Saturday was a beautiful day. Here is a picture at the top of Brighton Ski Resort.
Monday, February 23, 2009
How to lose $20 Trillion
How do you lose $20 Trillion?
The same assets are there. In fact, the demand on those assets is increasing, simply because of the increase in world population.
So what happened over the past two years that the wealth in the US is now about $20 Trillion less?
The simple answer is aggregate pessimism.
When markets decline, the aggregate need is to become more conservative as a method of self-preservation.
This conservatism, pessimism and protectionism contributes to lower overall aggregate demand. This causes job losses and economic contraction.
If President Obama wants to balance the budget in 4 years; in time for the next elections; he simply needs to reverse world psychology, creating progress, optimism and freedom, and the resulting wealth will balance the budget. His goal of shrinking the deficit by half or more should happen.
The same assets are there. In fact, the demand on those assets is increasing, simply because of the increase in world population.
So what happened over the past two years that the wealth in the US is now about $20 Trillion less?
The simple answer is aggregate pessimism.
When markets decline, the aggregate need is to become more conservative as a method of self-preservation.
This conservatism, pessimism and protectionism contributes to lower overall aggregate demand. This causes job losses and economic contraction.
If President Obama wants to balance the budget in 4 years; in time for the next elections; he simply needs to reverse world psychology, creating progress, optimism and freedom, and the resulting wealth will balance the budget. His goal of shrinking the deficit by half or more should happen.
Thursday, February 19, 2009
Sean Hannity - Capitalist or Socialist?
If I heard Sean Hannity correctly today, he said that he would not buy a stock (capitalism).
He said that he is putting his money into municipal bonds, treasury securities and a little bit in gold.
By default, he is saying that he doesn't know what to do with his money, so he is investing most of it with the government. They obviously know better how to spend and protect his money than he does (socialism).
Buying gold is a bet against the US dollar, and thus against America, as gold is mostly just a storehouse of value.
So he obviously thinks President Obama is going to lead us down the road of socialism. Therefore, that is where Mr. Hannity is going to invest his money.
Dear Mr. Hannity,
It appears to me that you are a capitalist in word and convenience only, because you are voting your dollars in favor of socialism.
He said that he is putting his money into municipal bonds, treasury securities and a little bit in gold.
By default, he is saying that he doesn't know what to do with his money, so he is investing most of it with the government. They obviously know better how to spend and protect his money than he does (socialism).
Buying gold is a bet against the US dollar, and thus against America, as gold is mostly just a storehouse of value.
So he obviously thinks President Obama is going to lead us down the road of socialism. Therefore, that is where Mr. Hannity is going to invest his money.
Dear Mr. Hannity,
It appears to me that you are a capitalist in word and convenience only, because you are voting your dollars in favor of socialism.
Wednesday, February 18, 2009
Economic Paradoxes
What is interesting about economic downturns is that human emotion contributes to the problems.
In other words, here are some interesting paradoxes:
As the economy worsens, the savings rate increases, causing the recession to worsen.
As the economy worsens, the tax rate goes up, causing the recession to worsen.
Government handouts can stabilize prices, but may enable low productivity.
Capitalistic greed often destabilizes prices. It often promotes protectionism, restricting wealth creation.
Note to President Obama:
To maximize the benefits of the stimulus plan:
1. Higher prices are the recipe for a larger crop.
a. But unstable pricing causes unrealistic expectations and/or fear.
2. Energy and work overcome entropy.
3. Protectionism destroys wealth. Teamwork increases wealth.
I'm glad the economic stimulus plan has been approved and signed. It appears to me that it will help, even though the long-term benefits will be suspect and slow in coming.
The paradoxes of socialistic enabling and capitalistic greed are still with us, but maybe we'll learn from this experience and be better off for it.
In other words, here are some interesting paradoxes:
As the economy worsens, the savings rate increases, causing the recession to worsen.
As the economy worsens, the tax rate goes up, causing the recession to worsen.
Government handouts can stabilize prices, but may enable low productivity.
Capitalistic greed often destabilizes prices. It often promotes protectionism, restricting wealth creation.
Note to President Obama:
To maximize the benefits of the stimulus plan:
1. Higher prices are the recipe for a larger crop.
a. But unstable pricing causes unrealistic expectations and/or fear.
2. Energy and work overcome entropy.
3. Protectionism destroys wealth. Teamwork increases wealth.
I'm glad the economic stimulus plan has been approved and signed. It appears to me that it will help, even though the long-term benefits will be suspect and slow in coming.
The paradoxes of socialistic enabling and capitalistic greed are still with us, but maybe we'll learn from this experience and be better off for it.
