Browsing the archives for the Politics category.



The US and Russia…Can we be Pals/Strategically Alligned Partners on Specific Issues

Barack Obama, Foreign Policy, Obama, Politics, President Obama

Adam

This will be a short post. I think we are beginning to see what could be the potential end of two long disagreements for the US.

Fareed Zakaria points out in his recent article in Newsweek that

His sin was to point out in a letter to the Russian president that were Moscow to help in blunting the threat of missile attacks from Tehran, the United States would not feel as pressed to position missile defense systems in Poland and the Czech Republic—since those defenses were meant to protect against Iranian missiles. This is elementary logic. It also strikes me as a very good trade since right now the technology for an effective missile shield against Iran is, in the words of one expert cited by the Financial Times’s Gideon Rachman: “a system that won’t work, against a threat that doesn’t exist, paid for with money that we don’t have.”

http://www.newsweek.com/id/189240/page/2

The Russians don’t want the US to install a missile defense system in Eastern Europe.  The US does not want Iran to expand their nuclear activity.  Russia has the ability to influence Iran.  Russian works with the US to end Iran’s nuclear ambitions, then the US does not install the defense system. 

This seems like a very good and possible scenario.  Why can’t we get this process rolling?

Also, scary thought…could Bush’s insistence on the defense system play out to ultimately be a brilliant strategic move?

Rate this:
2.8
No Comments

Can you fix a broken nation with a broken record?

Bailout, Barack Obama, Economic Policy, Economic Stimulus, Economy, Election, Infrastructure, National Infrastructure Reinvestment Bank, Obama, Politics, President Obama

Adam

I am going to say that it is probably difficult to fix our current situation with tax cuts.  I know…I know, the crazy liberal wants to raise your taxes and then spend all your hard earned wages. Not exactly.

I have a difficult time grasping the notion that the conservative chorus can only recite the same tune we have heard during a very recent 8 year administration.

“The only way to stimulate the economy is with lower taxes and tax incentives.”

Everyone is skittish now. Consumers, producers, and lenders. The argument that tax incentives will create job growth does not work.  Lets take a look at a couple of scenarios.

-  We create an incentive where an employer gets tax breaks for hiring new employees. (Currently part of the Obama plan, but really done for the purpose of appeasement)

So, under this theory, a company will hire a new employee for the purposes of expanding production of a good that a consumer is buying less of. Does not really work out in my mind.

- We lower taxes…

Well, with all of that extra money from lower taxes, companies will be able to expand production. Okay, so they expand production after borrowing to purchase what is necessary for the increase in productivity. They have to borrow because lower taxes do not mean available cash. This also seems to be a difficult challenge due to the well publicized reluctance of banks to give our money.

So why is it that the party that got a strong message from the American public this past election is grasping hold to its oldest idea?

I would like this cartoon to be an exaggeration, but right now it doesn’t seem to be.

Rate this:
2.8 (1 person)
1 Comment

Detroit Broke City

Automaker Bailout, Bailout, Big Three, Economic Stimulus, Economy, Politics

Robert

Recently US Senator Carl Levin from Michigan stated that in regards to Honda locating in Alabama:

[Alabama] has cheaper labor, younger labor, no legacy costs (for retiree health care) — younger work force means lower medical costs. They have certain competitive advantages that are not the result of brilliance or greater skill.

Holy sh*t. Has Levin been smoking too much green or what?

I hate to keep throwing around the phrase “basic economic principles”, but I learned about competitive advantages on my first day of Econ 101. “If Country A can produce a widget for $1 and it costs Country B $2 to produce the same widget, Country A has a competitive advantage.” If Honda can produce cars in Alabama more cheaply than it can in Michigan, then why wouldn’t they build a factory in Alabama? It is really difficult for me to sympathize with the state of Michigan on this. 

