June 2008

Is this a great country (for bankers), or what?

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It sure is great being a banker these days.

Let's take the example of Countrywide Financial.
Today both California and Illinois opened lawsuits against Countrywide for "using misleading advertising and other unfair business practices to trick borrowers into taking on risky home loans they didn't fully understand". Also today, Washington State is moving to pull Countrywide's licenses after it found "evidence of predatory practices aimed at minorities".
This is after a year in which Countrywide stock has dropped from nearly 40 to just 4.58.

A fundamental look at the future

By now readers of my blog posts know that I tend to have a "muddle-through" point of view. Times may be good, or times may be bad, but rarely does Armageddon happen. In the last 100 years, it only happened 1 time -- in the 1929-39 Great Depression. There may have been inflation, there may have been recessions, but always people adapted and an equilibrium was struck, and growth resumed.
Even World Wars 1 and 2 (and 2 had a lot to do with the oppressive settlement of 1) occurred after 100 years of near universal international peace in Europe.

Over the last 25+ years the entire globe has been undergoing a disinflationary period of growth. Interest rates have declined; consumers in advanced countries who haven't made much progress in wages could at least refinance their debt, or perhaps cash in the value of booming stock or real estate assets.
All of that appears to be coming to an end.

McCain's economic ideas

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"I'm very well versed in economics."
- John McCain, January 24, 2008

Senator McCain may think he knows a few things about economics, but his latest comments show an increasingly widening gap between reality and his version of reality. This is one of those "Oh. My. God" moments.

The presumptive Republican presidential nominee regularly asserts that 1.3 million people worldwide ``make a living off EBay.'' He holds up the figure as evidence the world's largest Internet auctioneer is a model for job and economic growth.

Something tells me that selling beeny babbies on EBay isn't a real economic plan. In fact, the idea of selling used stuff online is some sort of economic model that we should aspire to as a country shows such a complete lack of understanding of fundamentals that it should scare you.

Age Discrimination So Brazen, It's Documented in the New York Times

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You know something is brazen when the New York Times can publish an article where corporations admit to not hiring anyone over 40 years of age.

The biggest obstacle, experts say, is that most companies are reluctant to retain or hire older workers. At the top of the corporate ladder, executive recruiters are routinely told not to seek anyone over 50, notes Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School.

It’s the Economy, Stupid! NO It’s the Stupid Economy!

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McCain and Obama may both be on the wrong page!

 Everyone knows that sin taxes on alcohol and tobacco are intended to discourage their use. Exactly the same rationale should cause one to question our present income and social security taxes. Working and investing are both desirable. Yet our nation collects over ninety percent of its income from taxes on American labor and investment. Does this make sense?

Certainly workers and investors should both pay taxes, but should we tax them more when they do these desirable things more often and better? Republicans see this problem when they advocate cutting taxes on corporations and investment. Neither party seems to recognize what our present taxes do to American labor.

When a business hires a worker, it has to come up with enough money pay the worker and also for the worker to pay taxes on his wages. Every incentive exists to cut jobs, automate, use imports, and outsource labor.

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