Showing posts with label Great Depression. Show all posts
Showing posts with label Great Depression. Show all posts

Saturday, December 11, 2010

Wearing Black

I wear black. I should not have to explain.

Black is a beautiful color. I wear black. A certain shade of black, with a little shine on it.

Used to be sky blue, now it is black. I like black. It is an amazing color. It has depth.

I showed up in Kentucky with a tailor made suit from back home: brown.

But right now it is black. I like the color.

It also is about simplicity.

I have a few different black Brazil shirts that I wear at home on a few different days. Pele was God when I was growing up. He still is. Brazil is Mecca.

I wear black to express solidarity with my president Barack Obama. I wear black for him too. You have no idea. You have no idea what he means to me. All he ever needed to do was win in 2008, and win he did. He could have let the Great Depression happen, he might not have passed health care reform or Wall Street reform, and I would still have liked him just fine. The fact that he is destined for greatness makes it easier to like him, but that is not why I like him. (The Tea Party Is Getting America Talibanized)

I wear black. It feels good. It feels right. It feels warm.

Monday, November 29, 2010

Racism Caused Recession

Comet P/Halley as taken March 8, 1986 by W. Li...Image via Wikipedia
Farrakhan: Levee May Have Been Bombed To Flood ... flood poor black people out of New Orleans after Hurricane Katrina.
You could argue it was cyclical. It happens every 70 years. The last time was the Great Depression. And there was something like the Great Depression about 70 years before the Great Depression. I guess I will not see the Halley's Comet or another Great Recession in my lifetime then.

Monday, September 06, 2010

Treating This Like It Were A 1992 Or 1980 Recession: A Mistake

Paul Krugman, Laureate of the Sveriges Riksban...Image via Wikipedia

The government stepped in to bail out the banks. The government stepped in with a stimulus bill. But the government did not step in to create about five million jobs. That third part is the missing part of the zigsaw puzzle. The Great Recession has not been fed the Tennessee Valley Authorities of these times. It has been for the government to dream up the jobs of tomorrow and bring them home. And I am not talking cutting edge stuff that perhaps is best left to the visionaries and the qualified in the private sector, although even there, it can be argued, bold would be beautiful. Perhaps this is just the time for a Manhattan Project for the environment, or to take a man/human to the environmental moon.

The first stimulus bill was a little misguided. It was too small, the tax cuts were unnecessary. Too much of it went to just paying people unemployment and salaries until the economy went back to normal. That normal has not happened. Because this is not 2001 or 1992 or 1980. This is more like the FDR times. It is a great crisis that can be steered to create a better future than ever before existed. This is a time for big, bold action still.

Band aid solutions will not work. And caving into GOP fervor to go back in time will fare even worse. The electorate has to be saved from itself. The electorate has to be relentlessly educated to do the right thing in November.

What are the options?

Some say a second stimulus is a fiscal non event. It is not happening. I am not so sure.

The Fed has not exercised all the monetary options available. Paul Krugman seems to suggest that. And I agree. Letting inflation go up a little so it becomes expensive for the private sector to sit on the near two trillion dollars it is sitting on would be a great idea.

The president has to engage in vision talk. He has to start talking like he is the nation's CEO, which he is. You engage the leaders of all segments of the private sector in brainstorming sessions. You let them help you think in terms of the jobs, companies and industries of tomorrow. And you give a series of speeches. You are not proposing to spend. It is not about money. It is about making speeches to prop up private sector confidence. It is about pumping vision. Where there is no vision, the people shall perish. This is as important as fiscal and monetary moves, and the most in command of the top guy. And it does not cost money.

These are not normal times. The wheels of capitalism are not churning like they are supposed to. Capitalism is fish outside water right now. Political leadership matters more, not less.

This is not like 2001. This is not like 1992. This is not like 1982. This is more like 1938. What finally got America out of the flunk back then was the massive spending of World War II. For the American voter to vote for the cut-the-deficit people in November would be suicidal. This is time for more, not less spending. But more alone will not work. The spending has to be about creating the five million jobs of tomorrow. I am thinking more along the lines of basic retraining for solar panel installation and the like.

America does not need World War III, but it does need a second stimulus bill that will be geared towards giving history a push. It has to be about the government actively creating about five millions jobs of tomorrow. They would be to do with green tech, education, with health.

