You know, I bet former presidential candidate John McCain has been thanking his lucky stars everyday since losing to Barak Obama. It seems things are worse…far worse than we were led to believe. If Obama succeeds in revitalizing the economy, stabilizing global relations, and securing our borders, he will go down as one of the greatest presidents ever in American history. If he fails on any of these points, both he and Democratic Party will be rode out of Washington in the back of a garbage truck. Frankly, it wouldn’t have mattered if McCain and the Republicans had won. They would get the same treatment. As it now stands, Americans are sick to death of what they see as both an economic failure brought on by corporate greed and a lack of governmental oversight. The Republican Party, after a long run, has demonstrated a complete and utter failure to protect the American household when they had the chance. Now, it’s the Democrats turn. The election itself, I think, was not Americans coming out in mass to elect our first bi-racial president (in fact, among the vast majority of non-black voters, I don’t race was even a factor), but was instead a vote against Bush's economic and foreign policies.
So, what are we looking at as Americans? Well, for starters, we’re looking at one of the longest and deepest recessions (some are already calling it a depression) since the Great Depression of the 1930s. The unemployment rate for October was 6.5%, which was double what most economists were expecting. The first couple weeks in December saw near record numbers of Americans being laid off; just fewer than 600,000. Since January 2008, there are over 1.2 million unemployed Americans, and that’s not including those who are underemployed, temporary, or part time seeking full time, or those who have simple given up and dropped below the radar. The unemployment rate is now expected to tip near 7.5% over the next three to six months. While the figures for Christmas, which can count for as much as a third to half of total annual sales aren’t in yet, many economists are forecasting a stocking full of coal for most retailers.
Personal consumption dropped 0.3%, or about $33.6 billion dollars. Disposable personal income decreased by $25.7 billion dollars, or about 0.2% while personal income increased 0.2% to $24.5 billion dollars. The Gross Domestic Product (GDP) fell 0.5% in the third quarter according to the US Department of Commerce. During the same period, corporate profits were declined 1.2%. Non-financial corporate profits increased 6.7%. Yet, overall financial profits have dropped 20%. Industrial production, which includes factories and mines, has dropped 2.8% in September and a whopping 6.0% in the third quarter.
One of the few bright signs is the price of oil has continued to drop despite attempts by OPEC to boost the price by cutting oil production. Most Americans are now paying in the neighborhood of $1.68 a gallon, which is a far cry from the near $5.00 we were facing just a few months ago. However, the decline in gas prices hasn’t translated into cheaper heating bills. The US Department of Energy reported that Americans will pay an average of $2644 to heat our homes this winter; an increase of 33% over last year. Folks who use natural gas will pay an average of $1059 this winter to stay warm, which represents an increase of 23.8% over 2007. Combined, that’s $22 billion dollars more we’ll pay over last year. Oil companies meanwhile continue to rack up record profits while you and I turn down the thermostat and grab another blanket. Just in case you were wondering, Exxon posted a second quarter profit of $11.68 billion; the largest ever by any company. Or to put it another way, the profits of the top five oil companies was $1.5 trillion dollars in 2007, which was larger than the GDP of Canada.
Congress rushed through a massive bailout of the very people who caused our economic meltdown to the tune of $700 billion dollars. So what did these banks and other financial institutions do with the money? Good question. It seems many sent their corporate executives on some rather expensive junkets right after getting the money and many have simply told Congress it was none of their business what they were doing with our money. Yeah, seriously. It appears that in their hurry to appease Wallstreet, and over the very vocal objections of Main Street I should add, Congress failed to include language that would require some type of oversight or monitoring of how the money would be spent. Now, in my humble opinion, that was either intentional or a huge oversight bordering on incompetence.
Speaking of incompetence, what did you think by the heads of America’s automakers flying in on their private jets asking for a handout? These “gentlemen” have known of years where the auto industry was headed and did nothing. The second time around, the heads of “Big Three” at least had the decency to come by commercial carrier though none have gotten rid of their private jets or other diamond clustered perks (did you know that the average US chief executive earns 8.8 million dollars a year? Senior executives earn on average 364 times more than the average US worker). Auto industry leaders blame unions and unions blame management. The end result may be both standing in the unemployment line if they don’t learn to work together and quickly.
By the way, that $700 billion dollar bail out that the American People objected to and Congress ignored, increased the Federal Reserve's balance sheet from $900 billion dollars to $1.8 trillion dollars. To put it another way, that’s 13% of the GDP. The Treasury Department said it may have to float approximately $550 billion dollars in debt in the fourth quarter and anticipates floating another $368 billion in the first quarter of 2009. I’m no accountant, but in my opinion, you can’t run up those kinds of numbers and expect to stay afloat for long.
Meanwhile on the home front, state and local governments have been cutting every service that can, including sending employees on extended unpaid furloughs. Key programs, and by that I mean those which assist the elderly, children, and handicapped have been deeply impacted. State and local governments have passed on rates hike after rate hike on the very people who are hanging on by their by fingernails, namely the middle class. Quasigovernment government agencies responsible for water, gas and electric, and sewers have been trying to get rate increases through, and with some success. Local school systems, fire departments, the police, and EMS have been pressing for rate hikes too. Frankly, I’d like to know where they think this money is going to come from. The American People have been tapped dry.
