I have been hearing nothing but gloom and doom bailout stories on the airwaves -- so much that I just don't believe anyone really knows what will work. Remember that old song "Rescue Me" - that has been going through my head so much when I hear the news that it should be a theme song for the times we are going through.
You know there are a lot of people who would like to be rescued. And there are a lot of people who used to live with the optimism that if anything went wrong, someone would rescue them from disaster. So tell me, why should corporate America be rescued? Why shouldn't they, like us, suffer the results of their excesses, their greed, their poor judgments, their disappointments, etc.?
Are we just feeding the monster by not letting everything hit a natural bottom. Who is to say we would not rebuild a better system? We will never know because "bailout money" is flowing like a river of American blood. I don't see any rhyme or reason to the approach being taken. It seems like everything we are doing is a knee-jerk reaction to another leak in the dam. We have not had time to take any proactive preventative steps because in my opinion everyone is guessing at the solutions and throwing good money after bad. Even Greenspan admitted that his long held beliefs were wrong. I am not a total Grinch because I do see the importance of shoring up our banking system and some of the other basic systems, but as a country, we can not continue to support these failing companies with unlimited funds.
I remember when I went through what I call my "down-to-earth" moment when I was a Junior in college. I realized that yes you can do anything you put your mind to but you have to put your mind to it 100%, you have to be focused and this is important -- you have to sacrifice. That was when I realized that life was not a fairy tale and that happy endings were not guaranteed. I also realized that sometimes an individual's dreams did not match their talents or their passion. I learned to live with my own imperfections as well as those of others. I accepted that I was never going to succeed at the level I wanted to succeed. But I also took responsibility for this choice. I chose not to sacrifice, I was materialistic and I required more security than I could expect if I followed my dream.
Today, I feel satisfied with my life and the direction I took. I have reached a level of success that allows me to have very few regrets. I tried to make careful decisions, I took few risks, but I did pursue some things that required I commit to a life changing direction. None of these choices were more than I could handle and some required a little sacrifice on my part. None of my goals were unattainable, but all of them could have been derailed for a variety of reasons, and some were due to my own actions. The point is that I picked myself up from every disappointment or failure and kept on. Most of us do that, giving up is not an option. Unlike a corporation we can't just shut down operations.
So by rescuing these corporations we are saying take any risk because we will save you if it turns sour. I just think that is wrong. In the meantime, the real suffering is at the lowest level, the working "joe" who is struggling to make ends meet to pay the bills and to raise his family.
There is no doubt that unpleasant things will happen to good people. It is how they handle themselves that means the most to me. Do they turn bitter, angry and resentful? Or do they start again and take responsibility and not let the disappointments turn them into blamers, complainers, and negative people. I confess that there are often reasons to be bitter and angry, but if you don't move beyond that, how can you make things better?
I realize that this may sound like I don't care if the country goes into a deep recession. But that is not why I am wondering out loud about this. I almost sound like a Republican on this subject, but no I do believe in regulation and that as a nation we have social responsibilities to help with things like heathcare, security in our old age, and care for those who cannot care for themselves. But for the most part I do not believe in permanent federal subsidies. I do believe that the government is an agent for good not evil. But I also believe that there are some people in the government who do not serve the public good.
It is easy to see how the Libertarian ideas strike a cord on some points. But then so does Hucklebee (fair tax) and so does John Cain. It is still a matter of finding balance. I still think Obama will bring us a more balanced goverment.
So that is my point of view in this posting. Until my next thought strikes, so long for now.
Tuesday, October 28, 2008
Friday, October 17, 2008
Trickle Down Should Not be the Only Policy
First let me put in my disclaimer: I am not an economist and my theories and opinions are just that, my own.
