We had a big snowstorm this last week (January 11th and 12th, 2011) and so I had to suit-up and dig out the driveway again. I found my neighbor Jim out there and we dug our driveways side by side separated by a long pile of snow from previous storms. When the first rush of enthusiasm weakened in the face of the daunting job, we slowed down and began to “shoot the breeze” between our efforts to toss the snow up onto the growing pile. The topic on all our minds in early January was the awful tragedy in Arizona, just a few days earlier (Jan. 8), where nineteen people were shot including US Rpresentative Gabrielle Giffords who was greviously wounded in the head, and six shot fatally, among them US District Chief Judge John Roll. At one juncture, when were were half-way down the driveway, Jim broached the subject.
“Waren’t that a terrible tragedy”, he said, puffing, as he tossed a big shovel full of the white stuff up onto the massive pile between our drives. The tossed snow-remained coherent and broke away to roll down a little way, then hung up in a little snow-gully between our two piles.
“Yeah….terrible!” I said, pausing to watch the unstable ball of snow. The snow clump shuddered then rolled over the top, then picked up speed to cascade down the opposite side of the long pile making a minor avalanche that spread out over my partly dug-out driveway.
“That state has gone too far in a lot of ways,” I said, turning away from the avalanche and continuing to dig. “Too many guns allowed, too few regulations, too little of a safety-net to help those in need....” I trailed off and went back to the digging.
“But, hey the Constitution says”…began Jim, then he paused as he focused on pushing his shovel-blade deep into a big drift, “they have the right to carry a gun,”he grunted, as he sailed another over-loaded shovel-full up to the top.
I paused to watch the snow land and stay in place. Then I replied, “But, had there been some better social outreach --and fewer guns available in that state, maybe that tragedy might not have happened.” I said firmly, as I finally reached the apron of thick snow that Jim caused to toppled over to my side.
Jim reacted to my comment rapidly...his words were carried on his breath which condensed in the cold air and drifted down the driveway. “We can’t afford all those social programs. Most of them kind o’ people are just lazy. They take them benefits—like--like free healthcare, free college, and, and food-handouts, then they take off and head back home to God knows where. Leavin’ us to pay the tab.”
I was preparing a response, when Jim’s wife Doris called from the opened garage door. “Jim---your brother Marty’s on the ’phone. It’s somthin’ about yer mom!”
Jim stuck his shovel deep into the snow-bank, waved to me, and turned on his booted heel to disappear into the cavernous garage. He said nothing, but when he waved he had a “Well, I-won-that-one!” smirk on his face.
I continued shoveling… and thinking.
I first wondered where he got the patently erroneous idea that someone in Arizona was getting free health care and a cheap college education?
But what irritated me more was: why couldn’t Jim see into the lives of others…and perhaps have a little empathy for those that were less well-off, not so smart, or didn’t have a well-to-do developer for a dad, like Jim had.
The rhythmic scrapes of the shovel on the finally exposed asphalt and the deep breathing must have helped engorge my tired brain cells with plenty of oxygenated blood--for as I dug an idea came to me.
Perhaps the cause of Jim lack of empathy for others, is rooted in the fact that he himself is working hard each day, competing avidly for a smaller and smaller part of the economic pie! Jim’s thinking is, why should some Hispanic or foreign kid get “benefits” when he (Jim) was "bustin' his butt" to make his life a little better, and finding that it was a distinctly uphill battle.
It’s true, Jim and Doris do have a nice house, two new cars and two kids in high school. But to support that life style, both have full-time jobs and take overtime when they can get it. I also know that Jim’s house is mortgaged to the hilt, and he has thick payment books for those two new cars. Jim and Doris did work hard to keep up their lifestyle--that was true.
They had to struggle, because it has become more and more difficult to attain a “middle class” life style in America. Over the last several decades the middle class has been competing for a smaller and smaller piece of the economic pie. Since the 1970s the situation of those in the middle of the economic scale has deteriorated. In order to maintain their lifestyles these folks have had to resort to working a second job, remortgaging their homes to raise cash, and encouraging their wives into the market place too.
What went wrong with the American dream? A good part of the discontent in America is related to our present unequal distribution of wealth. You (reader) may not realize it, since the super-wealthy represent only one in a hundred of us, but they are sequestering a larger and larger part of the economic pie every year. As Americans, we believe in free-enterprise and a fair chance for everyone. We envision ourselves (and our kids) with a fair chance to grab the brass ring on our only go-around on the economic Ferris wheel. We imagine each of us having the same chance to climb up the economic ladder. But that view is outdated and is not the reality of the game we are playing now. How can it be, when the part of the pie middle class Americans are all competing for gets smaller and smaller each year? When the kids of the rich start their ball game from third base and our kids still must begin their run on first—and the distance to first base is getting longer and longer each year.
I read not so long a go an interesting piece by Steven Pearlstein “The Costs of Rising Economic Inequality”. (Wednesday, October 6, 2010, The costs of rising economic inequality, in: www.washingtonpost.com). Pearlstein pointed out the disturbing fact that the top one percent (1%) of families in economic ranking took home more that 23% of the nation’s wealth. That is right! One percent of the population has sequestered nearly one fourth of the Nation’s wealth, leaving the remainder--the other 99% left only with 77% of the total. (In another analysis of the data we learn that the top ten percent (10%) command more than two-thirds of the nation’s wealth. Thus if the top ten percent takes home 66 2/3 %, that means the bottom 80% must be scrambling for the remaining one third of the nation’s wealth.) These figures are the type of monetary wealth distribution you would not expect to find not in the USA--the largest economy in the western world, a nations which spends more on their miliatary than all the other nations in the world combined, but in a mid 20th century banana republic like Honduras or Guatemala (sorry to remind you Hondurans and Guatemalans!). How can that have happened to the USA--the oldest democracy in the world and the world’s wealthiest market economy!
Not so very long ago…in good economic times too…in the 1970s, the top one-percent earners garnered only nine (9%) percent of the total wealth (not 23%). It is important to note that that level of inequality (about 9%) is about where most modern industrialized countries in the western world are at now. Life is not so bad for their "economic royalty". Yet their middle class can live a reasonably full and healthful life. And the comparative figures on longevity, health, and childhood mortality support the fact—that the US with its high wealth inequality lags far behind in these measures of a nation's well-being. So in the last four decades (the period of Republican ascendancy and the Reagan, Bush I, Clinton, and Bush II regimes) the “take” of the oligarchs more than doubled. Is there any question what the Republicans have been attempting to do? Or that they are mostly responsible for these changes?
Today the USA stands out as a great place to be wealthy----if you are! But a bad place for the middle class, and for workers in general. Is that the way we want it to be? Would you want to see your children and grand-children grow up in such a place? I think not.
As Perlstein and others have pointed out, there are some very undesirable results of such inequity. For America which prided herself on her “freedom and equality for all” there can be no equality when we are creating an economic overlord-ship, or an economic “royalty” who live, think, act, and spend their money very differently than the rest of us. The establishment of a class of “economic royals” skews “opportunity, social standing and political power” (as Perlstein states so well). In the face of these facts, can we still honestly proclaim and actually believe our most deeply cherished tenets about “equality for all“? (And that “equality” was always interpreted and understood only as--an equal chance at success. But that equal chance we all hope for may not be there today.)
