Recession Sends Older Americans To Food Pantries

Life in US becomes more and more difficult. As the costs of all buch of insurances become more and more expensive and less and less money are left for food, cloths, and living necessities, especially for middle and low class people. Thesedays, there are a lot of food drives going on at kids’ school and church.
Read the Article at HuffingtonPost

US Self-Sufficiency, No Trade, Global Isolation / Protectionism, and Collective Sliding into Poorer US.

The night before Thanksgiving, there was one person’s comment to my Huffpost comment that insisted on the isolation of US economy from the world, protectionism, and the lie of globalization.  As there must be a lot of people who share the same opinion as this person’s, I want to clarify their misunderstanding as much as possible. The contents of the comment is listed as below:

danarothrock replied on Nov 25, 2009 at 16:55:50

“Tarrifs were not the main cause of the 1930s depression. The cause was the exact same financial casino gambling that brought us down this time. Hence, the Glass-Steagall Act, which was repealed in 1999.

America grew strong in isolation and protectionism. We produced almost everything we needed, except rum, coffee and bananas.

Globalization – “Flat Earth” – has been the theory that has destroyed the economy of this country and several other countries. We are on the losing end of every “Free Trade” agreement. We are trading jobs for foreign workers. The Ex-Im Bank and Overseas Private Investment Corporation (two agencies of the US Treasury) are funding $billions every year for American companies to move overseas. 67% of American corporations have plans to increase offshore operations. Do some research on “protectionism”. “Globalization is a LIE.”

My Response was:

Although I am tired, sleepy now. I am still almost sure that “tariffs, protectionism” were the causes of Great Depression. That’s why, since then, there were  international multilateral negotiations to reduce tariffs worldwide and not to repeat the same bad experience of tariff imposition / protection. If you were not sleepy, please check the fact and let me know !

Regarding “America grew strong in isolation and protectionism,” this is the most “RIDICULOUS” statement that I have ever heard! You want to put this country in economic, political exile away from the rest of world and cut off its position of economic and political superpower in the world to degrade into poorer and poorer country? Let me guess. You must have never left your block of town to travel around and see the reality of the world.

What do we trade off by engaging in world trade?

LOSS  :

Some labor-intensive manufacturing jobs as imports of those goods gain domestic market sales.

GAIN:

A. Gaining of export-related jobs (this is one reason of why the White House wish China to save US economy and unemployment problem through their purchase of US goods);

B. Cheaper imported goods make us be able to buy more goods, more foods, clothings, electronics, etc with same income. We feel richer when we can consume cheaper import goods; we feel poorer when cheap imports are not available and we have to buy more expensive domestically produced goods (please compare the numbers of grocery items that, with $100, we can buy from Wal-Mart (many of them cheap imports) and from a rather expensive grocery store. You will feel the difference of how much we can consume more or less with same income depending on whether cheaper imports are available to us or not. 

 Without cheap imports, we may save some jobs of ours or our fellow workers, but we altogether/collectively have to eat less food, wear less clothings and shoes, buy less toy…overall we will feel poorer without trade than when we have imports.

It would be a choice of what we prefer.

Unemployment: Blaming it on Wrong Causes? Why don’t we Blame it on Wrong Industrial Structure?

There was a comment to a blog about unemployment disaster by Adrianna Huffington. A person, nicknamed as Gatormouth, commented as below:

“ This obsession with pushing job creation as the central problem by pundits and politicians is a possibly deliberate distraction. The problem has been with retention of domestic investment capital and the exportation of existing and newly created jobs. Fair and reciprocal trade has been slandered as “Protectionism”. But “Free Trade” as practiced amounts to the equivalent of unilateral disarmament, a form of National suicide.”

My answer to this person is as below:

“Your comment is interfering with my Thanksgiving meal preparation and doing other fundamental living/bear- necessities.

This obsession with “Caring only for reducing Budget Deficits and Costs of doing whatever,” and “Having Nothing To Do /Doing Nothing” for “Recovering Economy and Helping with Unemployed People” as the central problem by “Misguided” politicians and people is a “Deliberate distraction for this country”.

The problem has “NOT” been with retention of domestic capital investment and the exportation of existing and newly created jobs. It has been the wrongly structured Economic Activities / Industrial Structure of this country, in which the major economic activities and growth have occurred in trading money in financial sector and having people enjoy good lifestyles via service and retailing sectors while US competitiveness in marketing and production of manufacturing goods have been staggeringly, delusively deteriorated by continuously producing goods that less and less people get interested in buying. Keep investing on businesses, production capacities or financial services, in which the executives keep producing products that nobody wants to buy, or legally robe investors’ money, does it help?

