LCACM

17 Comments

    • Blame Game Redux: 8 More Things to Blame for This Crisis [view article]
      The US economy has been sliding since Clinton signed NAFTA. Ross Perot had warned there would be a sucking sound of wealth leaving the US, during the 1992 Presidential campaign. Perot even debated with VP candidate Al Gore, regarding NAFTA. Though Perot had the facts, Gore managed to convince the electorate to ignore the issue. If US manufacturing jobs were lost, it was only a small sacrifice to the Free Markets Gods.
      Wall St. did not expect to be crushed by the sucking sound that Ross Perot warned us way back in 1992.       Oct 12 02:01 AM
    • Congress Charges 'Commission', Culminates Decades of Mismanagement [view article]
      Not sure why the 700B check to help Paulson's friends should not be also considered as "pork barrel". If Cowboy Capitalism was the highly resilient economic system that Wall St, claimed it was, it would not have created this mess. The current crisis proves that the fundamental assumptions of the Cowboy Capitalists may be flawed, and need a closer examination. It hardly makes sense to hand them a 700B check without ovesight and caution. As Paulson/Bernanke did not warn the US government sufficiently in advance, say 3 months before, these two fellows advice is very suspect. When scientists/engineers are faced with facts that do not conform to theory, they reexamine the theory to see why it failed. MBAs in Finance need to take a similar approach, instead of being blinded by ideology.
      Oct 12 01:35 AM
    • The Euro Shows Its Real Colors [view article]
      There is no choice for US and Europe other than to inflate their currencies. These economies are being devastated by the so called Free Trade ideology. Wall St has coined the word "Proctectionism&q... so that it can be used to label and ridicule those who propose a saner and Fairer Market. However, the same high priests propounding Free Markets and Cowboy Capitalism have no problem asking the US government to hand them a 700B check. The Free Market can be likened to an Airplane AutoPilot. AutoPilots do a good job of steering the plane when the human Pilot might be asleep at the wheel during long flights, howerver, the Pilot is supposed to take over the controls in treachorous situations such as landing, takeoff, engine fire etc. Deregulation of the last few years is similar to sending a plane full of passengers on a flight without a Pilot, because the Pilot might fall asleep at the controls. Oct 12 01:08 AM
    • October 9, 2008: Remember the Date - This is Huge [view article]
      During the last 2 decades most of the Capital Spending growth has happened in foreign countries and not in US. As a result the US worker does not have the productivity edge they enjoyed 20 years ago. The result of this is that their job prospects and consequently credit ratings have become much lower, and we see the consequences. There are only 2 ways to sort this out a) Longer term solution would be to impose tariffs proportional to the wage differential between US and it's trading partners. Goods from Europe will see much lower tariffs compared to those from Communist China where slave wages are paid. b) The other is to devalue the US currency via Bailout induced liquidity injections, so that the US real wages tend towards those of Communist China. Free Market ideological rigidity precludes Solution (a) so Solution (b) is being tried. This will lead to yet another liquidity bubble similar to the Internet Bubble and the Housing bubble, only larger in magnitude and more severe in its consequences. Oct 12 12:43 AM
    • What Happened to Free Markets? [view article]
      Very good and balanced analysis of the current financial situation. Pragmatic and non-ideological. Oct 05 10:44 PM
    • Credit Crisis Sharpens Anger Over CEO Pay [view article]
      The current sky high CEO salaries is one of the main contributory factors to the current crisis. To justify their huge salaries, the CEOs have outsourced most US companies to foreign countris, leading to severe job losses in the US. Needless to say a person without a job is unable to meet mortgage payments. Limiting the CEO salary to 7x the average company salary (as in Germany) would ensure that the US workers get better salaries, and in turn they would be in a much better position to pay their mortgages/bank loans. There would be no need for the Government to bailout banks, as is currently happening.
