The Bottom?

OK, this will be one of those posts that, when I look back on it, I will think, my, wasn't I smart! or jeez, how dumb could I be?

I think we've hit bottom.

I think this economy is starting to turn around--that what we needed was to get past the election cycle, get past the unrelenting doom & gloom, and to re-set the economy.

I'm a referee for forclosures here in Nassau County. I get assigned a very, very small proportion of the forclosures here, but I am, about once a month, present during the every-Tuesday forclosure sales.

Go back about 2 years ago--very few forclosures made it to sale (the mortgages were either refinanced, or the house was sold privately. The ones that did make it to auction would regularly be bid on by the business people who specialize in buying forclosed houses. On very few occassions would the bank have to eat the house--that is, actually have to take the house back because no one bid more than the outstanding balance of the mortgae, late fees, etc.

The past 6 months? Virtually every house was bought by the bank. We would go through 40-50 sales with not a single private bid. Not one.

This past Tuesday? Of the 40 or so houses on the auction block, about 6 were bid on--a few very vigourously. Which means that the pros in the room think there is now a margin between the fair market value of the homes and the purchase price.

A small sign--and maybe a false one. But for the first time in a long time there was excitement in the room.

Now today's news brings the good tidings that January retail sales were up. Surprisingly up.

And, further, jobless claims were down.

Don't get me wrong--even if we've stopped the downward spiral, there are still waves of pain to be felt, and it could be a long time before the economy starts to grow again. But many conservative economists think that the stimulus bill is unnecessary, and possibly harmful. And if we are already starting to see signs of healing, then they may very well be correct.

We Needed This Guy?!?

President Obama and Congress insisted we needed Timothy Geithner, that no one else could engender the confidence of both Wall Street & Main Street needed in this turbulent market.

In fact, we needed him so bad, they overlooked his failure to pay more than $35,000 in taxes. So instead of going to jail, Geithner got to go to the Cabinet Room.

Then, like a kid with a term paper to do, he asks for an extra day--to put the final touches on his plan to save America.

Then he unveils the plan. Which turns out to have virtually no specifics.

The TARP announcement "was a huge disappointment," said Stephen Stanley, chief economist at RBS Greenwich Capital. "There's been an incredible buildup for weeks and then they release a plan that has little in the way of details."

And how does Wall Street react to the Junior Savior's plan?

The Dow plunges 382 points (although CNN, laughably, refers to it on their site as "tumbles", the difference being, I guess, is that if the President is Republican, and the market goes down almost 5%, it's a "crash", but if he is a Democrat it's "a small correction".

Seriously. This is The Guy? This is the plan to spend $350 billion dollars, money that has been available since October?

My brother and I, drunk, came up with a better plan Saturday night.

Economic Silver Bullet

WARNING: THIS MAY BE DEEMED POLITICALLY INCORRECT

This idea hit me this morning as I drove to work through an economically-challenged neighborhood.

The U.S. economy has lost about 3 million jobs since the recession started.

We have approximately 10 to 20 million illegal aliens in our midst (estimates vary), holding approximately 4 to 10 million jobs (again the estimates I found are all over the place).

I realize it may be rude, but may we ask those here illegally if we may have our jobs back?

And concomitantly, may we stop providing many of them with free health care, free education, etc.?

Think of it as a wedding party. Illegals aren't our guests-- they are more like party crashers. Perhaps many of us didn't mind when there was plenty of food and drink to go around, but our stocks are running low. Whom should we feed first--our invited guests, or those who cut the line to get in?

One always sounds mean when talking about illegal immigration. Yes, they are people. Yes, I know and like many. But the truth is this country is very much like a lifeboat-- if everyone climbs in, we all sink. That's unfortunate, but that's the truth.

President Obama-- you say you want to save or create 3-4 million jobs? Enforce the immigration laws.

It'll be a heckuva lot cheaper than $1 trillion bucks.

Friday Quickies

...I see Michael Phelps got himself in a jam by being photographed suckin' on a bong.

Three thoughts:

First, I am ever so grateful that there were no cellphone cameras when I was in college.

Second, I find myself more and more forgiving when young athletes do stupid things. Three middle-aged golfers standing at the tee box waiting our turn, talking about some rich, young athlete doing something idiotic in a late-nite club.

Me: The more I think about it, if someone threw millions of bucks at me when I was 22, I'd have been broke by 24.

Golfer #2: I'd have been in rehab.

Golfer # 3: I'd have been dead.

Finally, when are we going to doing something about these ridiculous, hypocritical marijuana laws? Candidate Obama scored "cool points" when he jokingly expressed pride in having inhaled.

But what if he had been arrested and convicted of possession?

Would he be in the White House? Or would any of a dozen doors have closed on him on his way.,. just another black kid with a record?

What if anyone reading this had been arrested & convicted for possession--or worse?