For far too long the owners of the Big Three have been getting rich while at the same time producing inferior products. When a few companies have total control of the market, the average consumer can do little. I mean seriously, I am going to start riding a bike instead? Do you know how sweaty I get? I’ll just pull a quick hobo shower in office bathroom and be good. Via an open economy, foreign cars started to make an appearance on American roads. And you know what?  They were nice and, more importantly, they were cheap. They were cheaper because they were produced overseas where employee wages are substantially lower. They were nicer because without all of the overhead, the foreign car companies could put more money into the vehicle and still charge a lower price. An additional $2,000 is added to each car just to cover retirement benefits for employees. 2 Gs!!! Unfortunately, unions have a strangle hold on the auto industry. They have had far too much power for far too long; they have paralyzed the auto industry. They are just one more gigantic rock around the neck of the albatross that is the American auto industry.

Enter bankruptcy. Bankruptcy is the only chance that these companies actually have of recovering. Filing Chapter XI would give them a chance to break the shackles of many of their past poor decisions. They could renegotiate their union contracts, so that the autoworkers begin to earn wages that are more competitive. The new leaders would have to work in harmony with federal bankruptcy regulations that would prevent them from making bad decisions that would slow down the recovery process. As horrible as it is to see so many people lose their jobs because of greedy decisions made by those in charge, I see a basic purge as the most logical way to solve this problem. Break down the Big Three so that they can be built back up through the free market. Make them compete and they will either flourish or perish, but their success will hinge on the quality of their products and their company overall, not the artificial infusion of government funds.

 

 

Adam    

 

Robert…its bad news. This whole situation has been difficult to gauge my feelings. I have had somewhat unflattering things to say about the American auto industry for years. The market manipulation they have been able use to their extreme benefit is unbelievable. I don’t want to get into a history of how this industry (along with a couple of other cooperative industries) has brought our society to the slow and mind-numbing pace we found ourselves at now.

That being said, I should point out that the American consumer has a great deal of power and control in shaping the auto industry. Unfortunately price along with product choice can easily fool consumers.

Glad to get that bit out of the way. What about the proposed bailout of the Big Three? Well it sure is tough to advocate for some of the largest corporations on earth who have ignored the need to help themselves. The way I have thought about this issue is not in terms of “The Big Three”, but in terms of the Big Three Million plus who will lose their jobs if these companies fail.

In the economic stimulus package I wrote about in a past post, I advocated for investment in infrastructure to, partly, create millions of jobs. So, although it is beyond frustrating for me to advocate helping these slow and inefficient companies with a bailout, I have to. 

This $25 billion bailout is necessary to save jobs. In regards to the Big Three failing, Jonathan Cohn points out that three million people would lose their jobs in the first year after such a Big Three meltdown, swelling the ranks of the unemployed by nearly one-third nationally and leading to hundreds of billions of dollars in lost income.

A bailout of the Big Three could provide our country with a unique opportunity. One point to be made is the billions that would be spent in unemployment by the government if these jobs were lost. A bailout would mean billions of dollars saved in this context (I know…it’s a stretch). The other point is that the Federal government is in a unique position to put standards in place to force the Big Three to modernize and help the United States become less dependent on foreign oil.

It may be argued that the free market would force these companies to adhere to new standards without government intervention. This type of restructuring would take place in the Chapter 11 process described above. As pointed out at The 7-10 “Who wants to buy a car from a bankrupt company?” This is where the Chapter 11 scenario becomes a problem.

This situation is not similar to letting the airlines go into Chapter 11 in the 1980’s. A warranty is not necessary for me to fly from one part of the country to the other. It is, however, necessary for me to want to buy a new car. If any of the Big Three were to begin the Chapter 11 process their ability to continue to do business would be dramatically diminished.

So…where do we go from here?  I feel Robert Reich provides the best way to proceed in this brief summary:

In exchange for government aid, the Big Three’s creditors, shareholders, and executives should be required to accept losses as large as they’d endure under chapter 11, and the UAW should agree to some across-the-board wage and benefit cuts. The resulting savings, combined with the bailout, should be enough to allow the Big Three to shift production to more fuel efficient cars while keeping almost all its current workforce employed. Ideally, major parts suppliers would adhere to the same conditions.

Remember: The underlying goal is to help Americans through this crisis and come out of it with a stronger economy.

