A Good Read

I am not saying I agree with it all but this is a very thought provoking - and extremely well written - piece that I think everyone should read. It should at a minimum lead to some very worthwhile discussions and debates. And do not think about responding to this blog if you have not read the attached link.

http://www.truth-out.org/goodbye-all-reflections-gop-operative-who-left-cult/1314907779

Hatred and anger fueled the rise of the Nazis many years ago. Are similar emotions fueling the rise of the Tea Party today? I personally think so and it is quite disturbing.

"Sudden"???

Here's a good one. In discussing what is up with the EU, USA Today noted today that there is a "sudden" realization that some EU countries may not be able to pay their debts. Heeeeeeeeeelllllllllllllllloooooooooooooo!! Where have you guys been? Seriously, this is "sudden?"

http://www.usatoday.com/money/perfi/stocks/2011-09-08-europes-debt-crisis_n.htm


Well, it is USA Today.

We Havin' Fun Yet?

I missed Mr. O's big speech tonight. Not because I wanted to but I had work obligations. So I do not know what he said. Seriously, I do not. I am guessing from leading up reports it will be something like spending hundreds of billions of dollars in stimulus to create jobs. Now I have read articles claiming that the first stimulus cost over $225K per job. Okay, I did read it on Fox and we all know they are not the best friends of Obama, but they claim to have it from the CBO. Either way, I tend to doubt it is much off.

http://nation.foxnews.com/stimulus-money/2011/02/24/cbo-jobs-created-or-saved-stimulus-cost-228055-each

So spending $225K+ per job for jobs that I assume are paying less than $50K does not seem to me to be smart math, at least in the way I understand math. What me thinks the problem here is is a lack of understanding on what the problem here is. More specifically, building government deficits to throw money at problems can work in certain situations and can work on certain problems, but it is not working here. Certainly not the way we are doing it.

What we have is a debt problem. Sponsored by the US government, many folks got their collective arses in over their eyeballs in debt. We incentivized banks to give money to anyone who could fog a mirror. We allowed them to have bogus appraisals to justify such lending. We allowed credit agencies to give bogus ratings to securitize these loans. We just sat back and let it happen. And now we have a debt problem. Go figure!

While financial institutions do have somewhat of a financial problem (which they are not yet admitting), or at least a lot of them do - especially in Europe - most companies in the US are okay. They have capital, have reduced their work forces to an efficient level, etc. They simply have no customers or sales as their customers are heavily in debt, in other words, their customers are broke.

Now I read at the WSJ that companies simply want the government to get out of the way and strip out some regulations so companies can prosper and start hiring. Now I do agree with this to some degree as there are a lot of regulations on the books that only the bad players ignore and the good players spend tons on compliance (like SOX), but I do not see this needed step as necessarily what is in the way of economic growth at the moment. Removing the regulations does nothing to remove the debt of those we need to have start spending.

Perhaps we need to take the stimulus dollars and pay off some debt. I agree US debt needs to be paid off but if we are hell bent on spending tax dollars to stimulate, perhaps we should spend them by having Freddie and Fannie do loan mods that relieve debt and thinking of other ways to relieve individual debt. Perhaps we can allow consumers refinance high interest rate credit cards at lower interest rates through government programs. Perhaps we can assist loan mods at financial institutions other than Fannie and Freddie. The name of the game here is deleveraging and until we come up with a plan that does this in a serious fashion, the economy will not get back on track. No mistake here, a multi-year process, but we need to treat the cause, not the symptom.

Disclosures: None

Greek Default?

It looks rather inevitable that the situation in Greece is coming to a hear over the next few weeks, if not days. So Germany, what say you? Sink or swim?

http://www.bloomberg.com/news/2011-09-08/greek-credit-swaps-surge-to-record-signal-91-chance-nation-will-default.html

Not much Obama can say tonight to change this or its impact on US jobs. Really not much anyone can do at this point to stop this train and I think a lot of folks are finally waking up to that reality. Good or bad, there is a lot of pain ahead and perhaps it is best to let it happen and get it over with as best we can.

OK - More Mojo Macro

Now I am not going to do a lot of surfing to find it for the handful of people who read this, but I can if things take off on this blog and I get thousands of hits. I read recently that some group did a study that the world is operating at 150% of capacity. In other words, we are using resources to an extent that we would need another half earth to sustain our consumption. Let me repeat that so it sinks in - we are totally raping our planet and leaving it barren for future generations!

So we have millions of people being added to the world population each year, emerging economies buying all the resources that we all need and that are limited. Can we continue this path?! Please think about it.

Disclosures: None.