My Stimulus Plan

Now that the president has signed the new economic stimulus plan the pundits are all over it saying that it won't work for this reason, that reason, and all these other reasons. I don't know if it will work or not but at least it's SOMETHING! The non-plan of the last eight years didn't work out so well, and the Republican plan (see my prior Partisan Politics post) to simply give tax cuts instead of money was both laughable and typical. If I made $250,000+ per year I'd love a tax break. However if I'm currently making $0 per year what the hell does a tax break do for me? As a talking head on TV pointed out last night the tax breaks in the current plan would result in roughly $13 more per week in the pockets of the average family. That won't even pay for a neighborhood kid to shovel your driveway! Notice I said the 'average' family here, so Donald Trump and Bill Gates would probably see a more robust difference but they're probably not really concerned with having their driveway cleared. But here's my idea - unlike the last stimulus plan where checks were mailed that recipients either paid bills with or stuffed into their mattress I say the treasury issue a debit card to each taxpayer for $10,000. You can't put it in the bank or pay your electric bill with it but only buy a product or a service like plane tickets, a TV, furniture or even put it towards a new car as a down payment.  That accomplishes two things: people are able to purchase new or replacement items for their homes or go lay on a beach for a week and try to forget this whole mess, and products would start moving off the shelves in stores and lots. And then factories would need to make more furniture and televisions and cars so they'd need people to build or assemble those things. People would be brought back from unemployment and this entire current cycle will start spinning in the right direction. It can snowball upwards just like it has snowballed down. Anybody with me on this?

Partisan Politics Alive and Well

I see by the vote in The House that we've put partisan politics behind us and are moving forward for the good of the country, the average working family. Well that lasted a long time, didn't it? The Republicans ALL voted against the plan. That means not 1 in that entire group thought it might be a good idea and it might help their constituents. Not 1. Interesting. They all favor tax cuts instead of spending (we all know they're told how to vote by the few that run that particular party). Maybe we should have given Iraq a tax cut instead of pumping billions of dollars into that fiasco. I can't verify this but I think I read a week or two ago that the Iraqi government (such as it is) has an $8 Billion surplus. That's Billion with a B. So why are we spending our money? You'd think they'd be so grateful for us saving them from that tyrant Saddam that they would say "No, I insist! This war is on me!". To get back to my point, what the Republicans need to realize is that a tax cut isn't going to do a bloody thing for people that are out of work. It will sure help people with jobs making lots of money, but my guess is that they're not the ones needing help. If you get people back to work then they'll start paying taxes. See how that works? It's really not very complicated.

A Little PR Needed

It's a given that consumers drive our economy. And we constantly hear that consumer confidence is way down and going lower. Apparently Holiday shopping this year was down by varying estimates, but I heard one the other night on a national news program saying it was down by 2-plus percent. So that means if a store made $100 last year this year it made around $98. Somehow this does not strike me as a major catastrophe. Both electronic and print media are repeatedly telling us that the worst is yet to come for the economy and that unemployment will rise by millions of jobs in 2009. Is it any wonder consumers are holding back on spending? Now I'm not asking those in the media to outright lie to us and tell us that our homes will be worth at least 3 times what they are now by midsummer or that there will be such a demand for any type of skill in the job market that we'll all be making at least 6 figures within weeks but maybe a little more positive depiction of things overall might help even if a little bit. If everyone felt a little better about the upcoming year then maybe they'd spend that little extra to get something that they wanted or needed, and then the snowball effect begins in the positive just like we've seen in 2008 going the other direction. Let's get away from the "gloom and doom" news every night and maybe things just might start to look a little brighter! Happy 2009 everyone!

Punishing the innocent

Earlier today somebody sent me a video clip of a news account of CitiGroup and AIG reporting on the huge bonuses given to top executives. I think that's the same CitiGroup that put thousands of people out on the street not too long ago, and AIG has already had a small "reduction" with more to follow at any moment. Of all those people that were sent packing, how many of them do you think actually had an active role in the daily operation of those companies? Do you think they made key decisions regarding the direction that either of those two companies would take? My guess is no, that they were just ordinary people doing their jobs as instructed. So if they didn't cause the problem, why were they let go? And the senior executives that did make the decisions that resulted in financial chaos, why are they being rewarded for their stupidity? AIG said their bonuses were to keep the top executives from leaving and going to other companies. Considering the bang-up job they did I think I'd actually prefer them working for my competition! And it's more than these two companies, but they were brought to mind today so they win. I don't think you'd have to search very far to find people that think there's something fundamentally wrong with this. How about if we bring the little people back and whack all the top executives? The average person apparently has a better idea of right and wrong and it sounds like they'd also have a lot more common sense! And the companies would probably still save money!

