I don’t like what I’m hearing, or, more precisely, what I’m not hearing. Too many people are predicting a double dip recession.There are 25 million Americans out of work or not working the hours they’d like. Ditto for Europe. Yet the focus is on low interest rates and fighting inflation.
The only way to save the world’s economy is through economic growth. The only way to get economic growth is by putting all these people back to work. Yet, neither the Republicans nor the Democrats have a jobs/economic growth plan.
Bernanke says he’ll do more with monetary policy — keeping interest rates low. But low interest rates only benefit the banks and special companies like the mortgage REITs which benefit from interest rate spreads. Businessmen don’t borrow because interest rates are low. They borrow because they see expansion opportunities. Right now their sensible approach is to bulk up on cash — which is what businesses have been doing. There is an unprecedented amount of cash on corporate balance sheets. Sitting on cash doesn’t employ anyone.
What’s most depressing is that you and I could create in one-day a jobs-creating/economic growth plan that would blow away everything the Republicans and the Democrats have come up with. There are a zillion things people could be put back to work doing.
Don’t worry about the deficit, the debt ceiling or inflation. Just get people back to work. The resulting economic growth will solve everything. If you and I get it, why don’t our politicians?
The Wall Street Journal writes:
The trouble today is that there’s no clear path to a resolution of Europe’s sovereign-debt crisis or a clean bill of health for the U.S. economy. In both cases, it could take months before investors have real visibility. In the meantime, stock pickers might want to brush up on their macro knowledge.
Value Line points out that on March 9, 2009 (the market’s low), the median of estimated price-earnings ratios of all stocks with earnings was 10.3. It’s now 13.6. Not cheap.
Time to be more in cash and mulling.
Dumb investment: building a house on the beach. And then waiting for the next hurricane.
Susan and I spent the weekend at our Columbia County house 127 miles north of New York City. We got a lot of rain. Many roads were washed out. Streams ran like Category 4 rapids. Some trees came down. We lost power for a few hours. Miraculously, our emergency generator kicked in, depriving us of a romantic evening. This morning, the skies are azure blue. Not a cloud. The temperature is crisp. Perfect tennis weather. What will the TV “meterologists” talk about now?
Relatives in Vermont are stranded by washed out bridges and washed-out roads. Vermont got hit really hard by flooding.
Life inside China. From today’s Wall Street Journal and Newsweek.
The U.S. Tennis Open starts today. Live matches will be on ESPN2, with repeats on the Tennis Channel. When we get to the weekend of September 10 and 11 (semifinals and finals) it will move to CBS. There’s a timetable here and here. Weather and match length force changes in the schedule.
Novak Jokovic’s secret of being Number 1 revealed: Sitting in a pressurized egg. Today’s Wall Street Journal.
Big people words.
A group of kindergartners were trying very hard to become accustomed to the first grade. The biggest hurdle they faced was that the teacher insisted on NO baby talk!
You need to use ‘Big People words,’ she was always reminding them.
She asked John what he had done over the weekend? ‘I went to visit my Nana.’
‘No, you went to visit your GRANDMOTHER. Use ‘Big People’ words!’
She then asked Mitchell what he had done
‘I took a ride on a choo-choo.’
She said. ‘No, you took a ride on a TRAIN. You must remember to use ‘Big People’ words.’
She then asked little Alex what he had done? ‘I read a book,’ he replied.
That’s WONDERFUL!’ the teacher said.
‘What book did you read?’
Alex thought real hard about it, then puffed out his chest with great pride and said:
Harry Newton who played tennis (indoors) and read a lot of learned forecasters — including John Mauldin (“Last week I finally stopped being wishy-washy (with my 50-50% chance of a recession call) and said the US would be in recession within 12 months“) and the Economist’s How to Avoid a Double Dip — and stuff the Europeans are doing wrong — like raising interest rates. Most depressing.
Bloomberg had a piece this morning: The U.S. Needs a Jobs Policy, Not More Cheap Money. Click here.
From a learned newspaper in the south: “Witnessing the Republicans and Democrats bicker over the U.S. debt is analogous to watching two drunks argue over a bar bill on the Titanic.”
Harry there can be very many (and conflicting) opinions on the role of government in moving an economy forward.
The analogy that comes to mind is that government is like the road from point A to point B, A being where where are now and B where we would like to be.
Many of us feel that the road is broken, mismanaged, full of potholes, etc.
Where I disagree with apparently many of your readers is the subscription to the meme that government is best eliminated rather than shaped to meet our needs. Sure government and politicians and government workers and bureaucracy make convenient and at times well-deserved punching bags, but the kind of world I'd like to live in is one where I pay fair taxes for government services and get a return on those taxes. NOT the “elimination” of government- that's a pipe dream that will never happen, taxes will not go away, and that meme is being exploited by those who would not mind having us move in the direction of Somalia or dysfunctional (but suitable for the wealthy) every-man-for-himself paradises like Mexico.