There are moral and political reasons for caring about this dramatic skewing of wealth, which in the real world leads to a similar skewing of opportunity, social standing, and political power. But according to Perlstein there is also an important economic reason: Too much inequality, he concludes, just like too little, appears to reduce global competitiveness and long-term growth, at least in developed countries like ours.
It’s important for our future and our children’s future that we recognize the pitfalls of economic inequality. Perhaps when we do we will have more empathy for the “other guy” who is struggling too. We must be aware of the economic and political costs of putting too much money in the hands of a few. Perhaps some of these horrible tragedies –often the result of despair and hopelessness-- would fade away too.
Get the picture?
Sunday, February 27, 2011
OF SOAPS, CHEESE, AND MAKING MONEY EX NIHILO
RJ Kalin
January 2011
On a recent tour of our local stores Mrs. K. was annoyed to discover that one of her favorite house-hold products, normally stocked on the "soap and cleaner’ shelves of several local emporia is no longer available. The product--a stovetop cleaning agent-- was before the Great Recession expensive, but easily procured and widely available,but not so now.
“Why can’t I find this item any longer?” she asked in annoyance.
I tried to explain the underlying causes. “Well that product may not have a lot of demand, so Green’s, Walmarts, CVS, True Value, etc. do not wish to replace the stock so quickly, when they are gone. They are simply cutting expenses, by reducing the stock of a product that they must pay for, but may not be able to sell so easily….”
“So then this is just a response to the bad economy?”
“Exactly! It’s a sign of low demand.”
We walked on down the less than fully stocked aisles. I took this rare opportunity to add, "Yes, the low demand is surely the result of the fact that a good portion of the population is under employed or unemployed. Less money out there…less demand for stove-top cleaners and other stuff.”
Right now it is jobs, jobs, jobs that are on everyone’s mind. Today, I read in Portfolio.com, with some alarm that there are five applicants for every job that opens. Also, that there are some 15 million Americans out of work right now, and that nearly half a million have quit trying to find work. The formal joblessness rate is recorded as 9.6%, but that would be much worse were it not for the, nearly 500,000 who simply just quit looking.
Also the inflation rate has dropped down to 1.1% and has been holding steady at this rate for some months. That is well below the 2% rate that is considered desirable.
“That doesn’t sound too threatening. Why should I be concerned with the fact that prices are not rising much?”
“Well the problem is that such a low rate of inflation is and indicator of low consumer demand for goods and services.
“So that’s why I can’t find that “cook-top spray-cleaner, I like to use”?
“Exactly!“
“Some products which are not your big sellers are in lower demand anyway…are simply eliminated off the shelves, as a way to reduce costs and raise profits by the stores.“
“That’s one way to control expenses, but it makes me mad!“
“But more importantly, these circumstances of low demand may develop into what the economists call a “vicious deflationary cycle” in which low consumer demand causes product prices to fall, (or they may be simply eliminated as your cook top cleaner), this causes shoppers (like you and me) to retard purchases since they anticipate the continuing fall in prices (Why should you pay more for some product today when you can get some product cheaper tomorrow?). Then the store-owner, responding to low demand, may decrease prices further, while the products manufacturer or producer who is faced with less orders for his product, sells his stock at lower prices since he has too much of it, and, as well, may decide to slow production. These results exacerbate the problem and result in lower demand for labor in both the production end and in the sales end of the economy, resulting in lay offs, and firings. But job losses and reduced employment only tend to decrease money in circulation, and thus depress demand even further. The end result is a continual spiral downward of demand, as prices fall and employees are laid off. This deflationary spiral can be described as a classic “vicious cycle” or a process, which tends to exacerbate the cause or causes that generate it.
What can the Fed do? I read recently that Ben Bernanke is planning to decrease long-term interest rates (again) and stimulate growth by having the Fed purchase (“soak up”) Treasury Bonds. Treasury Bonds are safe, but they generally do not provide much interest on investment at maturity. So to encourage buyers, the government has to keep interest rates at a level high enough to encourage sales. But that impacts us down the line. So if the Fed were to buy up Treasury Bonds, that would put a cash-infusion into government coffers. It would save some dough too, by keeping interest rates lower. Since the government would have less urgency to sell bonds, they need not encourage buyers by raising interest rates. The down side is that this action would tend to decrease the value of the dollar. So we all have less buying power, particularly those on fixed incomes--like the elderly. That’s why the price of English Stilton cheese and Italian Parmigiana Reggiano have gone through the roof and the markets don’t stock them anymore.
There are times when just dropping the interest rate to zero, doesn’t help. Perhaps that might occur in those times when there is so little demand for stovetop cleaners and expensive cheese. Then there is the option of just printing more money. The government bankers don’t like to use those terms. They are too explicit and revealing. No matter that is what they are really doing. So they have developed the term “quatitative easing”, (QE). QE is a monetary policy used by central bankers to increase the supply of money. (they don’t simply dump the money on some corner on Main Street and let everyone come get it. Though that would be about what is happening. They simply write a check to themselves and drop that into their reserve account and voila! They have more money available created literally out of nothing (ex nihilo). They then use that account to buy government bonds, those awful mortgage-backed securities that no one really knows what they are getting or what they are worth, and corporate bonds or other financial instruments. That puts money into circulation, and hopefully stimulates the economy.
That takes care of the big shots and the bankers on Wall Street. Now if they could only find some way to get the unemployed back to work!
Get the picture?
January 2011
On a recent tour of our local stores Mrs. K. was annoyed to discover that one of her favorite house-hold products, normally stocked on the "soap and cleaner’ shelves of several local emporia is no longer available. The product--a stovetop cleaning agent-- was before the Great Recession expensive, but easily procured and widely available,but not so now.
“Why can’t I find this item any longer?” she asked in annoyance.
I tried to explain the underlying causes. “Well that product may not have a lot of demand, so Green’s, Walmarts, CVS, True Value, etc. do not wish to replace the stock so quickly, when they are gone. They are simply cutting expenses, by reducing the stock of a product that they must pay for, but may not be able to sell so easily….”
“So then this is just a response to the bad economy?”
“Exactly! It’s a sign of low demand.”
We walked on down the less than fully stocked aisles. I took this rare opportunity to add, "Yes, the low demand is surely the result of the fact that a good portion of the population is under employed or unemployed. Less money out there…less demand for stove-top cleaners and other stuff.”
Right now it is jobs, jobs, jobs that are on everyone’s mind. Today, I read in Portfolio.com, with some alarm that there are five applicants for every job that opens. Also, that there are some 15 million Americans out of work right now, and that nearly half a million have quit trying to find work. The formal joblessness rate is recorded as 9.6%, but that would be much worse were it not for the, nearly 500,000 who simply just quit looking.
Also the inflation rate has dropped down to 1.1% and has been holding steady at this rate for some months. That is well below the 2% rate that is considered desirable.
“That doesn’t sound too threatening. Why should I be concerned with the fact that prices are not rising much?”
“Well the problem is that such a low rate of inflation is and indicator of low consumer demand for goods and services.
