City Employees Must Make Concessions or Face Layoffs by September 30 –
City employees who hope they are going to ride out this council and hope for better days are in for a strong dose of reality. In June, the council approved a budget that will cut 2.5 million dollars in personnel costs from the budget. The hope of council is that concessions can be made before a self-imposed September 30 deadline to avert layoffs.
Up until that time, the real estate bubble enabled Davis to remain in the black, but once that engine was cut off, the city had to take measures to cut back. It took them nearly three years, but that is what happened this June.
This has perhaps been one of the worst weeks in the economy since September 2008. Many experts and analysts are talking about double dip recession.
As the San Jose Mercury News reports this morning, “Behind the sudden dive on Wall Street on Thursday is a series of bad economic reports from Main Street that have economists worried about another recession.”
The numbers are gloomy. Consumer confidence is decreasing, unemployment claims are up and manufacturing is struggling.
Growth in the first quarter this year was downwardly revised to just .4 percent, and second quarter growth was not much better at 1.3 percent – less than expected.
A recession is defined as two consecutive quarters of negative GDP (gross domestic product) growth. That decline ended in June 2009, but now economists fear a second downturn, which is referred to colloquially as a “double dip.”
Writes the Mercury News, “Adding to those gloomy statistics is a dysfunctional political system on display for weeks as a divided Congress turned a simple measure to raise the debt ceiling into protracted warfare over budget cuts. The possibility that more Washington gridlock is ahead is just one more worry for the economy, as is the European debt crisis.”
They add that one firm puts the odds of a new recession at 40 percent.
The New York Times has an article yesterday that it is “time to say it,” a “double dip recession may be happening.”
The real danger now may be less the economy and more the political ineptitude that seems to accompany it. Writes Floyd Norris of the New York Times, “When what may eventually be known as Great Recession I hit the country, there was general political agreement that it was incumbent on the government to fight back by stimulating the economy. It did, and the recession ended.”
He ominously adds, “But Great Recession II, if that is what we are entering, has provoked a completely different response. Now the politicians are squabbling over how much to cut spending. After months of wrangling, they passed a bill aimed at forcing more reductions in spending over the next decade.”
“Until recently, most observers believed the American economy was in a slow recovery, albeit one with very disappointing job growth,” he writes, “The recession now appears to have been deeper – a top-to-bottom fall of 5.1 percent – and the recovery even less impressive. The economy is still smaller than it was in 2007.”
While we focus this column on the local economy, this city is poised for some tougher times, perhaps. The impact of the downturn is likely to re-open the California state budget deficit that was optimistically thought to be shrinking.
With the inability to generate new revenue due to political gridlock, that means more cuts to education, both K-12 and higher education, and more furloughs and layoffs for state employees.
Davis has a huge percentage of its population that either works at the university or for the state. Further cuts figure to decimate our economy. The result is that we are going to see reduced sales tax revenues and probably, at the very least, a continued stagnation in the real estate market, if not an outright further drop in real estate values, meaning a subsequent drop in property taxes.
In the meantime, a proposed water rate increase threatens to worsen the economy. First, the impact on businesses could force some out of business, while reducing the bottom line for others. That threatens to further cut into sales revenue.
At the same time, the water rate hikes threaten both the viability of a spring parcel tax renewal for the schools, as well as the parks tax renewal for the city. If the parcel tax is defeated for parks, that will be another million that the city will need to find to keep up with infrastructure and maintenance costs of parks.
At the same time, the water rate hikes threaten the viability of our schools at a time when we may once again see huge cuts.
Even with projected flat revenues, the city was facing as much as $7 million in additional costs, due to losses by CalPERS (California Public Employees’ Retirement System) and rate hikes. However, some may have taken solace in the fact that CalPERS posted record increases in the value of their portfolio last year. However, this week’s stock market plunge figures to cool any thought that CalPERS can avoided decreasing its ARR (accounting rate of return).
We have gotten the sense that at least some employees are not taking this seriously, that they believe somehow that the council is going to back off the $2.5 million in cuts. The reality is, that $2.5 million is actually just the beginning.
The employees are going to have realize that they are going to face two choices – concessions or layoffs. Layoffs may be inevitable at this point, anyway. The city needs to prioritize the services that they provide and re-organize, in order to provide vital services in a more efficient way.
Back in June, the employees rallied together behind the efforts of Firefighter Union President Bobby Weist. What employees need to recognize, however, is that many of these cuts are necessary because of the policies that Mr. Weist worked with council to produce in the last decade.
While police officers got a modest 20% increase in salary over a 4-year period, and other bargaining groups got less than 15%, the firefighters got a 38% increase. The typical firefighter in 2000 was making between $40,000 and $50,000, now they make over $100,000 with over $150,000 in total compensation.
As the Vanguard has previously shown, the firefighters rode the bubble and, in fact, ate up the entire half-cent sales tax on their own.
In June, many city employees argued that they felt disrespected by this process and that they are the ones who make this city what it is today.
To me, this is not about the job that people have done, it is about the economy and budget realities that we face. The reality is that when 80% of our general fund costs are personnel costs, when the huge increases in the cost of city government from 2000 to 2008 were due almost entirely to increases in compensation to employees, the only way to get our fiscal house in order is to cut personnel costs.
That said, I favor an approach that puts the bulk of the burden on those who can most afford to take a hit. Listening to a bunch of guys who make $100,000 complaining about losing their houses is not going to engender sympathy from the citizens of this town who are being furloughed, laid off, and otherwise having far greater cutbacks to their salaries than what the city has imposed.
I am reminded of the comments of firefighter Kirk Talon who, in June, had the gall to complain that he’d probably lose his house with these proposed cuts.
This is a guy who made $101,000 last year. He makes $130,000 to $140,000 per year in total compensation. He’s going to lose his house if the city has to institute a 8 to 9 percent pay reduction? Give me a break.
We need employees willing to accept their part in this mess and share the pain. There is a very simple way we can get part of the way there, and that is to go from 4 firefighters on an engine to three.
I understand there are drawbacks to it, but it could save $1.25 million a year and most cities have gone to that deployment level. Moreover, it begins to target the actual problems that we face in this community.
Of course, if the firefighters believe strongly enough that they need four on an engine, I’m sure they would be willing to find $1.25 million in contract concessions to enable Davis to continue to have four on an engine. I won’t hold my breath on that of course.
“You see signs here that say welcome to Wisconsin and that is exactly what it sounded like,” Mr. Weist said back in June. “It sounded like the Governor for Wisconsin.”
What I see is a continuation of bad economic times, and people who somehow believe that you can find millions to cut that do not affect employees in a $40 million general budget in which 80 percent of the money goes to employee compensation.
Forget Wisconsin, this is the de-Nile. You know it’s not just a river in Egypt anymore, it’s a way of life for many Americans. The reality on the ground is that we have to change the way we do business.
As Dan Wolk put it back in June, this is the end of the era of business as usual. This is an era of shrinking revenues and unfunded liabilities. “This is an era of shared sacrifice,” he said.
—David M. Greenwald
Hey Blogger ,
“”””I am reminded of the comments of firefighter Kirk Talon who in June had the gall to complain that he’d probably lose his house with these proposed cuts.
This is a guy who made $101,000 last year. He makes $130,000 to $140,000 per year in total compensation. He’s going to lose his house if the city has to institute a 8 to 9 percent pay reduction? Give me a break.””””
This guy also said that he had been dealing with ” CANCER ” in his household !
Until you know both sides of the story , you should keep your YAPPER mouth shut …
David:”I am reminded of the comments of firefighter Kirk Talon who in June had the gall to complain that he’d probably lose his house with these proposed cuts.