So I agree with you that most politicians' take on the economy is wrongheaded; let's push them in the right direction instead of what some are calling for, which amounts to jumping from the pan into the fire.
For Reference: An excellent, though perhaps pithy, recent FORBES article: http://www.forbes.com/sites/pa…
Don’t worry about the deficit, the debt ceiling or inflation. Just get people back to work. The resulting economic growth will solve everything. If you and I get it, why don’t our politicians?
I couldnt disagree more. its how you create jobs that will stimulate growth, not stimulating growth at any price. Creating jobs with borrowed money is a proven failed economic growth strategy. If it werent the last stimulus(QE2) would have worked. Is that what youre advocating?
Keynesian economics dont work in the long run. Would have failed long before if USD wasnt reserve currency.
Sounds very Paul Krugmanish to me…youre writing historically has proven to be so much smarter and better than that loser…:)
QE2 was an extremely poor use of stimulus money. The stimulus could have been used much more effectively instead of giving welfare money directly to the banks to piss away.
Since the banks are doing a very poor job dealing with mortgagees in foreclosure, the gov't could have bought the underwater mortgages itself and renegotiated workable terms with the home owners. Instead of giving $Billions to banks while families are thrown out of their homes and those homes sit vacant.
Instead of expecting over cautious business' to create jobs, the gov't could create direct employment rebuilding and maintaining our country. Instead of DESTROYING the other side of the world, we could put the money to much better use REBUILDING our own infrastructure.
I agree that debt spending is irresponsible and counterproductive in the LONG term, but in the IMMEDIATE term, the gov't needs to step in and jolt the economy back to life. Intelligently applied stimulus is required to smooth out the extremes of the capitalist business cycle.
“….you and I could create in one-day a jobs-creating/economic growth plan…” The begs the bigger question, Harry, “Can Politicians create jobs?” The radio series, “This American Life”, (yes, I listen to NPR) did an excellent show on the topic. http://www.thisamericanlife.or…
One commentator on a different series claims that the only way a politician can create jobs is to start “a war.” It could be the “War on Drugs” or the “War on Poverty” or the “War on Sadam Hussein”. All of those “wars” employ a lot of folks. Are they productive jobs? Lots of room for argument there, no?
Now, I understand that you were really trolling for economic/fiscal/regulatory policies or actions, right?
I'll give you one, from right here in the Florida Keys: Oil companies based in China and other countries, in cooperation with the Cuban Government, are gearing up to drill for oil within 50 miles of Key West. http://keysnews.com/node/29492 They will be slant drilling right into our reserves. The best our politicians can do is to try to pass legislation to “deter” the companies from doing business with Cuba. Um, how well has that worked out in the past?
At the same time, according to an August 28th article in the Financial Times, because of the EPA and other regulators, only 41.5% of the shallow-water US rigs are working. http://www.ft.com/cms/s/0/d733…
So, you want to reduce the speculative price run up on oil, generate revenue for Florida, Mississippi, and Louisiana, and put a lot of people back to work? Then get the US regulators out of the way!
Oh yes, increased US oil production would make ethanol and “green energy” less desirable. It would raise the risk for some environmental problems (note that the Deep Water Horizon spill was much more of a PR disaster then an environmental disaster!) and various groups would run around with their hair on fire. But, you want jobs?? There it is!
— FJD
you make a few good points but then get back on the broken down problem-is-regulation-environmentalism train. Please.
Let's just just look at one country, one that has consistently committed to strong environmental policies, reduced/no nukes, strong unions, high standard of living, solid employment, extraordinary export economy that makes things people want, very little sun yet gearing up a commitment to solar that puts us to shame, universal health care, superb education, weeks of vacation time for the workers… shall I go on? Do I need to paint a picture by contrasting to our broken down model?
Obviously I'm talking about Germany, a nation whose policies mirror ours in the opposite direction and yet thrives in a world with sick bankster predatory economies.
I hardly can believe my eyes when yet again in a country that has just about gone off the cliff economically because of handing the keys over to the predators… I read: let's take away ALL regulation and pollute ourselves to death and totally commit to oil because that's the future and will lead us out of the swamp we've built for ourselves.
Many politicians, corporations, and citizens have this mindset, and it will inevitably lead to our demise (we're a good part of the way there obviously) and our being replaced as the model for a desirable economy and way of life for its population.