“So that’s why I can’t find that “cook-top spray-cleaner, I like to use”?
“Exactly!“
“Some products which are not your big sellers are in lower demand anyway…are simply eliminated off the shelves, as a way to reduce costs and raise profits by the stores.“
“That’s one way to control expenses, but it makes me mad!“
“But more importantly, these circumstances of low demand may develop into what the economists call a “vicious deflationary cycle” in which low consumer demand causes product prices to fall, (or they may be simply eliminated as your cook top cleaner), this causes shoppers (like you and me) to retard purchases since they anticipate the continuing fall in prices (Why should you pay more for some product today when you can get some product cheaper tomorrow?). Then the store-owner, responding to low demand, may decrease prices further, while the products manufacturer or producer who is faced with less orders for his product, sells his stock at lower prices since he has too much of it, and, as well, may decide to slow production. These results exacerbate the problem and result in lower demand for labor in both the production end and in the sales end of the economy, resulting in lay offs, and firings. But job losses and reduced employment only tend to decrease money in circulation, and thus depress demand even further. The end result is a continual spiral downward of demand, as prices fall and employees are laid off. This deflationary spiral can be described as a classic “vicious cycle” or a process, which tends to exacerbate the cause or causes that generate it.
What can the Fed do? I read recently that Ben Bernanke is planning to decrease long-term interest rates (again) and stimulate growth by having the Fed purchase (“soak up”) Treasury Bonds. Treasury Bonds are safe, but they generally do not provide much interest on investment at maturity. So to encourage buyers, the government has to keep interest rates at a level high enough to encourage sales. But that impacts us down the line. So if the Fed were to buy up Treasury Bonds, that would put a cash-infusion into government coffers. It would save some dough too, by keeping interest rates lower. Since the government would have less urgency to sell bonds, they need not encourage buyers by raising interest rates. The down side is that this action would tend to decrease the value of the dollar. So we all have less buying power, particularly those on fixed incomes--like the elderly. That’s why the price of English Stilton cheese and Italian Parmigiana Reggiano have gone through the roof and the markets don’t stock them anymore.
There are times when just dropping the interest rate to zero, doesn’t help. Perhaps that might occur in those times when there is so little demand for stovetop cleaners and expensive cheese. Then there is the option of just printing more money. The government bankers don’t like to use those terms. They are too explicit and revealing. No matter that is what they are really doing. So they have developed the term “quatitative easing”, (QE). QE is a monetary policy used by central bankers to increase the supply of money. (they don’t simply dump the money on some corner on Main Street and let everyone come get it. Though that would be about what is happening. They simply write a check to themselves and drop that into their reserve account and voila! They have more money available created literally out of nothing (ex nihilo). They then use that account to buy government bonds, those awful mortgage-backed securities that no one really knows what they are getting or what they are worth, and corporate bonds or other financial instruments. That puts money into circulation, and hopefully stimulates the economy.
That takes care of the big shots and the bankers on Wall Street. Now if they could only find some way to get the unemployed back to work!
Get the picture?
Saturday, February 26, 2011
THE NATION'S DISCONTENT
February 25, 2011
Today our TV screens are full of the unrest in Wisonsin and elsewhere across the nation. One does not need to be a seer to understand the connection between these events and the causes of the Great Recession of 2008--unfettered greed, unregulated financial institutions, lack of government oversight, and Congressionalcomplicty. But today the perpetrators and guilty parties on Wall Street—and the super-wealthy elites--are still functioning in the same way and are doing fine--the market was up on Friday.
As Noam Chomsky puts it: "The population in the United States is angry, frustrated and full of fear and irrational hatreds. And the folks not far from you on Wall Street are just doing fine. They're the ones who created the current crisis. They're the ones who were called upon to deal with it. They're coming out stronger and richer than ever. But everything's fine - as long as the population is passive."
Yes the populance is apathetic and passive. The poor average "Joe and Jane" somehow continue to identify with this shadowy group of oligarchs. Perhaps they simply do not know who the perpetrators are. These passive citizens must be accosted thus. "No you fool. You are not one of the superwealthy! Why do you think that you are an elite? Because you and your wife both have full time jobs and perhaps both scramble (slave)at a second job and take regular overtime when you can get it--just to maintain the status quo? So perhaps you pull down enough income to buy a big car and a wide-screen TV (on time)and maybe send your eldest off to college? That does not put you in a class with these elite folks. They don't live here. You don’t see them in our town. They don’t buy food in our supermarkets, or appliances, or products in the local Sears, Walmarts or Targets. They are not part of our local economy. They do not spend money like we do. Wise up dummy!"
There is much discontent and too much passivity, alas caused by ignorance. The elites and superwealthy—the oligarchs—who caused our pain, they live on untouched by it. With their excessive wealth they control the story-line the media and the Congress---and with their wealth continue to garner more political power. They pursue their greedy, short-term goals with their wealth. But these self-serving motives do not serve the nation well and are not coincident with the aims of those who would make try to make this nation a better place to live a full life, to raise our children to aspire to the American dream.
But the brutal “solutions” the oligarchs and their paid minions propose do have an ulterior motive.
It’s clear what the Republicans are doing in Wisconsin and elsewhere. They are attempting to break the back of the unions, undermine laws which might restrain their efforts to maximize profits and, of course, to decrease their taxes. Their actions and motives are regressive. They attempt to move us backward--into the 19th century. They dig us deeper into the financial and political hole we find our selves in today.
In regard to the events in Wisconis: Just when we desperately need a better-educated workforce to compete globally—the Republicans want to fire teachers, crowd school classes, eliminate essential educational programs and literally gut the nation’s school systems. Their actions will not make us a stronger, wiser, more prosperous nation. But it is very likely to make the top 10% of wage earner the ones that now garner nearly two thirds of the wealth of this nation, richer and even more powerful leaving the bottom 90% of the population with only one-third of the nation’s output in wages to scramble over.
Get the picture?
Think about it!
.
Today our TV screens are full of the unrest in Wisonsin and elsewhere across the nation. One does not need to be a seer to understand the connection between these events and the causes of the Great Recession of 2008--unfettered greed, unregulated financial institutions, lack of government oversight, and Congressionalcomplicty. But today the perpetrators and guilty parties on Wall Street—and the super-wealthy elites--are still functioning in the same way and are doing fine--the market was up on Friday.
As Noam Chomsky puts it: "The population in the United States is angry, frustrated and full of fear and irrational hatreds. And the folks not far from you on Wall Street are just doing fine. They're the ones who created the current crisis. They're the ones who were called upon to deal with it. They're coming out stronger and richer than ever. But everything's fine - as long as the population is passive."
Yes the populance is apathetic and passive. The poor average "Joe and Jane" somehow continue to identify with this shadowy group of oligarchs. Perhaps they simply do not know who the perpetrators are. These passive citizens must be accosted thus. "No you fool. You are not one of the superwealthy! Why do you think that you are an elite? Because you and your wife both have full time jobs and perhaps both scramble (slave)at a second job and take regular overtime when you can get it--just to maintain the status quo? So perhaps you pull down enough income to buy a big car and a wide-screen TV (on time)and maybe send your eldest off to college? That does not put you in a class with these elite folks. They don't live here. You don’t see them in our town. They don’t buy food in our supermarkets, or appliances, or products in the local Sears, Walmarts or Targets. They are not part of our local economy. They do not spend money like we do. Wise up dummy!"