“This is a guy who made $101,000 last year. He makes $130,000 to $140,000 per year in total compensation. He’s going to lose his house if the city has to institute a 8 to 9 percent pay reduction? Give me a break.”
Wow David, such indifference. How do you know he isn’t telling the truth? How do you know his peronal financial situation? As a renter you really don’t understand what it costs to own. Maybe he bought something that he could afford based on his salary schedule but is now upside down, has lots of money in and can’t refinance. If he takes a pay cut maybe he loses the house. For some reason you seem to think that the arbitrary number $100,000 a year is a lot of money and maybe this is colored by your own financial situation but owning a home someone bought during the bubble might require a huge income.
I think your lack of empathy is what is so disturbing about your view. Its sort of like Wisconsin where the Governor seems to want to rub union workers noses in it. These people, despite what you think, do their jobs to the best of their abilities. They are just trying to get ahead. In a bad economy when sacrifices have to be made its not easy for anybody but what is so troubling about your opinions is the way you seem to want to be right without consideration of the real impact give backs have on people. My father had a saying “Nobody wants to piss backwards.” By that he meant people don’t want to be worse off in the future. This is basic human nature to want things to be better in the future. Things for many may not be better in the future and that is sad but what seems so hard to take is that you seem so mean about it, so indifferent, so callous toward those who are about to take a pay cut or lose a job.
By the way, give backs are why I think Arnold really screwed public workers. To get re-elected Arnold set the tone by spending every penny the state had giving big raises to state workers and teachers, about 10% over 2 years. Many public sector workers bought homes figuring the raises were permanent. The when the economy tanked the state had no cushion and Arnold went to furloughs. As a result there are a lot of public sector workers who are upside down financially. No matter what your salary is you can get into trouble. Its like the kid who walks through the casino with his dad and asks,”How much can you lose in here.”
“While police officers got a modest 20% increase in salary over a 4 year period, other bargaining groups got less than 15%, the firefighters got a 38% increase. The typical firefighters in 2000 was making between $40,000 and $50,000, now they make over $100,000 with over $150,000 in total compensation.”
Many (myself included) would be happy with a “modest” 20% raise over 4 years. The firefighters increase has been obscene. When you add in their stubbornness on crew size, it gets worse.
This recovery has been almost non-existent and the unemployment rate disguises the fact that many have given up or are underemployed.
Reinhart and Rogoff point out that recoveries from financial crises are different—they are long and drawn out and growth is sluggish. Many experts and pundits were expecting a typical postwar recovery—this ain’t it. We still have a mountain of debt to clear off. Some of this has merely shifted from private to public (federal government/ federal reserve) hands, though there has been some repair in balance sheets and much of corporate America is actually doing well.
Correct on every point Wu but still the tone of the article is so mean spirited. It would be so much better if David were to write in a more dispassionate manner, at the very least, while he is putting his hand into people’s pockets.
“while he is putting his hand into people’s pockets”
Hold on a second, I’m not putting my hands into their pockets at all. Leave aside the fact that I’m a mere commentator, but this is city money, which means it is taxpayer money, and that’s our money, not theirs. As a taxpayer, the city needs to look after their own responsibility first and foremost.
I’m sorry that Mr. Talon has personal hardships, a lot of people do. You think there aren’t taxpayers and ratepayers in this city that are looking at a 300% increase in water rates, who don’t have health problems? He makes a salary that is public record and he makes a lot more than a lot of the people who also have health problems who are being asked to pay more to support water projects and city services. Just because we don’t know their story doesn’t mean they don’t exist.
I’m sorry for four years I have warned the council that this was coming, the employees apparently had their head in the sand, but they are all going to be unemployed if the city cannot maintain solvency and then where is Mr. Talon going to be with his family?
“While he is putting his hand into people’s pockets.”
Cool down man its a figure of speech. But what is really hilarious is the idea that you are doing this for their benefit. Please with friends like that they don’t need enemies. And please stop digging. Its really hard to believe you feel sorry for Mr.Talon when the next clause is dismissive because other people have hardships.
[quote]”When what may eventually be known as Great Recession I hit the country, there was general political agreement that it was incumbent on the government to fight back by stimulating the economy. It did, and the recession ended.”[/quote]
The recession may have “ended” in the minds of politicians, but most of us well understood the recession was far from over at the state and local level. And I very much doubt it was really “over” at the federal level. There was a lot of political spin going on, but wishing the recession was over doesn’t make it so or make the problem go away. In fact I would argue such denial makes things worse – which it did IMHO.
As for the local recession, I agree that layoffs will be devastating to anyone that happens to. Not only that, anyone laid off cannot pay taxes and is not likely to be able to find another job, which further shrinks the tax revenue base and causes an ever downward spiral into a deeper recession than the one we are already in. However, there is a solution – PAY CUTS/FURLOUGH DAYS. Or as the saying goes “shared sacrifice”. Yet how does the City Council, with a straight face, ask for “shared sacrifice” from its City employees, when it just increased the compensation of the new City Mgr by $44,000 (or whatever the actual figure is – some say closer to $30,000)?
It’s wrong to highlight salaries of individuals in discussions like this. I think you should apologize to Mr. Talon and never belittle individual hardships like cancer.
The last four weeks demonstrated the need to go back and find ways to Work Together to solve our problems – the alternative to that is very dangerous.
The idea of shifting truck staff from 4-3 sounds like a reasonable idea and it probabaly could be done without resorting to layoffs. There is probabaly adequate turnover (retirement) to accomplish the change over 2-3 years and in the meantime overtime reduction could absord some of the slack. The last thing Davis should do is start laying off people. If every community across the country resorted to layoffs the result would certainly be another major economic contraction.
ERM – I think we have been coming out of The Recession but the inept political “process” of the past four weeks has shaken the economic confidence worldwide and that may take us down again.
Our new city manager could voluntarily take a salary reduction the minute he comes in the door.
Mr. Toad,
Just a clarification. What did you mean by the”figure of speech”” putting his hands into people’s pockets”?
This figure of speech to me has always implied that the referenced individual was in some way cheating or taking something of value,usually money, from someone else. I am not sure how that applied to David’s blog and from the tone of his response, I suspect he didn’t see the relationship either.
Having asked that, I would add my opinion to those already expressed that I would prefer to see opinions expressed in a more respectful manner all around. I do not see how singling out individuals, name calling, stereotyping or derisive commentary such as “lol” or “give me a break” adds anything to the discussion and only serves to stir up an emotional response when clear heads with a willingness to consider all opinions might be a better strategy for learning and problem solving.
Elaine,
I agree with you about the apparent disconnect with the information put forward with regard to an economic recovery by some economists, the government, and the media and what we see in our daily lives. What does amaze me however, is that many seem to be surprised about the failure of a rapid turnaround, continued high unemployment, and a “double dip” recession.
I am admittedly very unsophisticated in my knowledge of economics. But what amazes me is that so many seem to have been caught of guard by our current economic state. I clearly remember in 2008, multiple news programs and interviews of economists on NPR ( commute listening) that indicated that this was likely to be a very prolonged recession with a projected even longer time to employment recovery ( with more than one analyst predicting around a ten year lag to full employment) and many stating that they felt we would be looking at a “double dip” recession. While there is very little that I can do about this as an individual except vote my conscience and donate, I would have hoped for, not a cure, but more realistic planning and information from our elected officials, and more patience from a pubic that has had a false expectation that everything was always going to improve, meaning materialistically, in our society which seems to continue to hold material improvement as our most important indicator of success.