As far as I remember, the US government’s imposing “Tariffs” on international trade around the 1930s was one of the main causes of “Great Depression” !!! (apology if I were mistaken; there’s a saying that dog trainers don’t train female dogs because they forget their learned tricks after delivering puppies)

(Reference: http://www.huffingtonpost.com/arianna-huffington/will-the-unemployment-dis_b_368329.html?page=2&show_comment_id=35184189)

Job Creation: Do we need the Second Recover Package and Other Measures?: Comment to Adrianna Huffington’s Blog

In her blog, “Will the Unemployment Disaster be Obama’s Katrina?” published on November 23, 2009 at Huffington Post blog, Ms. Adrianna Huffington talks about the need of 2^nd Economic Recovery Package for the goal of creating jobs. In the blog, she presents four prevalent ideas of alleviating the current unemployment situations as below:

1.  Use Wall Street bailout funds left in the TARP program to bail out Main Street (using money for small businesses, public services).

2.  Enact a one-year payroll tax holiday (creating a moratorium on Social Security, Medicare, and FICA taxes will encourage businesses to hire new workers).

3. Expand the Small Business Association’s lending programs (45 percent of all job losses have been at small businesses).

4. Offer businesses a tax credit for every new job created over the next 12 months, or have the government pay a portion of the salary of new workers hired over the same period.

From my perspective, I agree Suggestion #1. I think that the government should even require the refund of some portion of the bailout money from “Big Banks” and the return of those banks’ bonuses to their Executives, which were overpaid unjustifiably or through loopholes. These executives failed in their jobs and don’t deserve to be rewarded for their failures; they should not be even called as “Talents” when they actually drove their companies into bankruptcies. What kind of strange definition of “Talents”?

Suggestion #2 sounds good, but with side effect. The government needs money to support states or public projects or in case of further need of another recovery package in future, in addition to current huge budget deficits. If the government enacts payroll tax holiday, where the government will make up for its huge (I guess) income loss? As Dr. Krugman suggested, borrow money from other countries at low interest rates?

Suggestions #3 and #4 sound good. But the focal point at this point seems to be “how to stimulate consumer spending / consumption”, which is predicted to be continuously sluggish even in 2010. Without consumer spending starting to resume at their normal rate, helping out with supply, business side alone may have limited effect on job creation.

(Reference: http://www.huffingtonpost.com/arianna-huffington/will-the-unemployment-dis_b_368329.html?show_comment_id=35184189#comment_35184189).

Sherrod Brown: Obama Focused On Main Street, But Not All His Advisers Are

Concerning Senator Sherrod Brown’s (D-Ohio) remark that “the president and vice president are focused on Main Street, but some of the president’s economic consultants were too focused on Wall Street at the cost of small business.”

It’s good to hear that the blame of current negative or not-yet-visible outcomes of bailouts and recovery plan has not yet fallen onto President but onto his advisors/c­onsultants­.

But, if the outcome of financial sector overhaul, one of President’s Pillar policies, goes bad while the other pillar policy, health care overhaul, is struggling to be passed with or without waterdowned contents, it may eventually, possibly cost the credibility, achievement of President great deal for not delivering his promises.

I wish President and Vice President to be more careful and discerning on whom to listen and whom not to listen, who are in the side of helping them to achieve their policy agendas and who are costing their agendas for the goal of helping their Wall Street buddies. I wish public fire on President’s advisors’ decisions not to fall onto President himself, and him to rely on people who will deliver the right mind sets and policy recommendations to him and public.
Read the Article at HuffingtonPost

“Obama, China, and American Jobs” by Robert Reich and Global Riches, Poors, and US Corporate Centralism

Former Secretary of Labor, Prof. Robert Reich discussed the limitation of China as a source of boosting US economy and jobs in his blog, “Obama, China, and Wishful Thinking About American Jobs,” at Huffington Post. He points out the limitation of China in boosting US economy and jobs as China’s high savings and investments rates and low consumption rates. These characteristics have been the typical profile of developing countries in the stage of high economic growth before reaching the stage of becoming advanced industrialized countries like US and Western European countries.

Here is one irony that I cannot avoid but noticing. Americans here expect Chinese people to help, save US economy and job conditions while they themselves (or we ourselves) keep damaging our own economy and jobs by scheming / manipulating domestic policies for political advantages or profit reasons that end up providing excessive profits to a few wealth group of people at the costs of screwing up the rest of people and the whole economy. And we look for the solution of our problem from a foreign country which also struggles with its own sets of problems including starving people and high unemployment in parts of the country? Does this make sense?