I do not believe in the Trickle Down economic theory as a stand alone policy. My reasons are purely observational. Not much seems to trickle down and certainly not quickly. After everyone along the way has taken their "cut" there is not much left over for the guy or gal at the bottom. I think this is illustrated a little by the failure of banks to work with borrowers to rework mortgages for those in trouble.... the corporations just will not voluntarily give up any profit to help keep a loan viable. Instead of thinking that something is better than nothing, they take an all or nothing stand and in my opinion this is just stupid. Even if I were a shareholder of the bank, I think I would rather see adjusted earnings forecasts go down than a complete failure of the bank because of its inflexibility. Remember what I said about how banks used to operate, it was a person in the community that the bank knew personally and he would make a judgment based on what he knew about the person -- and that is not always numbers on an application.
Now an example of Trickle Up economics can be illustrated but it too has its flaws, especially if excess funds are put in savings instead of being spent. But even that would have its benefits, since it is savings that become the basis for bank funds available. My example is the last stimulation refund/tax rebate that was done. That hit the retail numbers pretty quickly and it was clear that it was needed (or a lot of it would have disappeared into savings accounts.) So this is the basis for my belief that Trickle Up needs to be combined with Trickle Down for a more balanced approach to resolving our economic woes.
Loan workouts need to become a priority and soon. People can not wait for the bailout money to trickle down and there is no pressure on the lenders to do anything but wait for the government to bail them out once again. Foreclosures are bad, finding solutions that avoid foreclosures whenever possible are good. We need to break the cycle and that requires interference -- a bold step and bound to be unpopular with corporate America but it is the morally right thing to do. Forget about blame -- so what if someone got into debt too deeply. Let's do what America does so well -- lend a hand and help your neighbor get back up.
You know, the attitude that everyone is responsible for themselves is not bad but it should not be absolute. Circumstances, luck, etc. -- think of the Nationwide Insurance advertisment "Life comes at you.." -- we need to be more compassionate, forgiving, tolerant and less judgmental, and that is not being gullible. Who knows, one day you or I might need that helping hand. Let's stop turning our backs on the less fortunate. One person at a time we can change the country.
Republican policies are not all bad and Democratic policies are not all good. Compromise, the willingness to work together to solve problems - what both candidates have promised to do -- is what we need. The give and take of good discourse is necessary but at the end of the day, be willing to give something a try.
We have a responsibility as citizens to be active participants in our government. This can be as simple as voting, not just in the national elections but in the local ones too. Tip O'Neill said it best: "All politics is local" so write that letter, attend a town council meeting and don't be afraid to speak up, go to that school board meeting, make an appointment to just chat with your county elected official, meet candidates and talk to them about what is important to you. Teach your children the importance of the freedoms that we have and voting is the most important. Don't be the silent majority about things that matter to you.
You know we are so fortunate here in America, there are two very decent individuals running for the top elected office in our country. Let's honor them by voting on November 4th!
I do not believe in the Trickle Down economic theory as a stand alone policy. My reasons are purely observational. Not much seems to trickle down and certainly not quickly. After everyone along the way has taken their "cut" there is not much left over for the guy or gal at the bottom. I think this is illustrated a little by the failure of banks to work with borrowers to rework mortgages for those in trouble.... the corporations just will not voluntarily give up any profit to help keep a loan viable. Instead of thinking that something is better than nothing, they take an all or nothing stand and in my opinion this is just stupid. Even if I were a shareholder of the bank, I think I would rather see adjusted earnings forecasts go down than a complete failure of the bank because of its inflexibility. Remember what I said about how banks used to operate, it was a person in the community that the bank knew personally and he would make a judgment based on what he knew about the person -- and that is not always numbers on an application.
Now an example of Trickle Up economics can be illustrated but it too has its flaws, especially if excess funds are put in savings instead of being spent. But even that would have its benefits, since it is savings that become the basis for bank funds available. My example is the last stimulation refund/tax rebate that was done. That hit the retail numbers pretty quickly and it was clear that it was needed (or a lot of it would have disappeared into savings accounts.) So this is the basis for my belief that Trickle Up needs to be combined with Trickle Down for a more balanced approach to resolving our economic woes.