I remember from the early 90’s when there was a backlash against a congressional pay raise. Vic Fazio authored the bill for the raise., I imagine they thought his seat was safe enough to lead on the issue and he was the party whip at the time. Two congressmen were riding in the elevator, I forget which ones they were. One of them, freshman, had just made a floor speech denouncing the raise. The other, a more senior member, told the freshman “Don’t you ever put your hand in my pocket.” I have often remembered that and tried not to get all uppity about how much money someone else made. People make what they make and others should be careful when condemning the income of others and keep their hands out of their pockets.
Mr. Toad,
First thanks for the clarification. I definitely see your point of view. And I wonder how far you would extend it.
Should we, as tax payers, not question the use of taxes to pay what we see as excessive salaries ? Should we not express our discontent if we feel that corporations while exporting jobs pay their executives huge salaries while effectively economically devastating communities here ? Should we not point out that we feel that there is overcrowding in the prisons and that we feel that the solution is less incarceration and not the building of more prisons because that will take money out of the pockets of the corrections employees? How about those who making their money by frankly exploiting the labor of others. Should we remain silent about slavery or
sweat shops ( yes, they still exist) because it will take money out of the pockets of “entrepreneurs”. Just where would you draw the line ?
Draw it where ever you like but remember we are all susceptible to this type attack. You see you left out doctors who one could argue make too much money. So you can see how it feels. I think we should be careful when attacking someone’s salary and understand what we are saying when we argue that someone else is making too much money. Personally I try not to go there.
Labor is most of our City’s budget so I think its hard to get away from discussions of salaries, though I agree focusing on specific individuals (unless prominent) is probably best avoided.
However I think our firefighters would be wise to listen to Alphonso above and try to work out something vis a vis crew size. Its going to happen; better if firefighters can get on board.
1.Sustained 9+ percent unemployment with many populated areas having sustained unemployment greater than the Great Depression era.
2.People continuing to lose their houses and businesses to foreclosures.
3.Consumer and business confidence at sustained all time lows, even though surviving businesses restructured and became profitable again… and have held on to their cash due to the uncertainty caused by the business-hostile regulation-friendly tone in Washington.
4.Deficit spending increases causing a debt trajectory leading to US to insolvency.
5.Continued failures in winning the UN-approved war in Afghanistan.
6.Continued failures to address the dismal state of our US public education system.
7.College and healthcare costs continuing to skyrocket.
8.401ks continuing to be wiped out by wild swings in the stock markets.
But, we have gotten rid of DADT and more states are legalizing gay marriage… so I guess Obama, the most polarizing US President ever, is a success to his supporters. This is evident from the recent Gallup Poll that has Obama’s total approval rating for Dems being 72% and for Republicans, 13%.
This reminds me of a partisan joke…
[quote]The Democrat jumped from the skyscraper and said “I’m okay, I’m okay, I’m okay” all the way down. The Republican said exactly the same thing, but refused to jump.[/quote]
Dow Jones Industrial average closing price.
Jan 19, 2001 10,558
Jan 19, 2009 8053
August 4. 2011 11,371
Not a partisan joke.
[i]”City employees who hope they are going to ride out this council and hope for better days are in for a strong dose of reality. In June, the council approved a budget that will cut 2.5 million dollars in personnel costs from the budget.”[/i]
None of the labor groups HAS TO CHANGE ANYTHING by September 30. DCEA is operating on the terms imposed on them and all of the others have valid contracts which are effective until at least June 30 of next year.
[i]”The hope of council is that concessions can be made before a self-imposed September 30 deadline to avert layoffs.”[/i]
This ‘hope’ is not legally binding. If the council finds that the labor groups want to keep all of the provisions of their contracts until they expire, the council can wait until the start of the 2012-13 fiscal year to impose its changes.
[i]”The reality is that layoffs are coming, as are more cuts.”[/i]
One thing to note about cuts: Davis effectively has a seniority system when it comes to laying off employees for budget reasons. (The seniority is not based on the time someone is on any one job or in any one department, but rather counts all the time on all jobs worked for the City over the course of a career.) So if employees are laid off under the plan David Greenwald is discussing, they will mostly be younger and lower paid personnel.
Alternatively, some higher-paying administrative jobs might be discontinued in a reorganization. I would imagine, though I do not know, that any such changes would be subject to either collective bargaining or at least consultation with the labor groups. Some of the contracts specifically say that alternatives to layoffs must be also considered.
[i]”Many experts and analysts are talking about double dip recession.”[/i]
The number you need to watch to know if we are going to have a double dip is the ‘housing inventory’ number. From what I understand, this number keeps getting worse, as banks try to sell off their inventories.
[i]”In the meantime, a proposed water rate increase threatens to worsen the economy. First, the impact on businesses could force some out of business, while reducing the bottom line for others. That threatens to further cut into sales revenue.”[/i]
I look at this from the opposite direction. The problem for local businesses, esp. restaurants, is that the higher water bills will impoverish every household in Davis by roughly $1,000 per year. That is $1,000 households will no longer spend to dine out or shop for new merchandise.
[i]”We have gotten the sense that at least some employees are not taking this seriously, that they believe somehow that the council is going to back off the $2.5 million in cuts. The reality is, that $2.5 million is actually just the beginning.”[/i]
It seems to me the large turn-out of employees at the recent budget meetings of the CC suggest they are taking this seriously. It is their livelihoods which are on the line.
Mr. Toad… note the word “sustained”. Note too that you are reflecting the “I’m okay” message by deflecting comparison (and blame) back to the Bush era.
Here is the DOW performance during Bush’s terms before the 2008 crash… and don’t forget that little 9-11 problem we had.
20019590.93
200210112.54
200310662.52
200411242.41
200511853.84
200612498.52
200713178.26
Conservatives seem to want everyone to believe that the world started 1-20-2009. By this one measure the DJIA Obama actually looks pretty good.
Here is the graph that our elected officials need to study:
[img]http://moneymorning.com/images2/DistressedHousing.jpg[/img]
Instead of borrowing money to pay for more public works projects–such as the sidewalk bulb-outs in Davis which were largely paid for by the Obama stimulus plan, Congress and the president should devise a new scheme to encourage and incentivize investors with lots of capital to purchase all of the houses which are foreclosed or under-water.
One way to do that would be to set a zero percent capital gains tax rate for those who buy these properties and re-sell them for a gain within the next 10-15 years.
Another incentive would be to set the net property tax on such properties at zero percent for the next three years. The amount of property tax owed to local and state government for that period would be paid by the federal government.
A third element of ridding the housing market of excess inventory would be to eliminate the mortgage tax deduction on the purchase of new housing. That would encourage buyers to purchase the existing inventory.
Obama should have prioritized the absorption of the housing inventory when he came into office. He mistakenly thought what we needed was better sidewalks.
Obama should have done lots of things different and so should have the Republicans.
[i]”Obama should have done lots of things different and so should have the Republicans.”[/i]
So, do I understand that you do not approve of Obama and congressional dem’s at this point?
When Bush left office he had a 60% approval rating from Republicans and a 7% approval by Democrats. This made complete sense given the economy of the country. Here were are almost three years into the Obama miracle and his party is giving him 72% approval ratings… just recently down from his consistent 80+ approval ratings from Dems.
Obama is the most polarizing prez ever:
[img]http://www.cscdc.org/miscjeff/ObamaRate.jpg[/img]
[i]”Obama is the most polarizing prez ever.”[/i]
I think that fact is due to circumstances beyond the control of Obama himself. I think it is much more of a reflection of the fact that since the early to mid 1970s:
1)the Democratic Party, which had included a great percentage of conservatives from the South, has since lost all of them to the Republicans; and
2) the Republican Party over the same period shed almost all of its northeastern liberals and urban seculars.
