Thursday, November 13, 2008

Joblessness and the Bail-Outs

As many of you know, I've been looking for something better for at least 6 months. At this point, I am blessed enough to be somewhat choosey and I don't have to jump at just anything.

But there is so little to select from, that my time is better spent doing household projects. If I couldn't find something to do, I would go quietly insane. Amazingly, there is so much to keep me busy that I wonder how I'll find time to work full-time again.

I recently knit and donated seven hats to Save the Children's Knit One, Save One, and have a couple blankets made and set aside to donate to our local Pregnancy Center, which helps needy mothers.

I do this because not everyone is lucky enough to have a little set aside for times like these. And although I don't have any money to spare, I do have time and energy to help in other ways. This is the time for us to rise above ourselves.

Today Bloomberg reports that:

Initial jobless claims increased by 32,000 to a larger- than-forecast 516,000 in the week ended Nov. 8, from a revised 484,000 the prior week, the Labor Department said today in Washington. The total number of people on benefit rolls jumped to the highest level since 1983.
And these figures do not reflect those of us who are barely making it, and are not making any claims on the government. Yet.

Barack Obama came out almost immediately after his election to say "Oh, and the economy? Well, I know that you elected me to change things, but don't expect miracles." And then he immediately hired all of Clinton's former advisors.

Change... right.

And now the government is talking about another big bailout, and another major expenditure of taxpayer dollars, to save failing automotive manufacturers. Has no one heard of Tucker, Plymouth, DeLorean, Hudson, AMC, Duryea, Morris & Salom, American Austin / American Bantam, etc.?!

Going in and out of business is the American way. If you succeed, you get to keep the profit. If you fail, you don't. It's that simple. We do not need to create a country where the government has ownership of such major companies or is willing to bail them out due to bad decisions that they should be responsible for. The last time I looked, this isn't what our flag looked like.

The front page of the St. Pete Times trumpets that "if Detroit's Big Three fail, say goodbye to 3 million jobs, $151 billion in personal income, $60 billion in tax revenue."

We know, we know. Business failure hits people hard. But it always has. Is it really up to the government to cushion the blow for them, but not for other failing businesses? Is personal welfare bad, but corporate welfare good? Where do we draw the line?

I thought we didn't believe in welfare as being the superior option in life. And the last time I looked, we were a Republic, not a Socialistic or Communistic country. But the lines are being blurred, and we are in danger of something even worse than a severe recession.


Ed Abbey said...

I'm in agreement with you on the bailout. Nobody talks about how many people are going to lose their jobs even if GM gets the money because GM is bleeding $2 billion per month and if they get say the largest share of the proposed $25 million for all three auto makers, they only have four more months before being back where they are now. In order to survive, GM has to drastically reduce its size and product lineup and I'm guessing that involved millions of jobs too.

I haven't been paying attention to who Obama's economic advisors are but if they were the same as Clinton, I guess I'm not scared of that. At least under Clinton there was a balanced budget which is something we sorely need. Although Clinton's decision to allow banks to get into the mortgage bond business turned out not to be so hot.

Scott said...

Yeah!! Wave that hammer and sickle hahaha.
Just kidding, I think the real issue with the bail out is why it was ever needed in the first place. That lack of regulation in the financial markets is shameful.

I would much rather see the Auto Makers get help then the banks. Their industry has been getting killed for so many reasons that are unfortunately out of their control (to a degree). The financial crisis was certainly not their fault but they are getting killed by it, and the pension obligations that they have which were a result of Unions that are just way too powerful and have held the companies hostage for too long. I wonder if the "Big Three" will ever be the same again.

The Doozie said...

The automakers need help rather than banks? Oh PULEASEEEEEEE

These are the clowns that have the ability to produce an aluminum block that allows most any car/truck to get well over 50 mpg, and last about 10 years, but won't do it because thats "bad for profit". They want people replacing their cars every 2 years. They want the cars going on the chopping block after 100,000 miles.

Good god. when are people going to realize and admit big business is not interested in the little guy, they are interested in the bottom line profit. So now? This is coming back to bite them in the ass. so they deserve it, and they need to suffer, but instead we have people rushing to their aid, because god forbid, we can't get a new car every 2 years.

We don't need an effing new car every two years. If they would use the technology they have. But NOOOOOO

Why are foreign cars so popular? because they freaking LAST LONGER

Fire the uppers in the corporations of the dumb ass idiots who sit on their fat bottoms all day and pass down decisions to lay off all the little people while they continue to collect their multi million dollar salaries.


Bee Repartee said...
This comment has been removed by the author.
Bee Repartee said...

I find it ironic that Microsoft gets fined by the government for doing well, but we need to bail out companies for doing badly.

