Dumping Greenbacks Into the System

Just how deep is the doo-doo that Bush has put us in?

Dumping Greenbacks Into the System

Postby Ferguson Foont » Wed Mar 12, 2008 5:50 pm

Just yesterday, the Federal Reserve "released" $200 billion to the banks to use as lending capital, primarily between banks. This is to try to mitigate the effects on our economy that are rippling outward from the subprime mortgage crisis, which was not caused by any lack of capital but instead by predatory lending practices stemming from relaxed regulation of financial institutions. In short, it was another failure of conservative political philosophy, which is always a failure in every area of public administration in which it is ever applied.

Think about that for a moment. $200 b-b-b-billion dollars. That's more than our entire annual budget deficit has ever been except for a few years of particularly poor Republican maladministration. One-fifth of a TRILLION dollars.

These are greenbacks, pure and simple. We are dumping paper dollars onto the market to emulate the effects of prosperity. This action drove up the stock market for a day, and because of its effect on the value of the dollar it also drove the price of oil above $110. I thank my lucky stars that I own a couple of high-mileage hybrids, I'll tell you what!

In taking this action, we are taking yet another step down the same road the Weimar Republic took in 1921-1923 post-WWI Germany. We are sinking the once-mighty dollar to new lows against the Euro, the Yen, the Pound, the Yuan, and other world currencies. Some economic "experts" (I believe that you earn the title of "expert" by spouting the rationalizations of the right-wing supply-siders, the disciples of Ayn Rand and Milton Friedman whose focus is on the quarterly report bottom line and never the future or the common good) claim that this is a GOOD thing, because it makes our exports cheaper and doesn't really have any inflationary impact. Well, have you checked the price of food and gasoline lately?

This is the third step down this treacherous, slippery slope. The first was a similar step late last summer. The second was this strange tax rebate thing that we'll see in May and June. And now this. Soon we will be carrying our payday cash to the grocery store in wheelbarrows.

Because everything around these parts is valued in dollars, inflation serves to conceal the effects of a failing economy as far as news headlines are concerned. Salaries seem to rise because the numbers are higher, although they buy a lot less. Many people regard the DJIA as their best-recognized measure of our prosperity, but stocks are also valued in dollars. If the DJIA were to be expressed in euros, however, on the day George W. Bush took office the Dow stood at 10,587.59 and one euro was worth $0.9363, putting the Dow's value in euros at 11,307.90. Today, the Dow stands at 12,110.24 and one euro is worth $1.5495, so the Dow's value in euros today is 7,815.83.

And some people still think our economy is doing well? That's a drop of over 35%. Our economy's performance under Bush has been positively Hooveresque.

And these "stimulus" packages do not address the problem, and in fact promise to make it worse, maybe much worse, by weakening the very most basic essence of our economy, the reliability of our currency itself.

It's a very bad thing to make a mistake in choosing our president.
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Re: Dumping Greenbacks Into the System

Postby Ferguson Foont » Thu Mar 13, 2008 2:57 pm

The Stock Market, comparing the last close of the Clinton administration with now, when valued in other major currencies and most essential commodities:

Commodity | DJIA 1/19/01 | DJIA Yesterday's Close | Pct. Change

U.S. Dollar | 10,587.59 | 12,110.24 | 14.38
Euro | 11,307.90 | 7,815.83 | (24.18)
Canadian Dollar | 16,045.49 | 11,983.08 | (25.32)
British Pound | 7,210.78 | 5,991.95 | (16.90)
Japanese Yen | 1,241,183.1 | 1,239,846.3 | (.001)

Gold (oz.) | 40.10 | 12.41 | (69.05)
Oil (bbl.) | 483.23 | 110.09 | (77.22)
Corn (bu.) | 5,374.41 | 2,120.88 | (60.54)
Wheat (bu.) | 4,429.95 | 976.63 | (77.95)

I know this can be a little confusing. Think of it this way (re gold): At January 19, 2001's close, the Dow Jones Industrials stood at 40.1 ounces of gold at the price of gold at that time. Yesterday it closed at 12.41 ounces of gold, a decrease in value of 69.05 percent. When expressed in gold, the DJIA has lost more than two-thirds of its value.