Wednesday, February 11, 2009
Memo to Congress:
As TARP and the Stimulus Plan get implemented, these thoughts come to mind:
1. If you give a man a fish, you feed him for a day. When you teach a man to fish, you feed him for a life time.
a. Apprenticeships, mentoring, education and innovation should be top priorities.
b. Bonuses to try and keep talent is protectionist. Protectionism will hurt the recovery.
1. If you give a man a fish, you feed him for a day. When you teach a man to fish, you feed him for a life time.
a. Apprenticeships, mentoring, education and innovation should be top priorities.
b. Bonuses to try and keep talent is protectionist. Protectionism will hurt the recovery.
Tuesday, February 10, 2009
Our Friend, Abe Lincoln
Abe Lincoln. What a remarkable man. What a wonderful President. We get to celebrate his birthday this week.
If he were here today, I think he would say, "It will be OK."
With his birthday being celebrated on Thursday of this week, I wanted to reflect on some of his reflections.
1. He often told the story of the Eastern Monarch (probably King Solomon from the Old Testament), who called all of the wise men of his kingdom together and charged them to find a statement, that he could hang prominently in his castle, which would be appropriate for any time and for any occasion. They came up with the phrase, "And this too shall pass." It consoles in times of sorrow and it chastises in times of pride.
2. He said that he was often driven to his knees, because the wisdom of all about him was insufficient for the day.
3. His favorite poem reflected on the fact that we are all going to die.
4. His compassion towards nature and men was often reflected in his actions.
If he were here today, I think he would say, "It will be OK."
With his birthday being celebrated on Thursday of this week, I wanted to reflect on some of his reflections.
1. He often told the story of the Eastern Monarch (probably King Solomon from the Old Testament), who called all of the wise men of his kingdom together and charged them to find a statement, that he could hang prominently in his castle, which would be appropriate for any time and for any occasion. They came up with the phrase, "And this too shall pass." It consoles in times of sorrow and it chastises in times of pride.
2. He said that he was often driven to his knees, because the wisdom of all about him was insufficient for the day.
3. His favorite poem reflected on the fact that we are all going to die.
4. His compassion towards nature and men was often reflected in his actions.
Saturday, February 7, 2009
TARP, Stimulus Package and other Random Thoughts
With the Stimulus Package ready to be passed next week, I've had some additional random thoughts.
The Stock Market: It still seems to me that the stock market is incredibly undervalued. It wouldn't take much to shoot the stock market up 200 or 300 percent.
What would prevent this from happening?
1. Additional greediness, fraud, fear, incompetency or dishonesty on the part of corporate and government leaders.
2. Too much inflation.
3. Laziness, idleness, dishonesty, fear and/or greediness on the part of people in general.
4. A weak US currency.
Representative Jim Matheson, from the State of Utah, voted against TARP, but in favor of the Stimulus Package. Many of our other government leaders are in the same boat. His reasoning for voting against TARP was the increase in the national debt. Since the Stimulus Package is another layer of debt, it seems inconsistent and contradictory for him to vote for one and not the other. I'd like to hear his explanation for the sudden change of heart. But, I guess that I already know the answer to my concern. He's a politician.
Should we nationalize Bank of America? Absolutely. Let the taxpayer own this institution. It seems to me, in the interest of fair competition, that it is time to nationalize some of our corporate institutions. I don't see any other way to reign in the cozy abuses of the leaders of many corporations. Corporate boards are just too cozy in justifying their own high pay packages.
The Stock Market: It still seems to me that the stock market is incredibly undervalued. It wouldn't take much to shoot the stock market up 200 or 300 percent.
What would prevent this from happening?
1. Additional greediness, fraud, fear, incompetency or dishonesty on the part of corporate and government leaders.
2. Too much inflation.
3. Laziness, idleness, dishonesty, fear and/or greediness on the part of people in general.
4. A weak US currency.
Representative Jim Matheson, from the State of Utah, voted against TARP, but in favor of the Stimulus Package. Many of our other government leaders are in the same boat. His reasoning for voting against TARP was the increase in the national debt. Since the Stimulus Package is another layer of debt, it seems inconsistent and contradictory for him to vote for one and not the other. I'd like to hear his explanation for the sudden change of heart. But, I guess that I already know the answer to my concern. He's a politician.
Should we nationalize Bank of America? Absolutely. Let the taxpayer own this institution. It seems to me, in the interest of fair competition, that it is time to nationalize some of our corporate institutions. I don't see any other way to reign in the cozy abuses of the leaders of many corporations. Corporate boards are just too cozy in justifying their own high pay packages.
