Thursday, November 04, 2004

My Mandates

Yesterday, I covered what I believe to be the greatest threat to world peace: radical Islamists.

Today, I simply want to list some domestic issues that are long term concerns.

  • Ethnic Divisiveness - the positive spin is "diversity", but the U.S. is not "absorbing" ethnic populations as in the past. Rather ethnic groups are seeking to carve out local and national political power based on being "unique"... unique goals, unique needs. This ethnic "diversity" becomes ethnic divisiveness as one "unique" group attempts to gain advantage over other "unique" groups. National goals and needs are secondary to these groups.

  • Education - schools are blamed for the poor performance of students and their parents' lack of interest or involvement. The role of dysfunctional sub-cultures is not being addressed. Universities do not accept an obligation... moral, social, ethical... to help address the root causes of poor performance in elementary and high schools. Universities find it easier to seek government funded programs as the solution to poorly prepared individuals or non-competitve groups than provide guidance and expertise,

  • Excessive Litigation - law is the underpinning of our land, but lawsuits are undermining our society. Real grievences are lost in the blizzard of "snow jobs"... lawsuits with little or no merit enabled by technicalities and sustained by an attitude of "paying back the big guys". The societal costs for insurance, medical care, products and personal protection are outrageously affected by the litigious purveyors.

  • Environmental Extremism - most forms of extremism are dangerous, costly, and generally ill-advised. But environmental extremism is most often counter-productive. By using fear as the primary weapon, legimate concerns about protecting the environment create convoluted actions and responses to the restrictions imposed. False science, such as the "hydrogen energy" efforts divert us from real, responsible approaches to protecting the environment while providing for the needs and growth of society [hint: hydrogen is a "storage medium" for energy... but to create hydrogen gas, large amounts of energy in the form of electricity... from oil, coal, nuclear material... must be expended].

  • Excessive Spending - as a society, we are "borrowing addicts". We spend personally and societally as if there is always going to be "some way" to "balance the books". Our present inability to balance the books leaves us collectively as a nation and individually in financial peril. Most of us are aware of the "budget deficit" and believe "something" should be done about it. Fewer of us are bothered by the overwhelming imbalance of trade... our trade deficit... that continues to grow. We are a debtor nation increasingly in debt to nations that are becoming our chief economic competitors... a dangerous situation.

We have just endured a year of political mayhem. I suspect that most of us are drained of much of our political energy... not because we have lost interest, but because we have been faced with choices that are too polarized. Most of us feel comfortable in more "centered" positions than our politicians and special interest groups take. Consequently, when we make a political choice, we end up feeling that it is a great compromise from the choice we really want... especially when it comes to the issues that affect our everyday lives and jobs.

That's why I don't feel I've given any politician a mandate... even if I have given my vote. My "mandates" are different from the choices I was given for my vote. Polarization makes for great talk shows... not necessarily great choices.

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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


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."
"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."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
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 "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

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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)