The phrase "there but for the grace of God..." keeps rattling in my brain.

....The cap on salaries is insane for so many reasons, far beyond the mere fact that we have gone from a capitalist society to a Marxist one without a shot being fired.

Lenin must be chuckling somewhere in hell.

But, if we are insistent on this flight of lunacy, then, hey, let's do it right.

Anyone who gets a federal subsidy, or a government contract, should have their compensation capped.

That includes: Farmers; sugar industry executives; defense contractors; lobbyists; "ministers" who run "community outreach" programs; University presidents; medical school professors and deans; etc. etc.

And why stop there? Using the same liberal "interstate commerce" analysis, why not simply raise the tax rate for any sum over $500,000 to 100%.

That'll show 'em.

Oh, and when the bailed-out banks can't compete against the other banks (or the new banks formed with Saudi or Chinese money to exploit the situation) because Congress is dictating how they compensate their employees, woo their clients, etc., and they fail again, what do you think happens to the value of the preferred shares we got with the bailout money?

Yep. Congress. That's Latin for "collection of idiots".

.....This "Stimulus" bill is a mess, and President O gets the blame for allowing Pelosi and the bunch of idiots on the Hill to craft the thing.

I'm all over the place on this, and I have a jumble of random thoughts on it, but here are some:

a) I'm told that no stimulus plan has ever worked, here or abroad. Japan tried it; we've tried them, including in the 1930's. They don't work.

But if we are intent as a nation to borrow a passel of money and throw it around in the hopes that this time it will work, well, then, let's build things, or fix things that are broken.

FDR's spending may not have stimulated the economy, but decades later we are using the bridges and tunnels and courthouses and parks he built.

The American Society of Civil Engineers puts out a report card detailing America's infrastructure needs. They currently list the cost for the necessary repairs and expansion of our transportation, water & sewerage, aviation, etc. to be approximately $1.6 trillion.

So spend a big chunk of this money on those needs--not the piddly amount contained in the House plan.

b) Our government oversight has fallen to pathetic levels. Want to hire a mess of people to put money directly and quickly into the economy--and still have it be beneficial to us long-term, as opposed to make-work projects?

Then hire auditors for the SEC and HUD; inspectors for the FDA & the FAA; chemists and scientists for the CDC and NASA; engineers and construction workers and emergency response teams for FEMA and the Army Corps of Engineers; border guards and investigators to enforce the immigration laws.

In other words, pump the enforcement and watchdog sector of the government--and then make them do their damn jobs. Or, outsource it to private companies with the mandate to make sure our water is clean, our food and toys free of poisons, the books of our public companies aren't cooked, etc. etc.

c) Give some immediate relief in the form of extended unemployment benefits and grants to soup kitchens and shelters;

d) Pump a bunch of money into solar and wind projects, to move our country from dependence on oil;

e) Provide incentives, such as the short-term tax credit for a house purchase--throw in an incentive to buy a car, as well. That's the kind of tax break we need--not some BS $10 per week cut that sounds good, but will help little, if at all;

f) Reform the system that got us into this trouble. Repeal mark-to-market, a ridiculous accounting reform that forces banks to declare a loan as "bad" even if the note is being paid, if the underlying asset decreases in value. Housing prices fluctuate; if the loan is being paid, why deem it bad? Why clutter the balance sheet--which makes banks more likely to hoard cash and less likely to lend?

I don't know. My fear is that at the end of the day, Congress will ram through a wasteful, useless bill and we will see things we haven't in 25 years:

Inflation

High interest rates.

And, man, those are soooo much worse than unemployment.

.....Bill Clinton once said that every mistake he made , he made when he was tired.

Most of the mistakes I've made have been when I was rushing.

Congress isn't going to take its time and do this right, so we'll have a mess as always. Recent examples:

Last year's bailout--Congress threw $700 billion dollars at the banks without thinking through ANYTHING. No reforms; no guidelines on how the money was to be spent. Nothing.

Another example? In knee-jerk reaction to the Chinese lead-in-the-paint toys, Congress mandated that all products sold or distributed or made available to kids under twelve had to be certified as lead free by this month.

Sounded good. Except they drew up the law so sloppily that the American Libraries Association advised its members that the Consumer Product Safety Council considered books to be within the scope of the law--so that all books in public libraries had to either be destroyed or tested and certified.

Retailers, who originally thought the bill applied to products they purchased after the February date were recently told that it applied to the inventory on their shelves as of that date.

Only after convincing pleas of the dire consequences of the law finally got through did the CPSC delay enforcement of the law for several months--presumably giving Congress the opportunity to do now what it should have done last year--to thoughtfully consider the consequences of their actions.

But it seems like Congress' in general, and this one in particular, are more interested in the headline and the soundbite than in whether a law is carefully crafted, or whether it will work

....And now a quote from the great Theodore Roosevelt:

The government is us...You and me!