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Photos and text, unless otherwise noted, Copyright 2003,2004,2005,2006 - Alan M. Pavlik
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Consider:

"It is better to be drunk with loss and to beat the ground, than to let the deeper things gradually escape."

- I. Compton-Burnett, letter to Francis King (1969)

"Cynical realism – it is the intelligent man’s best excuse for doing nothing in an intolerable situation."

- Aldous Huxley, "Time Must Have a Stop"







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Sunday, 25 July 2004

Topic: The Economy

Gloom and Doom: The Really Dismal Science and the Damned Invisible Hand

David Rothkopf was deputy undersecretary of Commerce for international trade policy during the Clinton administration. So in the Washington Post - the newspaper the "got" Nixon when, really, what had he does that was so very bad? - you would expect Rothkopf to write a doom and gloom column on the economy. And he does.

Just As Scary As Terror
Anyone Seen Our Economic Policy?
David J. Rothkopf, The Washington Post, Sunday, July 25, 2004; Page B01

His opening contention us that the world's investors have been voting on Bush already, with their money, and Bush, and his United States, is losing this "money election."

Evidence?
Last month, the Organization for Economic Cooperation and Development released figures showing that last year for the first time, China supplanted the United States as the No. 1 destination for foreign direct investment worldwide -- that is, money that goes into factories, equipment, real estate or existing companies. And in a blow to fans of "freedom fries," No. 2 was France. Though other major economies also suffered a drop-off in this category, no nation fell as far in percentage terms as the United States.
Oh my! France? Not France!

I thought we destroyed France, economically, when we boycotted their wine and cheese and no tourists from Iowa ever again appeared at CDG. Bill O'Reilly told us so.

In an April 27th radio debate with a Canadian journalist, Bill O'Reilly threatened to lead a boycott of Canadian goods if Canada didn't deport two American military deserters, saying that his previous boycott of French goods - the one he thought-up and championed - cost France billions of dollars in lost export business. And Bill O'Reilly cited the Paris Business Review as his source for those losses. Cool. Of course, Media Matters found no evidence that a Paris Business Review even existed, and it seems France's export business with us actually increased during the run-up to the Iraq war. But it should have been true.

And by the way, some internet wags tweaked Bill O'Reilly a few weeks ago and started a satire site called The Paris Business Review - just helping him out a little. "Although some in the media have disputed the statistics (and the existence) of The Paris Business Review, our data analysis demonstrates without question that the united American refusal to say `cheese' when smiling for snapshots has had a significant impact on the French economy." They will sell you Paris Business Review coffee mugs too.

So. Where do you get good data? The Paris Business Review or the Organization for Economic Cooperation and Development (OECD)? Decisions, decisions....

Rothkopf works with the second source.

And here's how he sees the problem with people deciding to invest in ventures not here, but in China, or in the land of the cheese-eating surrender monkeys:
While such numbers fluctuate and foreign direct investment is just one type of capital flow, this dramatic swing can be seen as further evidence that in the 21st century, America is going to have to fight hard for its piece of the global investment pie - money that translates directly into new jobs and the industries of tomorrow. Clearly, the world economy is shifting around us and our place atop it is being challenged.
Yeah, like we need more to worry about, David.

Should we worry about this?
Investment flows into emerging economies grew dramatically between 2002 and 2003, with investors pumping more than six times as much into developing markets as they did in the prior year -- nearly $200 billion. OECD analysts concluded that the primary reason for this redirection of capital was not simply that countries like China offer cheap labor; rather it was the size and promise of their markets. This is a big deal, because even when low wages in these countries go up, that will mean increased buying power -- so the attractive labor markets of today will gradually become the attractive consumer markets of tomorrow.

At the same time, the image the United States is presenting to global investors is increasingly tainted by our apparent disregard for both economic and diplomatic fundamentals. The message we have conveyed in recent years is that there is no economic problem we confront today - from gigantic deficits to huge under-funded liabilities - that we wouldn't prefer to have our children solve tomorrow. So, it should not be surprising that other important measures of investor interest have also taken a dramatic turn for the worse in recent months.
But everyone likes lower taxes (well, normal people earning over four hundred thousand a year), and putting off payments with deficit spending is, well, so convenient.

Yes, foreign purchases of Treasury bonds and other government securities are up, and we are financing amazingly large budget deficits is by selling more paper. So? And yes, Rothkopf says that the percentage of those foreign purchases made by private investors - people with confidence in our economy - is falling sharply. So? Foreign governments will take up the slack, as it seems they are doing the buying now. The private guys are wimps?

