Tag Archives: Ross Perot

The Gray Lady Is Hurting – Job Cuts Announced At The New York Times

Life imitates art.

Life also imitates blogs.

The Gray Lady has fallen. When you’re her age, recovery is very difficult, even impossible someTimes. A couple of days ago, in this posting about layoffs at CBS radio stations, we talked about the incredible shrinking New York Times. Today, the Times announced job cuts. Maybe we’re psychic or something.

No, we can’t claim any psychic powers. It wasn’t really hard to see this one coming. As we discussed, all of the traditional media are struggling. Newspapers have been getting smaller while their newsstand price has been climbing. Radio stations have been reduced to generating ad revenue by running commercials for snake oil, 24 hours a day. Broadcast television is pretty much a wasteland. Hey, Mr. FCC chairman… Is broadcasting infomercials most of the time considered “broadcasting in the public interest”? Don’t broadcasters have to demonstrate that as a condition of license renewal?

But good news is just around the corner. The Fed is talking about yet another rate cut, and the President says the checks are (almost) in the mail.

Our economy is looking more and more like an emaciated drug addict every day. Our neighborhood dealer, Mr. Bernanke, who has gotten us dependent on rate cuts, is going to run out of his brand of crack before too long. If the IRS doesn’t keep sending us rebate checks, we might have to start robbing little old ladies to support our habits. Disgusting habits. Like eating …and filling our gas tanks …and heating the house …and paying the mortgage.

How do things sound where you are? That giant sucking sound is getting louder around here. Ross Perot was right.

July, 2008 Update…

The New York Times layoffs are now five months old, the newspaper continues to shrink, and now, they raise the cover price yet again.  Read our latest article here.

– RoutingByRumor

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Stimulus, Schmimulus ! Why The U.S. Economic Stimulus Plan Won’t Have Much Effect

They are saying that the President’s economic stimulus package might be agreed upon today. Woo Hoo. Happy days are here again.

But wait a minute… I can still hear that “giant sucking sound”,  and it’s getting louder (oh, how I wish I could have found a clip on youtube of Ross Perot coining that wonderful phrase). What will the U.S. economic stimulus plan actually accomplish? Will it lower the U.S. trade deficit or increase it? Will it lower the unemployment rate? Will it have any effect on the crumbling real estate market? We believe that the proposed U.S. economic stimulus plan will not work. It is an attempt at a quick fix. It is an ill-conceived band-aid approach to what ails the U.S. economy, proposed by an administration that does not seem to grasp the root causes responsible for the American economy being in deep, deep trouble.

What the United States needs now is something along the lines of the Works Progress Administration (WPA), which put Americans to work and helped pull the country out of the Great Depression. The WPA existed between 1935 and 1943. A chicken in every pot, and two hybrid (or electric) cars in every garage wouldn’t be a bad idea either. (We’ve copyrighted that new twist on an old campaign phrase, so if Rudy, Hillary, Barack or John want to talk, you know how to reach us.) It’s quite likely that many of the government buildings and infrastructure projects in the American city or town where you live today were constructed by the WPA during that period. The WPA was one of President Franklin D. Roosevelt‘s New Deal programs.

Taking the money the U.S. government is proposing to distribute as tax rebates, and putting it into a massive infrastructure improvement program would have several benefits, both immediate and long-lasting. It would…

– Provide long-term employment for millions of Americans

– Stimulate spending by reducing the unemployment rate, and giving the currently-employed higher incomes

– Repair or replace our crumbling infrastructure, particularly bridges

– Provide an infrastructure that will facilitate future economic growth

– Keep the money in America rather than giving the recipients of the rebate checks the ability to buy even more imported goods, a major reason we’re in this mess to begin with

Let’s say, for argument’s sake, that every taxpayer in the United States gets a check for $1,000 (although it looks like many, if not most Americans will receive far less). Let’s say that Americans will spend every one of those checks rather than putting the money in the bank. Where will that money go?

If you’re about to loose your home to foreclosure, chances are good that that rebate check wouldn’t even allow you to make a single mortgage payment. Even if it does, that’s just postponing the inevitable for a few more weeks.

Perhaps you will take that rebate check and go on a shopping spree at Wal-Mart, K-Mart or Target. Wal-Mart is already America’s largest retailer and largest employer, but bigger is always better. If Wal-Mart grows, that means more low wage jobs for Americans. It means more Americans with little or no healthcare coverage. It means paving over more open land for new parking lots and big-box stores. It means more tough times for the few American manufacturers left, who are already being squeezed by the way Wal-Mart deals with their vendors.

About the only place you can spend that rebate check where the majority of the products are made in USA is at the grocery store. Unfortunately, for most Americans, eating is not a discretionary activity, and the amount of money you spend at the grocery checkout is unlikely to be influenced to any measurable extent by your rebate check.

Ben Bernanke will probably tell you that buying goods is exactly what you should do with your new found windfall. But wait a minute. As I’ve pointed out in this blog, and what you already know, unless you’ve been in a coma for the past few years, is that the vast majority of consumer goods you’ll find on retailer’s shelves are imported, overwhelmingly from China. In fact, we think that China will be the real winner if Americans go on a shopping spree. If you doubt this, just wait a few months and look at how our trade deficit with China increases as a result of this plan. Go to the mall and try to find clothing, shoes, toys, hardware or housewares made in USA. You won’t.