We need the Big Three to continue to exist. We need the three million jobs to continue to exist. We need a better American automobile fleet. The bailout of these companies, if done properly, can help us achieve all three of these needs.

 

Rate this:
3.3 (7 people)
8 Comments

The Digital Administration

Barack Obama, Obama, Politics, President Obama

www.change.gov

What are your thoughts on having a new administration keeping the public informed at a level like this?

Rate this:
3.2 (3 people)
1 Comment

Can You Stimulate Me Economically?

Barack Obama, Economic Policy, Economic Stimulus, Economy, Infrastructure, Obama, Politics, President Obama, Public Policy
Adam    

I heard a crazy thing the other day; things are not going in the right direction for our economy. Actually, I think I heard that a couple of years ago. You remember those days don’t you? There was a housing bubble still, sub-prime mortgages were parts of conversations, and the positions on the wars in Iraq and Afghanistan would decide the next U.S. President.

Today, we have a President-Elect whose stance on the wars most likely did not help him get elected.  The call for change of the way things have been going brought him to victory. Now, what change is going to take place is a couple of months away from being realized. One issue that is absolutely necessary is an economic stimulus package to go into effect as soon as possible.

The potential second economic stimulus package has been in the news for a couple of months now.  There are opinions flowing at both ends of the discussion. That being stated, I thought it was important for me to throw my thoughts out there.

First, checks being handed out to citizens should not happen again. That was like my cup of coffee at 1:00 pm after a late night…I’m still going to crash.

Second, Federal spending on infrastructure is necessary and has always been necessary. Its not spending for the sake of giving money back to the poor. Its an investment in the future.  I racked up a lot of student loans, which was an investment in my future prosperity. I didn’t go out and buy a bunch of stuff with credit, which I would say is not an investment.

These two scenarios are the way I see the two sides of the argument over the economic stimulus.

The current number most commonly being suggested is $150-$200 billion in economic stimulus. This should go heavily towards infrastructure investment. Liberals and conservatives are calling for this type of Federal spending. But why so little?

The United States’ GDP for 2009 is projected to be at $15 trillion. The package being talked about would only amount to roughly 1% of GDP. This past week China unveiled an economic stimulus package in the amount of $586 billion, 16% of their GDP. 

Some economists (liberal) are calling for more spending to make up the gap in output. Paul Krugman thinks the stimulus package should be 4% of GDP, or $600 billion. Similarly, Robert Reich states “government may have to spend $600 or $700 billion next year to reverse the downward cycle we’re in.

Now, to assuage any fears that the federal government is going to throw money at anyone who asks for it, there are actual needs for funds. The American Society of Civil Engineers puts the needed expenditures over the next 5 years to bring the nation’s infrastructure up to good condition at $1.6 trillion. This number is what is needed for “improvements”. What about the new investments that are needed for the world economic leader to continue to grow throughout the 21st Century?

We need infrastructure improvements, we need new infrastructure investment, we need economic stimulus, and we need jobs. All of these needs can be met with a strong economic stimulus package. The money needs to be spent at some point, so why not have the government spend that money when everyone else is hoarding their own money?

 

 

Robert

There is one basic flaw in your plan, Adam:  America is broke and it is time to start acting like it.  No one is talking about where this $200 billion dollars is going to come from.  “Oh, just skim it off the top of the GDP.”  It is important to realize that that money is going to have to come from somewhere and it will not be from the Defense budget (sorry, liberals!)  Who is going to fork it over?

The bottom line is that the last thing we need right now is for the government to meddle with the free market.  Their manipulating is what got us into this problem in the first place.  Though I may have slept through most of my economics courses, I know that basic supply and demand is the ultimate balancer of prices.  All that the government’s proposed stimulus package is going to do is continue to artificially inflate the economy.  Well, my friend Peter Schiff* and I have a better idea: bleed the pig.  It is time for us to let things get bad.  The economy is absolutely decimated and the only way that it is going to get better is if we let things occur naturally.  Save some money.  Tighten our belts.  Why is everyone looking at this like it is a bad thing?  It is a chance for America to get out the filth that has been poisoning the economy for so long.  We have got to go back to the fundamentals of our founding fathers: hard work, dedication, and savings.  This is how we are going to save the United States of America. 

