Random Thoughts on the Economy and Obama

1.  Obama's chances of having the Republicans sign on to his first initiative were zero.  He was naive to think otherwise.

2. Revisionist history that the New Deal made the Depression worse are laughable and quite frankly marginalize people like Mitch McConnell (if he had any credibility anyway.)  Look at industrial production from1929 to 1932 and then 1932 to 1937 if you have doubts.

3. Home prices nationwide have declined 20%, but that is counted from inflated prices from 2005 to 2006.  Over the past ten years, however, home prices have still increased.

4. Auto purchases are down from 17 million per year to 14 million.  Do we really need that many new cars which will eventually end up in landfills built every year?  With new technology and better cars, they should last longer. 

5. Obama's stimulus plan is a spending bill.  That's what stimulus is.  Tax cuts are not as useful for stimulus.  Too bad we didn't understand this in 2001 (see #12 below).

6.  Infrastructure needs to be improved in this country... this will improve our efficiency for the next two generations.  That's what the WPA, TVA, rural electrification, interstate highways, etc did in the 1930's to 1950's.

7.  We have been misallocating our resources for the last generation with the expansion of the financial indutry at the expense of nearly all others (except, of course, the military and oil.)  Drug research, access to medical care, education have all suffered.

8.  What's the big whoop if the financial industry contracts by 20-25%?  The investment banks are too big anyway and the home loan industry should be run like a utility: unleveraged, mega-regulated and uniform.

9.  The unemployed are not going to be re-employed at jobs that are at all similar to the ones they lost.  If you made windows or Chryslers before, or worked as an analyst for an i-bank... forget about it... take this oppotunity to learn a useful skill.  Community colleges, baby.

10. I see a new era where conservation comes back into style and conspicuous consumption becomes uncool.  Call it "Depression chic."  Nothing wrong with that, it's good old fashioned frugality and there is something honorable and patriotic to living within your means.

11. If your have any debt, pay it off before the interest rates go up.  

12. GDP growth the last ten years has been illusory and can be accounted for solely from the massive leverage in the financial indusrty.  Real growth was zero or even negative.