Observations On The Economy

The news is getting better. Housing sales are up, manufacturing orders are up, job losses are down. Now with a good dose of positive attitude we may start the slow climb out of the abyss. It’s not going to be instant coffee, but hopefully the worst is behind us.

It’s far too early for reflection on causes, mistakes, and blame. Besides, it doesn’t really serve any purpose unless we’re willing to change, and I’m not convinced the American people – much less the American politicians – are willing to change much of anything. However, here are some observations from which we can glean a few lessons:

• Back in February, Tennessee senator Bob Corker was skewered by the press, the UAW, and others for opposing a bailout for General Motors. They said he was un-American, anti-union, and against the “working man”. He said GM would end up having to file bankruptcy anyway, no matter how much money we gave them. Well, guess what? We gave them billions of dollars and, sure enough, they filed bankruptcy.
  
  Lesson: Money was not the problem, nor was it the solution. The problem was poor management. When someone is a poor manager, you can’t throw enough money at them to cover it up. And the penalty for poor management – in personal, business, or government finances – is bankruptcy.
  
  
• The final tally is in on the “Cash for Clunkers” program. The company who sold the most cars and profited the most was Ford Motor Company. By the way, they were the only one of the Big Three who refused to take bailout money.
  
  Lesson: If you make something people want to buy, they will buy it. If you don’t, they won’t. It doesn’t matter what incentives you offer if your product is ugly, inferior, or both.

• The official name of the “Cash for Clunkers” program is Car Allowance Rebate System (CARS). This was chosen over Car Allowance Rebate Program (CARP) and Car Rebate Allowance Program (CRAP), both of which more closely describe the end product.
  
  Lesson: Be careful with acrostics. Better yet, do away with them altogether.

• Check out this quote from the business section of the Nashville Tennessean:
  “PennyMac, a firm founded by the former president and chief operating officer of Countrywide, buys distressed home loans on the cheap with the goal of modifying them and later selling them for a profit. The company, whose top management consists mostly of former Countrywide executives, now stands to receive up to $6.2 million in taxpayer money to modify those loans, through the Making Homes Affordable program. “
  
  So let’s review….Countrywide makes millions of dollars in loans to people who can’t afford them, driving the company and the borrowers into bankruptcy. Then these same guys form a different company that buys the same bad mortgages, reworks the deal, and sells them for a profit. Plus we give them $6.2 million in taxpayer money for their trouble.
  
  Lesson: What’s the old saying? “Fool me once, shame on you, fool me twice, shame on me.” Well, shame on us and then some. I don’t see any difference between these guys and Bernie Madoff, except that he’s in prison and they’re not.
  
  
• As evidenced by the above, it is my concerted opinion that there is no problem facing this country that government intervention can’t make worse.
  
  Lesson: Can you say “healthcare”?
  

Till next time………