READ ABOUT DETROIT AND SOLUTIONS TO ITS PROBLEMS. CLICK HERE.

Monday, February 11, 2008

It's All About The Money

SEARCH BLOG: GOVERNMENT and POLITICS

Bill always sends interesting and challenging emails. Yesterday, I received this:

I recommend reading Dean Baker's blog. He's knocking some of his fellow economists out of the ring. Knockout punch style.

http://www.prospect.org/csnc/blogs/beat_the_press

Well worth it.

Bill

I responded in my usual long and roundabout way [some typos fixed and a few asides added]:
Bill,

I have reluctantly concluded that our representative form of government has lost its way.

Contrary to what the press or political candidates or political parties say, our country was not based on the idea of a democracy of ill-informed voters casting their votes for specific initiatives [such as health insurance or trade regulations]. Rather, our government was conceived during a time when the culture was relatively homogeneous and small. The people knew their representatives and the leaders were men of achievement and reputation outside of politics. The representatives knew that their responsibility was to protect the interests of their states and their people.

Now the population has become magnitudes larger and the culture is "diverse" ... fragmented and disjointed, if you will. A representative is supposed to represent hundreds of thousands instead of hundreds or thousands. Senators are even more removed from the individual voters. Now there are special interest representatives who have the attention of our representatives and senators. Some of those special interest representatives may align with us on an issue... or not. Some special interests may represent interests that are foreign and against our best interests. But all of those special interests bring money to the table. And that money buys candidates and future votes. And those votes may not have anything to do with the interests of the "common citizen" or any citizen.

We seem to have a government of special interests, paid by special interests, and for special interests... whether they are banks, unions, investment firms, foreign governments, trial lawyers, or whatever. The factory worker, small businessman, educator, doctor, and your neighbor may be able to cast votes, but they are not really voting for someone who represents them when bills are introduced and votes are counted.
Dean Baker's lament takes pot shots at economists and the media and the Republican party [no surprise] and the Fed [no surprise], but he is simply writing around the central, core problem that the special interests control government... the Clintons can be bought by the Chinese [think a boy named Hsu]... maybe Cheney was too close to Haliburton.... Consequently, the interests of the U.S. ... us... seem to take a back seat.

Obama may not have a record of substance or an understanding of economics or the dynamics of foreign relations. But I think he has picked up on a general feeling that our government may no longer represent us... whether we are liberals or conservatives... and he is playing to that discontent [and the unending gullibility of voters].

Baker is off target: it's not about economists being right or wrong or the Federal Reserve making stupid or untimely decisions or if the Federal government should manage health care. It is that our system and our representatives are no longer for the commonweal, but are for the special interests. It's all about the money.
Maybe there is no real way to avoid money having the first say... even if it is the worst say for us. The representative process may be just too broken to repair it to its original design.

Voters are content with being told by their unions or parties or corporations what is best for them... so they rally to empty suits... or suits full of foreign cash. And they get politicians from both parties who spend money as if it were free to purchase loyalty, pass legislation to benefit the manipulators, and promise us CHANGE... small change... bus fare... what's left over after the special interests get theirs.
Maybe it has always been that way... bail out the banks and investment houses, government benefits for illegal aliens (potential voters), sweet deals and pardons for campaign contributors... but I don't think that is what Thomas Jefferson had in mind or George Washington fought for.
It's not the stupid economy! That'll recover.

..

Can"t Find It?

Use the SEARCH BLOG feature at the upper left. For example, try "Global Warming".

You can also use the "LABELS" below or at the end of each post to find related posts.

Blog Archive

Cost of Gasoline - Enter Your Zipcode or Click on Map

CO2 Cap and Trade

There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates

FEDERAL RESERVE & HOUSING

SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
November 28, 2007 FED VICE CHAIRMAN DONALD KOHN
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."
http://www.reuters.com/

December 11, 2007 Somehow the Fed misses the obvious.
fed_rate_moves_425_small.gif
[Image from: CNNMoney.com]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's Economy.com. "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

My photo
Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)