RE-EMPLOYMENT REALISM - The More Things Change...

RE-EMPLOYMENT REALISM

Christian Science Monitor

President Roosevelt's radio address Thursday night expressed more of a conservative attitude toward the relief problem in the United States than he has yet voiced. In this respect, so far as the words are borne out by action, the present attack on the question of re-employment should be more satisfying and reassuring to those who believe the nation should get quickly back to reliance on private rather than governmental methods.

The points in which Mr. Roosevelt indicated this change of direction, or rather change of emphasis, toward retrenchment were these:

• He hailed the increase of employment in private industry by 350,000 in September, bringing the total gain, to 5,000,000 since the bottom of the depression.
  


• He hoped that the necessities of government relief furnished by funds received by taxation should decrease as rapidly as human needs will allow.
  


• He appealed for greater support of local and private
  charities to assist in making it possible to turn back the care of the needy to the states and to these organizations.
  


• He stressed the word "work" and added, "Neither private charity nor government relief wants to continue to help people who can work but won't work."
  

These all represent commendable purposes. Private business deserves a continued "breathing spell" from political heckling in order to show what it can do in keeping the recovery
ball rolling. Every bit of taxation that can be reduced or avoided by lightening the relief load will help in this process.

A measurable return of local, neighborly and personal responsibility for the legitimate demands, of charitable aid will be far better than a continued drift into the easy and lazy courses of governmental paternalism.

Sternness must be judiciously mingled with humaneness, but in the long run it has to be remembered that only work produces goods and only the willingness to work merits their enjoyment.

Evening Huronite, Huron, South Dakota, October 31, 1935 - Editorial Page

RH

P.S. In 1935 the country is still right smack in the middle of the Great Depression.

Burned Alphabet Soup - The Death Of California

Yup, here I am again, yacking about politics - I made the mistake of buying a newspaper and thus lost my blissful ignorance of the many ways those idiots in Sacramento are killing my state. I had to brush the mental cobwebs off my various degrees in economics - (I really only have two) and start running certain "budget remedying proposals" through my rusty econ brain.

I have to wonder whether anybody up there in Sacramento ever attended a class in economics. In case they have not, I thought I would offer up a neat little equation they may have missed.

It goes like this:

GDP = C + I + G

It says our Gross Domestic Product is the sum of how much consumers spend (C) plus how much is invested (I -like when a business builds a new factory) plus whatever the government spends (G).

When C, I and G get bigger, GDP gets bigger and we hear on the radio that the economy has grown. Whoopee we think.

Sometimes one of them gets bigger and one of them gets smaller - or two get bigger and one gets smaller, or two get smaller and one gets bigger or they all get bigger - in any of those combinations, we can still get happy news on the radio that our economy is growing. (As long as whichever one(s) get bigger do so by more than the other(s) got smaller.)

There is one combination of C+I+G though, that is unambiguously bad. That is when C, I and G all get smaller. That is the opposite of growth. That is shrinkage. We also call that a recession.

Wise government types - or at least those who want to get re-elected, will try not to cause any more shrinkage in either C, I or G. Indeed, many will expouse the virtues of deficit spending to help "kick-start" the economy or of cutting taxes to help "kick-start" the economy.

Notice I said deficit spending and not just spending. Deficit spending implies you spend more than you bring in - Gov. Terminator is a big fan of this. Deficit spending makes our equation look like this:

Before deficit spending:

GDP = C + I + G

After deficit spending:

GDP = C + I + G

G grows, C and I stay the same - economy grows.

If the government raises taxes, then C and I get smaller but G grows - and then everybody argues about whether G grows by enough to offset the now smaller C and I. Although it doesn't and cutting taxes would make C+I grow more than G shrinks

So, our state government here in California has put together a budget that both slashes spending and raises taxes. Meaning all three of our letters get smaller!

Like this:

gdp = c+i+g

Do you want to live in that economy? Note that this is on top of everything that is happening due to the financial mess. Our only option is to cut taxes by more than we cut spending. Or we are going to be in big, big trouble.

