Forward Observation Post – Vermillion

Views and Vents from the Frontline of the Culture War

Posts Tagged business

Why We Are Not Excited

Oct 30

Posted by FOPVermillion in Economy, General | No Comments

I was reading Peggy Noonan’s column today and I think she nailed it.  We are in the middle of good economic news and potentially the end of the recession and no one is excited at all.  As she starts off:

The new economic statistics put growth at a healthy 3.5% for the third quarter. We should be dancing in the streets. No one is, because no one has any faith in these numbers. Waves of money are sloshing through the system, creating a false rising tide that lifts all boats for the moment. The tide will recede. The boats aren’t rising, they’re bobbing, and will settle. No one believes the bad time is over. No one thinks we’re entering a new age of abundance. No one thinks it will ever be the same as before 2008. Economists, statisticians, forecasters and market specialists will argue about what the new numbers mean, but no one believes them, either. Among the things swept away in 2008 was public confidence in the experts. The experts missed the crash. They’ll miss the meaning of this moment, too.

The biggest threat to America right now is not government spending, huge deficits, foreign ownership of our debt, world terrorism, two wars, potential epidemics or nuts with nukes. The biggest long-term threat is that people are becoming and have become disheartened, that this condition is reaching critical mass, and that it afflicts most broadly and deeply those members of the American leadership class who are not in Washington, most especially those in business.

I read the rest of the column and I have to agree that we as a people are getting frustrated and disheartened.  I know why I am.  I am in the group that disagrees with the people in power and no one is listening to me (which is why I started the blog).  The proposed solutions treat me as a child who can’t be responsible while at the same time taking more and more of my money for my “own good” to fund this junk.  If Peggy is seeing this also, it is not something simply out here on the fringe.

Yes, I don’t see any of the leaders out there presenting a path to recovery and prosperity.  The Democrats with everything going on are more concerned with consolidating power than they are fixing the mess.  Regardless what Obama says about how we need to let him clean it up, I have not heard a plan.  Lowering emissions and decreasing energy use is not a plan to grow the economy.  Offering heathcare to those who don’t have it won’t grow the economy.  And spending $787 billion on stimulus over several years is not showing much progress either.

Where is the leadership?  Where is the plan to get us back?

I think Peggy says it nicely about our current leaders:

We are governed at all levels by America’s luckiest children, sons and daughters of the abundance, and they call themselves optimists but they’re not optimists—they’re unimaginative. They don’t have faith, they’ve just never been foreclosed on. They are stupid and they are callous, and they don’t mind it when people become disheartened. They don’t even notice.

At some point, children have to grow up.  Hopefully, it will be soon enough to make the pain bearable.

- FOP Vermillion

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New Hope

Oct 12

Posted by FOPVermillion in General, Politics | No Comments

Recently I have been getting down as the health care bill seems destined to be rammed through Congress.  There are many procedural tricks, the Dems in Congress are many, and the momentum against it is slowing down.  So today I get some good news that the insurance companies are finally starting to fight back.  Now that the financial details are starting to come out, it is clear nearly anyone in the medical care industry is going to get soaked.  It is easy to get in bed with the government if you think you will come out out ahead.  However, if your margins are being squeezed and you will be blamed as quality of care comes down then it is a little less appealing.

There is a lot of money on the sidelines at the moment and the public is not behind the takeover.  If the industry decides to push back hard, it will cause a significant problem for Congress.  The web, combined with large industry advertising spend, could cause the Democrats to pause and that would be a good thing.

Right now the inertia is on the side of “reform”.  We need some luck if we are to going to see this bill die.

- FOP Vermillion

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Promoting Irresponsibility

Oct 8

Posted by FOPVermillion in Economy, General | No Comments

I was listening to the radio today and I heard the ad for freecreditreport.com.  You know the one where the guy bemoans the fact that he when to buy a car and could not get what he wanted because he didn’t know his credit was bad.  Every time I hear this comercial, it makes my blood boil because the target audience is obviously people who do not understand personal finance or how credit really works.  If you are responsible with your money and pay your bills, you will not be in a situation where you find out your “credit is whack”.  At the same time, most people who know anything about credit scores knows that having a credit report does not grant you credit.

So if every one knowledgeable knows this then who are they targeting?  The answer is pretty obvious.  Those who have no clue about credit, probably have bill payment issues, and likely live beyond their means.  With their success, they promote more of the same.  This ends up creating more problems for people who need help and not enabling.  As the rule of shovels goes, “When you find yourself in a hole, stop digging.”

On a grander scale, this is what the government is doing at the moment.  They are spending more on debt (debt maintenance is rapidly growing as a portion of the budget), ignoring their credit (debt level), and living beyond their means (spending more than the tax revenue generates), all while refusing to address the problem because it could affect their power.

We are in debt as individuals and as a society and we refuse to accept the reality of the situation.  We must become fiscally responsible or it is just a matter of time before it ruins us.  The first step is spending less than we take in, and it needs to be in real terms.  The games with off budget, and funds repaid with IOU’s needs to end.  The other common game in government is the baseline budget that has built in increases.  A reduction in growth that actually increases spending year over year should not be labeled as a cut.  Unless we can make these little changes, we have no chance of pulling out of this dive.  We must promote responsibility if we are to have a chance, at both the individual and government levels.

- FOP Vermillion

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Opening the Lock Box

Sep 27

Posted by FOPVermillion in Economy, Politics | No Comments

I saw this article about Social Security having problems because of the economy.  The points about cash flow and how people are dealing with being laid off are all reasonable and I will not argue them.

However, I have real problems with how the writer glossed over the issue of receipts being less than payments in the next two years.

The deficits — $10 billion in 2010 and $9 billion in 2011 — won’t affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Sounds good, right?  If Social Security was a business that had $2.5 trillion in investments to draw on when things are tough it would be no big deal.  The thing is this is the government and not a business.  There is no savings, no surplus, and no Al Gore lock box where money is kept for a rainy day.  Next year and the year after that we will spend $19 billion more than we make.  That means that unless Congress runs a surplus during these two years, we will add to the deficit every year we have to draw from the accumulated surpluses.

If we are honest about the accounting gimmicks, we have $2.5 trillion in debt that is getting ready to be called in as people retire.  We are in a difficult position and pretending we have until 2037 when the “surplus” runs out to solve the problem is not productive.  Denial is a time honored political strategy when it comes to the third rail but we do not have eighteen years to come up with the ideal solution.

I do not expect we will have a solution right away especially considering the failure of the Bush Administration’s attempt to change Social Security.  However, we do need to be honest about the situation we are in and point out misrepresentation in the press and elsewhere when we see it.

- FOP Vermillion

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J O B S – Not Being Stimulated

Aug 31

Posted by FOPVermillion in Economy, General | No Comments

This article by the Heritage Foundation reinforces what I am seeing in the business sector.  The problem with the economy in general is that the current environment is one where risk and investment is being avoided on a massive scale.  This is topping the natural creation of new jobs.  Companies are not going to hire people when the next time congress meets, they could get whacked with regulations, taxes, and fees that completely undercut their strategy.  Business is in a bunker mentality.  Until they know the shelling is over, they are going to continue to lie low and make safe moves.

No matter how much our leaders in DC want to make us believe they can stimulate us out of the recession, the truth is it will take individuals who are willing to invest and risk to create the jobs that will grow us out of these times.

- FOP Vermillion

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