I am for a second stimulus bill that is a trillion dollars. Its primary component would be to guarantee 100 MB broadband to all Americans. It would require freeing up wireless spectrum not 10 years from now, but today. It would require South Korea like competition into the broadband sector. The Internet is the interstate highway of today. People telecommuting are people not having to drive to work. Save the sky. There would be a massive spending on retraining the jobless for the jobs of tomorrow. Shovel-ready is a worker who only needs three months of training. Dream up five million jobs in green/clean tech, in education, in health. Install tens of millions of solar panels. Cut the obesity in the country by half in five years. Send out health care workers with the task. Bring the illiteracy down. Send mobs of mentors into the inner cities. Pay them. Turn this into a country of 75% college graduates in five years by taking all courses and lectures and textbooks and journals online that anyone anywhere can access for free, ad supported.

This second stimulus has to be a declaration of war. America can afford to go from a 13 trillion debt to a 14 trillion debt, but it can not afford Great Depression II or World War III.

A trillion dollars is what America spent in Iraq alone. Some say it is but a third of what America spent in Iraq alone. A trillion dollars is not a lot of money in the big scheme of things.

New York Times

Housing Woes Bring New Cry: Let Market Fall: Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live...... a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash. .... Caught in the middle is an administration that gambled on a recovery that is not happening.... “They are deeply worried and don’t really know what to do.” ..... Sales of new homes are lower than in the depths of the recession of the early 1980s, when mortgage rates were double what they are now, unemployment was pervasive and the gloom was at least as thick...... “extend and pretend” or “delay and pray”

That ’70s Feeling:Steven Slater, a flight attendant for JetBlue, ended his career by cursing at his passengers over the intercom and grabbing a couple of beers before sliding down the emergency-evacuation chute ..... The “blue-collar blues” were so widespread that the Senate opened an investigation into worker “alienation.” ...... “I’d give the shirt right off of my back / If I had the nerve to say / Take this job and shove it!” ...... Workers have learned to internalize and mask powerlessness, but the internal frustration and struggle remain. ..... Today the concerns of the working class have less space in our civic imagination than at any time since the Industrial Revolution.

Paul Krugman: 1938 in 2010: The president’s policies have limited the damage, but they were too cautious, and unemployment remains disastrously high..... the year is 1938..... the nature of the recovery that followed refutes the arguments dominating today’s public debate, discouraging because it’s hard to see anything like the miracle of the 1940s happening again..... the stimulus raised growth while it lasted, but it made only a small dent in unemployment — and now it’s fading out......More stimulus is desperately needed ..... March 1938. Asked whether government spending should be increased to fight the slump, 63 percent of those polled said no. Asked whether it would be better to increase spending or to cut business taxes, only 15 percent favored spending; 63 percent favored tax cuts. And the 1938 election was a disaster for the Democrats, who lost 70 seats in the House and seven in the Senate....... World War II was, above all, a burst of deficit-financed government spending ..... the federal government borrowed an amount equal to roughly twice the value of G.D.P. in 1940 — the equivalent of roughly $30 trillion today. .... Deficit spending created an economic boom — and the boom laid the foundation for long-run prosperity. Overall debt in the economy — public plus private — actually fell as a percentage of G.D.P., thanks to economic growth and, yes, some inflation, which reduced the real value of outstanding debts. And after the war, thanks to the improved financial position of the private sector, the economy was able to thrive without continuing deficits. ....... when the economy is deeply depressed, the usual rules don’t apply. Austerity is self-defeating: when everyone tries to pay down debt at the same time, the result is depression and deflation, and debt problems grow even worse ...... Even under F.D.R., there was never the political will to do what was needed to end the Great Depression; its eventual resolution came essentially by accident. ..... politicians and economists alike have spent decades unlearning the lessons of the 1930s, and are determined to repeat all the old mistakes..... the big winners in the midterm elections are likely to be the very people who first got us into this mess, then did everything in their power to block action to get us out .... a little bit of intellectual clarity, and a lot of political will.

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Monday, July 26, 2010

The Economy: Uncharted Waters

Dorothea Lange's "Migrant Mother," a...Image via Wikipedia
The convulsion of the Great Recession has been the birth pang of a new kind of economy, a new kind of world. We had already been moving towards a post-industrial society, towards an information age for over a decade, but our pace had been too slow, not global enough, not as drastic as it ought to be. We are still unsure as to which directions to go. There is open talk of a double dip recession. The jobs are not here yet. It is still scary times.

After the Great Depression, America very clearly became an industrial economy. It was no longer the agriculture economy of Abraham Lincoln's time. A huge economic shift had been made. But there was pain along the way.

It is one of the failings of democracy that you need a big, bad event to get people riled up to go do something big. FDR wanted to enter the war long before Pearl Harbor happened, but he waited, and waited and waited until Pearl Harbor happened.

Why do you need a 9/11 before you realize the cause of democracy needs to be furthered across the Arab world? Why do you need a Gulf Oil Spill before even the average person starts thinking in terms of a zero emissions future? Why are intellectual extrapolations not enough? Or perhaps Hollywood is not doing its job.