There is much discontent and too much passivity, alas caused by ignorance. The elites and superwealthy—the oligarchs—who caused our pain, they live on untouched by it. With their excessive wealth they control the story-line the media and the Congress---and with their wealth continue to garner more political power. They pursue their greedy, short-term goals with their wealth. But these self-serving motives do not serve the nation well and are not coincident with the aims of those who would make try to make this nation a better place to live a full life, to raise our children to aspire to the American dream.
But the brutal “solutions” the oligarchs and their paid minions propose do have an ulterior motive.
It’s clear what the Republicans are doing in Wisconsin and elsewhere. They are attempting to break the back of the unions, undermine laws which might restrain their efforts to maximize profits and, of course, to decrease their taxes. Their actions and motives are regressive. They attempt to move us backward--into the 19th century. They dig us deeper into the financial and political hole we find our selves in today.
In regard to the events in Wisconis: Just when we desperately need a better-educated workforce to compete globally—the Republicans want to fire teachers, crowd school classes, eliminate essential educational programs and literally gut the nation’s school systems. Their actions will not make us a stronger, wiser, more prosperous nation. But it is very likely to make the top 10% of wage earner the ones that now garner nearly two thirds of the wealth of this nation, richer and even more powerful leaving the bottom 90% of the population with only one-third of the nation’s output in wages to scramble over.
Get the picture?
Think about it!
.
Wednesday, February 9, 2011
WHAT TO LOOK FOR IN NEW JOBS DATA FROM THE GOVERNMENT
I’m not a great advocate for Germany. OK my grandmother’s parents did come from Bavaria, and I did study the language in college, but all I remember of it is that we had to read some beautiful poetry by Freidrich von Schiller. (I recall the “Alpine Hunter“ in which God asks….“Earth has room for all to dwell,--"Why pursue my loved gazelle?") Perhaps Schiller's poem should be read by some of our economic gurus. Perhaps it will make them think more about the need of sharing too! But what makes me tout that wealthy central European nation these days is not the faint memories of poetry and Schiller's lines, but their economic policies. First, and importantly they are in the business of actually making things--to sell abroad. Second, they need their workers and wisely care about their wellbeing. Unlike the USA, where the manufacturing sector is nearly moribund--the Germans still have a thriving engineering, machining, and manufacturing sectors which today are booming. Their unemployment is low. Their export products out-compete those made in Japan and China, yet they pay their workers well and somehow, their companies continue tp make profits too. [Someone has to stick that up the noses of the CEOs of our economic giants so they get the full scent of that important fact (paying higher wages does not mean you can not compete)--such as the US giant GE which now "off-shores" so much of its work that it now generates less than half of its profits here in the US.] They (the Germans) have a well established national social safety net. Health care, child-care and elder care are all part of their economic equation. Unlike us, they have no trade deficit. They sell more than they import (or did so last year at least). But their birthrate is quite low, about 1.38 births per couple. Over the years Germans are expected to decline in population. Thus they now need and will continue to seek new labor. A recent study concluded that they will require an additional two million workers in the coming nine years! That works out to slightly more than 222,000 new workers each year up to 2020. And those figure are for a nation of only 82 million.
Since the 2008 collapse we lost eight million jobs! That's one out of every ten Germans in Germany. But here we are in the USA, some 310 million strong and this last month (January 2011) our businesses reported adding only 36,000 "new" jobs! That with some 17 million under or unemployed according to some reports. For us, that was not even enough to off-set the 120,000 wet-behind-the-ears young workers entering the workforce each month. To get those eight million jobs back over a period of ten years…we would need nearly 70,000 (actually 66,660) new jobs per month---that is over the 120,000 new workers we generate each month. That is a total of nearly 190,000 new jobs each month…and remember--even with those figures---we won’t get back to “full” employment we had prior to 2008for ten years! So when you see figures like those--that is--close to 200,000 new jobs--in the monthly report on employment--then you may take a deep breath and begin to feel---finally, we are on the way to better economic health.
Since the 2008 collapse we lost eight million jobs! That's one out of every ten Germans in Germany. But here we are in the USA, some 310 million strong and this last month (January 2011) our businesses reported adding only 36,000 "new" jobs! That with some 17 million under or unemployed according to some reports. For us, that was not even enough to off-set the 120,000 wet-behind-the-ears young workers entering the workforce each month. To get those eight million jobs back over a period of ten years…we would need nearly 70,000 (actually 66,660) new jobs per month---that is over the 120,000 new workers we generate each month. That is a total of nearly 190,000 new jobs each month…and remember--even with those figures---we won’t get back to “full” employment we had prior to 2008for ten years! So when you see figures like those--that is--close to 200,000 new jobs--in the monthly report on employment--then you may take a deep breath and begin to feel---finally, we are on the way to better economic health.
Friday, January 21, 2011
WE DON'T MAKE ANYTHING HERE ANYMORE
Just after Christmas and the New Year, I stopped into my favorite liquor retailer . The proprietor, Mister Aga Agra is a tiny Indian man who hails from Bombay. He smiled a greeting from the dark corner where he sat quietly. His big smile transformed and illuminated his craggy face revealing a row of large white teeth and multiple gold fillings.
“How was your Christmas season?” I asked, as I placed a few bottles from the “Specials” selection on the neat counter.
He shuffled over . “For me? You know, I am a Hindu, so we don't...,” his voice trailed off and he smiled again.
“No no, not you, I mean, for the business. How did it go here in the store. Well or poorly?”
“Ah yes!” He muttered, as he smoothed out a sturdy brown paper bag and began tallying my purchases on the wrinkled surface with the stub of a pencil.
“Was it well enough, so you will not wish to return to India?” I asked, with a smile and a wink.
“Oh not to go back! No no no! I am a citizen here now. And of course, I have my family here. There is no return for me.”
“But I hear the economy is very good there,” I pressed on. I looked behind me. There was no one else in the store.
“Yes. That is true. They are doing much better in the economy there than we are here.”
“Why?”
“The Indians make most everything they need in India. They import very little.”
“Only food?” I suggested with a wink.
“Oh yes. Some food, some grains---yes,” he nodded his head as he turned serious, brushing aside my question. “But here in America we are not doing so well as we used to. It is simple. We don't make anything here anymore. We make nothing, and what we need we import from China. We must begin making things here too!”
As I turned to leave, I kept hearing that phrase over and over in my head. It's true: "here we don't make anything anymore."
I remember as a child back in the 1950s and 60s when we did make things here---in fact all our clothes, shoes, hardware, autos and just about everything else. They were manufactured right here in the USA. Some were made right there in my native Brooklyn, New York. Then too, in those days our parents all had good-paying jobs as well. “Made in the USA” was seen on most of the products we bought . But even then, on occasion, you might find some poorly-made, inexpensive item, perhaps a copy of some American product or original idea, perhaps a child’s toy, or a bit of low-cost hardware that would have the “Made in Japan” (not "Made in China") sticker on it. It was a sure indication that whatever it was--a pocket knife, a camera, ceramics or pottery, etc.,--- it was not up to US standards. And too, in those days there was very little unemployment. Workers had good jobs and paid their bills and their taxes. People were confident that their children would do even better than they did. And for a while we did. But sometime in the 1970s things changed for us.