So what we have now in the Democratic Party is a much more left of center party (though the center line itself since 1970 has shifted to the right). And what we have now in the Republican Party is a much more clearly right of center party.
With the two parties much more distincty ideologically than they used to be, succeeding presidents have become more “polarizing.” And when times are bad, as they have been for all of the Obama years, this polarization appears to be more stark.
If the economy rebounds, Obama will suddenly seem less polarizing among the partisans. But that polarization says more about our country and the way our parties are orgnanized than it does about the man who is president.
I just discovered that Obama owns the highest sustained unemployment numbers that our country has seen since the Carter Administration. So why do Dems still love him so much?
“I sure know what matters to the president, and a brief survey of his first two years would reveal it rather baldly. “Non-argumentative reasonableness” so far has prevented a second great depression, rescued Detroit, bailed out the banks, pitilessly isolated Tehran’s regime, exposed Netanyahu, decimated al Qaeda’s mid-level leadership in Pakistan and Afghanistan, withdrawn troops from Iraq on schedule, gotten two Justices on the Supreme Court, cut a point or two off the unemployment rate with the stimulus, seen real wages for those employed grow, presided over a stock market boom and record corporate profits, and maneuvered a GOP still intoxicated with failed ideology to become more and more wedded to white, old evangelicals led by Sarah Palin. And did I mention universal health insurance – the holy grail for Democrats for decades?”
— blogger Andrew Sullivan, a conservative supporter of the president.
http://andrewsullivan.theatlantic.com/the_daily_dish/2010/12/mr-president-ignore-frank-rich-please.html
Rich: That is a reasonable explanation for some of the difference. However, this sustained economic downturn is unprecedented. This president would be seen as a profound failure in just about every other era. I cannot understand why people keep hanging on to him. Democrats still seem to hold labor.
A little example of his economic ineptitude and partisanship… his visit to Alcoa to trumpet their investment of capital to increase and improve production and create jobs… and then his subsequent threat to change the IRS accounting rules on corporate jets… thereby decimating an industry barely hanging on which is over 50% of Alcoa’s business supplying aluminum to aircraft manufacturers. If you are Alcoa management you are saying “not again until this guy is gone from office”.
Okay Don… you found one “conservative” (as claimed by the mostly liberal media) that will jump with the Dems and shout “I’m okay” until he smacks the ground. His quote is Huffington Post esk’… not anything near what I would expect any good conservative to write.
I read he is moving to Newsweek… a magazine that has grown so far left it slides off the counter into the trash by itself.
The issue is the economy. It sucks. It has sucked since Obama took office. It sucks after him throwing trillions of new spending at it. It looks like it will continue to suck for years to come. All of this on Obama’s watch yet he is still the da man for so many Dems. I just find that fascinating. I wonder what would be the case if we were a white Democrat with a Texan’s accent. Could we be seeing “affirmative action” approval ratings? I would like to think not, but then why are more unemployed recently made homeless people not mad at him?
In 1964, a white Democrat, with a Texan’s accent, did pretty well with , if I read the Klanspeak correctly ,”affirmative action” approval ratings .
Either they don’t blame him (I don’t ) or they think the alternative looks much worse (I agree). Regardless, public sector unemployment is the next shoe to drop. I think it’s regrettable that current fiscal policies (spending cuts) are likely lead to higher unemployment as the public sector jobs are lost. Federal revenues sent directly to state and local governments to sustain employment would soften the blow.
I am more concerned about the unemployment numbers than I am about the stock market or the housing market.
Mr Toad,
“people make what they make….”
I think that this thought process contributes to many of our individual and societal economic problems. As a group, Americans are very private about our salaries and I agree that we tend to be uncomfortable discussing them openly. Paradoxically, we are not at all shy about the public display of our wealth which we tend to use to establish social pecking order. I think this pattern contributes to major inequities.
You mentioned doctors specifically and seemed to imply that you think you know how I would feel if someone were to state that doctors in general, or me in particular were over paid.
You have no idea how I would feel. I would agree with them. Comparatively speaking, I think doctors are tremendously overpaid. When you compare the compensation of doctors to that of highly skilled professionals in other fields with similar degrees of responsibility, the discrepancy is striking and to me inappropriate. I believe that we could create a much more humane and just society if we were to do away with what I see as the egregious disparity in compensation for different types of work.
I believe that we use the wrong markers for compensation. What we all share that has the same amount of value is our time. An hour worth of tome is an hour whether you are a CEO or a doctor or a teacher, janitor , physicist, fireman…. My belief is that every one who studies, or works, or creates, or in any way contributes positively to the society should receive the same living wage. Would this kill incentive? Not in my opinion since those who desire more material goods, or vacations, or nights on the town could simply put in more hours thus accumulating more money, or credits to use as they choose. This is in fact part of the argument that many doctors use to justify their income. The argument goes that all those hours of college and medical school and residency plus their educational loans warrant their extremely high rates of compensation. All of this would be unnecessary if we agreed to support people for their time invested as opposed to charging them for putting in 90-100 hour work weeks while I was in training ( now restricted to 80 hours/week) thanks to some untimely deaths and a new focus on patient safety.
Our society has many necessary jobs that need to be done across all types of knowledge and skill sets. We need teachers, garbage collectors,doctors, pilots, firemen, plumbers…… All are necessary to our society. In my view all should be able to be ensured of adequate compensation for time spent contributing to the well being of our society without the waste and bitterness provoked by arguing about who should be compensated more for what.
Surprised to hear that from a doctor ? If so, you shouldn’t be. We are just another group of workers with views all across the political and economic spectrum. What I mind most in these discussions is not that people have opinions that are radically different from mine. It is some people assuming that they know from my career, or from my party affiliation, or from my previous posts what I am going to believe about any given issue.
[i]”However, this sustained economic downturn is unprecedented.”[/i]
I assume you mean unprecedented since the Great Depression? We have had worse economies in U.S. history. And it is also the case that when FDR was president and nothing seemed to be getting better for most of his 12+ years in office, he remained popular among most Democrats.
My friend Nate Silver had a couple of really interesting charts with his column a few days ago.
The second of them shows graphically how much worse the current recession is than all others since the Great Depression:
[img]http://farm7.static.flickr.com/6147/6006231951_850537233a.jpg[/img]
In my view–informed by my degrees in economics–it’s silly partisanship to blame Obama for our current recession. It came about because of policies that were put in place over 20 years before he took office which caused an over-investment in housing and which divorced mortgage lenders from the risk of their loans to marginal homeowners. I think Barney Frank desrves more blame than anyone for this mess, but there were certainly many others* who seemed to think poor people owning their own homes was a magic elixir. I do think it is fair to blame Obama for not knowing what to do to solve the housing inventory problem. He listened to Paul Krugman, when he should have listened to Rich Rifkin.
The other interesting graph in Nate’s column shows how steady real US growth has been going back to 1877, even accounting for the Depression and the lesser recessions:
[img]http://farm7.static.flickr.com/6026/6006231887_a651d4ca9c.jpg[/img]
*Dems have placed a great amount of the blame on the Fed’s low-interest rate policies under Greenspan. I don’t think there is any strong evidence to uphold this blame. They also blame “Wall Street,” esp. the publicly traded investment houses. Those companies did not cause the underlying problem. They either exploited it (like Goldman) or were subsumed by it (like Lehman). But the banks did not create the policies which caused the problem in the first place.