I supported the Obama stimulus plan, but my criticism was and is that it was not forward looking enough. Roads and bridges are important but those are rickety swings of the industrial age. The roads and bridges of the information age are to do with the internet.

The stimulus bill was not big enough. It should have been a trillion. And it was not future oriented enough. The stimulus needed to be about turning America into a country of 75% college graduates. You can't do that with the existing colleges and so you turn the entire country into one big college. Universal broadband. Free up the spectrum, not in 10 years, but now. (India Broadband Spectrum Bids)

It was lack of vision that brought down Wall Street more than anything. Pumping more and more money into real estate is not my idea of visionary investment. They were accumulating so much money and all that needed to go somewhere. And so they came up with ever nefarious ways to put more and more money into real estate.

Wall Street was not thinking in terms of the jobs of tomorrow, the companies of tomorrow, the industries of tomorrow. It was not thinking futuristic enough. It was not thinking global enough. If it had been thinking global, it would have sunk a few trillions into global microfinance and seen returns that were better than that of the S&P 500. It would have put the money into global infrastructure projects. There were clear alignments to be sought between self interest and global interests, but they were not sought.

BusinessWeek: Lucky for Obama, U.K.'s Cameron Is Embracing Austerity First
Plugging their economies into the life-support system of central bank liquidity and massive government stimulus packages was the easy part. The tough question is how long their governments should stand in for a private sector too nervous about the future to invest and hire. With the world economy threatening to slide into a double-dip recession, both the U.S. and the U.K. are nevertheless talking about fiscal austerity. The only good news for Obama is that Cameron is going first. ..... spending cuts of as much as 40 percent ..... the U.K. doesn't want to be the next Greece. ...... bond vigilantes are driving U.K. economic policy. "Questions that were asked about the liquidity and solvency of banking systems are now being asked of the liquidity and solvency of some of the governments that stand behind those banks" ...... "The austerity debate is now not about whether fiscal tightening in advanced economies is necessary, but on when it should begin in earnest." ..... growth collapses if all of the members simultaneously abstain from spending. Too many governments curbing spending and raising taxes in parallel would snuff out the nascent recovery. ...... Consumer confidence has dipped ..... government aid can't be removed without risking a relapse. ..... With so many job cuts, Cameron could find himself coping with strike action on a scale not seen since Margaret Thatcher neutered the nation's private-sector unions. ...... The banking industry, meanwhile, is crying foul at the prospect of bonus caps and a top income-tax rate that will climb to 50 percent from 40 percent. Threats to leave for Switzerland may prove more than empty. ...... The path Cameron is charting is so arduous, and public opposition is likely to become so intense, that rating agency Standard & Poor's isn't convinced he can deliver ...... If he forges ahead, there is a real chance that Britain returns to a recession. Neither scenario is cheery—and neither is beyond imagining for the U.S.
I am for a second stimulus bill that will focus primarily on creating jobs. It was finally the massive spendings of World War II that ended the Great Depression. Bold action is necessary.

A second stimulus package would be big, it would focus on a radical freeing of the wireless spectrum with a goal of cheap, universal broadband, it would entail creating millions of new government funded jobs, likely in the education and health sectors that people can go for with short training periods.

A lot of smart people ran banks. But banks had to be bailed out. Then the stimulus happened. That was the government bailing out the government. A lot of money has gone to keep unemployment benefits rolling, to keep paying teachers and police officers and firefighters. We did not expect the private sector to take care of the bailout and the stimulus. Similarly in these times, it has to be the government that has to step in to create millions of new jobs. Just like the banks paid back, the people will too.

The deficit and the debt will have to be reigned, but now is not the time.
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Saturday, July 10, 2010

Andy Grove On Creating Jobs

Image representing Vivek Wadhwa as depicted in...Image via CrunchBase
Andy Grove has done a good job of throwing light on a big problem. The Great Recession ended, the downslide stopped, but the jobs never came back. America still has an urgent need to move from 10% unemployment to 5%. I couldn't argue with the sense of urgency Andy Grove feels.

But Vivek Wadhwa offers better solutions. Vivek's thoughts are more forward looking. (Tweet from Vivek)

I was surprised by the stimulus bill in 2009. It was big on roads and bridges and so very small on broadband. Here was America's chance to make one big leap towards becoming a full fledged information economy, and it put most of that money into old school roads and bridges.

America has to think in terms of how to become a country that is 75% college educated. That asks for a rethink of what a college is in the first place. Universal broadband, textbooks online, journal articles online, lectures in video format online, massive online and offline socializing. There is much demand for jobs in the education and health sectors.

