Saturday, November 01, 2008
Today’s blog will make a lot more sense if you regularly read the materials I suggest. I’ll try to make it so as those that don’t can at least follow along. But the real beauty is seeing how all the pieces come together for the prepared -- and fall apart for those that aren’t.
First, you would need to have read Paul Krugman’s column Friday: “When Consumers Capitulate”. (It’s probably behind the firewall now. Take a few moments to sign up at the Times. It’s worth it.) In short, one of the few things the American ( and World) economy had going for it was consumer spending -- even though we were spending money we didn’t have. Money obtained by refinancing our homes to pay off credit cards so we could continue to spend money we didn’t have.
That all went bust along with the housing bubble and now economists use words like “terrified” and the U.S. Treasury Secretary converts to Socialism overnight -- government ownership of a major percentage of our private banking system.
If you’ve heard it once these last few weeks you’ve heard it a thousand times -- “this is the worst economic crisis since the Great Depression”. Not surprisingly, everyone is looking back to the Great Depression to see what worked and what didn’t. If you’ve read anything about the Great Depression (oh, I don’t know, something like “FDR”) you would know that FDR put millions to work by building America’s infrastructure. That might fill in the spaces between the lines for you when Professor Krugman says this:
”The ongoing efforts to bail out the financial system, even if they work, won’t do more than slightly mitigate the problem. Maybe some consumers will be able to keep their credit cards, but as we’ve seen, Americans were overextended even before banks started cutting them off.
No, what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.”
Hmmm, a “major fiscal stimulus” that will “take the form of actual government spending “. Like I said, a project for infrastructure. Some of you might have heard of the WPA. -- the Works Project Administration.
If any of you have read The Power Broker -- one of the first books I ever recommended -- you might be recalling the fact the Robert Moses (and New York City) was one of the main benefactors of the WPA because of the simple fact that he was prepared.
(Pause for a favorite saying -- Chance favors the prepared mind.)
If you didn’t read the book, you can take a shortcut to Wikipedia.
Shortly after President Franklin D. Roosevelt's inauguration, the federal government found itself with millions of New Deal tax dollars to spend, yet states and cities had few projects ready. Moses was one of the few local officials who had projects planned and prepared. For that reason, New York City could count on Moses to deliver to it Works Progress Administration (WPA), Civilian Conservation Corps (CCC), and other depression-era funding.
Right now, you might want to switch into aviation mode and ask yourself what “projects” the FAA has “planned and prepared”. The disappointing answer is “NextGen” (or as I refer to is “NexCon”). Two seconds later it hits you that even NextGen itself isn’t really defined. It’s more of a collection of ideas, fantasy and pork-barrel projects than it is a plan. Regardless, I would write President Obama and warn him not to waste our money on it.
Amazing how fast you can go from aviation to politics isn’t it ? Am I being presumptuous by saying President Obama ? I don’t think so. I’m trying to get you to think. What is John McCain saying in these last few days of desperation ? That he would freeze government spending (except for NASA when he’s in Florida). That is exactly the wrong plan at exactly the wrong time according to the people I try to get you to read -- and the Chairman of the Federal Reserve.
”When even the chairman of the Federal Reserve Board says Congress should pass a stimulus package we know we're in trouble. “
”America needs a comprehensive stimulus package, but it should be voted on by the next Congress under a new Administration. And it should be part of a broader jobs strategy that would include rebuilding the nation's crumbling infrastructure, funding alternative sources of energy, and creating tax incentives for businesses that generate new jobs. “
Robert Reich and Paul Krugman don’t always agree with each other. But when they, the Chairman of the Federal Reserve and history are all on the same page you might want to pay attention.
Chance favors the prepared mind -- and crushes the unprepared. On this issue, John McCain is like the FAA -- unprepared.
November 1, 2008