[i]” I do think it is fair to blame Obama for not knowing what to do to solve the housing inventory problem. He listened to Paul Krugman, when he should have listened to Rich Rifkin.”[/i]
To those who doubt my argument today on our housing inventory problem and how to solve it, look at what I wrote when Obama proposed his stimulus package ([url]http://3.bp.blogspot.com/_-iCrgpX1jNM/SY4dfjTIKlI/AAAAAAAAACI/GFYKv_SokEk/s1600-h/Stimulate+this.JPG[/url]), which his advisors said would reduce unemployment. I knew it would fail. I knew then what I know now: Obama’s plan attacked the wrong problem. Our problem remains excess housing inventory which is undercapitalized.
What amazes me is that anyone let the war profiteers lead us into the alley and mug us and then support them for four more years while they stole the cookie jar and pawned it with China ? What Obama and the Democrats have been struggling wi th was created by the Bush, Cheney team . And Obama shows up to work on the problems, not just throw tantrums . If the GOP takes the kind of whipping some are predicting in the upcoming presidential and congressional elections , will they still follow these sideshow barkers who have stolen their party ?
The TEA party, Palin, Bachmann et al are rich caricatures for late night comedy, but an insult to voters who want real solutions for our troubles, not bumpersticker statesmanship !
Now back on topic briefly, Davis can ill afford more unemployed and under-employed and the budget cannot be balanced on the backs of the rank and file workers .
[i]”Klanspeak”[/i]
Great Biddlin… next is the Nazi reference, right? You crack me up.
Rich:[i]I assume you mean unprecedented since the Great Depression?[/i]
Yes, although from what I understand, real unemployment is higher in many geographic areas than it was during the Great Depression.
[i]”it’s silly partisanship to blame Obama for our current recession”[/i]
I agree that it is not correct to blame Obama for the Great Recession (other than his ideological association with big government social engineering and meddling in the free market which, in my view, was the primary catalyst for the housing bubble and financial market meltdown). The correct blame is that by his actions and words he has undermined a successful and sustained recovery. He has failed to recover from the recession as an incoming President that committed to the American people he would be the one to fix the problems. Yet, he is still loved and approved by over seven out of ten Democrats.
[i]” I think Barney Frank deserves more blame than anyone for this mess, but there were certainly many others* who seemed to think poor people owning their own homes was a magic elixir.”[/i]
I agree with that. We should include Carter for CRA and Clinton for the repeal of Glass Steagall. Note that Barney Frank is also still in office. Maybe Democrats, as a group, lack the ability to hold their leaders accountable for their failures?
JB
I must have misinterpreted your point since it seems we agree on something. Did you really say that in your opinion, the free market was the primary catalyst for the housing bubble and financial meltdown ?
[i]The correct blame is that by his actions and words he has undermined a successful and sustained recovery.[/i]
You believe we would be having a ‘successful and sustained recovery’ if Obama weren’t president?
[i]Maybe Democrats, as a group, lack the ability to hold their leaders accountable for their failures?[/i]
You say the darnedest things.
JB said
“A little example of his economic ineptitude and partisanship… his visit to Alcoa to trumpet their investment of capital to increase and improve production and create jobs… and then his subsequent threat to change the IRS accounting rules on corporate jets… thereby decimating an industry barely hanging on which is over 50% of Alcoa’s business supplying aluminum to aircraft manufacturers. If you are Alcoa management you are saying “not again until this guy is gone from office”.”
What a complete load of BS – you really need to stop relying on Fox News for your “knowledge”.
Alcoa is a $21 billion (net rev) company and about 15% of the revenue is derived from the Aerospace Industry – Space, Commercial Airlines and Private Jets. That means less than 2% of Alcoa’s revenue comes from the Private Jet industry – not the 50% as implied by Fox.
Many people have stated we need to simplify our tax code and exclude things like the mortgage interest deduction (which would kill real estate in Calif). Yet the same people are stating Obama is out of his mind suggesting we change the tax life of private jets from five years to seven years – in other words simplifying the code by making the tax life the same as commercial jets. Oh and by the way the actual average useful life of private jets is 20 years.
We need to stop these bogus efforts to discredit the President and mislead the public. Both sides need to stop the partisanship and start fixing problems.
Medwoman:
No, sorry. If you read it again, I was making the point that Democrats and Obama tend to support meddling in the free market to engineer society to their purpose. For example, Carter’s Community Reinvestment Act (aka, force banks to change their credit policies to give more loans to poor minorities); Clinton’s repeal of Glass Steagall which changed the rules under which the free market operated to allow banks to do investment banking and investment banks to do whatever they wanted to do; Freddie Mac and Fannie Mae (buy up all the subprime mortgages so they could be pooled and securitized to free up bank capital to make more bad loans to minorities); and lastly, the bailout of some banks and not others even though they would have failed in a free market.
[i]”You believe we would be having a ‘successful and sustained recovery’ if Obama weren’t president?”[/i]
I don’t know. All I know is that any president with his domestic economic track record should be keel hauled.
[i]”You say the darnedest things”[/i]
I don’t know why that observation makes me feel all warm and fuzzy inside, but it does.
biddlin: I get why you constantly look back to blame a past prez for the challeges the current prez is unable to overcome, because I blame our current fed and state budget mess on FDR.
First, to Jeff, I don’t buy that Obama’s statements on the economy or on free markets or on anything else have had any material effect on the economy or the markets. I don’t see the objective evidence for that.
MED: [i]” the free market was the primary catalyst for the housing bubble and financial meltdown?”
The financial meltdown* came as a result of the collapsing housing bubble.
But the housing bubble was not caused primarily by the free market. I concede that if we had some kind of non-market Soviet-style price fixing program which did not allow home prices to be set in the market, we would not have had a bubble in housing and hence would not have had the problems which came subsequently. If we had that, our standard of living would be just like it always was in Russia: brutal.
The government caused most of the housing bubble problems. The Congress started this mess when they wrote new rules in the early 1990s which FORCED banks to lend to more and more minority borrowers with bad credit. If they did not make these loans, they would be taken to court and fined or jailed as if they were “racists” instead of “rationalists.”
The Congress then changed the rules by which Freddie MAC and Fannie MAE played, making those government owned companies buy up terribly risky home loans. That change divorced almost all of the risk of lending by many local banks and put it on the middle men who bought the mortgages.
The publicly traded investment banks*–who are free market actors–then invented the mortgage securities market and it was so complicated that yes, in this respect, the fault lies with the market itself.
Also, like with all bubbles, a lot of the blame lies with the buyers. I knew that Davis was in an unsustainable housing bubble back in 2004. The home price-to-rent ratio was out of whack. Yet despite my warning home buyers in Davis, people kept purchasing houses here for more and more money. So to that extent the problem was caused by the buyers.
Finally, interest rates set by the Fed may have been too low. That has the effect of inflating home prices. However, the Fed has as its core mission to keep the CPI inflation in check. And it did that. If Greenspan had raised interest rates with the core rate of inflation running so low during the housing bubble, he would have been blamed for acting too soon by the same people today who think he acted too slowly.
——————–
*A good book I read in 2009, the name of which escpaes me at the moment, made a very interesting distinction in the “financial meltdown.” The author, a woman, noted the performance of the publicly traded investment banks and the private investment banks. What she found was that all of the publicly traded firms behaved recklessly in trading in the sub-prime mortgage market, while none–not one!–of Wall Street’s major, but privately held investment banks got in trouble with mortgage securities. What she attributed this to was a failure of the boards of directors of the publicly traded companies and the CEOs of the same: they were not looking out for the interests of stockholders; the boards did not fulfill their fiduciary resonsibility to manage their companies’ managers; and the losers in all this were the stockholders and taxpayers who bailed them out. At the very same time, the private companies never got in trouble and needed no bail-out from anyone. The lesson may be that investment banks should privately held, not publicly traded entities, and maybe they should be smaller, and thus can more easily manager and oversee their risks.
DON SHOR!!!!
