-50 earlier this decade.
Between March 2001 and December 2007, average import airfreight prices increased just 1.7 percent; less than the cost of inflation. In certain years the cost of airfreight imports even decreased 5.1 percent. This made it extremely cheap for Boeing to import outsourced parts for their planes. Never minding the breach of quality impacts outsourcing allows, if union workers took no raises over the six year span, Boeing could still have outsourced work since supply chain costs were rock bottom.
In that time, 20,000 aircraft workers could have been added to the growing list of America's working poor. They would bog down the emergency health care system, apply for assistance, and stop spending, all while the private company recorded billions in profits. Economists should be careful when assigning "why" to causations of outsourcing. Implying workers should give up necessary benefits for the idea of saving a job is not so simple.
Today, the Bureau of Labor Statistics reported import air freight prices rose 21.5 percent over the past 12 months driven by petroleum prices. Boeing is now going to have to pay more for the parts imported from Japan, or pay workers here to make them. Note to the union: the ball is in your court.
September 27-28, 2008 (The Wall Street Journal) - Many of the defense industry's most important programs will start the new fiscal year next week with higher budgets, thanks to a quickly hashed-out bundle of bills expected to be sent to President George W. Bush for approval just before lawmakers return home to campaign ... Future Combat Systems, the Army's long term program to overhaul its fighting forces, received $26 million above the administration's $3.6 billion request, giving lead contractor Boeing Co. a boost.
Opposition of union authority cite the drag that higher wages, pensions, and health care benefits force upon corporate competitiveness. Peter Morici, an international business professor at Robert H. Smith School of Business at the University of Maryland, says "This is a good example of why manufacturing is leaving the country". But is this true?
Boeing makes 30 percent of their plane's parts but buys the remaining 70 percent from outside suppliers around the globe, from Japan to the U.S. According to the company it was closer to 50-50 earlier this decade.
Between March 2001 and December 2007, average import airfreight prices increased just 1.7 percent; less than the cost of inflation. In certain years the cost of airfreight imports even decreased 5.1 percent. This made it extremely cheap for Boeing to import outsourced parts for their planes. Never minding the breach of quality impacts outsourcing allows, if union workers took no raises over the six year span, Boeing could still have outsourced work since supply chain costs were rock bottom.
In that time, 20,000 aircraft workers could have been added to the growing list of America's working poor. They would bog down the emergency health care system, apply for assistance, and stop spending, all while the private company recorded billions in profits. Economists should be careful when assigning "why" to causations of outsourcing. Implying workers should give up necessary benefits for the idea of saving a job is not so simple.
Today, the Bureau of Labor Statistics reported import air freight prices rose 21.5 percent over the past 12 months driven by petroleum prices. Boeing is now going to have to pay more for the parts imported from Japan, or pay workers here to make them. Note to the union: the ball is in your court.
September 27-28, 2008 (The Wall Street Journal) - Many of the defense industry's most important programs will start the new fiscal year next week with higher budgets, thanks to a quickly hashed-out bundle of bills expected to be sent to President George W. Bush for approval just before lawmakers return home to campaign ... Future Combat Systems, the Army's long term program to overhaul its fighting forces, received $26 million above the administration's $3.6 billion request, giving lead contractor Boeing Co. a boost.
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