I read with great enthusiasm and interest Prof Richard Wolff’s article “The myth of American exceptionalism implodes” in the guardian.co.uk (January 18, 2011). Prof. Richard Wolff (Economics, University of Massachusetts) clearly lays out the sources of the economic crisis we find ourselves in today. This is a great piece and Wolff and the Guardian should be commended. Unfortunately, we do not get this kind of candor in the US press. Its too bad, because perhaps our citizenry would better understand our present predicament and what has become of their jobs and their paychecks.
Wolff understands that the sad underlying problem of our democracy is that both parties unfortunately depend on the financial support of the same oligarchs, barons of Wall Street, and the large corporations for their political survival. Unlike the banks and big business, the working man has today no powerful advocates in Washington (with a few exceptions, such as our worthy Senate team from Vermont), Wolff also seems to know too, that the economic policy of basing the stimulus and sustenance of our wealth on unfettered domestic consumerism is over. As Mr. Agra, the man from Bombay says, ”We don’t make anything here anymore.” That is our problem.
According to Professor Wolff, conditions were fine up to the 1970s. Prior to that time, the rich were getting richer faster than everyone else, but we were not angry with that for the middle class was prospering too. According to Wolff at that time, “A profitable US capitalism kept running ahead of the labor supply. So, it kept raising wages to attract waves of immigration and to retain employees…….until the 1970s“. After that, things went down hill for the middle class and real wealth of the working men and women declined and continued to do so through the end of the 20th century and on into the early years of this century. But since 2008, rather then helping the working classes, the government has turned on them, making them pay for the cupidity, excess and carelessness of the Wall Street barons, and the timidity, self-serving and craven behavior of Congress. The government bailouts were necessary, but their enormous costs fell on the backs of the working and middle class in the form of higher taxes and eventual reduced services, rather than where it should have on the businessmen and corporations and wealthy investors which profited from the act.
How did we get to this point in an economic crisis that rivals the Great Depression? After 1970 real wages stopped rising, as US businesses found alternate means to satisfy their labor need. At about this time prosperous local companies found ways to become even more profitable. They began eliminating well-paying manufacturing jobs here and moving the production and assembly aspects of their businesses out of the country. They began “off-shoring jobs” and whole factories to Mexico, Taiwan, India, and elsewhere around the world. The thinking of a typical small-company owner became: why should a CEO maintain a high-paid 5000-person workforce here in the US, when he or she could minimize the labor costs (and eliminate worker’s jobs) by moving the production and manufacturing parts of a business offshore, maintaining only a skeleton administrative and executive office here in the US? Thus, a former, well-run functioning American enterprise which provided say--employment to 5050 workers and executives,--all of whom paid taxes, bought appliances, clothes, shoes and automobiles where they worked, and supported the schools, the public and religious organizations where they lived--and yes bought houses (on time payments) --overnight became a US company in name only. What remained was a 50-person executive cadre ensconced in fancy offices with a well-used telephone line to somewhere in Mexico, or elsewhere. The five-thousand workers were out of work and had to seek employment elsewhere--but in an increasingly tight job market the loss of those incomes had an enormous effect on the community.
To add to the effect, about this time as well, the US was undergoing a massive technological revolution in which computers and computerized machinery began to replace human labor. Fewer men and women were needed in these modern manufacturing facilities. About this time too, the women’s liberation movement provided business with even more cheap labor, as more and more women entered the work force. For business there was practically no end of cheap labor and no need to consider labor’s demands for a fair distribution of business profits.
Workers who rightly felt insecure in a weak marker for their labor responded by increasing their productivity, working longer hours--often for the same pay, if it would help to keep their uncertain jobs. To maintain their lifestyles in face of deceasing income, many families had to send others into the workforce (a wife or mother) becoming a “two-wage-earner” family. Often, in real dollars, the two-earner family was earning not very much more than the single worker's family of decades earlier. The two-wage-earner families were simply maintaining their lifestyle, but at a heavy cost to family health, happiness, and coherence. With no one home for the very young , children were left on their own more..or grandparents had to fill the gap and take over mother‘s duties (where such relatives were available) or additional expenses had to be incurred--and perhaps more debt--when the services of a child-care-center were needed. When the financial burden became too great, many families turned to increasing their indebtedness by leveraging cash from their home mortgage--which--due to decreased regulations and a great housing-price bubble-- they used as a "ready cash" machine. Thus, we as a nation proceeded into the 21st century into its first decade. Then when excesses reached a crescendo and a number of banks with weak portfolios defaulted, the system responded with the massive recession of 2007 when the housing bubble burst.
While all of this was happening, the rich and super-rich just got richer still. As Wolff explains it: while workers salaries were kept flat and their productivity was rising the result was increased profits for businesses. “While workers delivered more and more value to employers, those employers paid workers no more. The employers reaped all the benefits of rising productivity: rising profits, rising salaries and bonuses to managers, rising dividends to shareholders, and rising payments to the professionals who serve employers (lawyers, architects, consultants, etc. “
The result of the growth of wealth of the business class since the 1970s led to a top-heavy distribution of wealth in the US. Prior to the 1970s the top 1% of wage earners garnered annually about nine percent (9%) of the nation’s wealth, but in the next three decades the percent of the top one-percent increased nearly three-fold to a whopping 23% of the nation’s income. That figure is the highest in the industrialized western world--even monarchical England and Sweden who both support a royal family do not have such a distribution of wealth. In fact, those figures are more common in tin-pot dictatorships and banana republics where a corrupted elite hold all the assets. When the top 1% of earners glean nearly a quarter (23% )of all wealth--leaving the lower 99% to scramble and compete for a smaller and smaller portion (67%) of the nation’s wealth, not only is it unjust, it is unsound economically. The super-high wage earners spend their wealth very differently than middle income people do. It is the middle class who buy kitchen appliances, furniture, automobiles, shoes and clothes and pay school taxes and purchases local services, and support the mechanisms which generate a healthy economy from the bottom up. The very few super-high wage earners use their wealth very differently...they invest their money (often unwisely--see below) and purchase such products as massive yachts, over priced art, jet planes, etc. Yes all that spending is good for the economy, but it does not have the same impact that millions of workers have when they buy refrigerators, furniture, clothes, shoes or food.
As a result, of the income inequality more and more wealth has been concentrated in high places…and how was that wealth used during the last several decades?
According to Wolff, the rich cashed in on their windfall “by speculating wildly and unsuccessfully in all sorts of new financial instruments (asset-backed securities, credit default swaps, etc). The richest also contributed to the crisis by using their money to shift US politics to the right, rendering government regulation and oversight inadequate to anticipate or moderate the crisis or even to react properly once it hit. “ The result of these investments and financial skulduggery was the financial crisis we faced in 2007 and continue to suffer from today.
