Ohio, Ready To Swing

Tomorrow Americans across the land will vote in Super Tuesday primary elections.  Ohio — the prototypical swing state — is once again ready to swing.

The latest polls show that the race between Rick Santorum and Mitt Romney in the Ohio Republican presidential primary is too close to call.  The polls indicate that Romney has made up a fair amount of ground over the past few days and is doing well with late-deciding voters. There also are indications that Ohioans are not exactly straining at the leash to address “social issues” and would rather that the focus remain on the economy.

I’m not surprised by any of these results.  Although Ohio has some folks at the extreme ends of the political spectrum, in my experience most Ohioans are middle-of-the-road, pragmatic people.  They don’t seek out conflict.  They are fully capable of having a political conversation with a friend or co-worker who has a different political viewpoint without seeing the discussion devolve into name-calling or cheap shots.  Ohioans largely keep to themselves and expect their neighbors to do likewise.  And, if they think there is a problem, they just want to fix it, without paying too much attention to who gets the credit.

This year, Ohioans know all too well that the economy has been poor, and they are interested in seeing how that problem can be fixed.  I expect that tomorrow’s results will give the country a pretty good idea of which Republican candidate middle America thinks is best suited to that job.

The Occupy Protests Turn Weird

We seem to have reached a kind of turning point with the “Occupy” protests.  Last night’s violence in Oakland, among other incidents, raises more general questions about the “Occupy” protests.  Who are these folks, really, and what do they want?

Some mayors have lost patience with protests that disrupt neighborhoods and interfere with commerce.  In other areas the “Occupy” protests appear to have attracted the attention of criminal elements who sense the presence of trusting souls who are ripe for the picking. In still other places the protesters look to be lashing out indiscriminately, and doing curious things like deciding to occupy random buildings

The protests seems to be searching for a common theme — and I predict that the lack of a common theme ultimately will be fatal.  This isn’t like the ’60s, when protesters of all stripes — from the Weathermen to the Black Panthers to guys who just didn’t want to fight in some faraway country for some ill-defined cause — were unified in their opposition to the Vietnam War.  Economic issues, in contrast, are much more diffuse.   It’s one thing to say, in effect:  “The economy sucks!”  Most people would agree with that sentiment.  But after you get past the general, and start to focus on the specific, the fractures appear.  For every “Occupy” protester who wants to tear down our current capitalistic system and replace it with a New World Order, how many of the protesters would be perfectly happy to just have a job in the field that they studied in college?

The President’s Bill Goes Down — Now What?

Last night the United States Senate — in one of those weird maneuvers that make sense only to Senators — took a vote that killed President Obama’s “jobs” bill.  A majority of Senators voted in favor of moving the bill forward, but there weren’t enough votes to overcome a threatened filibuster.  Every Republican opposed it, as did two Democrats, and other Democrats stated that they would have voted against the bill on its merits even if it had cleared the procedural hurdles.

So, the President’s speeches, radio addresses, and instructions to “pass this bill right away” failed to drum up support for his bill.  No shocker there!  Any request for another half trillion dollars in “stimulus” spending and tax increases was never going to pass Congress with Republicans in charge of the House, although it may be surprising that the bill couldn’t even get the unanimous support of Senate Democrats.  In any case, the President can now rail against a “do-nothing” Congress during next year’s campaign — which may have been part of his motivation for proposing the doomed measure in the first place.

The Republicans have claimed that President Obama’s proposal was just campaign politicking.  So what?  Does anyone really think the President is above partisan politics?   The problem with the President’s proposal is not that it was “political,” but that it did not generate much public support and the moderate Democratic Senators realized that.  The Republicans therefore demonstrated that there is no appetite in the country for hundreds of billions of dollars in more spending and more taxes to pay for it — which probably was their goal from the beginning.

So, each side likely has the political argument that they wanted out of this process.  Bully for them!  No doubt the “talking points” have already been drafted and distributed, and the insiders can lean back in their chairs and breathe a sigh of satisfaction at a job well done.  But, despite this tremendous exercise in careful political posturing, unemployment remains too high, the federal debt is skyrocketing, and the economic is becalmed.  For the rest of us outside the confines of the Beltway, the question is:  “Now what?”

Let Them Protest — It’s The American Way

Protesters have been camping out and protesting in the Wall Street area of New York City for the last few weeks.

Some participants are protesting “corporate greed,” others object to the role of corporations in politics, and still others appear to be venting general anger and frustration about our economic problems.  Similar protests have occurred in other cities, too.  (The story linked above says “A group in Columbus, Ohio, also marched on the capital city’s street” — which makes our fair city sound like a one-horse town.  Hey, AP!  For the record, we’ve got more than one street in Columbus.)

