Recession, anyone?

And why hasn't an official declaration of "recession" been made? The Dow dropped another 400+ points yesterday with no end in sight - a 6 year low for the markets.

Some headlines today:

• Job losses rise as recession plays on
• BREAKING NEWS: Jobless claims jump unexpectedly to 16-year high as labor market weakens
• Prospect for auto bailout dims
• Auto Bailout Breaks Down
• Markets in Europe and Asia follow Wall St. drop
• Weekly jobless claims surge to 16-year high
• Allied forces train merchant seamen to counter piracy
• Financials need at least $1 trillion: analyst
• GM finance arm seeks bailout
• Don’t junk the auto industry
• Markets look puny after big selloff

I normally avoid CNN and Fox like the plague, but the point here was to illustrate that across the news spectrum there is almost nothing but doom and gloom economically. This is one of the many reasons there is a crisis in faith in the government today. When they can't acknowledge what is plainly in front of them, why the hell should we have any confidence in them?

Gut Punch Correction

(Click for larger image)

Slight correction from yesterday. It seems the Dow has lost 42% (rather than 40%) of it's value from its high on October 9th, 2007 of 14,164 down to its low of 8,175 as of October 27th, 2008.

Gut Punch

516,000 jobless claims last month.

http://www.reuters.com/article/newsOne/idUSTRE4AC40B20081113

Dow Jones Industrial Average down 411 points yesterday. The Dow has lost over 40% of it's value from its high.

No sign of it stopping, either.

Batton down the hatches people.

The Challenges Facing Obama

Regardless of how you feel about the recent election of Barack Obama to the Presidency of the United States, you have to recognize that he is inheriting one of the most difficult set of circumstances since FDR in 1933. He has to face:

1. A spiraling stock market and weak economy with jobs disappearing at an alarming rate.
2. Two wars whose cost are siphoning off this weakened economy.
3. A federal budget that has been in deficit spending and totally out of control for eight years
4. Underfunded and underperforming schools
5. An unprecedented environmental crisis

Whatever your feelings about John McCain, you have to give him credit for the tone and content of his concession speech. He is absolutely right. This is a time of unprecedented national crisis. He is absolutely right that we need to come together and work together to resolve these issues in a bipartisan manner.

I hope he will be instrumental in leading the effort on the Republican side of the aisle. I hope President Obama will reach out to him and try to work with the Republicans, leading the Democrats in this spirit of bipartisanship. We need a spirit of national unity to address these problems.

Our status as a superpower is threatened. No nation can be a power without a dominant economy. Right now our power is based on limitless borrowing. With the economic crisis deepening around the world, this pool of borrowed money will soon dry up.

Regardless of where you stand politically, you have to be in favor of:

1. A strong economy with good jobs that will stay here in America.
2. A federal budget that is under control and that invests in America first.
3. A strong and effective education system. This is the foundation of the middle class and the middle class is the foundation of a strong America (economically and socially). An educated workforce is the kingpin in the inventive and entrepreneurial capacity that has made America great.
4. Energy independence. Energy independence makes us stronger economically and reduces our political and economic dependencies on hostile and unstable regions of the world.
5. Infrastructure. America's infrastructure is crumbling. Roads, bridges, electrical grid, and Internet are all in need of maintenance, replacement, expansion, and updating.

That's a lot of common ground! This is something that should excite us, all this common ground! The four points above could easily occupy any President for at least one, maybe two, terms. If you don't like the idea of a President Obama, then wouldn't it make you feel better if you knew he was occupied with issues that you could agree on?

Don't get me wrong, I think the charge of socialism is an idiotic one. But, if you think he's a socialist, then wouldn't it make you feel better to know that Obama was occupied fixing bridges, helping Detroit retool to make the next generation of fuel efficient cars, and fixing our schools? The alternative, in your mind, might be that he erect statues to Karl Marx on Constitution Ave in DC, I guess...

So if we all agree that there is a crisis (pick one), and we all agree that it needs to be solved, then can't we all compromise in that spirit and come up with solutions and actions that effect Americans directly? Jobs, the economy, and the environment can all be addressed with the same initiative - the Green Economy.

A Green Economy would:

1. ... invigorate the auto industry, making jobs and helping the environment by producing cleaner, more efficient cars.
2. ... create jobs by building out a whole new infrastructure for distributing electricity ("the grid")
3. ... in addition to weaning us from foreign oil, a $700 billion a year drain on our economy, the new electrical grid would create jobs in order to maintain this new grid. These jobs would be outsource-proof. A Chinese worker cannot maintain a distribution station in Nebraska.
4. ... create jobs in the manufacture and research of new technologies like wind turbines and solar panels. With proper tax incentives we could make sure that these jobs stay in America over the long haul.

Notice how these points all feed into each other? The jobs created by a new auto industry help the economy and the environment by producing a whole new wave of efficient cars.

The creation of a new, clean, and renewably-based electrical grid creates jobs and helps the environment by distributing energy gathered from wind, solar, tidal, and geothermal sources.

