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Secretary of the Treasury Geithner appeared before Congress this week. The advance scoop was that he would be proposing new regulations for the financial industry. What a great idea! You might have said, “It’s about time!” Otherwise, what will prevent another round of crises and meltdowns? But, our hopes were dashed. Geithner simply asked for more authority to take over and bail out an even bigger number of companies. That’s not going to put a stop to the wild speculation that is tantamount to gambling by the financial industry. In the business of fire fighting, it would be far better to prevent the fire than to fight the fire. Geithner reminds me of a fire chief who wants to buy bulldozers to clean up after the buildings have burned. Maybe Secretary Geithner has a prevention program up his sleeve. Maybe it’s too early to judge the executive branch. One can still hope for rules for higher reserve requirements, elimination of naked gambles by bankers and insurance companies, etc. On the other hand, the Congress has been around for years and years. What have they been doing? Your representatives and senators in the U.S. Congress have thousands of people working on their staffs. The Congress has no excuse whatsoever.
Click here to contact your representatives in Washington, D.C.: – Byron |
Archive for March, 2009
Where’s the Financial Fire Prevention?
Sunday, March 29th, 2009After The Bonus Uproar, Stay Mad!
Sunday, March 22nd, 2009|
This week’s hullabaloo over the AIG bonuses is an indication that the public is paying attention. However, the public may simply be going after the wrong people. In other words, chasing a red herring instead of attacking the real problem. One can only hope that the anger now turns toward the source of the real problem. The real problem people are the members of Congress. For thirty years, the Congress has gone along with the mentality of the corporate finance community. The mentality said regulations are bad. In fact, it looks as if criminal enterprise is now a part of the definition of free enterprise. Just look the other way and say, “Let the buyer beware.” AIG, and the rest of the financial industry, sold options to their customers which weren’t covered. It’s like selling insurance and hoping that claims wouldn’t come in. Why? Because AIG and the rest didn’t have the money to pay off. And Congress looked the other way. Albert Einstein told us, “Intellectuals solve problems; geniuses prevent them.” The good news is that Congress doesn’t have to be a genius, nor even very smart, to put back all the financial rules of the New Deal. Most of the legislation was written 75 years ago. The “financial crisis” started last year. Have you seen one effort by Congress to put the honest controls back in the system? Have you heard of one piece of legislation? It seems like we’ve seen lots Here’s what one wise man observed as the problem with Congress. Mark Twain boasted,
Click here to contact your representatives in Washington, D.C.: – Byron |
A Samurai Congress
Tuesday, March 17th, 2009|
Did you hear what Senator Charles Grassley said He may have meant that literally or just figuratively. But, Senator Grassley is on to something. That might apply to the Congress, which brought us all the deregulation. Ultimately, the House and the Senate brought about the meltdown of the financial system. It was done by undoing the old regulations and choosing not to control new practices. Warren Buffett said that the new highly complex financial instruments are time bombs and “financial weapons of mass destruction” that could harm not only their buyers and sellers, but the whole economic system. And he is certainly right. The ultimate price of a trillion dollars (and still counting) is being paid by each and every American. Look first in the mirror, Sen. Grassley. Then, address your fellow politicians in the Senate and the House. Here’s the message that’s appropriate:
Click here to contact your representatives in Washington, D.C.: – Byron |
Job Picture: Worse Than They Say
Friday, March 6th, 2009|
Today the Labor Department released the results of its survey of the employment situation in the United States. The “official” unemployment rate (their words) is now 8.1%. If you earned $10 last month, you’re counted as employed. Their “official” rate is the rate you see reported in the newspapers and on TV. In one sense, it’s the rosy statistic that has been used for decades. However, if you wanted to get a better feel for the true misery rate of America, you’d have to look at the underemployed as well as the folks who said they just didn’t bother to look for work anymore. The reference link below will show you better measures. The official rate, that 8.1% number, is called U-3. Take a look at a second statistic called U-6. That measure of misery says the unemployment rate is 14.8%. That measure is also worthy of mention in the media. It tells us that one person in seven can’t find a full-time job. For years, my rule of thumb is to double the official rate of employment to get a sense of how many people are doing poorly in the U.S. To get the exact number for U-6, you’ll invariably have to visit the website of the Dept. of Labor. They don’t even have a name for it except “U-6.” Let’s just call it the “Comprehensive Misemployment Rate.” Just remember the next time you hear the “official” rate that it is just not the whole miserable story.
Here’s yet a third way to see what the average working person is up against. The U.S. has an increasing population. In 8 years the population went from about 281 Million to 306 Million. So just to stay even in jobs for Americans, new jobs have to be created at the same rate. In the last 8 years, Americans have been falling behind. Here’s the slow decline for working men and women:
When was the last time you heard that phrase “full employment?” It’s a by-gone concept. In the 1970’s, the Congress defined “Full Employment” to be reached when the “official” unemployment rate is “only” 4%. That definition puts a seal of approval on a lot of misery for Americans. Remember, when you have 4% “official” unemployment, the “Comprehensive Misemployment Rate” U-6 is around 8%. Let’s have a wild and crazy dream. Let’s shoot for a full employment rate of about 105%. That would be a good indicator that jobs are going begging due to a booming economy in America.
Click here to contact your representatives in Washington, D.C.: – Byron
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