Veruch,
What you state about Germany is the widely accepted version as distributed by the media. Having lived there for about a decade, integrated into daily German life (not on a military base) I can tell you that what you state is not a completely accurate reflection of daily life Germany. Ever since the “wall” came down, real unemployment has been high (not the dressed up press release version) and the unions' power is so strong that it literally shuts down an entire city if workers decide to strike (hostage situation anyone?) As a nation, you just don't feel the vibe that you feel in the U.S. with people truly believing that hard work will almost certainly pay off and people are starting new ventures everywhere and all time, regardless of economic conditions. When was the last time you saw anything like Google, Groupon, Facebook, etc coming out of Germany? Germany is a socialist country and people there are content with where they are and how life is. They have job security, they have health care, they are allowed generous vacations every year, and they get to take daily naps after lunch when just about everything shuts down for two or three hours every day. That screams content to me and ovbiously, most Germans. As an American, I find that type of life utterly boring, dull, and uninspiring. It is a nation that simply goes through the motions. That is not America and thank God, it will never be. The beauty of America is that if that type of lifestyle is what you want, you can have it. If you get bored with that type of lifestyle, you also have many other options to go after. Not in Germany. God bless America, still the only “Land of Opportunity” bar none!
Germany has been the home of some of the most prominent researchers in various scientific disciplines, notably physics, mathematics, chemistry and engineering.[1]
For most of the 20th century, Germany had more Nobel Prizes in the sciences (physics, chemistry, physiology or medicine) than any other nation.[2]
You state: “They have job security, they have health care, they are allowed generous vacations every year,” and you assert that: “The beauty of America is that if that type of lifestyle is what you want, you can have it.”
Millions of people here will be relieved to hear that.
And you imply that German workers have too much power; perhaps, certainly from the perspective of corporations. Have we found the right balance here in the U.S. where workers are shamed for demanding “benefits”, where corporations now have used their freedom and “personhood” in a mad race to the bottom, including creating many new jobs- overseas, and to despoil our environment?
“Germany is a socialist country”- really? I suppose many European countries are socialist compared to the U.S. but that's a specious comparison. Europe has democratic socialist economies based on capitalism and there are no pure socialist economies there, not even close.
The U.S. and Germany are very different cultures and I would never suggest that the U.S. needs to be Germany. But I do think that the U.S. is losing its way when it comes to acknowledging that there is a commons to living in a civilized culture, something our founders realized and dedicated themselves to establishing, having come from the old European model where you were in the tiny privileged minority or you were out of luck.
Is it possible to have a vibrant free culture where the individual and ideas can thrive while at the same time having a solid foundation based on a strong commons that can provide for the elderly, the sick, children, education, infrastructure and evironment, and those who have given their productive years to our nation, to our military, and to their families?
If there is one country on this planet that should be leading the way in answering that question it's not Germany, and it's not China, and it's not Brazil- it's the United States of America.
1. ^ Back to the Future: Germany – A Country of Research German Academic Exchange Service (2005-02-23). Retrieved 2006-12-082. ^ National Science Nobel Prize shares 1901-2009 by citizenship at the time of the award and by country of birth. From J. Schmidhuber (2010), Evolution of National Nobel Prize Shares in the 20th Century at arXiv:1009.2634v1
http://www.daad.de/deutschland…
http://www.idsia.ch/~juergen/s…
http://www.idsia.ch/~juergen/n…
Frankly, I don't remember writing anything about Germany. You sure you don't have me confused?
Harry, Veruch was responding to my comment above, which I wrote in response to his comment. Before you know it, you may pull back from writing your columns and just moderate. 🙂
Veruch,
Interestingly enough, Germany is now starting to pick up a lot of hints from America. Their health care system is nothing like you think it is anymore. It is starting to be burdened by red tape and rejection of treatments, etc. just like the insurance companies do here. Sooner or later, their way of doing things is just not financially sustainable because all the advances that are made in medicine simply mean people live longer and will require more services. Where do you think the money will come from? I cannot tell you all the complaints I have been hearing from my friends in Germany how their healthcare system is starting to look like America's. It must be changing because not all must have been well.
Am I saying America is perfect? Absolutely not! We can certainly use improvements in many areas, lots of them. However, it is certainly not as bad as people and the media try to make it sound, especially when you compare it to other countries such as Germany. I cannot tell you how many of my German friends are trying to come to the U.S. to “improve their lives” and to “fulfill their dreams” among other reasons. All of them feel “stuck” in life. Most live in the first homes they built or bought, decades ago.
I do assert that unions are too strong and they almost always get their way because the consequences are dire for the locals. When one union moves for a strike, it is usually supported by other unions who will also strike in support and the domino effect literally shuts down an entire city. I have seen it and lived through it. Even college students “strike” in support.
I guess the bottom line is that based on the time I lived there, Germany is a great place for people who are content to have a secure job, decent healthcare, and generous paid time off from work. It really is a beauful place to visit as well. However, for people who are driven, motivated, and have little tolerance for routines, there is no better place than America. Our imperfections are ripe for the minds who want to create solutions for our daily problems and a country this size will never run short of problems…thus the term Land of Opportunity.
Veruch — I chose one example of a jobs-building action, local to me and very pertinent, to show the inherent conflict in any action by government. Pick at it if you like, but Germany as a model? No, I can't give that a “Like” …