I guess corporations must only be moderately successful? I say the oil industry should bail out the auto industry. The billion dollar quarterly Exxon profits should help the auto industry nicely and it's in the oil companies best interest, don't you think?

The Knit One, Save One is a great project. Good for you, Saur for using your time for others.

Uncle Joe said...

doggone it.
I like bee's idea.

The Lazy Iguana said...

Yea yea yea - communism and all.

So what would you suggest? Let the banks collapse? Great idea. Last time that happened it only took 20 years to start to dig out of the hole.

Let GM fail? Keep in mind what this means. A lot of pensions - gone. Jobs - gone. The government will have to pay unemployment benefits anyway. Many GM retirees will have to go on medicare. Communities will dry up when the major employer fails. Small business that depends on GM employees spending money will fail. People will miss house and car payments. This means more trouble for banks, and a further drop in property values. And so on.

So either way you look at it, the government is going to be stuck with a bill.

I hope you are not still getting this communism crap from talk radio. At least one host who pals around with drug dealers is already calling this "the Obama recession" - which is sort of amusing seeing as how the man is not even in office yet.

But be that as it may, here is the bottom line.

GDP = C+I+G+(exports - imports).

where GDP = gross domestic product, or the value of all goods and services produced and sold in an economy in a year

C = consumer spending
I = investment
G = government spending

Now regardless what you may hear, this is not communism. This is actually the E=MC2 of Keynesian Economics.

Right now there is no C and there is not a whole lot of I. We import more than we export - so no help there.

This leaves only one more variable. G. And right now G is the only one who CAN spend large amounts of money.

If we wait for the C to come around, this will become a major depression. If we wait for I to come around - well first the markets will have to recover, which means that consumers have to start buying shit again. So that could take even longer. C has to increase first. Then I can increase.

For the past 8 years, the government has operated under the same bullshit that crazy old man in the 80s operated under. Deficits don't matter, lowered taxes means increased revenue, and cutting taxes for those most well off means they will invest in America and not China.

Lets pick those big three apart.

Deficits DO matter. And now you know why. At times like this it would be GOOD for the government to spend more than it collects. But after 8 more years of "who cares about debt" it it up to record levels. The war, which was at one point so popular, was paid for on the national credit card. At the time the economy was OK.

The "patriots" would have cried and bitched and yelled and complained at the idea that there be a "war tax". The good patriotic republicans who were so quick to point out the danger to our freedom would have blown up if it was suggested that freedom does have a cost - either fight for it OR pay for it. With cash. Bush would have been a one termer.

But deficits do not matter - because Reagan said so.

Well now we will have to sell even MORE debt at a time when there is already a lot to pay down.

Point 2. Lowered taxes means increased revenue. Really now? So then with 8 years of lowered taxes, why there should be a huge shit pot full of money! The government has more than enough to pay down the debt! The government has plenty of money to bail everyone out! Right? NO!?!?!? But why?!?!??!

Because that shit does not work.

The whole premise with trickle down is that you cut at the top, where people are more likely to use extra money for the I part of the formula. Those at the top buy all the consumer crap they want. If they want new kitchen appliances - they buy them. Want a new car? Buy it. Just go to a store, pick out what you want, and write a check. No problem.

the I component on the other hand comes from money left AFTER basic needs are taken care of, and after all the other stuff you need/want is taken care of. The more you make, the more you have to invest.

The next administration is walking into a real shit storm here. The economy is already in the tank, and has been for some time now. There is very little consumer spending, and with no consumer spending investment is running scared. The government is going to still have massive debt.

Someone HAS TO start spending money. The question is who will that be?

The far right has nothing else to go on than "communism". Even though it was BUSH who decided to allow the treasury to buy stock (pumping money into the I part of the equation). I suppose if Obama keeps that policy going (he may have to by the way - whats done is done and selling the stock now will only drive the price DOWN as a lot of other investors will run away with the government)it will be all his idea right?

And when the G portion of the equation is increased, it will be "socialism". Right? Why the government is just spending and spending - and the deficit is just going up and up! That is change?

Yes. Because that spending will happen HERE. Not over there.

Its not perfect, but it does go along with the current flavor of CAPITALISM that exists today. Keynesian Economics.

NOT "communism".

As for the banks - hey how about that crazy theory that government regulation only "gets in the way" and that best government is one that you can drown in a bathtub??? We can TRUST major institutions to always do the right thing!! Right?

The "core" of the new Republican party has dissolved. The most basic beliefs have been shown to be bullshit. It simply does not work.

But instead of facing this, the core is lashing else calling everything else "communism".

They are going to have to do better than that if they ever want my vote again.

They would not know communism if it kicked them in the ass.

Saur♥Kraut said...

