Smarter Than Thou!

WHAT DID PEOPLE EXPECT?

   The “problems” with the bank bailouts continue.  The bankers, once given money, did things with it of which “we” do approve.  Thus, “we” get all upset and demand that something else be done.  Really?

   The bailouts are based upon a Keynesian economic theory.  To summarize this stupidity in a few words, it holds that any problem can be solved by throwing money at it.  The banks, once given the money, were supposed to lend it out to businesses.  Of course, businesses are going out of business, and thus neither want nor need to incur more debt, which they will not be able to pay back.  In addition, the banks got into trouble by making bad loans.  Thus, by giving them more money, the government is saying, “make more bad loans.”  So the government is saying “Get further into debt, Mr Banker, so that you will have more liabilities.”  This would perpetuate the problem forever, which is probably what Obama really wants. 

   Somehow the bankers are not responding as requested.  Of course, they could do other things with the money.  They could “invest” it.  That is, they could buy interests in other companies.  But then the American public would complain that these filthy, rich bankers would be making a profit, and/or playing around, and/or favoring their friends, and/or speculating with “our” money.  How dare they? 

   So what else could they do with the money?  They could give it away, to charities.  No one thought of this.  And no one will think of this.  They could save it.  That is, they could… could… could put it in… a bank, even their own bank.  Somehow this also seems destined not to be thought of. 

   So, following the general goal Tribal Leader Bam-Bam, they spent it.  They bought goods (fancy furnishings, airplanes) and services (like expensive vacations).  This money all went to people.  This is precisely what Bam-Bam wants:  namely, to put government money in the hands of people, who will then spend it. 

   Of course, the stimulus program, whether direct or via the banks, will NOT work.  However, it was the people want.  So why are they so upset that the bankers have become unpaid public servants?    

Rather than saving your money, "invest" it in a subscription to the A&E.  Only about 20 Euros per year.  

(NOT) DOING THE SAME THING OVER AND OVER

   THE current fashionable topic is the economy and the federal bailouts of certain distressed industries/companies.  One sub-topic is the subsequent actions of those banks which have received some of the money.  The sub-sub-topic is that these actions have been declared, by those who accept conventional wisdom, to be “abuses.”

   The reports go like this.  The Bank of America received, from the government, almost all the money in the world.  The bank executives then immediately went out and purchased expensive office furnishings, vacations, shrimp cocktails, theater tickets, and went to Disney World, AND without first checking the Internet for package deals.  How abusive!

   But is it, really?  What did “we” expect that they would do with “our” money?  Well, what do banks do with (excess) money?  They loan it out to people, and then make a profit by charging interest on the loans, as they are paid back.  However, as I alone, apparently, have noticed, this is precisely what began the crisis.  These banks were loaning out money, which then was not being repaid.  So instead of profits they had losses, and the feds needed to rescue them. 

   So, apparently, the pundits want the banks to do exactly what they have shown themselves to be incompetent in doing.  They want them to make more (bad) loans, and incur greater losses and need even more bail- out money next year.  In other words, there is never enough of a bad thing. 

   At least if the bankers buy new corporate jets, Persian rugs, etc, the banks are then gaining assets which could be sold later, if/when they do go into bankruptcy.  And the vacations probably do some good for the executives, who are highly stressed from trying to keep their banks solvent.  In other words, they are behaving rationally and prudently and, also apparently, everyone else (other than I) sees this as a horrible abuse. 

   Aren’t you glad that I am around to straighten out everything for you?  

I shall continue this commentary next time.  And if you want to have even more things straightened then subscribe to the “A&E,” which is not an abuse.    

A QUCK LESSON IN ECONOMICS (or why the sky will soon be falling)

   ALLOW me to inform you of the facts regarding the proposed “stimulus” package, and why it will not work.  Basically, the program is intended to put money into the pockets of the American public.  Let me pronounce that it DOES make a difference how the money gets into the pockets.  Let me, for simplicity’s sake, assume that the money is there, in the bad way, as is being proposed now. 

   The theory is as follows.  Joe Public wakes up with extra dollars.  He goes to the store, or car dealer, and buys hot dogs, and/or a Chevy.  The producer of this product, recognizing an increase in demand, then goes out and hires more workers to make hot dogs and cars.  These people, now (re)employed, re-start the economy by paying more taxes, removing themselves from unemployment rolls, and buying trips to Disney World, as well as more hot dogs and Chevrolets.  Then everything, and everyone, is happy and prosperous. 

   The only problem is that this can NOT work.  This is because the planners simply do not ever understand how producers (i.e. human beings) act.  As many a jerk economist has said, “There is nothing wrong with my policy; it is the people who malfunction!”

