Saved or created? That is the question.

It hit me while driving someplace and listening to the radio, maybe a month ago.  The President was talking about the outcome of his stimulus package while using the now oft-repeated phrase about three and half million jobs being, "saved or created."

(Freepik image)

I'm hearing it again as I watch one of President Obama's acolytes on "Meet The Press" and so I'll ask you dear reader...

How does one measure a job saved?  How can one record a job loss that didn't occur, but might have occurred under the circumstances?

Data on new jobs created are obviously available and broadly examined -- but jobs saved?  It seems like a clever mechanism to avoid any rigorous assessment of the relative success or failure of the stimulus plan.

What's actually been created, is a new rhetorical device called "jobs saved".  That phrase is designed to portray an anemic employment picture as something more robust, even if the 'metric' can't be measured. 

_________________________________________________________

Submitted to US Senator Herb Kohl moments ago...

"Dear Senator Kohl,

I am writing as a private citizen to voice my strong opposition to the bill misleadingly labeled as the `Employee Free Choice Act' also known as Card Check.

The coercive leadership of organized labor does not need additional tools to intimidate ordinary men and women who prefer to remain outside the union. I would urge you to speak out against this legislation and expose it for what it is -- a catalyst for union demagoguery.

I am not against organized labor per se, but I am against bullies and thugs gaining ground with sanction from Congress.

Respectfully,


John J. Maddente"

The individual and our economic crisis

If you had never met Milwaukee County Executive Scott Walker, you'd be hard pressed to spot him in a crowded room.  Mr. Walker is an average-looking man, with plain features and an unassuming demeanor. Even his name is common. He looks like millions of other guys. I made his acquaintance last year after he introduced himself before a debate with his election opponent, Ms. Lena Taylor.


Scott Walker
Wikipedia image

Yes, a common guy he is, but don't be fooled -- Mr. Walker packs a wallop and his piece in this morning's Wall Street Journal, "Why I'm Not Lining Up for Stimulus Handouts" defines his fiscal moorings and shows why he has drawn acclaim among conservatives and scorn from progressives.

Mr. Walker mentioned what other politicians know -- but often fail to highlight -- which is that our current fiscal calamities, were abetted by individuals -- not just banks, not just regulators, not just mortgage brokers, not just government. Those were all culpable parties to be sure, but what Walker reminds us today, is that our current turmoil began,

"...when millions of people were allowed (or encouraged) to spend borrowed money on homes they couldn't afford and were later forced into foreclosure." 

Amen.  I've been dismayed by the lack of discussion about individual responsibility and reckless borrowing.  In due course, we'll see more acrimony coming from the public, or at least the part of it that still believes in living within one's means.

There are two arguments currently offered to defend bailouts for homeowners who bought too much house, or who should have remained renters until their income and assets warranted otherwise, or who foolishly sucked all the equity out of their homes to buy stuff they couldn't afford. Here are those arguments:

Argument #1) "This is no time to teach people a lesson."

Who said anything about teaching? This isn't about vengeance either. Those who advocate for mortgage bailouts are appropriating money from responsible Americans to pay for the mistakes of others. Bailouts simply perpetuate that pattern.

The only way to help a heroin addict is to take away his opiate (in this case easy money), then encourage him or her to live healthfully. I see no reason why the responsible many should pay the freight of the irresponsible few, simply because the irresponsible few no longer meet their obligations. And in the cases I reference, we're discussing a self-induced foreclosure on a house, not a death sentence visited upon the falsely accused.

Many foreclosure so-called "victims" are personally responsible for their circumstances. There was too much predatory borrowing going on that is now being characterized, as predatory lending.  Yes, I know there were exceptions, people who were truly duped, lost their jobs, became seriously ill, or were improperly foreclosed upon -- but do you think that those cases constitute the majority of borrowers who suffered a foreclosure (I ask rhetorically)?  

Argument #2) "If we don't have mortgage bailouts to stem foreclosures, housing prices will continue to fall precipitously, including yours, so you should support this plan."

Markets work if we let them work. If housing prices continue to fall, they'll only be receding to a current level of value. The continuing collapse of our financial system and our way of life, which appears to be careening toward Euro-Socialism, is as disturbing as the trajectory of home values.

However, if we allow the eggs to break and take our necessary economic pain, the values of our homes could appreciate again one day. Things get better after the hangover. The reality that too few wish to acknowledge is this: we can't have a painless hangover.

Although the thrust of Mr. Walker's piece today is not about individual responsibility, it's about government's financial stewardship -- he gets it. We cannot, individually, or as a society, continue to kick the debt can down the road. It's immoral and stupid.

Our current state Governor, unfortunately, wants to leverage our future, reward his supporters like public teachers' unions and expand government programs we don't need and can ill-afford.  It's widely speculated that Mr. Walker will run for Governor in the next election. If he does run, I intend to support him. I hope like-minded voters in this state will do the same, unless a stronger candidate emerges.

Right now, I don't see a stronger one.