      Oct 05 04:09 AM
    • There's Still a Better Bailout Available [view article]
      Curbs-In: I agree that the huge trade deficit is due to the fact that Americans shop at Walmart, Target. US markets were opened up in the 1980's, and US wages have been stagnant since then. Low wages forces people to shop at Walmart/Target, which again increases the trade deficit. US government needs to protect their own market, as it is impossible for 300M US citizens to support all the overproduction by Asia. Asian governments are not doing their fair share of supporting the Global market by paying their citizens reasonable wages. The only proper solution is for the US government to impose a variable tariff on countries, proportional to the wage differential. Countries with decent wages will see lower tariffs, whereas countries paying low wages would have to pay a proportionately higher tariff to dump their goods in the US. Higher wages in Asia will create a market not only for their own goods but US goods as well. This might lead to some inflation in the beginning, but would generate good jobs not only in the US but the whole world. Oct 02 02:41 AM
    • There's Still a Better Bailout Available [view article]
      Financial types got us into this mess, due to their tunnel vision. It does not make any sense coming with some variation of the same general idea. We might start by asking the following questions. 1) Why were companies allowed to get "too big to fail" size that threatens us all 2) Is it safe to concentrate so much of the finances close to Wall St? Why not encourage more centers to develop all over the country. This will ensure diversity in thinking. 3) Currently it appears that the US is actually borowing from Communist China. If the Free Market is so great, how come US has become a debtor and Communist China the creditor? 4) How come Paulson is bailing out only his cronies in the financial industry. When Technology was wiped out we were told that it was a Creative Destruction by the Free Market devotees. What has changed now? For example if short selling is bad, it should be so for all companies not only where Paulson's cronies are working. Oct 01 11:20 PM
    • My Proposal for Improving Lending Between Banks [view article]
      The root cause of the current problem is that Americans do not have good job prospects due to the outsourcing of the Manufacturing base. Americans that could have worked in Product design, Testing, Quality Control, Maintennance etc have instead gone and obtained an MBA and created the current financial mess, by using Finacial Weapons of Mass Delusion. Do not forget that after the Great Depression that it was Engineering Public works that rebuilt the Economy that was destroyed by Wall St. By lobbying for deregulation Wall St. has managed to bring the US economy close to the brink again.This Free Market ideology was probably relevant during the times of Adam Smith, when slavery in the US and colonization by Europe was a well accepted fact, and automation was negligible. Since then the world has grown far more crowded, and due to automation the amount of goods produced far exceeds what people can afford due to lack of incomes. So for the market to grow, the focus should be on an international Minimum wage. US should impose tariffs on imports proportional to the wage/benefits differential, between the 2 countries. This would have the effect of growing the whole International market. Currently even large countries such as India and China depend on the US consumer market. US has only around 300M customers, whereas Indian /China have a combined population of over 2000M. How long is it possible for Asia to keep dumping on the US market, without destroying it? An international Minimum wage would create internal markets in Asia, Africa and Latin America. This would reduce the import pressure on the US and also enable US to export more goods to those countries. With time, more US student will then go into Engineering so that they can build bridges, roads, wind turbines, solar energy plants etc. and will spend less time conjuring Weapons of Mass Delusion. Sep 29 01:40 PM
    • Why This Bailout Can't Work - And What Will [view article]
      Excellent article by the author!!! He proposes cutting all taxes that might effect rich CEO types and fire as many workers as possible. One point he missed is that he should also propose cutting unemployment benefits to zero. And while we are doing this, what about firing all those school teachers? Many of these teachers and workers have been unaffected by the financial meltdown and it is time they shared in the pain. The government has put restriction on Executive pay, and it is entirely likely that some of these CEOs could see their pay be slashed from 60Million to a mere 600K. This will make life extremelly hard for these CEOs and might force some of them to dip into their meager savings which are probably less than a few hundred millions or at the mos ta billion. The CEO suffering could be reduced if funds could be transferred from the Teachers/Workers Pension plans to help the bankers. This will have the additional benefit to ensure that these retirees will be penniless and ready to work at hourly rates that will enable American Enterpreneurs to hire workers at rates comparable to China. This will bring pressure on all wages, so that in 2 or 3 years time American Enterpreneurs will be able to compete with their Chinese counterparts. Only the above measures will ensure that we are being true to the Free Market ideology. Else we are flirting with Socialism. Sep 29 11:36 AM