   When a producer recognizes increased demand he will do one or both of two things.  First, he will raise his price.  He may now be able to make as much a profit from selling one Chevy as he did before from selling two.  This means more income for less work.  Who would---or could---refuse this option?  This means increasing prices, i.e. inflation, which may lead to terrible consequences (e.g. Hitler or Mao, as has happened before).  The other course of action is that the producer will increase supply, to profit more.  But he will do so by overtime, or (re)using unused capacity.  He will NOT hire new people, and thus be burdened with enemy unions, additional hospitalization, extra processing and administrative costs, training expenses, etc.  He may well simply outsource whatever he can to Indonesia. 

   With a doubt, if the “stimulus” increases for years and years and years, and then even more years, the extra money MAY induce some new employment.  But by then the increase in this “free” money will drive prices higher, and higher, in a self-creating cycle.  And such results were precisely what Jimmy Carter gave us.  Those were the days of high inflation, high interest rates and high unemployment.  This is why Hitler and Mao came to power. 

  The proper course of action, as Reagan understood, was to aid the producers, and not the consumers.  That worked, and would work again.  Do not expect Obama to try it.  His ideology will not allow him to support prosperity.  He is, so far, committed to doom. 

When the sky falls you need something to keep you informed, and from getting hit on the head, so subscribe to the A&E.  

THAT OTHER KIND OF BAIL (OUT)

   I believe that all societies are hypocritical, in that they do not enact perfectly their officially accepted social standards.  But the USA seems to be setting new (sub)standards.  I offer, as evidence, two recent “criminal” cases.  The first deals with the governor of Illinois (no one can spell his last name!), and the other is the Bernard Medoff fraud case. 

    When the announcement regarding the governor was made by the Federal prosecutor, he was rather “firm” in his charges.  He used extreme rhetoric, regarding the undeniable guilt of the governor.  This caused a number of the cable TV pundits to criticize him, i.e. the prosecutor.  This was NOT the role of the prosecutor, who was possibly denying the governor a fair trial, by prejudicing the jury pool, blah, blah.  As they all said, repeatedly, the governor is, and must be considered, innocent until proven guilty.  Apparently it is unethical for a prosecutor to believe that the people he charges are actually guilty. 

   Now let’s move on to Medoff.  This guy stole, by phony stock deals, about 50 (or maybe 500) billion dollars.  After his arrest, he was allowed to wait in his home, where he, apparently, managed to divest himself of some assets by giving them to family members.  The prosecutors then asked that he be put in jail, in order to stop him. 

    But wait!  Stop him from doing what?  He is, like the governor, who is running around, officially, still innocent.  As an innocent man he can do what he wants.  Why should he, or any other innocent man, be put into jail before trial?  I know, I know, this pre-conviction detention is to keep the defendant from fleeing and/or to protect the rest of us.  But, again, the guy is innocent, no?  If the judge puts the guy away, in place of 5 million dollars bail, does this not influence the jury?  The judge is saying, “Of course, he is guilty!  Otherwise I would not punishing him already!”  And yet we are all supposed to ignore the truth of the matter… in order to get to the truth of the matter.  Huh?

   Again, I know that all societies are failures in some ways.  But has there ever been a more egregious, or a more silly, example of official social stupidity?  Your suggestions for candidates are welcome. 

An antidote to stupidity, official or personal, is the A&E.  Subscribe today, or tomorrow, if you are busy.  I shall wait. 

 

 

RUN(A)WAY RIGHTS

   EVERY few days we hear a distressing story about passengers on a commercial airliner.  It usually goes like this.  The airplane, for some reason, does not take of when it is supposed to.  The passengers are kept on the plane.  The details vary, but usually they are denied food and water, ability to move around (including access to the restrooms), are not allowed off the plane, and are kept there for hours!  The inevitable second part of the story, on cable news stations, presents to us a “passenger advocate.”  By the way, how do these people make a living?  Does some one pay them to advocate?  

    This advocate then mentions pending legislation, which will change all this.  Our universal, first reaction is to agree and to support.  “No should be treated this way.  Something should be done, blah, blah.”  I agree… but not really.  Something should be done… but nothing can be done.  This is one of those problems which have no solution, on Earth.  And recall that the problem is that the planes are on, and not above, the Earth. 

    Suppose that the people are given drinks.  Suppose that at this precise time the plane is now given a small takeoff window.  But it can not take off, as the drink cans have to be collected, immediately.  And they aren’t, because some of the passengers want to finish their drinks, and the time for a permitted takeoff passes… and the plane has to wait an additional three hours.  The same would, or could, happen, if the passengers were allowed to move about.  How does one get them back, instantly, into their seats?  And if they are allowed off the plane, they will miss the flight, and then sue the airline for not repeatedly calling them, personally and by name, from the gift shops. 

   In other words, the proposed attempts to solve the problem will help in some few cases, maybe.  But they will, definitely, cause the problems to become worse, and more frequently so.  Waiting, in the seats, thirsty and annoyed, is the best policy. 

    As I wrote, some problems do not have temporal solutions.  This is one of many.  If you want to send a complaint letter then send it to Adam.  He is the one who fouled up everything, back in the beginning.  

To help solve the problems which can be solved, read the A&E.