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Obama may very well rule from the center. Despite previously endorsing wasteful farm subsidies (McCain voted against those subsidies), Obama suggests he’ll pare back those very subsidies. Good for him.
… so argues the WSJ. I.e., by virtue of pleading for money, they’re admitting that they’re bleeding cash. Editorial also dispels five myths about the Big 3. Myths are:
Yes, according to this commentary in Esquire magazine.
His “3 myths” and his refutation of those myths…
Myth: Investment banks are an indispensable source of “innovation” and liquidity.
There are now no (major) investment banks. And no one will miss them. Like lawyers, these parasites basically create nothing, add no value. And now they don’t exist. The global financial system will survive not giving tranches of ten thousand combined mortgages from the farthest-flung sections of America. And whoever invented these CDOs, these “collateralized debt obligations,” should . . . find meaningful work.
Myth: Home ownership is an unalloyed good.
It’s not. Not just because it’s expensive and illiquid, but because it’sinappropriate for many kinds of people. And I don’t mean just in a class-division way. (Although that’s true, too, and Fannie and Freddie never should have been tasked with the social mission to “improve” the lots of poor people by saddling them with loans they couldn’t repay.) I mean for economic reasons. Fifty percent is about the maximum number of households that should ever own homes in a society. A modern, efficient workforce needs its members to be mobile and nimble and not tethered to homes they barely own and cannot sell.
Myth: “Deregulation” caused this.
We’re so, so, so not deregulated. The institutions that are failing are some of the most heavily regulated in the world. Investment banks are regulated by the SEC, the Federal Trade Commission, state attorneys general, and state banking commissions. But too many regulators are as bad as no regulators–none of them feels responsible since a failure can be blamed on all the others. Hedge funds are a great example. For years, people have been crying about the wild world of hedge funds. But hedge funds have actually held up well during this meltdown. Effective regulations are needed and possible. But any rush to clamp down willy-nilly will result in an even deeper freeze on liquidity and push this crisis deeper and longer.If you’re an investment banker or a mortgage broker, yes, these will be prolonged and difficult times. You should consider coaching Little League. But the rest of us? On October 10, I bought GE stock for $18.77 and Altria for $16.58–wildly profitable companies with price-earnings ratios under 10 and yields of about 7 percent. There are great American companies paying out suddenly valuable American dollars as dividends. I just can’t cry too hard when the stock market is holding the greatest sale of my lifetime. It’s enough to make me want to write a bullish finance column.
Blogs, search engines, e-commerce sites, video and social-networking portals are thriving today thanks in large part to the notice-and-takedown regime ushered in by the much-maligned copyright overhaul. A decade ago, when the DMCA was enacted, these innovations were unheard of, embryonic or not yet conceived. Now, Google has grown into one of the world’s largest companies, and its video-sharing site YouTube has left an enduring mark on public discourse. The Mountain View, California, company is one of many that openly acknowledges the DMCA’s role in its success, a view shared by public interest groups.
That’s from a blog-article on Wired magazine’s site. Tech geeks dogmatically hate the DMCA, but the article makes a compelling case that it’s a good thing overall.
Intro:
The doom-and-gloomers own the field right now with this global financial panic — no surprise there. But gleeful proclamations about the “death” of globalization, capitalism, the West, America, America’s superpower status, and so on are a bit much. A lot of celebrated experts, starting with Karl Marx, have made such claims before.
Strategist Thomas Barnett debunks the idea that, during this time of relative crisis (the financial panic in this case, not the US election), it’s the end-of-the-world-as-we-know-it argument and categorizes groups that tend to make that argument. Groups include (and I’m paraphrasing): old, cranky technocrat; old, cranky guy who thinks the next generation is inept; cynical futurist who wrongly projects current trends; “soft racist” who doesn’t think next gen–who is increasingly non-anglo saxon–is up to the task of continued prosperity; last, the slippery slope crowd.
All will make more sense if you read the column. The most interesting to me is the one who extrapolates current trends (the 3rd one mentioned above). Excerpt:
Third, there’s the senseless extrapolation — ad infinitum — of current trends. The most prevalent one: if everyone in the world joins a middle class modeled on our own, we’ll need multiple planets to accommodate all their resource demands, the assumption being that standard of living is rigidly tied to consumption. But of course, that’s never been the case. Technology always advances, meaning we accomplish more with less.
Labor Unions Prolonged the Depression
By the mid-1930s, the U.S. economy appeared to be climbing out of the Great Depression. The Dow Jones Industrial Average (DJIA), which had bottomed out at 41 in 1932, was advancing. It increased 73% from the beginning of 1935 through the end of 1936, when it hit 180. The number of unemployed, 13 million in 1933, dropped to 9.5 million in 1935 and 7.6 million in 1936.
Then, in 1937, the DJIA plunged 33% in what is often called “a depression within a depression.” Joblessness skyrocketed.
A principal factor in the meltdown that year was the U.S. Supreme Court’s surprise 5-4 decision in early April to uphold the constitutionality of the Wagner Act, which had passed two years earlier. This measure, which is still the basis of our labor relations regime, authorized union officials to seek and obtain the power to act as the “exclusive” (that is, the monopoly) bargaining agent over all the front-line employees, including union nonmembers as well as members, in a unionized workplace.
[...]
If the mislabeled “Employee Free Choice Act,” becomes law, it will likely have a similar effect on the economy as the original Wagner Act, transforming what could have been a recovery into a lengthy, deep recession, or worse.
If Democrats emerge with control of both the White House and Congress next week, they are promising to take U.S. trade policy in a more protectionist direction. That might assuage the Democrats’ labor union base, but it will put the U.S. at a disadvantage against countries that are liberalizing trade apace.
This editorial by Art Laffer (the famous economist) provides a sobering view of the American economy and the coming years of governmental interventionism, regardless of who gets elected this November. I don’t share his pessimism (and, truth be told, I think his tone is admonishing so as to change the course of events), but still, unneeded intrusions into the market by our government overlords have a real effect on our everyday lives–usually for the worse.