When valued in crude oil, it has lost nearly four-fifths of its value.
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Re: Dumping Greenbacks Into the System

Postby Whosyer » Mon Sep 22, 2008 5:00 pm

Well we know where to point them if they try to tell us that nobody saw this coming.
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Re: Dumping Greenbacks Into the System

Postby Ferguson Foont » Fri Sep 26, 2008 11:24 am

Of course, things look a LOT worse now. Those figures were back in March.
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Re: Dumping Greenbacks Into the System

Postby Carol Johnson Duharat » Tue Nov 18, 2008 7:47 pm

Whoever thought that massive GM, once considered the world's largest company, could actually go out of business, as they are saying, before the end of this year? Back in the days they sent private investigators after Nader, the thought was inconcievable. :shock:

Now Congress is actually dithering over whether a mere $25 billion of a $700 billion bailout package should be given to the nation's last remaining industrial base to keep it afloat until the economy turns around.
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Re: Dumping Greenbacks Into the System

Postby Ferguson Foont » Wed Nov 19, 2008 10:59 pm

The idea that they would let GM go down is so outrageous it has me screaming at my TV set whenever I see Richard Shelby or Lindsey Graham talking about how GM brought this all on themselves. Look, the Hummers and the Suburbans (and Expeditions and Rams) were absurd vehicles, sure, but how they got here isn't as important as what will happen if they fall. And remember, the government had some culpability in this, exempting SUVs and light trucks from CAFE standards and cutting CAFE standards up into weight classes, and offering BIG tax credits to the purchasers of the biggest and heaviest SUVs.

But Shelby and Graham are acting particularly nasty and hypocritical here. Shelby represents Alabama, home of the BMW plant that builds its R, GL and M class vehicles -- the big, heavy ones. Graham represents South Carolina, where BMW makes its X-class SUVs and the Z4. If our Big Three go down, their states will benefit from the disappearance of major competitors. I am sure that Graham and Shelby are wholly in favor of the EU's and Germany's bailouts of their auto industries.

And of course, Republicans have long lusted for the death of the UAW.

And how ridiculous is it, all this contrived hand-wringing over the CEOs of the Big Three flying to their hastily-scheduled congressional testimony in corporate jets? What did these congressmen expect, that these CEOs would fly into BWI using coach tickets on Southwest, and somehow that would ease GM's, Ford's and Chrysler's financial woes? Jeesh!
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Re: Dumping Greenbacks Into the System

Postby Whosyer » Thu Dec 11, 2008 7:29 pm

First, I believe we are where we are because we have resisted to do what we knew we needed to do back in the early 70's. So I believe there is reason to be critical of GM.

However to see the Republican party go after the Unions by allowing our Auto Industry to disappear is particularly hypocritical since it was just eight years ago that you couldn't find one of them who wasn't suggesting that the Right to own a Hummer or a Suburban was somehow Constitutionally protected. Just Eight years ago Republicans were happy that GM was building big ass SUVs and would brag about how terrible there City mileage was...

Now GM is run by idiots for building big ass SUVs... according to them.

We need to lead in alternative energy transportation... it would be best to not have to start from scratch on the infrastructure... GM re-tuned production lines to produce amphibious vehicles and tanks... this re-tune would be easy compared to what they did during World War II.
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Re: Dumping Greenbacks Into the System

Postby Ferguson Foont » Fri Dec 12, 2008 10:37 am

I don't think it's quite that simple, Whosyer. Nobody's buying Hondas or Toyotas these days, either.

Yes, our automakers have some culpability for their current plight. But not totally, and PARTICULARLY not GM. GM tried to move the American auto industry into the 21st century back in the early '60s with some really innovative automobiles, led by the Corvair but also including the Nova and the Pontiac Tempest. Ralph Nader made his name killing off the most innovative of the bunch, the Corvair, a truly fine car, the best subcompact in the world at that time and one of the finest handling off-the-shelf cars ever available in the United States until just recently, and his efforts set back American compact car technology thirty years and allowed Japan to eat our automotive lunch.

A friend of mine had a Corvair and an early Toyota Corona. The Corvair, although five years older, was superior in every way except oil consumption, and when we had a choice we took the Corvair because it was so much more fun and more pleasant to drive. We didn't yet have the hang of aluminum block engines at that time, a problem that also doomed the Vega, an car that was inferior to the Corvair in many ways. The Corona, a '68, was absolutely HORRIBLE, particularly its handling, a problem Toyota didn't solve until 1974.