Regarding Prof. Reich’s blog, I wondered about other reasons of China being a limited source of US export market and boosting US economy:  (a) the huge gap between the riches and the poors in that country; (b) the limitation of US international marketing / business.

Regarding the huge income gap in China’s riches and poores as a source of limiting the country’s potential to help out US economy and job losses, Chinese riches live like the corresponding American riches. Chinese poors live like the correspnoding African poors; they starve like poor Africans. Rather than high Chinese savings and investment rates, I wonder whether it may be the huge income gap between Chinese riches and poores that cancel out the potential of Chinese consumers as a whole to help out US. Years ago, I heard from a Chinese that, in poor rural China, there were even families that owned only one pants for 7-8 family members. So, whenever family members had to go out, each member took turn to wear that pants while the rest of family members stay home naked or without wearing pants. Of course, this is a side story compared to their starvation. This is the story of “Rural China” where there are few industrial bases and job sources to feed people. This Rural China story may be comparable to those of US cities or towns that have declining or disappearing industrial bases, less and less jobs available, and increasing homelessness and starvations, such as the conditions of mining towns or cities of declining car manufacturing. On contrast, in “Urban China” booming industries and jobs exist to support Chinese people to increasingly live like people in richer countries.

In case of my country of origin, South Korea, in the 1980s and early 1990s, the young generations of riches in their 20s lived like the corresponding age group in US, attending universities, partying, drinking, killing times for ultimate entertainments and dating, enjoying such spoiled lifestyles and consumption patterns. In contrast, the young generations of poor Koreans, such as sons and daughters of poor farmers or factory workers, were often involved with underground student/labor/political organizations and demonstrations against the military governments and social/political issues, run away from smoke bombs and got arrested during street demonstrations, blacklisted by the government and often tortured by policies or military, maybe partially comparable story to those of young terrorists in Middle Eastern countries. What I am trying to say here is, the choices of lifestyles and consumption patterns seem to determined by the availability of money, not by nationality. The hierarchy of income levels and choices of lifestyles and consumption patterns within a country is exactly parallel to those across different countries regardless of nationality or different economic profiles of countries but more because of availability of money. I believe, human nature is same all over the world.

Regarding US firms’ limitation of exploring foreign consumers, although US has the finest business schools such as Harvard Business School etc., either many US corporates haven’t utilized these human resources or these human resources forgot what they learned in school after their graduation and run business based on what they feel like or their personalities. Despite  some exceptions, many US companies seem to only target domestic consumer and produce goods at corporate/executives’ convenience and needs (as shown by US auto industries), rather than considering / analyzing what consumers or competitors think and act. Some time ago, I read a review/rating of international travelers by, I think, French employees of tourism. They rated Japanese as most cordial and pleasant travelers, French most obnoxious (French travelers were even disliked by their only country fellows), and Americans being as the only nationality who insist to speak only English instead of learning the local languages even while traveling foreign countries. This attitude of American tourists may also explain the mentality of US corporate executives. The story of US corporate people in doing foreign business often sounds similar to that of American tourists. These American business people in foreign countries often don’t like to learn local languages and cultures. They prefer / expect the local people learn English to communicate with them. I may call it as “US Corporate Centralism” although there may be other terminologies given to this kind of behavioral, cultural pattern. Instead of providing goods that fit to the tastes, sizes, and consumption patterns of people in foreign countries, US corporates expect foreign consumers to adjust, adapt to the ways of American-made goods that US corporates produce and provide as they like.

Along with the role of exchange rates between China and US (which has been another huge issue between two countries over a decade) and China’s country profile, this American style of doing foreign business has been and may continue to be the major barrier of selling American goods in foreign countries. In the past, there had been strong, high demand for American goods all over the world. In South Korea, for example, Korean mothers got crazy to rush to OshKosh clothing stores in Korea if they had heard about those stores’ sales advertizements. Because those OshKosh children clothings were sold in Korea at 200%-300% higher prices than the original US prices and not easily available there, if those clothing store had had sales, their were crowds of mothers around those stores and many people behind the crowd even couldn’t look at the products and just wait until somebody toss behind some unwanted products. That’s what I heard from Korean mothers. US products have often meant status symbols for many consumers in developing countries because of the image of US as world super power and American products were not easily available there. Foreign people wished to have American products to show up to their friends and neighbors, but they couldn’t find them. US corporates probably didn’t know that because they were not interested in foreign markets and didn’t do market research, mainly serving US consumers with products that the corporate people like to produce. Without solving visible barriers in engaging in international business, are we supposed to keep talking about why Chinese consumers would not really help US economy and unemployment problem?