I don’t blame people for protesting.  In my view, the Wall Street protests are a flip side of the Tea Party protests that started in 2009 and spawned significant grass-roots politicking.  The Tea Partiers dressed in colonial garb and the Wall Street protesters dress as corporate zombies, but both are expressing a deep concern, shared by many Americans, that the country is heading in the wrong direction.  The economy sucks, jobs are scarce, and nobody seems to be doing much about the problem.  The two groups’ proposed solutions to the problems are different, but the deep-rooted anger about the problems in the same.

The great thing about America is that the First Amendment allows the anger and frustration to be vented through peaceful protest, and the act of protest allows the protesters’ message to reach a wider audience.  If the protest strikes a chord with a sufficiently large segment of the population, as happened with the Tea Party, then stray protests can become a movement.  It remains to be seen whether the Wall Street protests have that kind of broad impact or staying power, but we’ll find out soon enough.  Until then, I say let them protest, and applaud their exercise of their First Amendment rights.

Looking For A Job, Any Job, In Cleveland

Times are tough in Cleveland.  How tough?  Today a story gave us some sense of the distress felt by many people.

The times in Cleveland are so challenging that, when the Horseshoe Casino Cleveland announced that it was accepting applications for table game and poker dealer jobs that pay between $17 and $22 per hour, 11,800 people applied for 500 openings.  Some applicants even took special coaching classes at a nearby community college to try to improve their interviewing skills and show the dazzling personality that casinos apparently are looking for in table game dealers.

In 2009, when Ohio voters approved the constitutional amendment allowing casino gambling in our state, it was sold as a way to create jobs — and at least that promise is being kept.  Two years later, the economy still stinks, and former construction workers, machinists, and medical billing technicians who have been out of work for months are so desperate that they have flooded a not-yet-open casino with applications and even taken classes in hopes of improving their slim chances of landing a job dealing blackjack.  In my view, that painful reality says a lot more about the true extent of our economic problems than cold statistics ever could.

 

The President’s Speech

I watched the President’s speech tonight, and I found it to be quite interesting for a number of reasons.

The first part of the speech seemed like “same old, same old,” and I think it will generally be perceived as such.  It appears to be more of the “stimulus” concept that has been tried and — in the views of many people, at least, including me — has been found wanting.  We’ll see what the bill itself says, but funding road and bridge construction projects to benefit construction firms and construction workers, extending unemployment benefits for yet another year, and arguing that the federal government should pay for the hiring of teachers, among other proposals, all sounds very familiar.  How is any of this different from the massive 2009 stimulus bill that has come, been borrowed and spent, and gone, and nevertheless left unemployment above 9 percent?

The middle part of the speech, in contrast, was much more interesting.  I think the President was signaling that he still wants to try to agree on a grand bargain.  He didn’t say specifically how he would pay for his new, “Stimulus Jr.” proposal — those details will be coming in a week or so — but he did talk about the need to revisit and reform Medicare and Medicaid and the need for tax reform as well.  If the President was serious in making those suggestions, there may be a basis for a meaningful compromise that actually puts those expensive programs on sounder long-term footing and gets rid of silly, outdated, tax breaks and special treatment.

The last part of the speech, with its vigorous defense of collective bargaining, government regulation, and government spending, sounded like a campaign speech and, like many campaign speeches, set up and knocked down some straw men.  And, indeed, the President promised to take his message to the country.  What’s wrong with that?  I hope that he does so, and I hope that the country responds with its honest reaction to the President’s proposals.  After we get the details of his plan and how to pay for it, let’s let the President’s ideas, the House Republicans’ ideas, and the ideas put forth by anyone else contend for support in the marketplace of ideas.  That is how America should work.

A Costly Solar Flame-Out (II)

It was bad enough that Solyndra, a solar energy company, abruptly closed its doors recently, after receiving hundreds of millions of dollars in federal loan guarantees as part of a federal government effort to promote “green jobs.” Today, the news got worse.

The media is reporting that the FBI agents, working in conjunction with the Department of Energy Inspector General’s office,  served search warrants on Solyndra and fanned out to scour buildings on the Solyndra campus, looking for . . . something.  In addition, Congress is investigating what happened, and two Democratic Representatives, Henry Waxman and Diane DeGette, have disclosed that less than two months ago they met with Solyndra’s CEO, who assured them the company was in strong financial position and in no danger of failing.  They urge the Republican chairman of the House Energy and Commerce Committee, which is conducting the investigation, to also look into why the CEO did not disclose the perilous condition of Solyndra.

I’m glad that Republicans and Democrats alike are interested in getting to the bottom of the Solyndra story, because investigating the loss of hundreds of millions of dollars in federal funds is not a partisan issue, but rather is a straightforward “good government” issue.  Every Member of Congress should want to know how this happened, and then use that information to assess whether the Department of Energy program, with its risky practice of providing substantial financial support directly to specific companies, should be continued — or should be ended in order to protect against misuse of tax dollars.

