shagbarker

Pompous Prognosticators 2004-2009

In the future predictions sometimes turn out to be correct. It is much harder to predict the past.

Taxpayers, Workers Could Be Forced to Help Pay for Pensions

Idyllic retirement may not be the issue, rather attention needs to be paid to meeting those needs. As demography plays its game out people will participate less in production, but will continue to play their vital role in consumption. Assuring that they can continue to do so is important to future prosperity. Indeed part of the definition of prosperity is that people can meet their basic needs. Poverty is not the road to wealth. Cutting pensions and retiree health costs assures that a substantial portion of the population will consume less meaning fewer jobs and less income for taxpayers and workers. When this occurred in the Great Depression we enacted Social Security to encourage older people to stop working and make their jobs available to younger citizens, while assuring that retirees still had income to purchase from producers. A return to McKinley economics will assure that older people are destitute, and can not buy necessities from younger people, assuring that they are destitute also.

Misguided Government Policies Helped Prolong the Great Depression

What the depression proved was that the belief that market economies always are self correcting was wrong. If sufficient damage is done to confidence low interest rates and liquidity are insufficient to restore aggregate demand. There must also be confidence that investment will be profitable, that incomes will rise, and debts can be paid. The market will often stabilize but it does not care if that stabilization is at a point below the poverty level. A better question is why after world war two we had such a dramatic recovery. The national debt was gigantic, war time industries were being deconstructed and millions of soldiers were being tossed into the job market. We should have returned to the depression, but we were filled with the confidence coming from victory, and had the new deal programs and policies in place, including the GI bill, VA loans, and public works on an unheard of scale, the national highway system, national student loans, etc.

When Bonuses Aren't Discretionary

Might be the other way around, it is becoming increasingly clear that we are entering a period of slippery wages, where employers have cut wages and benefits to the point workers can not pay their mortgages, hospital bills and grocery bills. The other problem might not be bonuses, if banks are profitable some of that profit ought to make its way to workers. However, an economy which ships production of wealth overseas, works hard to drive down wages, and expects to make a living solely by moving money rather than products may not be a sustainable model. What we need is an incomes policy designed to get wages rising again.

The Hopefully Not So Great Next Depression

What is wrong with white wine and brie?


On Jan 31 07:16 PM PrudentMan, CFA wrote:

> bin Laden liked the reducing military spending bit. Bill Clinton
> was kind enough to give George W. Bush an army, which ran Hussein
> out of Iraq and virtually destroyed the Soviet Union, in half. We
> are just starting to get over that blunder.
>
> Some believe we don't need a military. I have always wondered if
> they thought we don't need a police force or fire department. I
> imagine they talk about these things in their gated communities drinking
> white wine and eating brie.

The Nefarious and Destructive World of TARP

Insight is better than hindsight. The repeal of Glass-Steagal, promotion of interstate banking, efforts designed to drive down real wages, eliminate or reduce pensions, health insurance, to de industrialize the United States all have had the effect of driving down wages and reducing aggregate purchasing power. People are not undergoing foreclosure to have fun, but because we adopted an economic and fiscal policy that made them to poor to pay their bills. In the short run preservation of financial assets and institutions may be necessary, but unless we adopt an incomes policy designed to increase wages and return purchasing power to consumers we are unlikely to succeed. Bail outs of GM and Ford may be distasteful but if we think that terminating UAW pensions and health care and cutting wages will sell more cars, well then I know this bridge in New York I would love to sell .