In a very well written article in the December 22nd issue of BW I found a couple quotes I thought were very poignant:
Article "Job Losses: Is the Panic Justified"
http://www.businessweek.com/magazine/content/08_51/b4113000683374.htm?chan=magazine+channel_top+stories
"Keynesian economics is back in fashion for the first time since the Kennedy Administration."
"...the Obama Administration has to balance the short term with the long term. It needs a plan..."
And most important of all...
"Remember, the recession isn't all bad. Unsupportable debts are being erased. Consumers are rebuilding their savings and lowering their living standards to match reality. Workers are exiting dying industries. And through distress sales, foreclosures, and bankruptcies, assets are being taken away from weak hands and given to strong ones, creating the conditions for future growth."
Monday, December 22, 2008
Sunday, December 14, 2008
With all do respect, please stop talking Congressman Frank
I read the Facetime with Maria Bartiromo section of the latest BW magazine today and it was quite painful. Personally, I think Barney Frank, Chairman of the House Financial Services Committee (D, Mass), said some things he should regret.
The interview is about Frank's opinion on Detroit, Housing, and Exec Pay
http://www.businessweek.com/magazine/content/08_51/b4113000737793.htm?chan=magazine+channel_the+business+week
"...Who would be on your short list for [car] czar?
I don't have a list because nobody's asking me to appoint a czar, and... I don't think about things where nobody cares what I think."
^eek, you should have an opinion, hello, you do serve in the House of the US Government!
"...If they [consumers] don't buy cars from those companies, so what? An entrepreneurial company will take their place and build cars."
^ ok at first I thought, yikes this is kind of a dumb question because everyone knows that the capital investment needed to start a car making company takes a liiiittle more than entrepreneurial spirit, but then again, I think this question was asked mostly to see what he'd say:
"Well, in the first place, it's hardly the American way to just let people go bankrupt."
^ Argh! haven't we already pretty much agreed that is our problem
"You know, people tell me,'Oh, let's just let the market do it.'"
^ yeah... so...
"[For example] we have American agricultural policy..."
^HA HA HA you're going to use THAT as an example
"...At this point, you are talking about a very weakened patient, and slapping that weakened patient around in the interest of proving some economic theory would cause even more damage..."
^newsflash: we've already proven that one!
Then he goes on in the next question to reference vampires... okay so maybe he's been reading too much "Twilight"
"Should GM acquire Chrysler? I'm not competent to say. I try to resist the temptation that too many of us in politics and the media fall into, which is telling people a good deal more than we know."
^ WHAT?!?! yes, he just said that
That's FACETIME BABY!
The interview is about Frank's opinion on Detroit, Housing, and Exec Pay
http://www.businessweek.com/magazine/content/08_51/b4113000737793.htm?chan=magazine+channel_the+business+week
"...Who would be on your short list for [car] czar?
I don't have a list because nobody's asking me to appoint a czar, and... I don't think about things where nobody cares what I think."
^eek, you should have an opinion, hello, you do serve in the House of the US Government!
"...If they [consumers] don't buy cars from those companies, so what? An entrepreneurial company will take their place and build cars."
^ ok at first I thought, yikes this is kind of a dumb question because everyone knows that the capital investment needed to start a car making company takes a liiiittle more than entrepreneurial spirit, but then again, I think this question was asked mostly to see what he'd say:
"Well, in the first place, it's hardly the American way to just let people go bankrupt."
^ Argh! haven't we already pretty much agreed that is our problem
"You know, people tell me,'Oh, let's just let the market do it.'"
^ yeah... so...
"[For example] we have American agricultural policy..."
^HA HA HA you're going to use THAT as an example
"...At this point, you are talking about a very weakened patient, and slapping that weakened patient around in the interest of proving some economic theory would cause even more damage..."
^newsflash: we've already proven that one!
Then he goes on in the next question to reference vampires... okay so maybe he's been reading too much "Twilight"
"Should GM acquire Chrysler? I'm not competent to say. I try to resist the temptation that too many of us in politics and the media fall into, which is telling people a good deal more than we know."
^ WHAT?!?! yes, he just said that
That's FACETIME BABY!
Sunday, December 7, 2008
American Auto Industry Bailout - Raw Econ
Query:
I'm slowly but surely making my way through Alan Greenspan's "Age of Turbulence" and I am at the end of the Internet Start-up boom where he talks a lot about creative destruction. The good ideas survive, while the bad ones must die (even if some jobs/wealth temporarily do too because in the long run we are putting a strain on productivity). I love Ford, my family has been buying its cars for years. But, I am also a hard-core advocate for free markets. Why can't they bail themselves out with better business decisions rather than asking for tax-payer money?