America has always created new industries, and it has to continue doing so. Even old jobs, and old products have to be imbued with new technology to create new stuff. Electric cars are still cars, but they are the new kind.

China seems to be taking the lead on one of those next generation industries: clean tech. But if America could have collaborated with Russia in space exploration during the thick of the Cold War, China and America are not even at war. Win win situations have to be created.

Putting the country to work with goals of universal education and universal health could lead to job creation programs like during the New Deal.

America used to be a country where most people were farmers. America could not forever have been a country where most people were factory workers. That would have been one stagnant country. The Great Recession has also been an opportunity to reinvent this country and take it onto a new path. It is time to create new companies, new jobs and new industries all over again.

The jealousy of hundreds of millions in China rising out of poverty is a false jealousy. That jealousy is self-defeating. Those are hundreds of millions of new consumers that America could take a bite at. Look at it that way.

Global Finance, Global Terrorism, Global Warming
Possible Pitfalls In Barack's Way
Stimulus: Make It A Trillion
Stimulus: Size Matters

BusinessWeek: Andy Grove: How America Can Create Jobs
Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter. ..... In 1968 two well-known technologists and their investor friends anted up $3 million to start Intel ..... We had to build factories, hire, train, and retain employees, establish relationships with suppliers, and sort out a million other things before Intel could become a billion-dollar company. Three years later the company went public and grew to be one of the biggest technology companies in the world. By 1980, 10 years after our IPO, about 13,000 people worked for Intel in the U.S. ....... Some companies died along the way or were absorbed by others, but each survivor added to the complex technological ecosystem that came to be called Silicon Valley. ...... Today, manufacturing employment in the U.S. computer industry is about 166,000, lower than it was before the first PC, the MITS Altair 2800, was assembled in 1975 ....... Meanwhile, a very effective computer manufacturing industry has emerged in Asia, employing about 1.5 million workers—factory employees, engineers, and managers. ....... The largest of these companies is Hon Hai Precision Industry, also known as Foxconn. The company has grown at an astounding rate, first in Taiwan and later in China. Its revenues last year were $62 billion, larger than Apple (AAPL), Microsoft (MSFT), Dell (DELL), or Intel. Foxconn employs over 800,000 people, more than the combined worldwide head count of Apple, Dell, Microsoft, Hewlett-Packard (HPQ), Intel, and Sony (SNE) . .......for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods, and iPhones. ..... Five years ago a friend joined a large VC firm as a partner. His responsibility was to make sure that all the startups they funded had a "China strategy," meaning a plan to move what jobs they could to China...... there was a time in this country when tanks and cavalry were massed on Pennsylvania Avenue to chase away the unemployed. It was 1932
BusinessWeek: Vivek Wadhwa: Why Andy Grove Is Wrong About Job Growth
his proposed solution—levying a tax on the products of offshored labor—will do nothing more than resurrect the ghost of the 1930s Smoot-Hawley tariff. Many historians credit this tariff with igniting a global trade war that contributed to the Great Depression. ...... We cannot recapture a bygone era. ...... Intel ... 72 percent of its revenue now comes from abroad. ....... I doubt that even the most depressed regions of America would want to be home to factories that pollute the environment, pay minimum wage, and work at the profit margins of these sweatshops. ...... From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new outfits in their first year added an average of 3 million jobs annually. ...... the cycle of destruction of old industries and the creation of the new has given the U.S. its greatest global advantage. Protecting old industries isn't the best way to reduce unemployment; it is a sure road to downsizing. ....... globalization will disrupt industries and cause job losses in one industry while creating jobs in another. ....... We need to have the concept of lifelong education become part of our culture. Education doesn't end when you graduate from college; that is when it begins. ....... most high-growth companies are founded by middle-aged workers who have extensive industry experience, want to capitalize on their idea, and want to build wealth before they retire ....... we need to recruit the world's best and brightest to the U.S. and do all we can to keep here those already in the U.S. ........ during the recent tech boom, immigrants founded more than half of Silicon Valley's startups. In recent times, they have contributed to more than a quarter of U.S. firms' global patents and helped boost U.S. competitiveness. These skilled workers tend to be highly educated, to understand foreign cultures and markets, and to be highly entrepreneurial. ........ building mechanisms to break the innovation logjam at the source—the nexus between the scientists who make the discoveries, the universities that market the discoveries to the world, and the entrepreneurs with domain experience who could take these discoveries and turn them into products. ...... China, India, and many other countries have learned the secrets of America's success—its open economy and capitalist ways. They are trying very hard to become like us. Let's not become like they used to be.
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