Please fix my italic problem in my last post. The only thing I intended to italicize was MEDWOMAN’s quote. Then just erase this post. Sorry. And thanks.
Jeff Boone-
Scat stinks and you don’t cover yours that well .
@ biddlin: no personal attacks, please.
Alphoso: [i]” less than 2% of Alcoa’s revenue comes from the Private Jet industry”[/i]
That is too low. It is more like 10% of their total business. I will find my reference and post it. However, you are correct that 50% of their total sales is not accurate. What I read and meant to post is that the increase in aviation orders was 50% of the production increase expected to justify Alcoa’s investment in the new manufacturing equipment that Obama was touting.
This link reports the trends that supported Alcoa’s plant investment strategy:
[url]http://www.advocatetax.com/5308/strong-aircraft-orders-seen-driving-aluminum-demand/[/url]
So Obama congratulated them to get his “business friendly” PR moment, and then went to cut off one of their legs for his political gain with his base.
It really does not make any difference what the percentage is, because it is a clear example of Obama talking out both sides of his mouth causing more uncertainty in markets that result in companies not making expansion investments… or regretting that they did. That was my point and it still stands… especially considering that the change in accounting rules would only net $3 billion over a decade… while probably causing the US private jet manufactures to fail. Obama was making a political move at the expense of the economy.
So, just to clarify: Obama undermined the recovery by his words and actions, but you don’t know if we would be having a sustained and successful recovery if he wasn’t president, but he is responsible for the fiscal mess that you don’t know if he caused or not.
Got it.
Sorry , I should have taken diphenhydramine for my bovine excrement allergy before posting .
Rich: [i]” I don’t see the objective evidence for that”[/i]
Obama and the Dems have perpetuated uncertainty with so many attacks on business, free market capitalism, demands for more regulation and greater taxation. Obama has gone further and his position with veto power carries plenty of weight to influence business’s strategic planning. Companies do not like to bet their capital for growth until they see a clear path toward profitability. Why would a US company invest domestically when Dem politicians are screaming about too low tax rates and making a case to raise them?
[url]http://www.reuters.com/article/2010/10/27/us-corporates-cash-moodys-idUSTRE69Q00T20101027[/url]
[url]http://www.ibtimes.com/articles/189203/20110729/us-economy-jobs-recession-us-gdp-companies-hoarding-cash.htm[/url]
Question…
If the Democrats (looters) are better served politically by a greater population of moochers (people needing or expecting the government to provide for them), might they be motivated to reduce the population that gains prosperity through self-determination in free markets (producers)?
It seems there is not much downside for a Dem president these days for failing to keep the private sector economy and employment robust. If Obama is re-elected and the Dems maintain any control of Congress, I think it might confirm this as a planned and viable political strategy for Democrats. After all, if a person does not have experience gaining prosperity through self-determination, and instead they are trained to require government handouts of some type, they will likely become dependent on the handouts and support the Democrat party to ensure they keep on getting them.
Rifkin
“if we had that, our standard of living would be just like it always was in Russia, brutal”
For full disclosure, I have never lived in Russia, so I have no direct knowledge of whether their standard of living is more or less “brutal”than that of our own poor. But I have had the experience of being poor in this country. So there is something of which I am sure. If you are a hungry, or cold, or sick child, it probably doesn’t matter much to you whether your economic system is free market or socialist or communist.
When the topic of comparison of free market ve state determined economies comes up, my mind frequently goes back to an interview of a Russian woman which aired many,many years ago on 60 minutes. One of the points she made that has always stayed with me was, to paraphrase, you Americans value your freedoms greatly. You value your freedom to. What you do not appear to understand is that we also value freedom, but we also value freedom from. Freedom from hunger and homelessness. We are at a point in our country where we find it more important to protect the wealth of our millionaires and billionaires than we do to feed, house,clothe, and educate our children. I think that Jeff would probably see this as justified. I see it as shameful .
[i]Companies do not like to bet their capital for growth until they see a clear path toward profitability[/i]
Companies will invest, expand, and hire people when they see greater demand. Nothing else that you’re talking about makes any difference. Neither the Democrats nor the Republicans give the investment community any reason to invest or not to invest.
Why do you insist on calling Democrats ‘looters’ and trying to apply Randian analysis to these things? There is a spectrum of belief in the Democratic party, just as there is in the Republican party. Many Democrats believe in using tax policy to incentive certain economic behaviors such as alternative energy sources. So do many Republicans. No party is trying to expand the number of people who require government assistance. Democrats and Republicans differ in the extent to which they believe we need social safety nets, especially during times of severe economic constriction. Hence the fights over extension of unemployment benefits, or the decision to shore up the auto industry.
Proving my point, from the very first article you linked:
[i]U.S. companies are hoarding almost $1 trillion in cash but are unlikely to spend on expanding their business and hiring new employees due to continuing uncertainty [b]about the strength of the economy[/b][/i]
Hm. Nothing there about regulations, tax policy, presidential utterances.
[i]we believe companies are looking for greater certainty about the economy and [b]signs of a permanent increase in sales[/b] before they let go of their cash hoards, which they suffered so much to build,”[/i]
Nope. Nothing there, either. Companies are waiting for demand. Period. Wouldn’t make a whit of difference if it was President McCain or President Obama.
medwoman: I’m sorry but you don’t hold the higher moral ground caring about hunger and homelessness. With all due respect, I think your approach to the problem is the main source of the problem. I think it comes more from the heart than the head.
It frankly pisses me off that any child goes hungry or has to live on the street in this country. It also disturbs me that adults would go hungry, but I see it as a separate issue unless the adult is truly physically or mentally disabled.
Do you really want to use Russia as an example for a better life? The problem that plagues the Russian people is exactly what I fear in this country… self-determination being wiped away from a population as more and more learn to expect the government to care for them. It takes a generation or two to put that cat back in the bag once it gets out.
I support a social safety net that covers children and the elderly that need it. However, we cannot afford to save the able bodied adults that screwed their life up making one bad mistake after another. We encourage people to screw up their lives by giving them the alternative to prosperity through self-determination.
Go watch the movie “Buck” playing at the Vasity. It will demonstrate what American self-determination looks like and should be.
To Don and Rich:
[quote]”A recent Harris Poll for the U.S. Chamber of Commerce asked small business owners about their future outlook. Here are some highlights from the survey. A total 1,409 businesses were questioned, with a small business defined as a company with an annual income $25 million or less. An overwhelming majority of respondents, 84%, said they thought the US economy was on the wrong track, with 54% also indicating they felt their local economy was on the wrong track. When asked to identify what they say as the greatest challenge to the current business environment, the majority of respondents (49%) replied that “economic uncertainty” was the most pressing current issue, compared to “America’s growing debt and deficit,” 47%, the 2010 healthcare bill 39%, and “overregulation” 36″[/quote]
So, 47% blame the mounting debt, 39% blame Obamacare, 36% blame overregulation. The 49% that blame the economy, what has Obama done to jumpstart the economy compared to what Ronald Reagan did when he signed the Economic Recovery Tax Act of 1981?
I think you two are both ignoring quite a bit to make the leap to blame uncertainty about the economy being the only factor. You are also ignoring Obama and the Democrats’ contribution to economic malaise from not taking tax-cutting steps… while threatening to increase taxes and increasing regulations at the same time. They might not have caused the recession, but is under their watch that we have failed to emerge from it. The unemployment rate is still 9.2% across the country and much higher in the highly populated areas.
I read a recent article on the EPA’s phony cost-benefit press releases on environmental regulations… where they ignore most of the economic damage caused private industry. Related to this, how do you think the oil workers in the gulf fared from the moratorium on drilling?