What The Euros Are Thinking

Our friends in Europe often struggle to understand the American political system and its dynamics, which are so different from the European parliamentary systems.  I’m sure the latest weird political jousting between the President and Republicans is especially baffling.  I imagine this conversation between Pierre and Nicollette as they stroll past Les Deux Magots on a Parisian boulevard:

Pierre:  Will you watch President Obama’s speech on Wednesday?  We need the American economy to lead the way out of this recession.

Nicollete:  The speech isn’t Wednesday — it’s Thursday.  Wednesday conflicted with a debate of Republican candidates for President.

Pierre:  Oh, when is the presidential election?

Nicollette:  It’s in 15 months.

Pierre:  15 months?  I don’t understand, then.  Is this debate especially important?

Nicollette:  Not really.  There have been many Republican debates already, and there will be many more.  In fact, it’s possible that even more Republican candidates will be getting into the race.

Pierre (shaking head):  I thought the economy and unemployment were supposed to be the most important issues in America right now.  Hasn’t President Obama really been pushing to give that speech and lay out his plans?

Nicollette:  Well, President Obama has given lots of speeches about his economic plans already, and they haven’t had much of an impact.  And he could have presented his plans weeks ago, but he decided to take a vacation first and then give this speech to a Joint Session of Congress.

Pierre:  Well, at least now Americans will start focusing on the economy.  A prime-time speech by the President to a Joint Session of Congress demonstrates that this is the most important issue to work on!

Nicollette:  It’s not a prime time speech.  In fact, it’s being given at 7 o’clock so that it can be finished before the first game of the NFL season.

Pierre:  What’s the NFL?

The Power Of Zero

The August jobs report was released today, and it showed that the American economy created no net jobs in August.

That’s right:  a big, fat zero.  Nada.  Zilch.  A goose egg.  Naught.  Zippo.  What could be a more apt and powerful description for the moribund state of our economy?  Neither up nor down.  Dead in the water and becalmed.  Not really doing anything.  It’s the first time since 1945, 66 years ago, that the government reported a net job change of zero.

This result comes as no surprise to those outside the Washington Beltway who are looking desperately for jobs that don’t exist or are trying to find their way during this time of economic standstill. We’ve seen the listlessness, the lack of growth, and the lack of confidence firsthand and all around us.

Next week, President Obama will give a speech to a joint session of Congress to spell out his latest plan to jump start the economy.  If another speech could help, shouldn’t it have been given long ago?  If the Administration had new ideas on what to do, shouldn’t they have been proposed already?  The zero reported today seems to reflect a lack of ideas and a lack of urgency as much as a lack of economic growth.

Confidence Game

On Friday the index that purports to measure consumer confidence in the United States fell to its lowest point since May 1980.  May 1980, of course, came during the grim, final months of the Jimmy Carter presidency — and I’m sure the fact that consumer confidence has fallen to Carter presidency levels probably doesn’t make President Obama very happy.

Why is consumer confidence so low?  Well, wouldn’t it be fairer to ask why consumer confidence should be higher?  The American consumer is like a punch-drunk fighter that has been absorbing repeated haymakers for months now.  Whether it is the continued high unemployment rate, record numbers of home foreclosures, unending deficit spending, or paltry economic growth, there just isn’t any good news to grab onto.  Why should consumers have confidence when the trading patterns of the Masters of the Universe on Wall Street have all of the stock exchange indices jacking up and down like a bungee jumper and our political leaders can’t or won’t present any plans that plausibly seem capable of changing things for the better?

Consumer confidence needs to be inspired.  There just isn’t much inspiration out there right now, and more tired speeches from the President and congressional leaders aren’t going to provide any.  I’d be surprised if the consumer confidence index surges anytime soon.

Trying To Think Positive Thoughts About The Stock Market

It’s hard not to be depressed about the anvil drops on the stock market.  Many of us have lost about 10 percent of our intended retirement nest eggs in the space of only a few days.  However, my grandmother said every cloud has a silver lining, and I always have tried to follow my grandmother’s wise advice.  So, here is my attempt to come up with some positive thoughts about the recent performance of the stock market:

*  It’s knocked the stories about the Ohio State football program off the front page

*  I’ve been told that gray hairs make me look distinguished

*  I probably won’t like eating dinner at 4:30 p.m. until I’m in my 80s, anyway

*  Hey, maybe now people won’t think I’m “wealthy” and want to increase my taxes!

Bursting Bubbles

With the wild stock market swings in recent days I thought it might be helpful to recommend a book I just finished today, The Great Depression Ahead by Harry Dent.