Loan workouts need to become a priority and soon. People can not wait for the bailout money to trickle down and there is no pressure on the lenders to do anything but wait for the government to bail them out once again. Foreclosures are bad, finding solutions that avoid foreclosures whenever possible are good. We need to break the cycle and that requires interference -- a bold step and bound to be unpopular with corporate America but it is the morally right thing to do. Forget about blame -- so what if someone got into debt too deeply. Let's do what America does so well -- lend a hand and help your neighbor get back up.
You know, the attitude that everyone is responsible for themselves is not bad but it should not be absolute. Circumstances, luck, etc. -- think of the Nationwide Insurance advertisment "Life comes at you.." -- we need to be more compassionate, forgiving, tolerant and less judgmental, and that is not being gullible. Who knows, one day you or I might need that helping hand. Let's stop turning our backs on the less fortunate. One person at a time we can change the country.
Republican policies are not all bad and Democratic policies are not all good. Compromise, the willingness to work together to solve problems - what both candidates have promised to do -- is what we need. The give and take of good discourse is necessary but at the end of the day, be willing to give something a try.
We have a responsibility as citizens to be active participants in our government. This can be as simple as voting, not just in the national elections but in the local ones too. Tip O'Neill said it best: "All politics is local" so write that letter, attend a town council meeting and don't be afraid to speak up, go to that school board meeting, make an appointment to just chat with your county elected official, meet candidates and talk to them about what is important to you. Teach your children the importance of the freedoms that we have and voting is the most important. Don't be the silent majority about things that matter to you.
You know we are so fortunate here in America, there are two very decent individuals running for the top elected office in our country. Let's honor them by voting on November 4th!
Friday, October 10, 2008
Hunkering Down
Remember back when I said something big was coming but I did not know what? Well I guess we all know what it was ... a huge economic crisis that is a once in a lifetime (we hope) event. When combined with the political campaign, I am sure that a lot of people are conflicted about what to do. I have always thought that there is some truth to history repeating itself. But more than that, I think that history informs us on how to go forward.
I have always been fascinated by economic theory. When I took my introductory course in economics we covered both macro and micro economics and I never missed a lecture. I probably would have taken more classes in economics if I had the luxury of unlimited time. But instead I have to rely on the talking heads to give me glimpses into current theories, sometimes conflicting opinons on what is happening and how to fix it. And what I have gathered from everything I have heard is that there are a lot of theories but no one really knows for sure what the real fix is. The reason is that there may be the right option embedded in all those theories but we can't agree on the path.
I have spoken with a lot of really smart and savvy people and some have really, really sharp minds and all of them say that we need to be prepared for an extended recovery period of several years. But the real question is whether the right theories are being followed by those who are trying to chart our path out of this mess. The wrong choice could extend the recovery timeline. And we are not just talking about national policy but international policy. It is possible that this is going to propel the paradym shift in international power.
So now that brings me back to politics. In the big scheme of things the economic policies of the two major political parties are far apart. Forget the people running for office and focus on the policies and try to make a judgement whether the current policy is working or whether a change in policy is needed. That is what will guide my vote in November. The individuals are both going to have a hard time their first few years in office and this crisis will resolve itself regardless of who is in office, with the benefit of reflecting favorably on the person in office if the recovery goes well. So the question I ask myself is what policy do I buy into and do I think the individual will implement it properly and can they implement it with the congress that they will have to work with. So there -- that is the big decision we all have to make. Of course there are other things that I am interested in and which also will effect my decision, but this is the big one, the deal breaker, the elephant in the room.
I have to say something about social conservatism and the Christian right. The republican party is not well served by the extremes of these philosophies. In fact the converse is also true, the democratic party is not well served by the extreme liberal philosophies. I believe that the majority of US citizens are much more moderate and tolerant in their opinions than either of these extremes. There are some things that act as lightning rods such as abortion and illegal immigration -- but on the majority of governance issues I think that there is more accord than not. What I am saying is that compromises could and should be made on the majority of goverment actions and that there should be an acceptance of agreement to disagree on the more difficult issues -- but that the majority rule needs to be honored. The problem as I see it is that there may not be a clear majority opinion, which implies that there is a real schizm in the country.
