Which way in economics

Well, I learned today that the 50 year average of consumer spending is 60 percent of GDP. Today, it is 70 percent. That is 16 percent higher than is the norm. Most of that was financed by easy credit--this is a quarter century of flat salaries. So, we increased spending without earning more. (Fareed Zakaria, Global Public Square).

He interviewed large corporate CEOs (IBM, Alcoa) and they noted the answer lies in better educated workforce. No argument there. But after 40 years in education from classroom teacher to president, I don't see that happening. Absenteeism, workload complaints, outside interests all take precedent over school work.

Those same people will complain in 10 years that they cannot find a good job. Hello. The world is turning into a brain-based economy. A strong back and a pick up truck won't do it anymore and too many of our students aren't getting the picture.

More than 40 percent of our Ph.Ds are foreign born (and can't get a green card to stay here). Our best students are the best in the world. Unfortunately, they are a small percentage of the total population. We best get an understanding of and support for education if we are not going to slip into further mediocrity.

Government (particularly the federal government) needs to cut waste and duplication, and the U.S. public needs to forgo its anti-intellectual bias.

Conservatives and Liberals

Well, Cal Thomas says this morning that Obama's outlook is based on "grievance, entitlement and revenge." Can't argue with that; he's a Democrat, isn't he? Thomas goes on to say the American ethic (read Republican) is based on self-control, hard work and personal responsibility." Wow, that sounds pretty good.

Unless, of course, you look closely at it. Conservatives just can't stay out of our bedrooms, can't stay out of our vices (no toking, but beer swilling is OK) and can't leave our bodies alone (we will tell you what you do with your body, ma'am).

Thomas says Obama is an elitist, a socialist and a statist, No argument there. But, how does the far religious right conservative movement stack up? Listened to Sarah lately? Listened to any of the hellfire and brimstone fundamentalists (who have hijacked the Republican Party) lately?

Do we really have any centrists left in the political arena today? Do we really have any of the American ethic that Thomas describes? If we do, I can't find it. I have longed maintained that the Democrats want to give the country away and the Republicans want to sell it.

Where do the rest of us go?

More on Juan

Well, tonight's news is filled with Juan Williams' firing. Two camps: 1.) First Amendment protects his right to speak out and 2.) He has the right to speak, but his employer is not required to employ him. Let me say from the get go, as a former journalism professor, I subscribe to the latter position. BUT, his employer is you and me. NPR is publicly funded. That's a whole different animal.

Would anyone support his firing for standing in a public park? A street corner? I think not. Public radio is you and me. His firing was a travesty.

Freddie, Fannie and CRA

Well, Freddie and Fannie need $215 billion MORE of our money. Yet another fed bailout. Charlie Rangel and his band of loonies nearly guaranteed the current housing mess with the Community Redevelopment Act that set a goal of homeownership for everyone--ability to pay for it notwithstanding.

Then the geniuses on Wall Street found they could make billions with credit default swaps that even they did not understand. They just ignored the "consistent with safe and sound lending practices" provision.

We live in the looney bin.

CRA

The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.^[1][2][3] Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.^[4][5]

The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.). To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions (Section 804.).^[6]

Britain's economic response

Well, Great Britain will lay off 490,000 government workers. That will be quite a hit to their economy. As I thought about how this would play out in the U.S., I realized we will never do anything similar. \ Even though we face $1.3 trillion this fiscal year, we continue to spend like drunken sailors. No heed for the future, satiate our current desires. On this course, I believe the end of Pax Americana draws nigh.

Social Security Cure

Finally, a possible, sensible solution to the world's largest Ponzi scheme, aka Social Security.

A new government-backed investment plan. Some academics, including Alicia Munnell, director of Boston College's Center for Retirement Research, have proposed an altogether different method of risk management — one where the government bears the brunt of the risk. She imagines a new kind of guaranteed account, where the government would guarantee that beneficiaries receive a certain rate of return on their investments.

If the market plunged before they retired, then Uncle Sam would make up the difference. If a relatively modest guaranteed rate of return were chosen, such as 6 percent, then she says the government would rarely have to step in, so the cost would be minimal. Another option is to guarantee just a 2 or 3 percent return but to allow investors to keep any higher return provided by the market. If the government found itself needing to pony up during bad periods like the current one, then, Munnell says, "it can take on more debt and spread the losses over several generations," instead of forcing the soon-to-be retirees to absorb most of the pain.

Now, this makes sense. Uncle Same guarantees all sorts of things, why not old age pensions. There has NEVER been a 15-year period in which the market has lost money. And 90+ percent of the 5-year periods have seen positive returns. Nearly ANY investment vehicle would have a higher return than Social Security. This plan could have the additional advantage of heritability. 

In those years when the government had to make up a shortfall, the system could recapture lost dollars from the estate (if the money could be left to an estate, unlike the current boondoggle). 

Walmart

We learned today that Walmart throws many of its leftover foodstuffs away. This policy is about one month old. We tried to get the basket of goodies donated to our church, since we feed the homeless five days a week, 25,000 people last year. We need a letter writing campaign to Walmart to help them understand how critical donations of this sort are to the poor. Without donation, these foodstuffs go in the dumpster!