What sequence of events caused the mess?

Hedge fund executive Oscar Schafer in a Barron's interview (January 12, 2009, "Hang on Tight!") described our current economic condition thus: "The world is experiencing a giant margin call."

Yes, a giant margin call enabled by easy credit extended to millions of people who couldn't afford as much home as they purchased, or as much cashed out equity to finance a lifestyle they couldn't afford, before defaulting on their mortgages. 

These mortgages would be bundled into what equated to securitized time bombs gobbled up by over-leveraged financial institutions. 

How did it all happen?


Policy makers in Washington wanted to guarantee home ownership for anyone with a pulse. Then the Fed left open the spigot of cheap money by keeping rates too low for too long and America became intoxicated by illusory home price appreciation. Money center moguls and central bankers made enormous bets upon this whole sorry misuse of credit, until the system collapsed.  

Millions of people, who either ought to have remained renters until their income and assets could justify their mortgage, or who should have purchased more modest homes and received loans at fixed rates, were enabled by government-coddled institutions like Fannie and Freddie and populist legislation to "invest in our communities". 

The risks they took (policy makers, investment banks...and millions of  Americans), have poisoned the well that the rest of us must drink from -- perhaps for decades. Now we hear that the other shoe to drop will come from commercial credit busts, or the next highest risk level of mortgages above subprime.  

Grandma warned us when we were children.  If you can't afford it -- don't buy it. If you can't afford to lose it -- don't risk it. In short, live within your means.  Greed is the same thing that destroyed Rome. How will we get treatment and beat our addiction to debt before we all go down in flames?

A president's farewell

I felt sorry for him as he approached the lectern with a sheepish smile.

As Kissinger reminded Nixon, history will treat him better than his contemporaries. His policies precluded another attack since 9/11. To conclude otherwise is to posit that the other side simply stopped trying to harm us after 9/11.  The President deserves credit and at least grudging acknowledgement from his political opponents for stalwart efforts to fight terrorism and protect Americans.  

I'm reminded of another parallel with Nixon. Richard Nixon asked readers this question in one of his later books: if America does not lead in this world -- who will?

I repeated the question in one of my columns and a rebuttal came from a letter writer who declared that the correct answer to this question is -- the "leaders" of other countries.  Unfortunately, the world has always been replete with 'leaders' like Stalin, Hitler and Hussein that refuse to back down.  

This President did not have the luxury of presiding over a relatively peaceful world and the safety of American citizens has been this President's overriding concern.  That fact will endure as a positive part of his legacy, even if the Iraq invasion does not. 

George W. Bush

Finally, his administration failed to stem the profligate federal spending we have seen during the last eight years -- punctuated with a new drug program we can ill afford; but that's a trend the new administration appears destined to continue.

Monday morning quarterbacking

If the economy, the war, an opponent with more cash and an unpopular President in office, all were not enough to doom his campaign -- any chance of victory went irretrievably south after Senator McCain selected Governor Palin as his running mate.  Bold choice? You betcha.

I was hopeful after Ms. Palin's rousing convention speech, but I still worried that Joe Biden would wipe the floor with her at the debates -- he did not and I kept hoping.  My heart sunk after those Katy Couric interviews.  I became an impostor by my silence.

Katy Couric's interview revealed a vacuous performance from a candidate who is supposed to be a heartbeat away from the Oval Office.  Ms. Palin will have a future in national politics, but she was not at all ready for this experience. Don't blame her, blame McCain's advisers. Having the "right views" and no skeletons, is not enough. 

Yes, Ms. Palin has a fine record as Governor, yes she appeals to my Midwestern values and yes I was invigorated by selection of a conservative woman on the ticket, but she simply doesn't know enough and she is not yet equipped to think fast enough on the national stage.  

As Peggy Noonan aptly put it in her October 17 Wall Street Journal column (Palin's Failin') -- "She just. . . says things."  

One thought for future GOP campaign strategists:  even if the research does suggest that your candidate's running mate should be a female-outside the Beltway-gun toting-strident Pro-Lifer; you must look harder than your predecessors did in 2008.

The infamous AIG party

AIG logo

The outing in question, was the same type of company outing that many other American companies fund each year. There were perhaps a dozen AIG people in attendance.

Unfortunately, due to the timing, the issue has become a a silly media-driven frenzy. Even the White House couldn't resist criticism and CNN keeps blaring, "Spa treatments! Spa Treatments!"

Any other insurance company that employs a business model of selling through independent reps holds a similar conference to reward and motivate top performers (Note: they are not employees).

These events are planned months, or years in advance. It has nothing to do with the loan program -- it wasn't even funded by the holding company. It is...a cost of doing business. Should AIG shut down incentives for independent sales agents?  If so, there's no incentive to sell their products, ipso facto.

I own shares of AIG, but even if I did not, my reaction to this storm would be the same and I did not like the bailout. However, I reject some of this populist furor because it paints the AIG event with the same brush used for the Dennis Kozlowski Toga bash. Different deal.