This schizm may be the warning canary of the gap developing in our society between the haves and the have-nots. I will have to think about this a little more.
I don't know the answer to how we resolve the abortion issue as a country, but I believe it is a personal choice up to a certain time in the pregnancy. I also believe that easily available abortions have changed our society -- and I have no religious issue here -- for the worse, making casual sex more acceptable because the consequences can be eliminated. This does erode our culture and our family unit. But I also believe that to totally prohibit abortions have costs both to individuals and to society, the burden of teenage pregnancies, the unwanted children, the health risks, illegal abortion clinics, etc. So as a result I believe that sex education is the absolutely right thing to do and that preventing unwanted pregnancies is important. In this role our religious institutions provide an important service. I do not agree that abortion should be legislated beyond where it is now. I also believe that we have a long way to go to reconcile the extremes on this issue and I would be alarmed if Roe v. Wade were reversed. Honestly, I want my granddaughter to have a choice and not to be trapped into a situation that was the result of immature and poor judgement on her part. Life's lessons are hard enough and the long term effect could ruin her future irrepairably.
Now the current mortgage crisis is a real problem which I am sure is very complex and will take a long time to resolve. But I was thinking that maybe it could be simplified. The big challenge is the loan workouts that need to happen. The banks did not get this done because they were so focused on their profits. They sort of bit off their nose to spite their face, don't you think?
I am sure there are a lot of solutions being considered but let me put my solution out there, it may be just too simple to take into consideration everything but here it is: Establish a nationwide mortgage interest rate and impose that rate on all mortgages made since 2005. The rate would have to be really low -- I am thinking maybe 3.5% or lower. Convert all the mortgages to this fixed rate and then base the term of the mortgage on the individual income of the mortgage holder. This means establish a standard percentage of total individual income -- say 30% --that is allocated to housing debt and this would then determine the length of the loan. Right now the conventional length is a 30 year mortgage. In this case the mortgages might actually have to be 50 year mortgages to get the payments low enough. This should stabilize the market enough to allow people to stay in their current homes. It would definitely change the real estate market - making it harder to actually sell a home because the built up equity would not be there -- so some thought should be put into that problem too. Then going forward re-confirm the lending practices -- how much of the value of a home would be financed, how much of someone's income should be available for housing debt, the term of the mortgage, limit the flexibility for a few years of the interest rates charged. Then provide assistance programs for first time home buyers to help them come up with downpayments. That is my plan with a going forward plan for tightening up on predatory lending practices.
I should also give you another opinion about how to solve this crisis. Rather than bail out all the corporations and financial institutions, my husband believes that instead of bailing out we should just give every tax paying American citizen $1 million dollars to pay on their mortgage or to buy a home.... would probably cost the same as the bailout.
So there you have my thinking today. It may change next week or next month. And yes I am thinking that I will vote for Obama.
I have always been fascinated by economic theory. When I took my introductory course in economics we covered both macro and micro economics and I never missed a lecture. I probably would have taken more classes in economics if I had the luxury of unlimited time. But instead I have to rely on the talking heads to give me glimpses into current theories, sometimes conflicting opinons on what is happening and how to fix it. And what I have gathered from everything I have heard is that there are a lot of theories but no one really knows for sure what the real fix is. The reason is that there may be the right option embedded in all those theories but we can't agree on the path.
I have spoken with a lot of really smart and savvy people and some have really, really sharp minds and all of them say that we need to be prepared for an extended recovery period of several years. But the real question is whether the right theories are being followed by those who are trying to chart our path out of this mess. The wrong choice could extend the recovery timeline. And we are not just talking about national policy but international policy. It is possible that this is going to propel the paradym shift in international power.