Why:
Because in order to continue to operate, because of the recession, they would have to operate at a deficit for a while, which BTW it does make business sense to do for a while IF (1) in the long run you can be profitable again and (2)you can get loans. And that is the difference in the current economy. They can't get loans because of the financial crisis. Businesses without bail-outs would destruct even though they could in normal situations stay alive, even during a recession, and be profitable again in the long term.
Like I said, I am a pretty hard-core advocate for free markets. Unfortunately, however, the world is not a free market, so I can't analyze it as one. It seems that little steps toward free markets do not work all the time though because of all the rest of things in the economy that aren't free. Many people are asking, is this financial crisis the fault of Capitalism? Let's clear this up once and for all: THIS is not Capitalism. I am saddened by peoples' inability to understand the economy. It is so important, why isn't it taught in primary education? Another thought, The US government has been running at a deficit, are we being destructed for this now?
W/o knowing the text of the current bailout bill, except that the companies are getting money. What should I support?
Raw Answers:
Support a Bailout - if you think American car companies can be profitable in the long run again, then you should support a bailout because you believe that these three companies will pay us back eventually.
Against a Bailout - if you believe that ultimately American car companies are inferior to foreign car makers and won't catch up in price or innovation, then you would likely be against a bailout and all about creative destruction of American auto makers.
Protectionism - if you think ultimately American car makers are inferior to foreign car makers and won't compete in the long run but still think they should be bailed-out, you are advocating protectionism. (Protectionism is the economic policy of restraining trade between nations, through methods such as tariffs on imported goods, restrictive quotas, and a variety of other restrictive government regulations designed to discourage imports, and prevent foreign take-over of local markets and companies. This policy is closely aligned with anti-globalization, and contrasts with free trade, where government barriers to trade are kept to a minimum (wiki))
Alternative - if you think that American car makers could be profitable if they just put their heads together then you may support a merger. I believe this is a great way to ease the short term pain and end up profitable in the long term. I think this would make American car makers competitive with foreign ones and, in the end, create jobs.
Yes, this is very raw and you are probably thinking, what about jobs, or anything else but I stand by my basic option summary.
I'm slowly but surely making my way through Alan Greenspan's "Age of Turbulence" and I am at the end of the Internet Start-up boom where he talks a lot about creative destruction. The good ideas survive, while the bad ones must die (even if some jobs/wealth temporarily do too because in the long run we are putting a strain on productivity). I love Ford, my family has been buying its cars for years. But, I am also a hard-core advocate for free markets. Why can't they bail themselves out with better business decisions rather than asking for tax-payer money?
Why:
Because in order to continue to operate, because of the recession, they would have to operate at a deficit for a while, which BTW it does make business sense to do for a while IF (1) in the long run you can be profitable again and (2)you can get loans. And that is the difference in the current economy. They can't get loans because of the financial crisis. Businesses without bail-outs would destruct even though they could in normal situations stay alive, even during a recession, and be profitable again in the long term.
Like I said, I am a pretty hard-core advocate for free markets. Unfortunately, however, the world is not a free market, so I can't analyze it as one. It seems that little steps toward free markets do not work all the time though because of all the rest of things in the economy that aren't free. Many people are asking, is this financial crisis the fault of Capitalism? Let's clear this up once and for all: THIS is not Capitalism. I am saddened by peoples' inability to understand the economy. It is so important, why isn't it taught in primary education? Another thought, The US government has been running at a deficit, are we being destructed for this now?
W/o knowing the text of the current bailout bill, except that the companies are getting money. What should I support?
Raw Answers:
Support a Bailout - if you think American car companies can be profitable in the long run again, then you should support a bailout because you believe that these three companies will pay us back eventually.
Against a Bailout - if you believe that ultimately American car companies are inferior to foreign car makers and won't catch up in price or innovation, then you would likely be against a bailout and all about creative destruction of American auto makers.
Protectionism - if you think ultimately American car makers are inferior to foreign car makers and won't compete in the long run but still think they should be bailed-out, you are advocating protectionism. (Protectionism is the economic policy of restraining trade between nations, through methods such as tariffs on imported goods, restrictive quotas, and a variety of other restrictive government regulations designed to discourage imports, and prevent foreign take-over of local markets and companies. This policy is closely aligned with anti-globalization, and contrasts with free trade, where government barriers to trade are kept to a minimum (wiki))
Alternative - if you think that American car makers could be profitable if they just put their heads together then you may support a merger. I believe this is a great way to ease the short term pain and end up profitable in the long term. I think this would make American car makers competitive with foreign ones and, in the end, create jobs.
Yes, this is very raw and you are probably thinking, what about jobs, or anything else but I stand by my basic option summary.
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