Rothkopf quotes Treasury Secretary John Snow sating this in Cleveland a few weeks ago - "There is no more serious threat to our economy than the threat of terrorist attacks on our soil."

Rothkopf says that's wrong-headed. The economy is a bigger problem, or just as big -
Let's start with the biggest domestic economic problems. Almost any one of them is a greater threat to the economy than virtually any imaginable form of terrorism. There is the record-breaking budget deficit that is likely to amount to $5 trillion over the next decade. Then there's the burgeoning trade deficit. And the $72 trillion in unfunded future retirement and health care obligations to our own citizens. And a record low savings rate, which suggests that we will need even more help with retirement funding. And the hemorrhaging of manufacturing jobs and the cost of fixing our dysfunctional health care and energy systems. Every one of these is a gigantic problem on its own. Taken together, they represent a series of bombs placed at the foundations of our society, and they are capable of exploding in ways that would touch more Americans than anything even the most sophisticated terrorists could devise.
Damn. Gloom and doom! Economics is the dismal science.

And this -
Let's move on to the global economic threats. One, as I've said, is the erosion of American economic leadership and consequent disaffection of important classes of international investors. Another is our dependence on those investors, and still another is our addiction to foreign oil. Even more important is the growing tension between developed and emerging nations, as a billion new workers from the emerging world compete for their place in the global economy. Emerging economies depend on change. Advanced markets are comforted by the status quo. This is the bipolar reality that has replaced that of the Cold War.
Well, that's cheery.

Rothkopf then says that while we do this war thing in Iraq quite earnestly, we have "undertaken what amounts to unilateral economic disarmament by ignoring, exacerbating or failing to adequately address any of the real economic threats...."

How would we do that?

We could do what Singapore has done - "come up with an actual National Economic Strategy that reorients public policy - tax laws, worker training, industry regulation - to strengthen competitive industries and shore up weak aspects of the economy."

But of course, that is a bit big-government and not exactly free-market, isn't it? Democrats do such things. Republicans don't. Bush and his crew won't. Trust the invisible hand.

Singapore it seems has an annualized growth rate about three times that of the United States - but we trust the invisible hand.
The United States has no such formal strategy, nor any systematic process for devising one, and this is a mistake. There's little point in producing a National Security Strategy every year if we ignore the wellsprings of that security -- the economic might that underlies our military strength, our political clout and our internal stability.

Consider our broken health care system. Americans pay, on average, $4,000 more a year for the same or less adequate health care than citizens of other OECD countries; at General Motors the cost of employee health care now exceeds the costs of steel. That is the kind of labor cost that drives foreign investors (and domestic companies) overseas. So health care becomes a jobs issue; and the lost jobs are an economic security issue.

This is a cold, hard reality. And every minute we ignore the problem or fail to view it in strategic terms we are losing ground. In this light, health care should become a top priority in a thoughtful National Economic Strategy, as should education and investment in infrastructure. Addressing these areas would mean creating jobs -- and that is a much more positive, proactive approach to protecting workers than reactive, punitive trade strategies that produce tensions with our trading partners.
Dream on. Ain't gonna happen.

Unless the party of the invisible hand loses in November.

Posted by Alan at 14:34 PDT | Post Comment | Permalink
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Saturday, 22 May 2004

Topic: The Economy

What's up with this?

I don't know why, but I just find this a little unnerving...

Insiders Are Selling Like It's 1999
Eric Dash and David Leonhardt, The New York Times, May 23, 2004
Across corporate America, executives have been selling company stock as if it were 1999. Even amid this resurgence of insider selling, however, a few dozen executives - including those at Zimmer - stood out for having unloaded supersized portions of their personal stakes in their company's future. At Wendy's International, Qualcomm, Occidental Petroleum, Boston Scientific and Comverse Technology, one or more executives sold at least half their holdings, according to a SundayBusiness analysis of hundreds of big companies.
Perhaps these guys know something the rest of us will know later, as in too late? Rats vis a vis sinking ships?

No. Couldn't be.

The Times says its something else.
The magnitude of insider selling, many governance experts say, suggests that even after more than two years of scrutiny, corporate America has yet to figure out how to link pay and performance. No matter what happens to profits or stock prices over the next year, some executives have already locked in multimillion-dollar paydays. Even if their corporate strategies fail in coming years, they could still retire with bank accounts fit for a king.
Huh? Reread the sentence several times. What does it mean? I guess they're just being careful. That's it.

But, "... `We have been tracking insider sales since 1971, and in the last few months they have never been higher,' said David Coleman, editor of Vickers Weekly Insider Report."

Curious.

