Posts Tagged ‘economy’

• My uneducated view

  Date: 2009.12.23 | Category: Life as we know it, ahh the news, rants | Response: 0

  I’m 15 pages deep into Economics 201 I don’t know near enough to figure out what has and hasn’t work in our economy in the past few years. I’m sure that with one to two more years of study I still won’t know enough to figure it out. What I do know is that the “talking heads” on our 24hr news stations surely can’t grasp a problem as large as the one we face. There are simply too many variables involved. Normative economic principle (how people should behave) and positive economic principle (how people will behave) both come into play. How many people have put off spending money because of the “economy”? How many of these people are salaried and haven’t seen a drop in their income nor an increase in their cost of living? Why would they stop spending at their normal rate (unless they decide to pursue a different monetary goal)?

  Questions like these are why I love economics – huge, broad, expansive questions with long detailed answers – answers that we may not get correct. Sure, our policy makers are educated and their advisors often have PhD’s in their respective fields but the problem is simply massive. By the time we’ve collected and analyzed all of the data the situation will have surely changed.

  Look at the weather, for example, how often have we been told that that the mean temperature on our planet is rising. How much bizarre weather have we all experienced in the past few years? Isn’t it strange that Seattle had its warmest and driest summer ever but is experiencing one of its coldest winters so far? Our climate, much like the economy, is a massive system with millions of variables. To think that we can figure out what is causing it and “solve” the problem completely is ridiculous. I think that we can find solutions that will improve our situation but I doubt we can “stop” the warming like we can stop our cars in front of a stop sign. It’s simply too big. If we ALL changed – today – forever – we could start a gradual change in both the economy and in our climate. Without everyone involved its simply going to take time.

  Wait a minute? I remember a speech from our President shortly after he came into office saying that it would take some time for our economy to recover. Hmmm… good advisers? Wise choice of words? Absolutely! Recent indicators show that we are on our way out of this hole that we have dug – we’re not out of the woods yet but we’re headed into the right direction.

  Just my two cents.

• Fireside chats

  Date: 2008.11.15 | Category: ahh the news, videos | Response: 0

  President Elect Obama released his first “fireside” chat that can be viewed below in its entirety.

  
  

  It sounds like Jessica and I were correct in the belief that we would see a shift from the military industrial complex to civic works and green energy. I think these are both going to be needed changes but with any change we must strive for balance. The military has worn out much of our equipment over the past 7 years and some needs to be replaced. We still fly tankers that are as old as my parents and we still use fighters that are older than I am. Simply put, we can only upgrade them so many times before they need replaced. Balance is the key – lets hope we get some.

• What are we going to do now?

  Date: 2008.11.07 | Category: ahh the news | Response: 1

  

  Obama won the election much to the chagrin of republicans across the nation. In his acceptance speech he spoke of the challenges that we are facing and that the solutions could take years or even an entire term before we see change. Legislation takes time – we’ve got to understand that he is only a man – hopefully he will be a great leader and fulfill his promises. Obama had his first press conference and was backed by some of the best economic minds in our country.

  Jessica and I have talked about potential paths to creating jobs and stimulating the economy. For the past 8 years much of the growth has been in the military industrial complex. We’ve spent billions on improving our military while fighting a war. Much of the money has gone to contractors that provide a variety of services to military members stationed overseas – they fed me while I was in Iraq and I’m glad we were paying them instead of sending more military members overseas to cook.

  Civic projects will probably be one of the highlights of the Obama administration. Roads and bridges are in dire need of renovation and repair (save for the bridge to nowhere). I think we’re going to see new schools, hospitals, and libraries constructed across the nation. The fall of the housing market has crushed the construction industry and our nation could use the work. We’re going to pay for the work – and in reality – it’s not that bad. The masses aren’t standing in soup lines and food and other commodities aren’t being rationed like they were during the world wars. Change is going to be tough for America. We have the grit to make the change but we’ve all got to give. I give my service to my country and I pay taxes. If I had to pay more in taxes to fix the problems at hand I would. I wouldn’t want to but these things are necessary evils. In order to make money we’ve got to spend some money.

• Yes, I can be petty

  Date: 2008.10.17 | Category: ahh the news | Response: 2

  FDR said

  This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.

  To me, that seems to be one of the major underlying problems with our economy. Investors are skittish about putting their money into banks for fear that they might not get any returns. Banks are skittish about giving other banks loans for fear of not getting any returns or at worst loosing their hats. Fear is a large part of the economic problem. The other problem is that we, as Americans, carry far too much debt and we’ve got to change our lifestyles. I’m working on chaning mine as I have been for years but I’ve got a ways to go.