[i]”Why do you insist on calling Democrats ‘looters’ and trying to apply Randian analysis to these things?”[/i]
Simplified concepts for my simple mind. Dancing with nuance and trying not to be offensive is too tiring…
Democrat politics today are controlled by liberals. Barack Obama is not Ted Kennedy. He is not Bill Clinton. Harry Reid and Nancy Pelosi are far left of center. When I refer to “Democrats” as looters I am thinking of these Democrat politicians. However, it is a point taken that I should differentiate and type “Democrat politician”, since I agree that there are many moderate Democrats that would not qualify as Randian “looters”.
A video of my investment advisor…
[url]http://www.youtube.com/watch?feature=player_embedded&v=W4hfdaC7eL4[/url]
Happy Friday all.
“Related to this, how do you think the oil workers in the gulf fared from the moratorium on drilling? ” Not as well as the crawfish, shrimp, water fowl, and fishermen will . You’re correct about the harm to the oil workers, but don’t worry, big oil will still reap huge profits !
JB
1) Have you ever lived in Russia ? Or any socialist or communist state for that matter ? if so, I would concede the superiority of your knowledge. If not, I doubt either of us has much knowledge of the brutality, or lack there of, of the lifestyle other than what we choose to read.
2) I have made no claim to a “higher moral ground”. It is just that I would set feeding, housing and clothing the vulnerable population ahead of anyone having special perks as a national imperative. I feel that nations should be judged first and foremost by the manner in which they treat their most needy. That is my personal top value.I respect the right of others to have different values.
3) And, I fail to see how you can say that you think that “my approach”is the source of the problem when you have no idea what “my approach” would be. You have only made the assumption that you know what I think because you have labelled me and fit me neatly into the little box that you have constructed and labelled “liberal”.
[quote]…which means it is taxpayer money, and that’s our money, not theirs. [/quote]ok…anyone who works for local, county, university/state, federal government derive their salaries from “the public trough”… they also pay the same taxes as anyone else… except the “weakest” members of society… the ‘weakest’ pay no taxes, but expect publicly funded benefits beyond their societal contributions… fine… we reserve a certain portion of our income to contribute to these folks… with ‘furloughs’, loss of income due to a senior teacher in the household giving up the position for a younger “bread-winner”, etc., that charitable contribution has decreased. What has David & his partner, contributed in real dollars? other than state & federal taxes, to augment “taxpayer dollars?”
U.S. debt was downgraded tonight by Standard and Poors for the first time ever to AA+ with a negative outlook. Keep up the good work Obama, keep borrowing and spending.
[i]”So there is something of which I am sure. If you are a hungry, or cold, or sick child, it probably doesn’t matter much to you whether your economic system is free market or socialist or communist.”[/i]
This statement is easy to disprove. Under its communist economic system, China had 65 percent of its population living under the poverty line. Since they adopted market economics and began trading with the free world, that percentage fell to 4 percent in 26 years ([url]http://www.chinadaily.com.cn/china/2009-04/09/content_7661994.htm[/url]).
The story of getting rid of widespread poverty has repeated itself in almost all countries which moved from communist, price-controlled economies to market based economies where prices determine allocation of goods and services. The rare cases of former communist countries which still have widespread poverty are due to new government systems which continue to interfere too much in the markets, driving out productive investment.
Another interest case is to study countries like Taiwan, S. Korea or Chile, which were very poor, when their governments controlled prices and stifled competition, and suddenly became first rate countries with very healthy economies in a decade or less once they allowed full price competition in the domestic markets and more-less had free trade abroad.
Those sorts of countries need to be compared yet again to countries like Argentina, which were very wealthy and had for a time a first world, first rate economy and one of the highest standards of living in the world. Argentina was taken over by the socialist policies of Juan Peron, and in a decade became a third world country and has had widespread poverty ever since. Venezuela, today, has Argentina’s same sort of corporatist-socialist command economy and is faltering. However, Valenzuela has a great amount of oil which it exports (mostly to us), and that is masking over the failures of its corporatist dictatorship.
One more thing to keep in mind, Medwoman, about how important economic liberty is to fighting poverty. Look at the list of the countries with the most economic freedom and those with the least. You will notice that the standard of living is much higher, with much lower rates of poverty in free countries, and the standard of living is much lower, with higher rates of poverty in countries which control their economies. It’s not a coincidence that North Koreans are far poorer and far less free than South Koreans. It’s no surprise that poor African countries like Zimbabwe and Eritrea and Congo have governments which severely restrict economic liberty.
[quote]”I clearly remember in 2008, multiple news programs and interviews of economists on NPR ( commute listening) that indicated that this was likely to be a very prolonged recession….”[/quote]”Even a stopped clock,” medwoman. There were so many disparate, and multiple, predictions, I could’ve been rich if I’d just picked the one that’s turning out correctly. And people tend to accept the explanation that feels best to them.
I also clearly remember–at the very beginning of the HIV/AIDS awakening–expert reports that it not affect the blood supplies. Forecasting’s a bitch, particularly when leaders are trying to calm a restless populace. This line was accepted for a short time, ’cause we all “knew” how the disease spread.
[quote]”I clearly remember in 2008, multiple news programs and interviews of economists on NPR ( commute listening) that indicated that this was likely to be a very prolonged recession….”[/quote]”Even a stopped clock,” medwoman. There were so many disparate, and multiple, predictions, I could’ve been rich if I’d just picked the one that’s turning out correctly. And people tend to accept the explanation that feels best to them.
I also clearly remember–at the very beginning of the HIV/AIDS awakening–expert reports that it not affect the blood supplies. Forecasting’s a bitch, particularly when leaders are trying to calm a restless populace. This line was accepted for a short time, ’cause we all “knew” how the disease spread.
[b]David/Don:[/b] What is the time set to dump people off the site? After I’ve logged on, I type my comment in the box, then press “Add Comment” at which point a yellow like pops up letting me know I have to be logged on to comment.
That means, open up another window, then log off (since I’m still logged on), then re-log on, then go back to the page with the completed box and press “Add Comment” again. Sometimes, I end up having to start again when my comments are lost during this process. Other times–like right here–the post shows up twice with one blow.
Thanks.
Rifkin
I am not making an argument in favor of communism. My argument is that in a country such as ours where the wealthy are on wait lists to buy
$9000.00 jackests (Today’s New York Times ) on high end fashion purchases booming, we could easily choose as a nation to care for our children, and we choose not to. That is my only point. Quoting statistics about other countries does not alter that shameful fact.
JustSaying: I don’t know the answer to your question. That happens to me occasionally but I’ve always assumed that it was because I am on a rural ISP and my connection dropped. I pull duplicate posts when I see them.
Rich,
To be fair, you must acknowledge that there are severe trade restrictions that US and other trading blocks have with countries like North Korea (and have had with Cuba). You can bet that big finance and big business applies relentless pressure on them (thru western governments) to open up their markets so they can move in.
Not to say that even if trade policies were on an even keel that these countries would be as wealthy as western countries; but surely they would be better off than they are now.
I personally think its good that there are different types of governments thruout the world; and that we should leave these different types of governments alone and not impose trade penalties on them. As it is, the rest of the world is evolving rapidly towards a homogenous system run by and for big finance and big business. There will be no alternative system that will be allowed to exist that will challenge their hegemony. Surely the best of all possible worlds.
Don: Now, I’ve just lost an incredibly insightful comment that was almost ready to go as I tried to respond to you. I’ve always assumed that it must be something that Hathway Tech had done to the site because I’ve got AT&T’s high-speed service for urban and suburban residents. My guess is that 10 minutes is about all we get. Deep perception sometimes requires up to 20 minutes. Thanks.