We also legislatively mandated emissions reduction before the technology existed to accomplish the goals set in the legislation. I do not argue that such legislation was not badly needed at the time, nor do I maintain that American automaker resistance to improvements was a factor in this, but anybody who bought a 1974 American car was left with a great reluctance ever to buy any similar car again. The onset of catalytic converters then made things right, but the public relations damage had been done. And still American technology lagged behind Japan's when it came to smaller cars.

But we also mandated a lot of very weird safety regulations, particularly impacting the design of automotive interiors and adversely affecting comfort. This chased a lot of automakers, particularly those from France and Italy, out of America, and made American cars a lot more dorky compared to their German and Japanese counterparts. Remember, Japanese cars have at their bases the reverse-engineering of German designs, just like Nikons were initially reverse-engineered Leicas. Honda aped BMW, even down to some design specifics like the dashboards. Mazda got its start with the German firm NSU. Toyotas began to negotiate curves when they copied Mercedes suspension designs.

But the rise of SUVs is a relatively recent phenomenon and has resulted largely from marketing. This marketing was augmented in recent years by particularly strange Bush administration policies offering HUGE tax breaks to the purchasers of the biggest and most inefficient SUVs, breaks that, unlike the credits for hybrid cars, are not capped and terminated after the sale of a certain number of units (which Honda and Toyota have already exceeded). It isn't that long ago that "jeeps," which is what we used to call SUVs similarly to the way we call all facial tissues "kleenex" no matter who actually made them, were uncommon and were generally bought only by people who had need for off-road capabilities. Nowadays I doubt that more than 10% of SUVs have ever even been on DIRT roads, much less off-road.

But again, as far as I know, the only automaker actually doing well right now is the AMG subsidiary of Mercedes Benz, because one thing about Great Depressions is that the rich not only still have theirs, they've got yours, too.

But foreign governments ARE rescuing their auto industries, and providing other ongoing advantages to their carmakers as well, most notably their national health care systems that take away from their manufacturers that huge burden that our own industries are expected to bear. Health care alone adds an estimated $1,200 to the price of each American car.

You may have noticed that the chief players obstructing the bailout are from Alabama, Tennessee and South Carolina, all home to recently opened assembly plants owned by foreign car companies including Mercedes Benz, Hyundai, BMW, Toyota, Honda and others, whose home countries are heavily subsidizing their carmakers and bailing them out of their current woes with huge infusions of cash. This, my friends, is the very essence of anti-competitive practice, and to have lawmakers from those states carrying out a vendetta against the UAW at the expense of literally MILLIONS of American jobs angers and sickens me.

They bandy about this "$74.00/hr." figure implying that it represents compensation to auto workers. Bullshit! That wildly-inflated figure includes retirement costs for CURRENT retirees no longer working, health care for current workers and retirees, and every other benefit negotiated between the carmakers and the unions. They compare this with a claim of "21.00/hr." average hourly rate for workers at foreign car assembly plants, conveniently ignoring the fact that the retiree population for a plant that only opened in the last decade is far smaller than for the century-old American automakers, and that the plants are largely involved in the mere assembly of foreign-manufactured parts, with far fewer of the higher-paid design and high-tech machine work required to initially make those parts. There are VERY few workers in the UAW earning $148K/yr., even when all their benefits are added into their wages. Furthermore, I doubt that most workers at the MB plant in Alabama are making less than $42K, even in salary alone. The compensation comparison made by Shelby, Corker and others is totally BOGUS.

If it were only car quality at issue, then Honda and Toyota would still be doing well. It is not. New automobile sales depend on the availability of credit, and that availability has largely been curtailed in recent months. American automakers were also hurt badly by $4.20/gal. gasoline last summer, but GM in particular is already deep into the process of retooling for greater fuel efficiency, led by the Volt (which will have an EPA rating over 100 mpg) but including many other models, including the world-class Chevy Malibu. They have also greatly improved their quality, now matching the best from Germany and Japan. It is unfair to blame current management for their plight, a plight shared by every automaker throughout the world.

Foreign carmakers, alas, do not have to deal with obstructionist Republican senators. It will be such a shame if we let these few small-minded, evil-intentioned men destroy the very industry that has played the greatest role to make America a world power. We must not send our automakers into bankruptcy, and we must not allow these rightwing jerks to destroy the UAW.
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