RH

Lost My Mind? - I Wish

I know you think I've lost my mind based on my last post - I do too in the light of day - but then again, nobody really expected the last civil war - (women and children were invited to the first battle and brought picnic lunches to watch the North trounce the South) - That was two Fourth Turnings (4T) ago.

What about the last turning? The most recent period of US history to experience a 4T was the Great Depression, culminating in World War II. Did anybody see that coming? You be the judge! Here is a headline from a newspaper dated October 31st, 1929.

This article appeared on the front page of the APPLETON POST- CRESCENT - one week after the stock market crashed! You don't have to be a history buff to know how wrong they were... with the benefit of hindsight it seems like whoever wrote that article had taken too many happy pills.

But guess what they would have said back then if you had told them that the country was headed for 10 years of depression which would end in a world war?

RH

PS: One Year Later: Income Tax Is 148 Million Dollars Less 10/29/1930

Then and Now - The Great Depression, Act II

"Those who cannot remember the past, are condemned to repeat it"

Meaning: We didn't learn our lesson yet so that lesson will now be repeated.

"If expansion of the brokers loan account gets to the place where it is dangerous and borders on unwarranted speculation, the American banking fraternity itself would correct the situation." Former Governor Roy A. Young of the federal reserve system, quoted in 1928. He said he could recommend no legislation to that end.

Meaning: What me worry? The banks don't need to be regulated! They will self-regulate and everything will be hunky-dory!

Event: 1929 Stock market crash, the Great Depression, Misery, Poverty and a distinct absence of Hunky Doriness.

Event: Glass-Steagall Act Of 1933 - set up a regulatory firewall between commercial and investment bank activities, both of which were curbed and controlled. See Source

Meaning: By 1933, people were not so happy with the results of banks regulating themselves so they decided to help out - (Hunger tends to make folks grumpy)

... Hunky Doriness ...

Event: Gramm-Leach-Bliley Act 1999 - to the delight of many in the banking industry (not everyone, however, was happy), in November of 1999 Congress repealed the Glass-Steagall Act with the establishment of the Gramm-Leach-Bliley Act, which eliminated the Glass-Steagall Act restrictions against affiliations between commercial and investment banks. Furthermore, the Gramm-Leach-Bliley Act allows banking institutions to provide a broader range of services, including underwriting and other dealing activities.


Meaning: Representative Jim Leach (R-Iowa) and Senator Phil Gramm (R-Tex.) owe us some money.

I would also like to see money paid back from the following people:

1. Daniel Mudd - Fannie Mae, the biggest U.S. mortgage finance company, said that it paid its chief executive, Daniel Mudd, salary, bonuses and stock valued at $14.25 million in 2006, an increase of 25 percent.
2. Richard F. Syron - 5-Year Compensation Total $29.06 mil - Richard F Syron has been CEO of Freddie Mac ( FRE) for 4 years. Mr. Syron has been with the company for 4 years. The 64 year old executive ranks 34 within Diversified Financials
   
3. Kerry Killinger - Washington Mutual lost $3.3 billion in the second quarter, on top of more than $1 billion of losses in the first quarter, as it scrambled to raise reserves for loan losses. Killinger received no 2007 bonus amid huge losses and a 70% stock price drop. That cut his pay to a mere $4.9 million. His board decided in March to exclude the financial damage from WaMu's subprime lending from the operating profit figure used to calculate his bonus. Directors backed off in April after shareholders forced former finance committee head Mary Pugh to resign.
   
4. TBD
   

If you care that we taxpayers are being asked to foot the bill for this bailout, then join me in getting our money back from the people who stole it. And yes I mean stole it. Since when does one deserve bonus pay for driving a company into the ground? I want that money back - These people had no business taking on a job that they were so obviously not qualified for. I want consequences!!!

RH

PS Consider this a lesson in Home Economics. - My list will continue to grow and if you know of somebody who should be on this list, by all means nominate him/her!