As Wolff puts it “First, they utilised both parties' dependence on their financial support to make sure there would be no mass federal hiring programme for the unemployed (as FDR used between 1934 and 1940). The absence of such a programme guaranteed that real wages would not rise and, with job benefits, would likely fall – as they indeed have done. Second, the rich made sure that the prime focus of government response to the crisis would benefit banks, large corporations and the stock markets. These have more or less "recovered".
In order to change the equation, we must put people to work here not in China or Mexico. As Mr Aga Agra said, "We must begin making things again, here in the USA".
Get the picture?
rjk
“How was your Christmas season?” I asked, as I placed a few bottles from the “Specials” selection on the neat counter.
He shuffled over . “For me? You know, I am a Hindu, so we don't...,” his voice trailed off and he smiled again.
“No no, not you, I mean, for the business. How did it go here in the store. Well or poorly?”
“Ah yes!” He muttered, as he smoothed out a sturdy brown paper bag and began tallying my purchases on the wrinkled surface with the stub of a pencil.
“Was it well enough, so you will not wish to return to India?” I asked, with a smile and a wink.
“Oh not to go back! No no no! I am a citizen here now. And of course, I have my family here. There is no return for me.”
“But I hear the economy is very good there,” I pressed on. I looked behind me. There was no one else in the store.
“Yes. That is true. They are doing much better in the economy there than we are here.”
“Why?”
“The Indians make most everything they need in India. They import very little.”
“Only food?” I suggested with a wink.
“Oh yes. Some food, some grains---yes,” he nodded his head as he turned serious, brushing aside my question. “But here in America we are not doing so well as we used to. It is simple. We don't make anything here anymore. We make nothing, and what we need we import from China. We must begin making things here too!”
As I turned to leave, I kept hearing that phrase over and over in my head. It's true: "here we don't make anything anymore."
I remember as a child back in the 1950s and 60s when we did make things here---in fact all our clothes, shoes, hardware, autos and just about everything else. They were manufactured right here in the USA. Some were made right there in my native Brooklyn, New York. Then too, in those days our parents all had good-paying jobs as well. “Made in the USA” was seen on most of the products we bought . But even then, on occasion, you might find some poorly-made, inexpensive item, perhaps a copy of some American product or original idea, perhaps a child’s toy, or a bit of low-cost hardware that would have the “Made in Japan” (not "Made in China") sticker on it. It was a sure indication that whatever it was--a pocket knife, a camera, ceramics or pottery, etc.,--- it was not up to US standards. And too, in those days there was very little unemployment. Workers had good jobs and paid their bills and their taxes. People were confident that their children would do even better than they did. And for a while we did. But sometime in the 1970s things changed for us.
I read with great enthusiasm and interest Prof Richard Wolff’s article “The myth of American exceptionalism implodes” in the guardian.co.uk (January 18, 2011). Prof. Richard Wolff (Economics, University of Massachusetts) clearly lays out the sources of the economic crisis we find ourselves in today. This is a great piece and Wolff and the Guardian should be commended. Unfortunately, we do not get this kind of candor in the US press. Its too bad, because perhaps our citizenry would better understand our present predicament and what has become of their jobs and their paychecks.
Wolff understands that the sad underlying problem of our democracy is that both parties unfortunately depend on the financial support of the same oligarchs, barons of Wall Street, and the large corporations for their political survival. Unlike the banks and big business, the working man has today no powerful advocates in Washington (with a few exceptions, such as our worthy Senate team from Vermont), Wolff also seems to know too, that the economic policy of basing the stimulus and sustenance of our wealth on unfettered domestic consumerism is over. As Mr. Agra, the man from Bombay says, ”We don’t make anything here anymore.” That is our problem.
According to Professor Wolff, conditions were fine up to the 1970s. Prior to that time, the rich were getting richer faster than everyone else, but we were not angry with that for the middle class was prospering too. According to Wolff at that time, “A profitable US capitalism kept running ahead of the labor supply. So, it kept raising wages to attract waves of immigration and to retain employees…….until the 1970s“. After that, things went down hill for the middle class and real wealth of the working men and women declined and continued to do so through the end of the 20th century and on into the early years of this century. But since 2008, rather then helping the working classes, the government has turned on them, making them pay for the cupidity, excess and carelessness of the Wall Street barons, and the timidity, self-serving and craven behavior of Congress. The government bailouts were necessary, but their enormous costs fell on the backs of the working and middle class in the form of higher taxes and eventual reduced services, rather than where it should have on the businessmen and corporations and wealthy investors which profited from the act.
How did we get to this point in an economic crisis that rivals the Great Depression? After 1970 real wages stopped rising, as US businesses found alternate means to satisfy their labor need. At about this time prosperous local companies found ways to become even more profitable. They began eliminating well-paying manufacturing jobs here and moving the production and assembly aspects of their businesses out of the country. They began “off-shoring jobs” and whole factories to Mexico, Taiwan, India, and elsewhere around the world. The thinking of a typical small-company owner became: why should a CEO maintain a high-paid 5000-person workforce here in the US, when he or she could minimize the labor costs (and eliminate worker’s jobs) by moving the production and manufacturing parts of a business offshore, maintaining only a skeleton administrative and executive office here in the US? Thus, a former, well-run functioning American enterprise which provided say--employment to 5050 workers and executives,--all of whom paid taxes, bought appliances, clothes, shoes and automobiles where they worked, and supported the schools, the public and religious organizations where they lived--and yes bought houses (on time payments) --overnight became a US company in name only. What remained was a 50-person executive cadre ensconced in fancy offices with a well-used telephone line to somewhere in Mexico, or elsewhere. The five-thousand workers were out of work and had to seek employment elsewhere--but in an increasingly tight job market the loss of those incomes had an enormous effect on the community.
To add to the effect, about this time as well, the US was undergoing a massive technological revolution in which computers and computerized machinery began to replace human labor. Fewer men and women were needed in these modern manufacturing facilities. About this time too, the women’s liberation movement provided business with even more cheap labor, as more and more women entered the work force. For business there was practically no end of cheap labor and no need to consider labor’s demands for a fair distribution of business profits.
Workers who rightly felt insecure in a weak marker for their labor responded by increasing their productivity, working longer hours--often for the same pay, if it would help to keep their uncertain jobs. To maintain their lifestyles in face of deceasing income, many families had to send others into the workforce (a wife or mother) becoming a “two-wage-earner” family. Often, in real dollars, the two-earner family was earning not very much more than the single worker's family of decades earlier. The two-wage-earner families were simply maintaining their lifestyle, but at a heavy cost to family health, happiness, and coherence. With no one home for the very young , children were left on their own more..or grandparents had to fill the gap and take over mother‘s duties (where such relatives were available) or additional expenses had to be incurred--and perhaps more debt--when the services of a child-care-center were needed. When the financial burden became too great, many families turned to increasing their indebtedness by leveraging cash from their home mortgage--which--due to decreased regulations and a great housing-price bubble-- they used as a "ready cash" machine. Thus, we as a nation proceeded into the 21st century into its first decade. Then when excesses reached a crescendo and a number of banks with weak portfolios defaulted, the system responded with the massive recession of 2007 when the housing bubble burst.