And while I'm at it, what the hell is an "orderly bankruptcy"? Do they all march out in single file? If this wasn't so sad it would be hilarious.

Time to Get Creative

The Fed lowered their benchmark interest rate today to basically nothing which kicked off an immediate jump on Wall Street. If nothing else, this recession has caused lots of ordinary people like me to pay more attention to how the overall economy works. It's like a big wheel where every spoke feeds into the next spoke all the way around. Granted the banks and mortgage companies shot themselves in their collective feet by giving large mortgages to mostly well-meaning people that had no chance of paying them. Should the consumers have known better? Probably. But I remember when I bought my first house. I had stars in my eyes and thought that it was the most wonderful thing I could ever imagine which is what most of these people also thought I'm sure. The mortgage brokers fed into this and probably assured them that the $400,000 house they were buying today would easily be worth $800,000 in a couple of months. But to get back to my main point, consumers drive this economy. We buy cars, food, clothing, furniture, toys and we take vacations. However right now we're not buying much of anything because we either have already lost our jobs or are worried that we will lose our jobs. That's because if nobody buys anything then they don't need to make those products. So then the factories tell us they'll have to lay off thousands of people because nobody is buying their products or visiting their resort and restaurants. Is this the chicken and the egg or what? There are things that I personally would buy both for myself and others but I won't because I hear every day that it's going to get much worse. That's because the companies ran themselves into the ground with bad debt related to the mortgage stuff and other very creative "financial instruments" which is a term them all love. This had nothing to do with you or me. So now the Fed has lowered rates. They've given tons of money to banks that I thought were for loans to consumers. Maybe some of it has actually found its way to the consumers but I'm not seeing any mention of it. Maybe it was meant for businesses to help them get through this current situation and keep people employed, but every night it's a few thousand layoffs at this company, a few thousand layoffs at that company which puts more people out of work and more people worried about being out of work and fewer people spending any money. Maybe it's time to try something different. The modern version of the WPA will probably help to some degree and I hope the new administration has more ideas that hopefully won't take 15 months to put into motion. What's the answer? At this point I don't know. But I do know this: repeating the same action over and over hoping for a different result doesn't get it done. Anybody have any ideas? We can't afford not to listen.

Consumer Confidence?

I have to admit that I do find it somewhat amusing that on all the news programs they go on and on about the lack of consumer confidence and how it's affecting the economy. Then they follow up that story with some "expert" telling us that AAA Corporation is laying off thousands of people and XYZ Corporation is laying off thousands of people and preparing for Chapter 11. How much confidence does that bring? If you're still employed you're not going to spend any extra money because tomorrow it could be you. Now if you had some confidence that maybe your job would be safe for 6, 9 or 12 months anyway maybe there would be that extra Christmas present under the tree or maybe you'd buy yourself that new set of golf clubs you've been ogling for. As with anything nobody is looking for a guarantee, which is good because there aren't any. But maybe we need to stop bombarding the public with gloom and doom every single day. We know what the current climate is, we didn't cause it and we don't need it shoved in our faces at every turn.

The Current Economy

Doesn't it seem strange that the 3 CEO's of the major US auto companies, who are going to Washington with their hands out, make infinitely more money than you or I (unfortunately) will ever make and the welfare of thousands of ordinary people under their rule? They threaten the country by saying that if we don't give them millions and millions they may have to close down and toss many thousands of ordinary people out of work. Well, I don't know the exact figures but my guess is that if each CEO took some of the money he was paid to run his company into the ground and gave it out to the workers then things wouldn't be so bad for them at least in the short term. Like Wall Street how do we manage to reward people that essentially do lousy jobs with lots and lots and lots of money? It makes me want to go out and really screw something up just for the money! Remember when we rewarded a "good" job? Now these guys just get rewarded. If they happen to also do a good job then that's a bonus. And why are we buying out the insanely bad mortgages that banks wrote during the boom? If I bought a car and found out 6 months down the road that I really couldn't afford the payments could I just call my Senator and ask him to pay off the loan for me? That would be a funny phone call! Remember accountability? I know I'm going back a ways but is was pretty simple - you did something good and you got rewarded; you did something bad and you got punished. It was really simple and we all understood it. Hopefully this will be enough to get things started. But stay tuned because I have a LOT to say!