The last thing we need right now is for the government to pump a bunch of cash into America’s infrastructure.  You do not buy new shoes right after you lose your job; You make do with the shoes you have until you are in a comfortable enough position to get a new pair or until your old pair is completely destroyed.  Same goes for the infrastructure.  Let the market dictate when the roads are improved, not the government.  There is no overnight fix and until the government is willing to stand aside and let nature run its course, Americans are going to continue to suffer. 

 

*Disclaimer: I am in no way an acquaintance of Peter Schiff.  He is the ultra successful CEO of Euro Pacific Capital, as well as a best-selling author and I am writing for a blog that even my mom won’t read.

Rate this:
3.2 (9 people)
10 Comments

A New Hope or…

Barack Obama, Election, Obama, Politics, President Obama

Adam

Well…here we are with a new President Elect waiting on deck.  Obviously I am extremely happy with the outcome on many different levels.  But I’m not writing to gloat, I’m writing about the opportunities I feel we have for the country.  I believe, as is so often espoused in an election year by politicians, that we live in the greatest country on earth.  The opportunities every individual has access to here is not found anywhere else.  This is in large part due to our freedoms and individual desires and motivations.  The other part is in how our governments support the dreams of so many people.  This is the opportunity for our government to make the needed steps for renewed opportunities in the future.  I think that the building blocks for renewed innovation and growth will be set under this administration.  Is it possible for those who represent the people to work towards setting things in place for this renewal?  I can’t answer that. 

I do think it is very likely that our government will move past disagreeing for the sake of not conceding to the other side.  I know, it sounds like something a person on the “winning side” would say, but I truly believe it.  We are in, and going further into, desperate times.  This should be the time that we look towards the long term future, instead of only acting on crises as they overtake us.

I know I’m not getting into specific details on solutions to current and future problems.  I want to know if others believe these desperate times will bring great opportunity.  Will they?  Has optimism for our future left the people of this country?  Is it foolish to be hopeful of the potential that lies ahead?  Are the thousands of people who celebrated Tuesday night crazy or was that a time for them to truely be excited and inspired?

Right now, I’m hopeful…

 

Robert

Adam, I cannot help but be nervous about the next four years.  I guess I am one of the few people concerned that we now have a Democratic President, Congress and possible Supreme Court nominations looming.  Though there is a lot to be said for getting things done, my concern is that this government is going to undo many of the fundamentals that former bi-partisan governments worked so hard, together, to get passed.  I fear that checks and balances, a pillar squarely constructed on the shoulders of the Constitution, may be compromised.  This is not something that I can take lightly. 

As an American citizen, I feel it my duty to whole-heartedly support our new President.  It is crucial for us to unite as a nation and work as one to keep America’s flame burning bright.  These coming years are going to test not only our national unity and Barack Obama’s merit, but most of all they are going to test the fortitude of our Constitution.  I hope and pray that our elected officials remember the ideals that this country was founded on and use the Constitution as a beacon to guide America through these dark times.

Rate this:
0.5 (9 people)
8 Comments

First Post, November 2nd, 2008

Barack Obama, Election, John McCain, Politics

This is our first post on the eve of a historic night.  The election that has seen such great excitement,  along with great animosity, is going to be coming to a close with Senator John McCain or Senator Barack Obama becoming the next President of the United States.  Most assuredly, the outcome will bring anger, if at least great disappointment, to nearly half the country.  This point is why we feel it is necessary to create a forum for conversations between people with differing ideas.  This blog should allow us to see that both sides do seek the betterment of the American people, though they believe it may take two different directions to move towards the ultimate goal.  

The continuing interaction between those of different viewpoints will allow us to move forward and go beyond the strongly perceived differences of the past.

So with this, we look forward to a great night for our country on November 4th, 2008.  We  also look forward to meaningful discussions on the issues that will shape our country.

Rate this:
0.5 (4 people)
No Comments
Newer Posts »