Random Thoughts
Last night at 2 am I was awakened by a noise outside. On the front lawn of our cabin were 20 elk eating the grass. There was one beautiful 4 point bull elk and the rest were cows and calves. It was fun to watch them feed and then bed down, right there on the front lawn. They were gone by morning.
Also last night I watched six or seven muskrats and at least one beaver work up and down the stream that runs in front our place. Busy as a beaver is sure appropriate for these little animals.
This morning a lone bald eagle soared overhead, 4 mallard ducks circled the cabin a couple of times, and 16 small mule deer, all does and fawns, paraded in a straight line in front of our cabin.
Winter is a fun time to watch these animals as they scurry about. They must know that spring is approaching. They seemed unusually busy.
Also last night I watched six or seven muskrats and at least one beaver work up and down the stream that runs in front our place. Busy as a beaver is sure appropriate for these little animals.
This morning a lone bald eagle soared overhead, 4 mallard ducks circled the cabin a couple of times, and 16 small mule deer, all does and fawns, paraded in a straight line in front of our cabin.
Winter is a fun time to watch these animals as they scurry about. They must know that spring is approaching. They seemed unusually busy.
Tuesday, February 3, 2009
Dear President Obama:
Dear President Obama:
As the economic crisis is still getting a majority of press, the self-fulfilling prophecies of doom and gloom are permeating economic activity.
Both Republicans and Democrats are trying to get funding for their respective projects. Some of these projects will improve economic activity, but many will be a long-term drag on productive assets.
Historically, socialism has not worked very well.
Capitalism has it's own problems of fear and greed.
So what is the best solution to overcome our economic problems?
The main economic problem is job loss.
Second to job loss is the loss of aggregate income; reflected in declining real GDP from fear and protectionism.
There are several ways to solve these problems. Here are just a couple of thoughts:
I. Work: Productive work will generate wealth sufficient to cure our economic ills. Real asset wealth creation can take place by 1. The improvement of the utilization of productive assets, 2. Alternative productive usage of productive assets, and 3. Technological advances in the usage of productive assets.
II. Education: As stated above, the technological advances in the usage of productive assets will enhance wealth creation. For example, the work by scientists in such technologies as catalysis and surface chemistry, can, in some cases, nearly eliminate waste and pollution.
III. Morality: The people of the world at the time of Noah, the people of Sodom and Gomorrah, and the people of Pompeii may have all been destroyed because of immorality. The elimination of immorality in our society will lead to prosperity.
Mr. President, I applaud your efforts to unify our country. I believe that improving our roads and making them more productive will help us. I believe that a better education for all of us will help. I believe that additional infrastructure improvements, such as building dams, will help us. For example, rebuilding the Teton Dam near Pocatello, Idaho would create jobs, create energy production, improve irrigation and farming capabilities, mitigate flooding, utilize efficient surface chemistry technologies, and provide recreational opportunities.
Best wishes to you Mr. President as you tackle our economic challenges. I very much want you to succeed.
As the economic crisis is still getting a majority of press, the self-fulfilling prophecies of doom and gloom are permeating economic activity.
Both Republicans and Democrats are trying to get funding for their respective projects. Some of these projects will improve economic activity, but many will be a long-term drag on productive assets.
Historically, socialism has not worked very well.
Capitalism has it's own problems of fear and greed.
So what is the best solution to overcome our economic problems?
The main economic problem is job loss.
Second to job loss is the loss of aggregate income; reflected in declining real GDP from fear and protectionism.
There are several ways to solve these problems. Here are just a couple of thoughts:
I. Work: Productive work will generate wealth sufficient to cure our economic ills. Real asset wealth creation can take place by 1. The improvement of the utilization of productive assets, 2. Alternative productive usage of productive assets, and 3. Technological advances in the usage of productive assets.
II. Education: As stated above, the technological advances in the usage of productive assets will enhance wealth creation. For example, the work by scientists in such technologies as catalysis and surface chemistry, can, in some cases, nearly eliminate waste and pollution.
III. Morality: The people of the world at the time of Noah, the people of Sodom and Gomorrah, and the people of Pompeii may have all been destroyed because of immorality. The elimination of immorality in our society will lead to prosperity.
Mr. President, I applaud your efforts to unify our country. I believe that improving our roads and making them more productive will help us. I believe that a better education for all of us will help. I believe that additional infrastructure improvements, such as building dams, will help us. For example, rebuilding the Teton Dam near Pocatello, Idaho would create jobs, create energy production, improve irrigation and farming capabilities, mitigate flooding, utilize efficient surface chemistry technologies, and provide recreational opportunities.
Best wishes to you Mr. President as you tackle our economic challenges. I very much want you to succeed.
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