Sliding scale for unemployment benefits?

....what do you think about a sliding scale for unemployment insurance benefits during this downturn? You know.....sort of like the idea of...... I have paid into it for ten years and never used it....so give me a greater benefit than someone who collects benefits every year or two....or someone who has not paid into it very long.....It would sure help those of us that have mortgages stay in our houses....I am a responsible borrower.....I just lost my job in a plant in somewhere USA.....just a thought.....think the government would look at this?

What is the problem the value of the house or the value of the mortgage!

The banks are holding the mortgage...the home owner is in the house.....the Fed is trying to figure out what to do. What if we just consider the value of the mortgage from a financial asset point of view. As long as the payments are made, the value of the security (the house) doesn't matter does it? So what if the Fed looked at making the payments on the problem mortgages until such time as the asset values increase or the home owner finds other work. The Fed could perhaps develop a model to measure whether the default is the result of poor lending practises or the result of the economic downturn. Let the banks absorb their mistakes and let the Fed help those that truly need and deserve the help. I think that the banks are using this problem to have the American tax payer cover their bad lending decisions and the huge bank bonuses that were paid on them.

What Role Should The Media Play

Is the media being responisible in it's reporting of the economy? Are they magnifying the fear of the already terrrified public. Watch it today and judge for yourself......are they?

Spending or Tax Cuts...Economic or Political Decision

Well the package is out!!!! Not as big as what we thought. But more interesting is the direction it is taking!!! What happened to large tax cuts to put the money directly into the consumer's pocket ASAP. What happened to the 1.6 multiplier that these tax cuts create? Is this not more effective than MORE GOVERNMENT SPENDING! What about spending on infrastructure that we can live off of in the future.....you know the kind of spending like interstate highways and rail lines...yes the money takes longer to get into the system but it provides growth opportunities down the road...no pun intended. Spending on education and health care infrastructure will only cost the taxpayers more down the road.....they will not create private sector growth. I cannot provide the answer.....only the question.....what do you think?

Uncertainty breeds fear, fear breeds panic, panic breed irrationality

OK let's all slow down a bit here. Yes there are problems out there but let's stay rational. There are strong companies and there are weak companies. There are growth industries and there are declining industries....but remember most companies will survive.....probably all industries will survive. Lets not throw in the towel or paint every company in some industries with the same brush. America will still have an automotive industry when the dust settles, American will still have a construction industry when the dust settles and American will still have a banking industry when the dust settles. When the uncertainty creates panic people behave in a very irrational manner and that manner may magnify present problems or create new problems. I recently enjoyed a conversation with a banker who stated that his bank had made a policy to no longer fund the auto industry because of the uncertainty of it's present state. Is this a rational statement? Just to get him thinking I said I can certainly understand his bank's policy. Who knows where the industry is going.
Oh ya, and wow I commented, I cannot believe that his bank's stock had declined 40% in the last six months......babooooom......his face lit up and he assured me that his banks value decline was just caused by the traders who want to dump all bank stocks. His company's balance sheet was strong and their exposure to the sub prime mess was limited.....funny isn't it I thought.....when you see a dog on the street it just a dog......when you have the dog on your lap......IT IS A PET!!!!

Have we spread our wealth too thin? Greed or gratitude?

The basis for decision making in corporate America is comparative advantage and specialization. Foreign countries, with vast supplies of cheap labor have a comparative advantage over the west for labor intensive manufacturing. As long as the cost of shipping and the political risk are offset by large enough cost advantages we will continue to shift our manufacturing base to these countries. Is this good or bad? It increases our standard of living by allowing us to purchase these goods at lower prices in the short term. It also increases the standard of living in these poor countries by us paying them to manufacture the goods for us. In effect we spread our wealth around the world. Sounds like it is a win/win situation......right? I guess that as long as the west does not have excess capacity and we all have jobs it is ok...the theory is that we have higher skill sets that will allow us to get better, higher paying jobs. I guess it is like going to work everyday at a manufacturing job and hiring someone to cut your grass or clean your house.....right? I have a good job so I don't have any excess capacity....but what if I lose my job...and I have excess capacity? What do you do? This may be over simplified but it sure hits home.

International economics and politics unfortunately are intertwined. The answer is not simple or complete. But what is the answer?????

Captain Please Save This Ship

It appears as if the American public and Wall Street have the expectations that Captain Obama will save the ship. Is this possible? Can one person, one government, rush in to save the public from the pain resulting from the over consumption from the night before. My Dad always said there was no cure for a hangover but time. You had to endure the penalty for the night before. I still think he was right. Thinking that a "package" is going to cure the pain is like the Gatorade and aspirin before bed theory. I have no doubt that it helps, but come morning you are still going to have a headache. As the companies report lower and lower earnings and job losses mount we have to look over the next mountain, take the pain, accept the struggle and adjust. Adjust to what the new standard will be for economic life in the western world. Not life threatening, but....the bling thing.....well it might be a thing of the past....at least until the hangover has gone away.......

When Will Recovery Start?

How long will it take for things to get better? When will a recovery take place? Well......when do you think people will start to spend again....answer that and you will be six months ahead of the game. Until we decide that it is "safe" to spend again I cannot see the economy getting back on track. We have taken to much value off the books to just throw some gas in the tank and expect the engine to fire up again.

My fear is that the longer this takes, the greater the risk of a deeper dive into depression like economics. I think that the next step down will be seen in the supply chain of the companies hit so far....the auto parts manufacturers, window manufactures, lumber mills, etc. If these fall as far and as hard as the auto companies.....look out.....there will be some great opportunities.

How Far Willl Asset Prices Fall?

If there is no liquidity in the economy how do you find a bottom in asset prices. I am not talking about shares necessarily but companies, houses, cars, etc.. People with liquidity continue to sit on the sideline and watch....waiting for a fire sale....but how many people have the liquidity required to build a bottom in all these markets.....and at what price will this occur? M and A activity is non existent, leverage buyouts seem to be a thing of the past and the consumer has lost his/her job and the banks won't lend. The next shoe to fall will be the supply chain that leads to all these assets. Hold on it is going to be a wild ride!!!

Is Obama's Stimulus The Right Package?

As Obama looks to spend 900 billion dollars to keep the economy above water the US public is starting to question it's outcome. Will it be enough? Is it being spent on the right things? Should we look more into tax cuts as an alternative?

History has shown that huge government stimulus will help an economy continue on feeble legs. However, we are a mature economy with an aging population that has little domestic manufacturing. Should this make a difference in the decision of where we spend our money from a stimulus package?

We know that tax cuts produce a bigger growth multiplier than government spending. Should we look a little closer at letting the American people decide where to stimulate the economy?

Building roads and bridges are great in a young economy with growing manufacturing, but is it wise for a mature, consuming economy? Spending on health care and education will no doubt focus funds on future areas of demand but will these new assets only require more government funds in future years to continue to provide the services that will be provided by the new schools and hospitals? Funds that we no longer be able to borrow. Evey problem has many solutions....some are just better than others.....lets think about what the best one is!!!

Cio

Turning Around A Consumer Based Economy

How do we turn around a consumer driven economy if there are no consumers? What if we decide it is not vogue to consumer anymore? Look around...inventory is growing everywhere....hundreds of thousands of houses for sale sit emtpy...hundreds of thousands of cars sit idle on lots....shelves are full at the malls and the discounts signs are tattered....there are no consumers around......what now?