Lazy, You are so far from reality where it concerns the Republican party that I won't bother to answer.

As for getting my ideas from conservative talk show hosts: I actually happen to possess some brain cells of my own, believe it or not. Perhaps they (and others) agree with me because we're on to something.

Uncle Joe, Me too.

Bee, Oh so very true!

Doozie, So very true! Years ago my ex-husband was on an airplane and was seated next to a top engineer for a major car company. The guy confessed to him that they had something called "Planned Obsolescence" (something we'd not heard of until then) and when he'd explained it to my husband, our eyes were opened.

Scott, I didn't like either bail-out. But in the case of banks, they are the underpinnings of society (sadly).

You're right about the unions, but it is predicted by many that unionization will become the bane of even more companies now. And actually, I am in support of unions to a certain extent. Here in Florida (a "Right to Work" state which translated means "Right to Fire for Any Cause") we certainly need them.

Ed, Yes - no matter what, the car companies will still be impacted greatly.

Clinton wasn't the ideal President by any long shot, IMHO, but the economy didn't stink under him, and we didn't find ourselves in a seven year + war. So, he's a hero compared to George Bush.

However, a great deal was luck. Many of his advisors were not men that I respect, although I DO respect Hillary Clinton in many ways (though I think she should've left him when it was disclosed that he was a man-whore. It makes her look either desperately needy or calculating beyond measure).

However, my point isn't about how GOOD Clinton's choices were, but how little true "change" we're seeing here.

daveawayfromhome said...

There's no point in giving the car companies any money, because they will fail regardless. Why? Because they've spent years in the large/luxury mode, selling high profit vehicles and somehow still losing money (GMs financial woes are nothing new). They've built their corporate style around waste. Yes, Unions have contributed to it, but they didnt do it alone. The idea that they'll succeed, now that fewer people are buying cheaper cars, without a major amount of worker and stockholder pain is absurd.
If we want to do something for American car companies, maybe we should think about relaxing size rules (though that has safety issues). GM builds a car in Mexico that is cheap and has 3 cylinders. Yes, gas is at $2 right now, but that wont last. Even with cheap gas, we'll like the idea of a car that'll save us money.

GM, as far as I'm concerned, can suck it. Any company that not only refused to pursue a successful electric design, but actively destroyed the ones they did have (google EV-1) deserves to crash.
Toyota has succeeded so well because they built reasonably-priced, extremely dependable cars for the masses which lasted and lasted. America built pretty, comfortable cars that fell apart almost as quickly as you paid for it. I've often lamented my wife's last car, a Dodge Caravan: it was roomy, comfortable, easy to drive, good-looking, but, at 140,000 miles, leaked like a sieve and needed $1000s in repairs. Compare this to my last Toyota: 250,000 miles of abuse before the point of diminishing returns. I'd happily buy American, but they dont last.

So put me in the "no" column also.

Ultimately, though, we can argue round and round about whose "fault" all this is, but the truth is, when you base your economy on consumption and making money from other money, rather than on the actual production of concrete goods, you're setting yourself up for a fall.

The Doozie said...

Did somebody say STEAK?

Saur♥Kraut said...

Doozie, (?) As in staking the beast in the heart? Or...?

Dave, Dittos all the way!

The Lazy Iguana said...

I am far off huh? So nobody ever said "deficits do not matter"? And under Bush there has been a massive surplus! The tax cuts only gave that surplus back to those who paid into it?

And GDP = C+I+G is something I made up?

And we all know consumer spending is through the roof! Best Buy just announced record sales, and retail sector stocks are soaring?

Investment money is so safe, that the stock market almost seems like cheating! Money for nothing.

A proposed tax to actually pay for the war would have been welcome? The "freedom is not free" parrots were not just talking about the 4th and 5th Amendment when they said that - they also meant that they would be happy to pay cash for it as well??

The only thing right wing talk radio is on is crack. I know this because I used to listen to it. While driving around in a delivery van most of the day. I can turn the radio on right now and it will be the same crap I heard in the 90s.

They got exactly what they were crying for. A "decisive leader who just leads - and does not stick his finger up in the air to see how the wind is blowing". Remember that line? Usually reserved for "liberals" and those wishy-washy moderates.

The congress was stacked with decisive leaders, and one was placed in the White House.

I remember the victory gloating. Grand predictions about how wonderful it all would be. A 1,000 year Reich of all Republican rule. The end of liberalism. The free market would finally be allowed to do its thing. And so on.

Well - what can be said now.

I do not think the republican party is dead. I just think the "base" is dead. The horses they bet on to win, place, and show came in last.

The only hope the party has is with the moderates.

And talk radio will do all it can to talk DOWN those moderates as "not real".

Just keep listening.