So now that brings me back to politics. In the big scheme of things the economic policies of the two major political parties are far apart. Forget the people running for office and focus on the policies and try to make a judgement whether the current policy is working or whether a change in policy is needed. That is what will guide my vote in November. The individuals are both going to have a hard time their first few years in office and this crisis will resolve itself regardless of who is in office, with the benefit of reflecting favorably on the person in office if the recovery goes well. So the question I ask myself is what policy do I buy into and do I think the individual will implement it properly and can they implement it with the congress that they will have to work with. So there -- that is the big decision we all have to make. Of course there are other things that I am interested in and which also will effect my decision, but this is the big one, the deal breaker, the elephant in the room.
I have to say something about social conservatism and the Christian right. The republican party is not well served by the extremes of these philosophies. In fact the converse is also true, the democratic party is not well served by the extreme liberal philosophies. I believe that the majority of US citizens are much more moderate and tolerant in their opinions than either of these extremes. There are some things that act as lightning rods such as abortion and illegal immigration -- but on the majority of governance issues I think that there is more accord than not. What I am saying is that compromises could and should be made on the majority of goverment actions and that there should be an acceptance of agreement to disagree on the more difficult issues -- but that the majority rule needs to be honored. The problem as I see it is that there may not be a clear majority opinion, which implies that there is a real schizm in the country.
This schizm may be the warning canary of the gap developing in our society between the haves and the have-nots. I will have to think about this a little more.
I don't know the answer to how we resolve the abortion issue as a country, but I believe it is a personal choice up to a certain time in the pregnancy. I also believe that easily available abortions have changed our society -- and I have no religious issue here -- for the worse, making casual sex more acceptable because the consequences can be eliminated. This does erode our culture and our family unit. But I also believe that to totally prohibit abortions have costs both to individuals and to society, the burden of teenage pregnancies, the unwanted children, the health risks, illegal abortion clinics, etc. So as a result I believe that sex education is the absolutely right thing to do and that preventing unwanted pregnancies is important. In this role our religious institutions provide an important service. I do not agree that abortion should be legislated beyond where it is now. I also believe that we have a long way to go to reconcile the extremes on this issue and I would be alarmed if Roe v. Wade were reversed. Honestly, I want my granddaughter to have a choice and not to be trapped into a situation that was the result of immature and poor judgement on her part. Life's lessons are hard enough and the long term effect could ruin her future irrepairably.
Now the current mortgage crisis is a real problem which I am sure is very complex and will take a long time to resolve. But I was thinking that maybe it could be simplified. The big challenge is the loan workouts that need to happen. The banks did not get this done because they were so focused on their profits. They sort of bit off their nose to spite their face, don't you think?
I am sure there are a lot of solutions being considered but let me put my solution out there, it may be just too simple to take into consideration everything but here it is: Establish a nationwide mortgage interest rate and impose that rate on all mortgages made since 2005. The rate would have to be really low -- I am thinking maybe 3.5% or lower. Convert all the mortgages to this fixed rate and then base the term of the mortgage on the individual income of the mortgage holder. This means establish a standard percentage of total individual income -- say 30% --that is allocated to housing debt and this would then determine the length of the loan. Right now the conventional length is a 30 year mortgage. In this case the mortgages might actually have to be 50 year mortgages to get the payments low enough. This should stabilize the market enough to allow people to stay in their current homes. It would definitely change the real estate market - making it harder to actually sell a home because the built up equity would not be there -- so some thought should be put into that problem too. Then going forward re-confirm the lending practices -- how much of the value of a home would be financed, how much of someone's income should be available for housing debt, the term of the mortgage, limit the flexibility for a few years of the interest rates charged. Then provide assistance programs for first time home buyers to help them come up with downpayments. That is my plan with a going forward plan for tightening up on predatory lending practices.
I should also give you another opinion about how to solve this crisis. Rather than bail out all the corporations and financial institutions, my husband believes that instead of bailing out we should just give every tax paying American citizen $1 million dollars to pay on their mortgage or to buy a home.... would probably cost the same as the bailout.
So there you have my thinking today. It may change next week or next month. And yes I am thinking that I will vote for Obama.
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