Edvenson Consulting

Economic Recovery: Potential Redux   

Subject:  Economic recovery footnotes for the *U.S.  (*Note:  Just as good a place to start as any.) 

 News item:  Recent weeks have shown President Obama and his team attempting to grapple with the financial mess left for them by the outgoing administration and a host of greedy and secretive financial folk that stretch from Alaska to Florida.... and probably also Saudi Arabia to China.  Still, the American people who put Obama in the White House have held hope that he would 'change business as usual' in Washington ? and beyond, as necessary.  They also hoped he would be able to help them personally - to recover their forward momentum, their own economic status, their dreams for their children and families, and help make the 'American dream' of safety in one's house and home, and satisfaction with one's work a reality.  Not only this, but Americans also want to recapture global growth in technology and professionalism and, of course, secure the social services that a tax-based system should provide: good health care at affordable prices and a social safety net for the disabled, sick and elderly - all things that Americans once had, and that smack of the honest, hard-working and respectable nature that is part of our own particular heritage - one we are damned proud of. Therefore, it is hard not to notice some sad developments 'at home' while pointing out some observations that appear crystal clear as an American sitting in Norway.

 One of these observations is made by Paul Krugman, the Nobel prize-winning economist.  Krugman writes that the Republicans in Congress are standing in the way of an economic recovery plan in a situation that has much more dire consequences than they can have any notion of wishing on anyone, including themselves.  Perhaps someone should do the math for the politicos.  The economy cannot be held up by greedy bankers, lenders, shysters and hucksters.  Nor can it be held up by millionaire senators and representatives, no matter how clueless or mean-spirited they want to be.

 Item 2.  The auto industry.  In early January, the International Herald Tribune reported that, "GMAC LLC will no longer have exclusive rights to provide no- or low-interest loans to people who take advantage of General Motors financing incentives, as part of the complex deal that gave the troubled lender billions in federal aid. The move could reduce the Detroit automaker's dependance on GMAC to provide financing and possibly boost its sales by giving consumers more options for affordable loans.  GMAC, which provides GM dealer and customer financing in addition to home mortgage loans, disclosed the terms of the agreement in a regulatory filing Friday. The lender said the government will get 5 million preferred shares of GMAC paying 8 percent interest in exchange for its $5 billion capital injection to help GMAC avoid bankruptcy." ("GMAC gives up some GM car financing in bailout," The Associated Press, Published: January 2, 2009).

The auto industry is back in Washington soon to attempt to get more money without promising to pay back any loaned money already received, all while attempting to show that they have used billions of short-term dollars for precisely the things that will save their industrial life (um, not 'their' bank) from otherwise economic death.  Meanwhile, Hyundai is capturing a growing segment of the new car market, with soaring sales in the U.S. (and Norway).  What has GM been?  Answer: In part, another car loan salesman ?another greedy banker, lender, huckster, and shyster of high-interest, repo-prone car loans.  Is it any surprise that we do not hear the car companies reminding Congress that they just love the banking business? Let's see income as a percentage of sales of cars vs. loan interest and appreciation.  One could add in a column for proceeds from repo's, re-possessions of cars whose 'owners' failed to make a payment or two, only to see their entire investment be driven off by the company for re-sale elsewhere, their own contributions acting more as a lease than a contract for purchase. And, frankly, one could take them out of the banking business - which would be good for American business - if one was strong enough, smart enough, and interested enough.  This would appear to be a reasonable proposition (ie: for discussion).  Note:  It is not nationalization (ie:  for those who think that would be the end of the growth economy, that is).

Item 3.  Several thousand persons show up at a housing assistance program office to complete applications for a small number of housing assistance grants in Fort Lauderdale, Florida, causing such fear of overcoming the capabilities of the public authorities that the police are called in to maintain order, resulting in escalating tensions and periods of chaotic desperation, tearing the social fabric and surprising with its personal and identifiable sadness.  Meanwhile, in Norway, the office of unemployment insurance announces that there are so many qualified people applying for unemployment insurance just now that check-postings will be delayed for weeks and weeks, resulting in a similar gasp of collective panic.  Which country would you prefer to live in?  Despite the gloomy days and nights of winter we have seen lately, the answer is: Norway.  Reason:  They manage to have a social safety net ? um, at all.  For those of you who are history-challenged, this (a social safety net) began to disappear in the age of Ronald Reagan, and never re-appeared.  Reagan's legacy may have been the gipper guy, but it was also the age when ordinary Americans began to become permanently homeless, and the entire 'volunteer' economy was ordered into being.  Americans work hard...for the most part.  They are willing to work hard, and they like working hard... in general.  But cut off a person's ability to try to succeed, and when failing, not be caught by someone somehow as they fall, and you begin to ruin the promise that a caring society should afford its members ? respect for the need for food, lodging, medical care, safety and community.  The sooner our new President and his administration can do something about that, the sooner the fear ? and loathing ? will begin to subside.  That's not a promise, but it is a good guess.

 I like most Americans pray that God will speed all of the necessary tools and talents to the persons at whose disposal they will begin to unravel and re-invent these crucial and difficult societal concerns.  For personal assistance from Yours Truly, please call me!  After all:  "Under-employed professional in Norway seeks meaningful work to retire persistent balance on law school loans, caused by unavoidable repayment delays...caused by under-employment in Norway, the total sum of which was caused by lack of options ..a lack of options for avoiding ... greedy bankers, lenders, shysters and hucksters."