JS: You could be right. That’s very frustrating. If you are having an ongoing problem (I’ll make sure David sees this and gets it to Hathaway), I suggest writing longer responses offline and then copying and pasting them in. It’s a habit I got into a while ago because my ISP does drop connections. But let’s see if there is a fix via the web developer.
JustSaying
You make a valid point about the difficulty of predicting. And a corollary about the nuances that are lost between the discussion as it occurs among professionals and how it is portrayed in public proclamations and by the lay press. I was in the early stages of my medical training when HIV/AIDS was surfacing in California. The discussions at that time in Internal Medicine and Infectious Disease were regarding how very little was known about the cause, means of transmission, and possibilities for prevention let alone treatment of this essentially unknown entity. Of course there are always individuals who will give interviews, whether well intentioned as in an attempt to calm public fears, or not, as in an attempt to build their own reputation. Unfortunately this is often done when there is little to no substantial body of knowledge established.
My comment was not meant to imply that anyone should have “known better”or “acted differently based on these interviews. Merely that the idea that this was likely to be a double dip recession was out there, and thus should come as no surprise.
[i]”My argument is that in a country such as ours where the wealthy are on wait lists to buy $9000.00 jackests (Today’s New York Times ) on high end fashion purchases booming, we could easily choose as a nation to care for our children, and we choose not to.”[/i]
Medwoman: I think you are stuck on class envy here. $9000.00 jackets are produced by some company that provides jobs. The profit the company earns allows it to expand its products and production and add more jobs. The compensation earned by the owners allow them to purchase more goods that allow more companies to do the same.
A article in the forum section of the WSJ today with quotes from Eric Cantor, I think, sums up our differences here:
[quote]The “philosophical starting point” of today’s Democrats, as Mr. Cantor sees it, is that they “believe in a welfare state before they believe in capitalism. They promote economic programs of redistribution to close the gap of the disparity between the classes. That’s what they’re about: redistributive politics.” The Virginian’s contempt is obvious in his Tidewater drawl. “The assumption . . . is that there is some kind of perpetual engine of economic prosperity in America that is going to just continue. And therefore they are able to take from those who create and give to those who don’t. We just have a fundamentally different view.[/quote]
biddlin: One your point about oil companies making high profits, oil company profit margins are some of the lowest of all industries:
[url]http://seekingalpha.com/article/269679-oil-industry-profit-margin-ranks-fairly-low-there-are-bigger-fish[/url]
[quote] If Greenspan had…[/quote]
From slate:
[quote]Democrats frothed and Republicans shuddered this week when Alan Greenspan suggested that Congress slash Social Security benefits. The frenzy was a shame, because it overshadowed an even more controversial statement the Fed chairman made earlier in the week. On Monday, the 78-year-old banker seemed momentarily to morph into peppy-personal finance maven Jean Chtatzky. As the headliner at the Credit Union National Association’s meeting—although I’m sure the bankers were also eager to see “David Landis performing as the U.S. Sen. George Norris, original signer of the 1934 Federal Credit Union Act”—Greenspan explained why consumers might be better off considering adjustable-rate mortgages, or ARMs, instead of standard fixed-rate mortgages.[/quote]
From wikipedia:
[quote]In 2000, Greenspan raised interest rates several times; these actions were believed by many to have caused the bursting of the dot-com bubble.[/quote]
The thing about economic forcasters is that there a lot like weather forcasters. None of them seem to have exactly the same forcast and it seems to change constantly. I think the only thing any of them acctually aggree on is that the current economy is not good. Beyond that they all differ as to exactly how bad they think it is, is it improving or getting worse, and how long it’s going to be before it gets back on track. To some extent it almost boils down to whether their a “the glass is half full” or a “the glass is half empty” kind of person.
For all we know whe could actually be on the verge of a complete global economic collapse. Its no secret that the oil is going to eventually run out. Our own goverment conducted geological survey predicted a peak in oil production sometim within the next few years. If you read “Confronting Collapse” by Michael Ruppert or watch the movie “Collapse” he makes some compelling arguments a global economic collapse in a post-peak-oil world. If that were to happen it would make the budget woes in Davis the least of our problems.
medwoman, no doubt you’re correct about early predictors being ahead of real knowledge–egardless of their motives. It was a long time ago, but my memories are that one of the strongest voices came from the trusted Red Cross, reassuring us about safety of blood supplies.
JB
You really think that my feeling that it is shameful to be spending $ 9,000 dollars on a jacket when we have hungry children is an example of class envy ? Who do you think is demonstrating the envy ? The child ? I would say that would be a justifiable sentiment. Me, not exactly since I probably could afford the jacket if I wanted it badly enough. And, I can’t help but wonder how this statement fits with your previous assertion that the thought of a hungry child makes you angry. Maybe it hasn’t occurred to you that if the purchaser spent $ 1000.00 on the jacket and fed however many children the additional $8,000 would feed, that is still money that would have gone back into the economy, and alleviated a lot of misery along the way. And, by the way, I did not include another point made in this article. The luxury items were actually being marked up from the initial sales price because they found that the items sold faster if they were believed by the purchasers to be more exclusive and prestigious. Now there is a true manifestation of envy for you.
JB
And on a more practical note, many of the high end items are not made in this country and therefore do not provide jobs here. Now perhaps you are looking at the bigger picture and are promoting overseas jobs, but that has not been my impression of your priorities from previous posts.
jimt: [i]”To be fair, you must acknowledge that there are severe trade restrictions that US and other trading blocks have with countries like North Korea (and have had with Cuba).”[/i]
There are only two countries in the world who have trade restrictions with Cuba: the US and Israel. No others ban any trade at all with that country. I fully believe Mr. Castro has used our trade embargo to prop up his terrible regime. If we had just ignored him and let American companies do business with him, he might have been ousted by his people a long time ago. As it is, Cuba has suffered for 60 years under Castro. He drove his island into poverty. They still are not Haiti poor. But Cuba was once the second richest country in Latin America (after Argentina). Today, Cuba is near the bottom of Latin countries. And with that poverty they have no civil rights and they have jails full of political prisoners and they have millions of people afraid to speak their minds.
As to North Korea, they have imposed most trade restrictions on themselves. They trade with China and South Korea and a few others. I assume we don’t allow much trade with them. (I don’t really know.) However, their poverty and the relative poverty in Cuba is not due to other countries’ policies.
I find this particular image really enlightening about the two Koreas:
[img]http://marketpower.typepad.com/.a/6a00d8345158c869e201287640f769970c-800wi[/img]
Revealing the North’s impressive efforts to follow Mayor Julie’s admonitions to stop disrupting the ecosystem and reduce luminous pollution.
JustSaying
Thanks for the smile !
[i]”many of the high end items are not made in this country and therefore do not provide jobs here”[/i]
Actually medwoman, this is not exactly true. Many high-end products are made, or are assembled, in the US. Also, you employ people throughout the distribution chain.
In any case, you don’t add jobs by increasing taxes. You increase jobs by reducing taxes. There is an equalibrium for how much we should tax production to cover infrastucture, defense and social security needs. See the Laffer Curve. That equalibrium is affected by global competition for business capital investment.
Job growth generally follows GDP growth. How do we increase GDP? We don’t do it by increasing taxes on people buying $9000 jackets.
Rich, thanks for that image of North and South Korea. Just imagine the human misery and suffering in that dark state. This is another in the large library of evidence of the destructive consequences of the collectivist mindset. I guess they can celebrate that more North Koreans are equal and there is very little gap between the private wealthy and the poor.
JustSaying: Nice!
Although North Korea is out of dogs, cats and toads. I don’t think mayor Julie would approve of that.