Posted by Alan at 21:48 PDT | Post Comment | Permalink
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Sunday, 18 April 2004

Topic: The Economy

Marketing: Be Careful of Labels in French

Yeah, you buy your kid a backpack and suddenly you're part of the Democratic left that hates America and doesn't support our troops and thinks all the tax cuts are unfair and wants to take away everyone's gun and thinks Mel Gibson may be a bit unhinged.

How so? You purchased the backpack from this company.

See The Insider: Label this a clever attention-getter
SEATTLE POST-INTELLIGENCER, Monday, April 12, 2004
FAUX FAUX PAS?:

The bilingual labels sewn into backpacks and briefcases by Tom Bihn, a Port Angeles manufacturer, earlier this week carried more than care instructions. Appended to the French version of those instructions were the words, "Nous sommes d?sol?s que notre president soit un idiot. Nous n'avons pas vot? pour lui." In English, that means, "We are sorry our president is an idiot. We didn't vote for him."

Bihn, 43, who's president of the privately held company he started 13 years ago, said he thinks the labels were meant to refer to him.

"But if someone else wants to take it as being about some other president, they're free to do that," he said.

He doesn't know who made the unauthorized amendment and doesn't much care. No one was reprimanded or fired.

"There are bigger fish to fry," he said.

About 1,000 of the doctored labels were sewn into products this week, and the remaining supply of about 700 will be used next week.

Partly because of nationwide publicity over the label, sales of the company's products last week were double those of any prior week, Bihn said.
Maybe it was just a marketing thing.

Here's the tag.


Posted by Alan at 09:41 PDT | Post Comment | View Comments (1) | Permalink
Updated: Sunday, 18 April 2004 09:54 PDT home

Monday, 12 April 2004

Topic: The Economy

Misery Loves Company: Economic data for most of us in the middle...

Today in CNN Money
Not so bad, not so good
Household income is little changed since 2000 -- not the message sent by either Kerry or Bush.
April 12, 2004: 2:39 PM EDT

I read it. It confused me.

But I liked this summary from Kevin Drum -
Kerry says middle class families are worse off and the rich are better off under George Bush.

- George Bush says that's not so: average income has gone up 5.9% in the past three years. Not bad!

- Oops, wait a second. That's "average" income. The right measure is "median" income, since the average is skewed upward by.....the rich being better off.

- Median household income has decreased 3.3% since 2000.

- But wait! If you take into account tax cuts and increased entitlement income, median household income has.....declined 0.6%.

Even flat income for three straight years is disastrous, of course, something the writer of the article seems not to understand. So no matter how you measure it, middle class families are worse off and the rich are better off under George Bush. Just like Kerry said.

It's worth noting that the article is non-bylined. I can understand why.
Well, today the Kerry campaign came out with its "Misery Index" - some sort of thing that's supposed to let folks know why things seem so bad, and how they got to be so bad, and then allow them to rag on Bush's methods for improving life here, at least economically. I would have preferred the thing be called the "Hard Times Index" as that sounds much more Woody Guthrie populist and much more appealing.

On the other hand, when I lived in the far upper left corner of New York, almost where it meets Canada at Niagara Falls, the radio station at the State University of New York (SUNY) at Brockport broadcast its daily "Dismality Index" - temperature and precipitation and cloud-cover and humidity and snow-cover and what not all balanced against each other. That was amusing, and made us all laugh as we looked out the window at the crap in the sky.

Maybe the economic "Misery Index" is okay.

Posted by Alan at 21:59 PDT | Post Comment | Permalink
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Tuesday, 16 March 2004

Topic: The Economy

Economic Theory - Our Leader Explains What Is Happening

Note that George Bush said this in Washington, on February 19, 2004 - and Jacob Weisberg is forever finding more.

"Recession means that people's incomes, at the employer level, are going down, basically, relative to costs, people are getting laid off."

A textual analysis? Employers (people at the employer level) are seeing their incomes decline. They're making less money. Or their money doesn't go as far as it used to go - their income is declining relative to the costs of what they want. Employers have a diminished ability to buy the things they like to buy. Big cars? Jeweled watches? Whatever.

That is to say, basically, all sorts of stuff just costs relatively more for these people who employ others. Bummer. It's a real shame. Thus employers lay off workers. Who knows why? Apparently they think that laying of a few more people might help.

And this then is how you define a recession.

Implied here is the idea that if employers just made more money, and the cost of goodies remained constant, then these employers might not lay off so many people.

Thus it would seem the way to end a recession is to make sure employers make more money. Those at the top need to have more money. For some reason not given here it seems that might make them stop laying off people.

Of course Bush here could mean something else entirely. It's hard to tell.

Posted by Alan at 19:57 PST | Post Comment | Permalink
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