It is an excellent book which is simple to understand that everyone who is an investor should read with an open mind of course. Mr Dent is a long term stock market bull who predicted the technology boom and it’s demise and turned bearish a few years ago. He is predicting Dow 3500 – 3800 between now and 2014.

The premise of the book is that simple trends drive long – term growth and that changes in demographic and technology cycles are critical in predicting business and economic trends. He mentions that government intervention (QE2, stimulus etc) can sometimes delay, but won’t be able to overcome the massive baby boom generation productivity, earning and spending power that have now peaked.

He uses data going back to the mid – 1800’s to come up with three different cycles – the 80 year lifetime cycle (last peaked in 1930), the 40 year generational cycle (when generational spending was at their peak in 1930 – 1970 and 2010) and the 30 year commodity cycle (that peaked in the years 1890 – 1920 – 1950 – 1980 and 2010) all converging bubbles that are popping at approximately the same time 2010 to cause an upcoming major stock market crash.

It’s his opinion that a diversified portfolio which we are all taught to have will not be able to withstand the coming stock market crash and that only cash and high yield bonds will fair well in the near future. Mr Dent believes there will be bear market rallies until 2020 -2023 at which time a new “boom period” will emerge.

My next read is going to be Aftershock by David Wiedemer, Robert Wiedemer and Cindy Spitzer, all economists who are predicting a more radical market meltdown then what Mr Dent is predicting.

Retirement Fund Haiku

The stock market — and the 401(k) plans of millions of Americans — really took a beating today.  Anytime the market plummets more than 500 points and loses almost five percent of its value in a single day, it is just not a good day.

Why did the market drop like a drunken sailor after his last mug of grog?  Who knows?  The zig zags of the market are beyond the ken of mortal investors.  Perhaps the Wall Street wizards have come to recognize what most of us have realized for a long time — the economy sucks wind like an overweight sprinter, and its not getting whipped into shape by the expensive “cures” emanating from Washington, D.C.

There’s not much we can do about it, except compose another bit of stock market haiku to commemorate our vanishing paper profits:

Economy blows

Retirement just a dream

And summer’s too hot

Looking On The Bright Side

Today’s announcement of the latest unemployment figures was bad news all around — only 18,000 jobs created, the unemployment rate up to 9.2%, more than 270,000 out-of-work Americans who have just stopped looking for a job, and growing fears that our lingering recission is going to get worse before it gets better.  One economist quoted in the linked article said it was “an employment report with no redeeming features whatsoever.”

My grandmother told me, however, that I should always look on the bright side.  I’ve tried to do that about the current sad state of the American economy, and have come up with the following possible silver linings:

*  We’re kicking Greece’s ass!

*  “Quantative easing” would be a good phrase to use in a laxative commercial.

*  When you think about it, owning your own home really is kind of a hassle, anyway.

*  Look, a squirrel!

If those don’t do the trick, how about the classic song of unbridled optimism from Monty Python’s Life of Brian:

 

Spinning Stimulus Statistics

President Obama’s “stimulus” package has been dogged by controversy since its enactment.  There have been questions about the accuracy of reports of jobs “saved or created” by the stimulus spending, claims that the money really was used mostly to maintain public employee jobs and to allow state governments to defer their own deficit-reduction efforts, and an admission by President Obama that there were no “shovel-ready” projects to be funded, notwithstanding what was represented when the “stimulus” legislation was enacted.

The most recent analysis of the President’s Council of Economic Advisers, released Friday, estimates that the “stimulus” has cost $666 billion and produced between 2.4 million and 3.6 million jobs.  The 2.4 million jobs estimate was developed using the “CEA Multiplier Model” and the 3.6 million estimate was based on the “CEA Statistical Projection Approach.”  Republicans and The Weekly Standard have used the lower estimate, divided it into the total cost of the “stimulus,” and concluded that each of the 2.4 million jobs cost the taxpayers $278,000.  The White House responds that such an analysis is biased because it uses the lower jobs estimate and does not consider the tangible items that were built using “stimulus” funds.  Whose spin is closer to the truth?  When you consider that both jobs numbers are based on theoretical economic models and undertake the slippery task of estimating jobs “saved,” you may as well argue about how many economists can dance on the head of a pin.

Outside the Beltway, I think there is general consensus that the “stimulus” legislation did not deliver much bang for the buck.  The “stimulus” was sold as a way to massively jump start the economy, prevent high unemployment, and ensure a speedy recovery.  Those things clearly haven’t happened.  We’ve spent more than half a trillion dollars and we are still facing a stagnant economy characterized by high unemployment and low growth.  It’s as if we’ve gone on a bender, the intoxication has worn off, and we’ve now awakened to a painful hangover and a gigantic bar tab that we really couldn’t afford in the first place.