I don’t envy president-elect Obama one bit. He’s got to hit the ground running and running hard. If he fails, the outcome may be more horrific than anyone can imagine.
Things I’d Like to See
What would I like to see President Obama do? I would like to see him get Wallstreet under control. That means eliminating financial derivatives, which led, in part, to our economic meltdown. I would like to see stronger monitoring of financial transactions. I would like to caps placed on executive compensation similar to Europe and Asia. I would like to see the US dollar tied to the gold standard again.
I would like to see a serious effort to get off imported domestic oil and gas. This means a major investment in alternative fuels. I would like it mandatory that any money the auto industry receives be in conjunction with the development new fuel efficient cars and trucks. No extension after extension like they did with emission control. A fixed firm date with specific criteria or they repay the loan in full and lump sum. I would like to see the airline industry nationalized like most every other nation. I think a single national airline may be the only way to save jobs, reduce costs, and maintain airline safety. I would like to oil and gas treated as a strategic resource, and that means government monitoring of production and distribution. While I think profits are wonderful, I think the level of profits being earned by the likes of Exxon and Shell is obscene. I would like to see a portion of those profits go to research and development of alternative fuels and energy as well as protecting the environment. I know many companies claim to do it already, but let’s just say I don’t believe their…huh…”hearts” are into it. Frankly, I don’t trust big business to look out for the interests of the common working man and woman.
I would like to see a complete overhaul of the tax code. Perhaps a flat or consumption tax. There’s really no reason the tax code should be any thicker than a sheet of notebook paper. And the beauty of this would be the elimination of the IRS. I would like to see personal savings account become tax exempt in order to encourage savings (Americans have the lowest savings rate of most developed nations). This in turn would provide banks with more money to lend. I would like to see the elimination of “corporate taxes” in the form of fees, service and late charges (or at least, allow them to be written off). Since when did we give corporations the right to tax us?
I believe we need a basic national health care system in the country. There is simply no reason our poor, handicapped, elderly or our children should be denied basic healthcare. Folks who can’t afford healthcare end up in the emergency rooms, which in turn clogs up an already overstrained medical situation and you and I end up paying for anyway in the form of higher rates. I think we need a basic coverage for all US citizens. Companies who can’t afford to offer their employees insurance will be in a better position to try and attract employees since they aren’t losing out to companies who can. Employers can offer supplemental packages as employment incentives. I think we should allow individuals to shop around for the best prescription rates, and if that includes buying from licensed companies in Canada or Mexico, so be it. If US pharmaceutical companies don’t like it, get competitive. I don’t think any non-US citizens should be entitled to any taxpayer based service or program.
I would like to see the passage of the Employee Free Choice Act. Management acts in unison when making decisions for the betterment of the company and its stockholders. I see no reason why employees should not have that same opportunity. However, employees should not be intimidated by either management or Labor. If the employees want to bring in a union, that’s great. If not, then that’s fine too. If management wants to avoid unionization, don’t wait until employees start doing card counts. Start by treating your employees like human beings. Pay them a decent wage. Treat them with respect. Keep the work facilities safe.
I would like to see a major emphasis on education. There is no reason that our kids should test lower than kids in some second and third world countries. If some students don’t want to learn, get them out of the ways of those who do. I think we should test kids to see where their academic skills are. Some may need to be directed to college and others into trades. We need to stop “teaching to tests” and get back to teaching critical thinking skills. We need to cut back on sports programs and put more emphasis on math, science, technology, as well as history, English, and the arts. They have the weekend and all summer for sports.
We need to stop acting as the world’s policeman. Obama needs to bring our troops home from Europe and Asia. We need to get out of the nation building business. Sure, people may elect governments we don’t like, but that’s their decision (let’s not forget too that we’ve been ousting governments we didn’t like since the 1950s, including supporting some brutal military juntas). We need to secure our borders, and this means more than walls, barded wire, and guards. We need to increase trade with our neighbors south of the border to help develop their domestic economies. If their economies are strong, there will be less interest in coming here illegally. Speaking of which, we need serious financial fines imposed on those who aid illegal workers. That includes for-profit and non-profit companies as well as religious institutions. Obama also needs to realize that a nation is bound together by a common culture and set of values. These are communicated by common language. In our case, that is English. Failure to develop this bond will result in the balkanization of America.
While this list is by no means conclusive, it would be a great start to any presidency. Obama has his work cut out for him. I wish him well with efforts.
Poll Results
We asked in our last poll how to deal with terrorists. 46% of you said you would respond in kind. While the remainder, almost equally split, thought you should either try to reason with terrorists or talk and fight back. Personally, I like the Israeli approach. You hit me, I’m going to hit back fast and harder. Then maybe, just maybe, you might like to talk instead
Thanks!
I would like to take a moment to you, the reader, for a great year here at AO. W'eve had some great articles, terrific feedback, and some amazing numbers in terms of readership. On behalf of AO, I would like to thank every one of you for reading AO. I wish you a happy, healthy, and successful 2009.
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