All of this reduces oil consumption which has the dual effect of helping the environment and removing a major strain on our economy.

All of this would both spur and be spurred by a necessary boom in research. This would stimulate our universities and education system, creating the next generation of scientists and engineers who will be the future of American innovation.

All of these points are completely non-partisan in nature. Republicans and Democrats alike can come together around this core set of principles to do what's right for America and Americans.

Religulous

I went to see Religulous tonight, the new film by Bill Maher. We have this great old theatre here in town which has but a single screen. It's the only commercial venue in town where this sort of film is par for the course.

Do not let the reviews you may have read fool you about this flick. It is very much anti-religion. I say that as a matter of fact and without judgement for or against the movie - or religion, for that matter.

The basic gist of the movie is that anyone who approaches religious belief with certitude is a fool. Religion is foolish and dangerous. Dangerous because the apocalyptic fantasies that are at the core of so many religions are now possible due to man's recent grasp of apocalyptic technologies.

Technologies such as nuclear weapons which, along with pollution, are listed as some of the ways man's technologies could facilitate the apocalyptic fantasies contained within various scriptures. I would add biological and chemical weapons to that list of apocalypse-enablers.

Bill Maher says at one point, "The only thing worse than prophecy is a self-fulfilling prophecy."

To close the film, he sums it all up with, "Grow up or die." Meaning religious faith is immature and its foolish tenants can lead to our destruction given man's grasp of modern technology.

I am agnostic, myself. I don't claim to be wise enough to know what the answer is. I agree with the assertion that religious institutions are prone to corruption and have been so for centuries and millenia. Centuries and millenia of corruption have most likely lead to a perversion of the teachings of Christ, Muhammed, Moses, whoever.

The Grim Reaper of Greed

alternate title - Power Word Kill Rich Whitey

Recession Finally Admitted by the Fed

Finally there are rumblings from Washington that seem to admit to a recession. I think the American people have been tuned into the reality of an economic downturn for quite some time.

As of now, the Dow is down another 502 points. The other day it was up by around 900, but I knew that was mere volatility. This downturn won't stop until the actual fundamentals of the world economy are repaired.

The U.S. especially needs to put its economic house in order. We need to start making things again. That is what is fundamentally at the core of our floundering economy - we don't make anything any more. We make money off of money. We flip houses. We use credit.

There are many things that have gone awry, don't get me wrong. However, increasing manufacturing jobs in America would have the effect of decreasing unemployment, putting more money in the pocket of Americans. Two thirds of our economy is based upon consumer spending.

I think retail stores are going to take a major hit this Christmas. Americans are losing their jobs, their homes, and their confidence. Watch the stock market in late December and early January. Look for a big drop when the retail numbers prove to be abysmal.

I think the turnaround here will take a good long time. I think Americans have been shocked into waking up from a credit card coma. Spending will slow. Savings will increase. Less cheap crap will be bought in stores. Bad news for China, really.

If Americans are smart and we have good leadership we can come through this better and stronger. If the focus is on technology and research into alternative energy we have a chance. If America leads the way with a whole new fleet of battery driven and alternatively fueled cars we can again be the auto manufacturer of the world. If we invest in infrastructure like schools, roads, a new solar and wind electrical grid, and college we can again become competitive.

If our leaders have the political will to raise taxes we might be okay. If we are honest with ourselves then we see that raising taxes is unavoidable if we are to address our national debt and other needs simultaneously. If Americans can change their ways and refrain from spending what they don't have then each of us may yet find economic salvation.

If we hold our leaders accountable on the issues that matter to all of us we can save ourselves from ourselves. Issues like education, roads, jobs, a stagnating economy, and the environment are all interrelated and can all be solved on a single line of attack.

The simplest answer is usually the best answer. I usually denounce Occum's Razor as a means for oversimplification of complicated issues and ideas. In this case, however it is right on.

Problems like crumbling roads, vaporizing jobs and a worsening environment can all be solved by investing in green technology and providing government subsidies for green infrastructure projects. This would lay the foundation for jobs and a revitalized economy. It would allow us to export this technology and put America back on the economic map as a producer and exporter rather than an importer and borrower.

More Americans with good jobs boosts consumer confidence and provides the fuel for two thirds of our economy (consumer spending). More good jobs means a larger tax base. Government subsidies for technology research means many many small businesses getting startup money from either the government or venture capitalists.

And to cement the continued growth of this new economy you invest in education. A smart workforce is an efficient and innovative workforce. You also ensure this new boom is sustainable with massive infrastructure investment in both existing and new techologies (as they come online). Improve roads and build a new sustainable electrical grid. This will create jobs in and of itself as well - this will feed back into the positive cycle by putting more money in the pockets of Americans and growing the middle class.

That is a lot of "ifs." Believe me, I am aware of that fact. Every pay period I am putting a little bit towards survival gear and supplies. I am trying to hope for the best, but I am planning for the worst without a doubt.

EDIT: At close of trading today the Dow was down 733 pts.