How is buying foreign goods supposed to help the U.S. economy? The U.S. national debt is being increased substantially by the stimulus plan in the first place. Buying foreign goods will only increase the trade deficit. Few American jobs will be created by this plan. That’s because we manufacture few products here any more, with the notable exception of food products, and even those are increasingly being imported.

With the cost of heating your home and filling your gas tank becoming an unaffordable luxury for many Americans, perhaps all of us should use our rebate checks to buy fuel oil or gasoline. The oil producing countries would love that more than oil itself. The American oil companies would support that too. Despite the fact that the oil companies have been raking in record profits, you can never be too rich, or too thin. On second thought, I think we will just cash our rebate check and ask the teller to give it to us in one dollar bills only. Then we’ll take the cash home, and use it as kindling in our fireplace. That’s one way to stay warm this winter, and it should reduce our heating bill slightly. Is it illegal to burn money?

About the smartest use we think you could put that rebate check to would be as a down payment on a hybrid or other low-emission or zero-emission vehicle. That would reduce America’s dependency on foreign oil, while helping the environment at the same time. The only problem is that very few low-emission vehicles, and almost no zero-emission vehicles are being manufactured today. And chances are good that your next car will be a foreign make that might not even be assembled in America anyway. So much for stimulating employment.

The biggest reason that the economic stimulus plan will not have any significant or long-lasting effect on the U.S. economy, is that it does nothing to address the two underlying causes of our economic problems; loss of jobs (particularly loss of good paying jobs) and the U.S. trade deficit. Until those issues are addressed, the administration can throw all the money they want at the problem, but it won’t go away. The deepening economic recession will turn into a depression, as sure as Winter will be followed by Spring.

I just came across a posting on the AFL-CIO’s website outlining their views regarding what a U.S. economic stimulus plan should include. Unfortunately, it looks like a couple of their suggestions which were originally announced by the President as being part of the package, have been eliminated in the final draft. Although I have never belonged to a labor union, I was struck by how many of their ideas match my thinking on the subject.

Maybe those rebate checks should come with the stipulation that they are not to be spent on food, imported goods or foreign oil, gas-guzzling vehicles, and may not be burned.

– RoutingByRumor

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The Great Bernanke Pulls A Rabbit Out Of His Hat

What might have come to be known as Black Tuesday 2008 (yesterday) was averted at the last minute, when Ben Bernanke and Company delivered a 3/4% cut to the overnight bank rate. Tuesday’s rate cut was the largest one-day rate cut ever by the U.S. Federal Reserve Bank.

As any great magician will tell you, timing is everything. The Federal Reserve waited until just before the markets opened Tuesday to announce the latest rate cut. Here at Routing By Rumor, we were way too conservative in our predictions for yesterday. We forecast the Dow dropping 200 points within the first hour of trading. In fact, the Dow dropped 464 points within minutes of opening. We predicted a loss of over 700 points on the day, which did not happen, thanks to the intervention by the Federal Reserve yesterday morning. The Dow lost just over 1% on the day, closing down 128 points. Not a good day, but much better than everybody was expecting, for a trading day that resembled nothing as much as a wild roller coaster ride. We have little doubt that had it not been for the Fed’s action yesterday morning, there would have been a bloodbath on the floor of the New York Stock Exchange yesterday, just as there was on world markets earlier in the day. Instead, there was controlled bleeding, and a market that was touch-and-go all day.
That was a pretty big rabbit that Mr. Bernanke pulled out of his hat. He will only be able to pull that trick off a couple of more times before he is fresh out of rabbits. Then what? Mr. Bernanke’s rabbit arsenal reminds us of the bluff the United States pulled off in World War II. The dropping of atomic bombs on Hiroshima and Nagasaki prompted the surrender of Japan a few days later. Things might have turned out much differently, had the Japanese known that we used the only two atomic bombs we had. We were fresh out.

This is economic policy driven by crisis, rather than by plan. The Fed is putting out fires, rather than addressing the reasons why the U.S. economy is faltering. But the policies that are responsible for America’s economic problems are not controlled by Mr. Bernanke and his friends. There is little more he can do than loosen and tighten the tourniquet now and then.

Hear that giant sucking sound? We do. Ross Perot did, way back in the 1990’s when he was warning us about NAFTA. That’s the sound of jobs leaving the United States. I’ve written about the problem in this blog recently. As long as we are importing most of the goods we consume in America, our economy will continue to disintegrate right before our eyes, no magician necessary. Quick fixes and slight-of-hand will only work for so long.

So what’s ahead? Look for another wild ride when the markets open later this morning. The stock market futures are pointing to a 250 point drop on the Dow and a 35 point drop on the S&P this morning, Wednesday, 1/23/2008. Don’t look for any more rabbits, at least not for a while, despite hints by the Fed that another rate cut might come at their scheduled meeting next week. We view that as an attempt to maximize the mileage they get out of Tuesday’s rate cut. And even if we’re wrong about another rate cut, don’t expect another whopper. If there are any more rabbits in Mr. Bernanke’s hat, they’re likely to be a lot of smaller rabbits, rather than another 2 or 3 bunker busters.

….And the bad news keeps rolling in. Iraq, layoffs, foreclosures, energy prices, bankruptcies, inflation, unemployment, just to name a few. As the Bernanke effect starts to wear off, we believe the markets will trend lower in the days and months ahead. Expect to see a lot of volatility in the markets, similar to what occured yesterday.

– RoutingByRumor

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