While all of this was happening, the rich and super-rich just got richer still. As Wolff explains it: while workers salaries were kept flat and their productivity was rising the result was increased profits for businesses. “While workers delivered more and more value to employers, those employers paid workers no more. The employers reaped all the benefits of rising productivity: rising profits, rising salaries and bonuses to managers, rising dividends to shareholders, and rising payments to the professionals who serve employers (lawyers, architects, consultants, etc. “
The result of the growth of wealth of the business class since the 1970s led to a top-heavy distribution of wealth in the US. Prior to the 1970s the top 1% of wage earners garnered annually about nine percent (9%) of the nation’s wealth, but in the next three decades the percent of the top one-percent increased nearly three-fold to a whopping 23% of the nation’s income. That figure is the highest in the industrialized western world--even monarchical England and Sweden who both support a royal family do not have such a distribution of wealth. In fact, those figures are more common in tin-pot dictatorships and banana republics where a corrupted elite hold all the assets. When the top 1% of earners glean nearly a quarter (23% )of all wealth--leaving the lower 99% to scramble and compete for a smaller and smaller portion (67%) of the nation’s wealth, not only is it unjust, it is unsound economically. The super-high wage earners spend their wealth very differently than middle income people do. It is the middle class who buy kitchen appliances, furniture, automobiles, shoes and clothes and pay school taxes and purchases local services, and support the mechanisms which generate a healthy economy from the bottom up. The very few super-high wage earners use their wealth very differently...they invest their money (often unwisely--see below) and purchase such products as massive yachts, over priced art, jet planes, etc. Yes all that spending is good for the economy, but it does not have the same impact that millions of workers have when they buy refrigerators, furniture, clothes, shoes or food.
As a result, of the income inequality more and more wealth has been concentrated in high places…and how was that wealth used during the last several decades?
According to Wolff, the rich cashed in on their windfall “by speculating wildly and unsuccessfully in all sorts of new financial instruments (asset-backed securities, credit default swaps, etc). The richest also contributed to the crisis by using their money to shift US politics to the right, rendering government regulation and oversight inadequate to anticipate or moderate the crisis or even to react properly once it hit. “ The result of these investments and financial skulduggery was the financial crisis we faced in 2007 and continue to suffer from today.
As Wolff puts it “First, they utilised both parties' dependence on their financial support to make sure there would be no mass federal hiring programme for the unemployed (as FDR used between 1934 and 1940). The absence of such a programme guaranteed that real wages would not rise and, with job benefits, would likely fall – as they indeed have done. Second, the rich made sure that the prime focus of government response to the crisis would benefit banks, large corporations and the stock markets. These have more or less "recovered".
In order to change the equation, we must put people to work here not in China or Mexico. As Mr Aga Agra said, "We must begin making things again, here in the USA".
Get the picture?
rjk
Saturday, December 18, 2010
RED TAIL HAWK KILLS GULL IN SUBURBAN PARKING LOT
On a cold and windy December the 15th, 2010, I received an excited telephone call from Mrs. K. Nash, a fellow wild-life observer who informed me that a hawk had killed a big gull in the Walmart Shopping Plaza in Setauket, New York. Mrs. Nash described the bird to me as "some kind of hawk" and "smaller than the gull". A short time later, she e-mailed me a photograph taken with her iPhone. The photograph revealed the bird to be a Red-tailed Hawk (Buteo jamaicensis). The photograph at left (by Mrs K Nash) depicts the bird sitting on the carcass of a Ring Billed Gull in the Walmart Shopping Center. Mrs Nash added that as she approached the hawk, it seemed unafraid, but annoyed at the intrusion and dragged its big prey further away along the asphalt surface. Undeterred, she retreated to her automobile, and drove it to a point where she was able to get close enough to make a fine photograph.Later that day, I visited the site and sought out the carcass. It was located near the southern end of the parking lot adjacent to Route 347. It appeared to have lain undisturbed since the kill. The prey was indeed a mature Ring-billed Gull (Larus delawarensis). The gull looked to be in good condition and seemed of average size for the species. According to Wikipedia, Ring bill adults "are 49 cm (19 in) length and with a 124 cm (49 in) wingspan". While according to the same source, the male Red-tailed Hawk "may measure 45–56 cm (18 to 22 in), while a female can measure 48 to 65 cm (19 to 26 in) long; wingspan is about 114 to 133 cm (45 to 52 in)." Thus if the photographed bird was a male, it was either very close in size (or probably smaller as the observer indicated) and with less of a wing span than its prey.
The initial attack on the gull appeared to have been made at the neck, which the Nash photograph seems to attest to as well. The carcass was found lying on its back, with its wings partly folded. The hawk apparently tore open the neck and consumed the gizzard (it was missing). However, the grainy contents of this organ were scattered in small clumps near the body. The contents appeared to be composed of small yellow seeds mixed with red-colored fruit-fragments (possibly a pomaceous fruit of some sort, or perhaps the berries of the Japanese Bittersweet (Celastrus orbiculatus) which birds are known to eat avidly and which grows in profusion near-by. The hawk appears to have then proceeded to consume the gull's breast. At the time I observed it, the skin was found neatly laid back and the full breastbone exposed. The high-arched bone was completely and neatly cleaned of all flesh. Furthermore, the soft cartilage at the tip of the breastbone and parts of the thin flat bone near the edge were torn away and were apparently also consumed. Also missing and presumably eaten was the liver and part of the intestines. In addition, the neck and back of the head were skinned and partly defleshed. Other than the gull's carcass, the scattered contents of the gizzard and one small puddle of blood there were few evidences of an attack. Few gull feathers were found(though it was windy), and recall that the original observer noted that the prey had been moved some distance.
The unusual attack on a gull by a Red-tail Hawk (waterfowl, and particularly gulls, are well down the list of preferred prey for this species), the large size of the prey, and the location of the kill in a well-used and active suburban parking lot were all unique enough to suggest that this event may be of interest to those who study and admire our native birds and their habits. As a consequence, believing it worthy of reporting to the general public I enter it here as one of Bob's Sermons in Stone and here too at rjkspeaks.
Thanks to Mrs Nash for her quick action and fine photograph.
Tuesday, December 14, 2010
DRIVING A TOYOTA WITH NO BRAKES
My golf buddy “FXS” is a real pinchpenny. He drives a Toyota Prius which gets about fifty miles per gallon. But his recent offers to drive us to our golf destinations have been regularly and resolutely denied. So we have been traveling regularly in over-consumption-style in Del’s Cadillac.
As we barreled down Florida’s Route 1 toward our early morning tee time in Bunnell, Del, a “good ole boy” who hails from Atlanta, Georgia began.
As we barreled down Florida’s Route 1 toward our early morning tee time in Bunnell, Del, a “good ole boy” who hails from Atlanta, Georgia began.
“Say Frankie, you get them brakes on that 'ere Toyota fixed yet? That 'ere model of yourn was “re-called”, he added, drawling out the “re” and “called” way longer than I thought necessary.
“Uhh-- no not yet,” responded Frankie absently staring out the window at the passing Florida scene. His nose twitched a bit, in a nervous response he had when he was forced to deal with an unpleasant problem on a "golf day".