Mr. Reich’s Oroginal Article: http://www.huffingtonpost.com/robert-reich/obama-china-and-wishful-t_b_361492.html

The Ersatz Public Option

It appears that there should be systematic ways of (a) disconnecting the linkage b/ corporates and politicians and (b) blocking corporates’ clouding of media, public information. In the same was as politics and religion should be seperated.
A few portion of citizen (I would say, more like uncivilized, piggified residents) yielding money power to dominate a country’s politics in their favor and exploiting the rest of citizens’ quality of living doesn’t seem to be the kind of politics that anybody in thrid world countries would expect to see in this presumably world’s number one super power country of economy and civilization. The elected congressmen who were voted by people going against their constituents’ welfare because of their personal benefits. And the public who’s opinions constantly blind-sightedly being swayed in multiple directions whenever the wind change it’s direction. It almost looks like a “Banana Republic.”
Read the Article at HuffingtonPost

Bailouts, Economic Recovery Plan, Government Interventions are Bear-Necessities. But Without Loopholes Please!

“The words, “Too Big to Fail,” seem to be in every news media pages these days. Regarding this issue, Ms. Arianna Huffington at Huffington Post criticized the US systematic failure of punishing immoral financial business practices that legally schemed and robbed their victims or unjustifiably awarded their executives even after their failed businesses, letting these legal crimes and their players escape without taking responsibility. This systematic loophole in existing (or non-existing) rules and regulations that govern financial sector sets the foundation of recurring similar business schemes over and over.

Ms. Huffington cited two such cases. The first case was JPMorgan’s scheme on bribing the officials of Alabama’s Jefferson County to obtain billion dollar contract and then persuading them to switch from fixed rate bonds to bonds hedged with risky derivatives, which drove the County on the verge of bankruptcy. Another case was Merrill Lynch’s reward of $3.6 billion bonuses to its executives, without informing its shareholders, even after their $27 billion-losing-business failure and on the blink of being acquired by Bank of America. Ms. Huffington’s blog post on this issue is listed at the end of this writing….”

Read more at:

http://www.everydaycitizen.com/2009/11/bailouts_economic_recovery_pla.html

Coin Conspiracy, Penny Conspiracy, and Ms. Palin

In the morning of hearing Ms. Palin’s coin conspiracy, my 5 yrs old Kindergartner and I practiced “Kindergarten Math” using coins. The kind of addition and deduction thingy. We called it “Penny Conspiracy.”

I read that Ms. Sarah Palin is going to wage a “War against “New Class” of intellectuals, government bureaucrats…and parasitic elites.” (Reference: Jacob Heilbrunn, “Sarah palin’s Slap Shot,” http://www.huffingtonpost.com/jacob-heilbrunn/sarah-palins-slap-shot_b_357178.html)

My first response was a sigh…. Holly s…….sheep (goat or cow, by the way, God bless Ms. Palin! If she is meant to be).

In respect to the official, surfacial bipartisan standpoint of Gop and Dem, I’d respect any presidential candidates from any political parties, as far as they are qualified for the JOB and have sincere mind, political talents, and put up hard work on themselves to qualify for.

If Ms. Palin is serious about running for Presidency, I would expect her to do her best to equip, surround herself with qualified advisors, experts, and educate/train herself to get ready for the next bid !

Instead, I am hearing that she is planning to wage a “Class War” against people who went colleges, read about issues more than usual folks, educated themselves more than usual, and raise their voices on social, political issues more than usual. I hear that she is planning this war in the midst of recession, along with endless numbers of insurmountable international and domestic conflicts. She wants to do it like there are few problems in this country, so it’s necessary to create one to energize it?

After the disastrous former presidency, even simple-minded folks, who voted for beer-buddy-looking candidate, said that they don’t want President who acts like them and stammers in middle sentences. They declare that they want President who doesn’t look like them, a non-stammer, “the one” who is able to handle the complicate JOB of being President, wanting not to be pushed into another  “RECESSION” !

Even when ordinary folks changed their mind and prefer non-stammering President, Ms. Palin talks about waging a war against non-stammering politician folks (in professional terms, are they called “new class” intellectuals?)?

Instead of working hard on training and teaching herself for the BIG JOB, are we expected to see Ms. Palin waste her time on this kind of MISSION? Isn’t she expected to be a “Uniter” of the country, instead of being a “Divider.”Also, arn”t there enough serious international and domestic problems that U.S. is facing now?

Instead of solving them, Ms. Palin wants to create, add one more problem?