    • Is Paulson's TARP a TRAP? [view article]
      Wall Street seems to have a hard time understanding that the current Credit crisis is not short lived and cannot be solved by a 700B bailout. The entire manufacturing and technological base of the US has been outsourced, with the result that US as a nation does not have good Technical job prospects in the next 10 to 20 years. With the current Free Market ideological rigidity preached by Wall Street this situation is not likely to change in the near future. Wall Street however does not want a taste of their own medicine and are trying to convince the Taxpayers to bail them out with a 700B heist. When an armed robber tries to take away from his "customers", he convinces the helpless customers that the alternative of not parting with ones wealth are WORSE. The only long term solution to this crisis is a discussion of how the Manufacturing and Technological base of this country can be restored, so that US citizens can direct their creative energies into great products that the World wants and needs(profits). Currently with a floundering Technological base, too many Americans are going into Law or MBA and the results are bad for everyone. Without factories I am not sure what will these MBAs do? Create what Buffet refers to as Financial Weapons of Mass Destruction. Sep 26 10:37 PM
    • The Secret Villain Behind Our Economic Collapse [view article]
      Very good analysis. One small point to consider, you state
      "Even the village idiot got in on the act. He went from flipping burgers to flipping houses"
      Nostradamus predicted that in the year 2000 the Village Idiot would be elected President. Some people claim that prediction came true.
      President Bush has publicly boasted that he was a C grade student. When voters elect a C grade student to be President one can only expect F grade as the result for the nation. It is a pity that this nation has so many Scientists, Engineers , Nobel Laureates but they have close to zero representation in the Congress/Senate. Instead we have lawyers and financial types running this country and ruining it for future generations.       Sep 26 11:28 AM
    • India's Approaching Age of Basic Materials [view article]
      When free markets are crumbling in the US due to a lack of proper government oversight, it is strange that the author is advocating less deregulation in India. Sep 23 10:53 PM
    • Balancing Free Market Forces and Regulation [view article]
      Good point... We are told that these Companies are too big to fail. 1) Wonder why the government allowed these Companies to get to this Too Big To Fail Status 2) To avoid future bailouts will any laws be enacted that prevent companies from getting to this Dynosaurish size? 3) What about regulation to prevent failures at already existing Dynosaur sized Companies.
      To have a healthy economy we should ensure that companies only attain mammalian sizes and not these monstrous Dynosaurs. The problem with the Dynosaurs was that their brains were very small in relation to their bodies. So they could not quickly adapt to change. After all a company has only 1 CEO , 1 CFO etc. If this can be considered the BRAIN of the company, to mantain mammalian proportions and intelligence a company should not be allowed to grow much beyond 10 Billion. One easy way to ensure this would be to require companies to pay at least a third of their earning as dividends.       Sep 22 10:15 AM
    • Blame Realtors, Brokers and Bankers - Not Greenspan [view article]
      The US Constitution prescribes a system of Checks and Balances to stop the corrupt from destroying the system. Even if the the Realtors /Brokers were greedy it was the duty of the Fed and other Financial Regulators to advise the US government to pass regulation to stop them. AG and other financial types were cheerleading while the US manufacturing base was being uprooted and transplanted to communist China. As a result interest rate cuts prescribed as a solution to the crumbling economy failed to have an effect. The liquidity generated as a result of the low interst rate went to first cause the Internet bubble and then the Housing bubble. Also were US to have a strong manufacturing base, all these realtors / brokers would have probably gone into Engineering instead of Finance. I know a lot of folks who became realtors / brokers when they lost their Engineering jobs. As AG was primarily responsible for lowering interest rates and generating the bubbles he is definitely responsible. Sep 21 02:17 AM
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