“You’re jest crazy ta keep rollin’ round in that ‘ere tin buggy!” persisted Del, shooting a glance over his shoulder. He paused to grip the fat Panatella from his nicotine browned teeth and roll the driver side window down a crack. The air whooshed by loudly as he tapped his cigar tip close to the edge to suck ashes out of the window.
He rolled the window up and began his final assault on Frankie, with: “I don’t care how cheap it is per mile!”
“Yeaah!" "If'n you cain’t be sure if’n that little bug’ll stop!” added Terry who comes from Jacksonville. “I wouldn't travel a coon's mile in it!” he added, with finality.
I wondered what a "coon's mile" was. I figured it was a probably a southerner's way to say a short distance.
“Aint that the main thing....Stoppin'!" laughed Del rolling up his window to the top so the whoohsing sound died down. "Stoppin's real important!" he repeated, as he stubbed out his thick cigar in the big ash tray he had "special built" into the dash.
Terry jumped back into the fray. “Aint you skeered? Ain’t you heerd about that fambly in Californ-i-ay. They all died ‘cause their Toyota ran ‘em right through a busy intersection,” he added excitedly.
Frankie remained glumly silent in face of the overwhelming golf-buddy opinion that driving a Toyota without "fixin' the brake problem" was "jest dumb". Golf buddy opinion ranks high among most older men in Florida.
We were all convinced of the danger of driving Frankie’s auto in the face of the seeming real potential for disaster. I dont know for sure, Frankie may have been bullied into doing it, or perhaps he was convinced of his error, but for whatever reason the next week after our trip to Bunnel he attended to those brakes. But he lost a whole day of golfing waiting for his Toota to be repaired.
But with our financial institutions it’s another story.
Our present banking system is still rolling along at 100 miles an hour toward a busy intersection but we have not bothered to fix the brakes.
After the Great Depression in 1933 President Roosevelt signed into law the Glass-Steagall Act which among other things established the FDIC (Federal Deposit Insurance Corporation) which insured depositor’s accounts up to $100,000.00. It also put banking reforms into effect which were designed to control speculation. It categorized firms based on their business. Investment firms, (securities industry) which were involved in making profit by taking on greater risk, were separated from banks (savings and commercial banks) where cash deposits were expected to be protected from excessive risk. Prior to the Great Depression, bankers and brokers were indistinguishable. Unscrupulous bankers and brokers used other people’s money to fund risky investments. Fraud and conflict of interest were rife. After the Great Depression Congress held hearings which revealed these weaknesses and the Banking Act of 1933 (Glass-Steagall) was the result.
Congressional hearings at the time established that there were inherent risks of conflict of interest in the granting of credit (lending) and the use of credit (investment) by a single institution. These conflicts led in large part to the Great Depression. Furthermore, depository institutions have enormous clout since they have the use of other people’s money. This power to invest must be made available via loans or investments on a competitive basis…not used only in-house by the same firm. Finally, deposit based firms should be managed to limit risk and protect the investments of their depositors. Security based firms make profit by taking risk. These latter investments may sometimes lead to enormous losses which without regulation, could impact the integrity of savings deposits. Since the government insures these deposits (FDIC) these losses would have to be borne by the taxpayers.
But since the Clinton and Bush II administrations these wise regulations controls were tossed into the waste bin and now President Obama and his bank-friendly associates seem to have no stomach to put the brakes back on the Toyota..so to speak.
So though Frankie is back with a hard brake pedal and car full of golf-confederates confident in his stopping power…the country he lives in is still careening along like an out of control Toyota!
Get the picture?
RJK
“Uhh-- no not yet,” responded Frankie absently staring out the window at the passing Florida scene. His nose twitched a bit, in a nervous response he had when he was forced to deal with an unpleasant problem on a "golf day".
“You’re jest crazy ta keep rollin’ round in that ‘ere tin buggy!” persisted Del, shooting a glance over his shoulder. He paused to grip the fat Panatella from his nicotine browned teeth and roll the driver side window down a crack. The air whooshed by loudly as he tapped his cigar tip close to the edge to suck ashes out of the window.
He rolled the window up and began his final assault on Frankie, with: “I don’t care how cheap it is per mile!”
“Yeaah!" "If'n you cain’t be sure if’n that little bug’ll stop!” added Terry who comes from Jacksonville. “I wouldn't travel a coon's mile in it!” he added, with finality.
I wondered what a "coon's mile" was. I figured it was a probably a southerner's way to say a short distance.
“Aint that the main thing....Stoppin'!" laughed Del rolling up his window to the top so the whoohsing sound died down. "Stoppin's real important!" he repeated, as he stubbed out his thick cigar in the big ash tray he had "special built" into the dash.
Terry jumped back into the fray. “Aint you skeered? Ain’t you heerd about that fambly in Californ-i-ay. They all died ‘cause their Toyota ran ‘em right through a busy intersection,” he added excitedly.
Frankie remained glumly silent in face of the overwhelming golf-buddy opinion that driving a Toyota without "fixin' the brake problem" was "jest dumb". Golf buddy opinion ranks high among most older men in Florida.
We were all convinced of the danger of driving Frankie’s auto in the face of the seeming real potential for disaster. I dont know for sure, Frankie may have been bullied into doing it, or perhaps he was convinced of his error, but for whatever reason the next week after our trip to Bunnel he attended to those brakes. But he lost a whole day of golfing waiting for his Toota to be repaired.
But with our financial institutions it’s another story.
Our present banking system is still rolling along at 100 miles an hour toward a busy intersection but we have not bothered to fix the brakes.
After the Great Depression in 1933 President Roosevelt signed into law the Glass-Steagall Act which among other things established the FDIC (Federal Deposit Insurance Corporation) which insured depositor’s accounts up to $100,000.00. It also put banking reforms into effect which were designed to control speculation. It categorized firms based on their business. Investment firms, (securities industry) which were involved in making profit by taking on greater risk, were separated from banks (savings and commercial banks) where cash deposits were expected to be protected from excessive risk. Prior to the Great Depression, bankers and brokers were indistinguishable. Unscrupulous bankers and brokers used other people’s money to fund risky investments. Fraud and conflict of interest were rife. After the Great Depression Congress held hearings which revealed these weaknesses and the Banking Act of 1933 (Glass-Steagall) was the result.
Congressional hearings at the time established that there were inherent risks of conflict of interest in the granting of credit (lending) and the use of credit (investment) by a single institution. These conflicts led in large part to the Great Depression. Furthermore, depository institutions have enormous clout since they have the use of other people’s money. This power to invest must be made available via loans or investments on a competitive basis…not used only in-house by the same firm. Finally, deposit based firms should be managed to limit risk and protect the investments of their depositors. Security based firms make profit by taking risk. These latter investments may sometimes lead to enormous losses which without regulation, could impact the integrity of savings deposits. Since the government insures these deposits (FDIC) these losses would have to be borne by the taxpayers.
But since the Clinton and Bush II administrations these wise regulations controls were tossed into the waste bin and now President Obama and his bank-friendly associates seem to have no stomach to put the brakes back on the Toyota..so to speak.
So though Frankie is back with a hard brake pedal and car full of golf-confederates confident in his stopping power…the country he lives in is still careening along like an out of control Toyota!
Get the picture?
RJK
Subscribe to:
Posts (Atom)