  There is one highlight in the economic downturn. Simply because investors believe the economy is slowing they think that oil consumption will also decrease. As a result, we have seen oil prices (in the futures market) drop to $70 barrel. For many of us, this is good news. Yes, we’re still waiting to see some of that drop at the pump because although the price rises quickly it takes a long time to fall. OPEC isn’t too happy about the price drop because the downturn is hurting their bottom line. They’re going to call an emergency meeting where they will undoubtedly cut back production in an effort to drive prices higher.

  It feels nice to have them be scared – it feels nice to not be under their thumb for once. Maybe they’re getting what they deserve. In the future we are going to run out of fossil fuels and we’ll have to engineer a new way to provide power. They know this and we know this. When that happens, they’re going to hope that they saved enough because its going to be quite hard to sell Iraq as a tourist destination.

• Financial meltdowns of the past

  Date: 2008.10.08 | Category: ahh the news | Response: 3

  The current financial meltdown isn’t the largest nor the first of its kind. We’ve had our fair share and we’ll probably have them in the future. Neatorama has a great list of them that includes highlights like

  The Panic of 1907
  Wall Street crash of 1929
  Great Depression
  1973 Oil Crisis
  Black Monday
  Savings and Loan Crisis
  Long Term Capital Bailout
  Dot-com Bubble
  California Energy Crisis

  If you’ve got ten minutes its high time to bone up on boneheaded things we’ve done to the economy. Do you think we’ll learn from our mistakes this time? nah

• One thousand, one hundred, and forty

  Date: 2008.10.08 | Category: ahh the news | Response: 0

  Its hard to measure how the economy has grown and there are many different measuring sticks. Most use the gross domestic product. I was curious to see if I could use the Dow Jones index as a measuring stick. Since Jan 20, 2001 when Bush took office the dow has lost 1140 points. The GDP was around 10.2 trillion in 2001 and 13.4 trillion in 2007. The dow was around 10280 in 2001 and 13400 in 2007. I know that the two aren’t tied together but the losses and gains we’ve seen here are almost the same. I’m curious to see what the GDP is at year end. Will we drop to 9.4 trillion?

• The bailout

  Date: 2008.09.25 | Category: ahh the news | Response: 3

  It’s been all over the news and I’ve been watching the developments over the last few days but I still have my reservations with the plan. Over the past 80 years we have created a number of social programs to help fellow Americans that were unable to reach acceptable living standards. The degree of these programs varies based upon the scope and many are short term programs with specific eligibility requirements.

  To my knowledge, we have never created a social program for failed businesses. Government incentives and grants have been given to businesses that work in specific fields. They needed short term support because the initial cost of operation were far too prohibitive. The businesses in the bailout plan need long term support because they had a failed business plan.

  I want to know whether it would be more expensive to pay for the social programs for the individuals that would be affected if these businesses should fail or if it would be cheaper to bailout the businesses.

  I don’t know if anyone else has actually looked at this issue from this viewpoint. If it would cost more to bailout the businesses we should let them fail. If it would cost more for social programs we should do the minimum to keep businesses in the financial sector alive. Additionally, the legislation should include provisions for fully recouping our investment. This investment would be one in our neighbors next door and across town – we’ve just got to make sure that we make the right decision.

  If the bailout is passed in congress and subsequently signed we should quickly create further legislation that would prevent this from happening again. All business is a risk – the taxpayer shouldn’t pay the price when one of them fails – no matter how big or old they might be.

• Economists on the bailout plan

  Date: 2008.09.23 | Category: ahh the news | Response: 0

  A group of over 100 leading economists sent a letter to congress outlining their reservations with the proposed bailout plan. Their concerns mirror my own – I need more answers before anything is done. The full text is below

  As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

  1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries “systemic risk.” The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

  2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

  3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America’s dynamic and innovative private-capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

  For these reasons, we ask Congress not to rush, to hold appropriate hearings, to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

• This isn’t Lorenzo’s oil

  Date: 2008.07.21 | Category: ahh the news, links! | Response: 1

  Theories attempting to explain the current oil market are quite varied. Wired has compiled a list of the top eight reasons and delves into each one. Its worth a read if you’ve got a few minutes to spare.

• Todays required reading

  Date: 2008.05.05 | Category: ahh the news, links! | Response: 0

  Friedman and Zakaria are two of my favorite journalists/authors and they have written a pair of editorials that are definitely worth sharing.

  Both editorials focus on the challenges we face as a nation and what we may see in the future. If you don’t read anything else today you should read these – and if you feel so inclined, let me know what you think.

  The Rise of the Rest – Fareed Zakaria via Newsweek

  Who Will Tell the People – Thomas Friedman via NY Times