A Few Preliminary Thoughts On the Economic Mess

President Obama inherited on big ol’ pile of poo. Not only did his poopy-headed predecessor aid in constructing a culture of criminal greed, but the very fabric of our economic cloth was shown to have become something akin to tissue paper. There are some industries that, I believe, should be looked at seriously as targets for some major, if not innovative, re-think.

Trading

The stock and commodities markets just irk me. Not because of their underlying intent, which is to help fund companies and set price points for goods, but because they’ve been intentionally made so volatile for the purpose of “easy money” that they lose much of their true value. I call it the Trading Places phenomenon.

I think that restrictions need to be put back on the industry. First, no more day-trading. I know a lot of people are going to moan about that, but the trading markets shouldn’t be some “Fantasy Economics” game just anyone can play in their robe and slippers at home.

Next, I’d eliminate programmed trading. While technology can be useful to limit runs on the market and to make actual trades more efficient, I think people should be behind them. When the trading decisions are made via software… well, as a programmer I know that a lot of mischief can be hidden (intentionally or otherwise) in those thousands/millions of lines of code. Besides, these are not pieces of software designed to invest in the worth of a company. They exist solely to manipulate prices to maximize monetary gains without having to actually, you know, invest in a company because you believe in it.

I’d ban short-selling. This is the practice of betting that the value of a stock with go down. No… do not invest unless you believe in the company.

I’m hopeful that removing day-traders will help with some of the wild fluctuations in the markets that have happened, but that’s not enough. Honestly, I haven’t yet figured out a way around that. Once it comes to me, I’ll let you know. It might be as easy as having share prices be tied to 30-day, 180-day, 1-year, and 5-year averages with the longer averages having more weight.

Lastly, it might be safest to go the very conservative route and eliminate buying stocks on margin (i.e. with a loan). If you don’t have the money, don’t get the stock.

Banking

Banking needs to be about money savings, money movement, money lending, and nothing else. Fees earned through interest paid and overdrafts (only from the overdraftee, please) should be sufficient to pay all the employees and to pay for all those things business need to pay for (leases, utilities, new construction, etc.). Public banks should not be a for-profit enterprise. Now, the rich tend to have different needs. If their banks want to rake them over the coals, then let them have fun.

I’ve mentioned before that mortgages (and other loans) need a fair reporting of the interest that will be paid over the life of the loan (unless you over-pay the principal, which is a wise practice). When you take out a 6% 30-year mortgage, in turns out that of all the money you pay, 53% of it goes to interest. To me, that says it’s a 53% loan. It should be marketed as such.

In our current climate, the total compensation of members in the executive suite should be tied to the health of the bank. Their base pay is what the lowest-paid employee makes per hour times 2000 (i.e. full-time). They need to be the last to get compensation. Customers and employees first, shareholders second, and then the poopy-heads at the top.

The Stimulus

The nearly $900 billion dollar amount being tossed around amounts to about $3000 for every man, women, and child in the U.S. That’s a heck of a stimulus. I have to tell you, if you gave out that kind of stimulus, money would definitely be flowing back into the economy (of course the banking and investing poopy-heads will likely just gobble it up to line their nests). What to do with it?

Don’t give me a rebate unless it means something. I think the biggest of the government rebates I received (state or federal) was $80. Eighty-friggin’-bucks. That doesn’t even pay for a trip to the grocery store. You want to help me, give me a $3000 check. Then you’ll see some consumer spending (and saving) let me tell ya.

I’d love to see a big honkin’ wad of this money go into the buying and installation of solar power in the sunny states. The fact is that the ordinary person doesn’t have the extra income available to install these things themselves, regardless of government “help”. Install them for free. You’ll have to employ installers and you’ll have to kick-start an industry that we are most definitely going to be needing in the long term. Besides, with plug-in cars, we’ll need every volt of extra non-carbon-producing juice we can get.

I’d like the GOP to wrap their poopy-heads around something else other than tax breaks. Is that all you’ve got? Government is big. It’s going to stay big. To fund that requires taxes. Deal with it and don’t pawn if off on the states when it should be federal. I’m at the lower end of the middle-class income pool, and all I see is you wanting to give breaks to those who are in a much better position to afford their tax bill than I am.

I’d like to see the hospitals nationalized. Healthcare should be held to a high standard and not be a puppet to profit. Once the MBAs and not doctors started making medical decisions, the quality of healthcare for the masses relative to what was available went down.

The Sharks

Lastly, we need to reduce the number of shirking-responsibility lawsuits. Too many people are suing for things that, frankly, they shouldn’t be suing for. Easy fix: limit the number of lawyers per captia. Make all lawyers who want to practice law have to be re-certified every five years (yup, re-take the bar). That should cut down a bit on some of this shystering.

The thing is that all of the money spent in court, for filing fees, for payouts that mostly go to the sharks in pinstripes, to the absurd jury awards that get restructured on appeal anyway…that all costs us all a lot of money. Not just for the lawsuits, but for all of the insurance that has to be bought for protection against them. If anything, it’s the insurance that becomes the killer.

Made in the U.S.A.

You don’t see that too much anymore. “Made in the U.S.A.” That used to mean something. Now, as often as not, it’s mocked. We need to increase our ability to produce commodities. We grow lots of cotton. We should be making more clothes. We need electronics for everything from talking toys to stealth fighters. We need to make more of our electronics. The list goes on.

From both economic and strategic perspectives, it only makes sense that we not be a solely service & IT nation. We have to utilize all of our resources to ensure a healthy country. The big poopy-heads in this are all those others (China, the E.U., etc.) who threaten a trade-war whenever we want to look after our own. Funny, I don’t see them having much problem limiting the stuff we can sell to them.

Trade-wars are never good for anyone, but we need to hammer out some fair trade agreements to ensure the health of our economy. They need to understand that what’s good for us will be good for them. If we’re healthy, we all prosper. Well…maybe not “all”, but at least we’ll prosper. I think it would make for an interesting change of pace.

More Later

There is much to digest about what has gone wrong and what must be done to set things right. The monetary figures that are being thrown about are staggering (we’re talking trillions instead of billions). My feeling is that we should take this as an opportunity to fix institutions that have been broken for a long time. I mean, even the most beloved jalopy eventually gets replaced when the costs of repair exceed the price of something new. It would appear that we need to start applying this sort of thinking to some of our aging institutions.