Housing Foreclosures still Not Decreasing ?: My Response to Huffington Post’s “The Economist The Obama Administration Should Have Listened To.”

Politics seems to be hard guessing work based on trials and errors. An example may be seen in today’s news (November 12, 2009) by Huffington Post reporter, Shahien Nasiripour. Mr. Nasiripour reported that when the administration decided on spending the tax payer fund of $75 billion on a plan to reduce troubled-homeowners’ monthly mortgage payments and, therefore, housing foreclosures earlier this year, Pres. Obama should have listened to economists, John D. Geanakoplos and Susan P. Koniak’s suggestion that the administration should reduce the principals that troubled homeowners owed to banks and mortgage servicers instead of trying to reducing their interest rates as a way of reducing homeowners’ monthly payments. As a result, the government plan of reducing interest rates has not been successful in reducing the rate of housing foreclosures up to now. The report by Mr. Nasiripour can be found at below website.

http://www.huffingtonpost.com/2009/11/12/the-economist-the-obama-a_n_355022.html

This blog post consists of my comments to the article by Mr. Nasiripour at Huffington Post.
__
Economists Geanakoplos and Koniak’ proposal to help troubled homeowners sounds convincing.

I am not sure whether it is reasonable to put the blame of current not-working program of easing foreclosures purely on President Obama. Although he is in the spot to take all blames, including those for others like ex-president, his advisors / staffs, or skimmers of housing market. The blame should rather go to the dominant voices, primary policy advisors that surrounded Mr. Obama and led him to take the current path. As Mr. Obama himself had not been an economist or financier, he must have relied on dominant voices, opinions around him to make the decision.

What I wish is, at that time of making the decision of plan for solving foreclosure problem and hearing different economists’ different approaches to solve the problem, President should have hold intensive forums / discussion panels with many economists to debate, weigh the pros and cons of different approaches in order to reach the final choice (or did he do that?). Of course, even if he had done so, if the voice of economists who support Prof. Geanakoplos and Koniak’s approach had been dominated by the voices of opposing groups, still the result would have been same. In politics, the power of persuasion seems to be more lethal weapon than that of “truth, justice.”

Now, at least before spending more housing money, the administration may conduct the mid-term, or staged evaluations of the program and make adjustments / amendment to the program to make it work better.

Ideally, I wish the administration to create a “Law,” titles as “National Emergency Act” or something like that. The law may dictate that, in case of national emergency such as depression or natural disaster, the government should have the power of interfering, regulating, and rewriting the codes of corporate business activities in order to recover from emergency situations to normal conditions, especially when corporate acts damage public / national interests and trigger national emergency situation. Under this law, the government can temporarily or permanently freeze or decrease corporate profits and/or executive compensations until the emergency situation recovers to normal, healthy economic condition or if there are dangers of recurring situations of the same emergency / disaster¬. And the government can ban any lobby activities by the offending corporates/industry against the government’s intervention.
At the same time, economists should “Re-Write” the text book economic assumption of human being as “reasonable decision makers” in “Free Market System.” This understanding on the nature of human beings has been proved by the fact that many corporate executives (and/or their lawyers?) have proved to be very insanely, excessively-greedy, dangerously risk- taking, toxicaly harmful existences to the society. By changing this economic assumption, it may discourage some people from praising their love for “Free Market System” when others are dying without medical care, losing jobs or houses, or don’t have food on their dinner tables because of these corporate villains. No individual or corporate interests should be allowed to go against the interests of majority of country.

Mr./Ms. Learneddemocrat commented to my comments as below.
“Lim, there are countries that do exactly that, even without a “disaster”. Venezuela comes to mind as well as Cuba…..even Russia. Perhaps you should consider taking up residency there. I am pretty sure once you spend quality time living in such a place, you will consider the free market system and the true meaning of capitistic society the better choice. Been there, lived that.”

Initially I was confused that this comment is complementary. But now I consider that this commentator may not have quite grasped the essence of what I said. My reply to him/her was as below.
“In Asian countries, such as Japan or South Korea, the governments had crafted and guided their economic / industrial developments. Their government interventions on industries and promoting competitive industries have contributed to these countries’ rapid economic developments, success stories, calling them East Asian Tigers. In the midst of U.S. economic disaster and chaos, why not learn from the lessons of these Asian success stories?”

Sometimes, government intervention can be very productive if it is designed carefully. It doesn’t have to be called as socialism. Thesedays, the word “Socialism” seems to be the most popular name calling for any kind of policies or ideas, regardless of their true nature, that some people don’t like.