I tend to ignore political blogs, but sometimes one encounters politics when reading what are presumably non-political blogs. Sorry to those stumbling across this post which is written in response to such and, in the process, guilty of the same thing. Cut me some slack. I think this is only the second time I’ve touched on politics here.
I was looking through the abiword site to see if I could compile without libgnome* and without libfrbidi. I looked at their blog page and came across an entry by one of their programmers ranting about politics and the US economy.
There are two sides to every story. This time there’s a right one and a wrong one. Let me clear up Mr Lachowicz’ misunderstandings and biases.
1. The US economy is fundamentally sound and grew at a 3.3% clip in the previous quarter in spite of record fuel prices and a slow down in the housing market. US exports as percentage of GDP in FY2007 were the highest since 1810. WTF do you know about booming exports and continued GDP growth and what that means economically? Obviously not very much. It’s not a fucking recession. Far from it. This whole “sky is falling” nonsense reminds me of the 1992 election and the following Wednesday evening CBS News led with Dan Rather sheepishly grinning and explaining that Bill Clinton wouldn’t be inheriting such a bad economy after all. Go figure!
2. The predicament of Lehman Brothers isn’t indicative of wider problems, but rather problems relatively limited — for now, despite the collusion between the administration and Congress — to the capital markets. And the capital markets are truly messed up, no question about it. These problems, though, aren’t tied to the state of the broader economy but rather to deranged anti-capitalist controls placed on the financial sector. Most of these controls precede the Bush administration, some relaxed during both the Clinton and Bush (41) administrations, and some novelties imposed during the Clinton administration to increase home ownership among groups traditionally not able to qualify for mortgages (i. e., subprime mortgages). These risky loans were hailed by the Clinton administration among its triumphs; I don’t know what’s so triumphant about the dual problem of cheap capital and coercing mortgage companies to underwrite loans for borrowers who traditionally wouldn’t qualify for large (or in many cases small) loans, and then waiting for the proverbial shit to hit the fan when the adjustable rates on those mortgages went up a few points as called for in those contracts so few people apparently bothered to read. You can’t take credit for forcing bullshit loan underwriting upon companies in the name of “fairness” or “economic justice” and then blame everyone else when that whole house of cards comes crashing down. Those were very risky loans, and now the people who pushed for them want the rest of us to subsidize those mortgages. We shouldn’t do that. It rewards the wrong people, it punishes the wrong people. But this is the metrosexual Amerika now where we punish success and reward stupidity (edit: I forgot that Bonnie Erbe wrote that Obama — übermetrosexual that he is — is more of a woman than Hillary Clinton).
3. I could spend a full page on employment statistics, but they’re pretty clear and easy to summarize:
The Democrats took control of Congress on 5 January 2007. The unemployment rate according to the Bureau of Labor Statistics that day was 4.6%.
After 21 months of a do-nothing Congress, with House and Senate banking committees chaired by un-distinguished members who should be answering questions about the lack of oversight AND their sweetheart mortgage deals from Countrywide and other dubious lenders rather than asking them, that rate is up 33% to 6.1%.
4. The government should be getting out of the financial industry, not getting more involved in it. Propping up home values that were artificially inflated by the ridiculous imposition by the government upon the financial industry to write more loans for those incompetent to get a standard mortgage serves the long term interests only of those whose defaulted mortgages will now be subsidized by taxpayers, the executives of companies that engaged in poor underwriting practices, and investors who will be rewarded for risks they shouldn’t have made. Those who have played by the rules and not gotten in over their heads will now have to pay to bail out those who broke the rules or couldn’t live up to their obligations.
5. Equity and other similar markets aren’t direct functions of the full economy, even if they’re occasionally influenced by the broader economy. I say that half in jest because equities (stocks), debts (bonds), and commodities are more often influenced by the Lemming Rule than by fundamental economic conditions or news. The Lemming Rule is this: As one lemming jumps, the next one jumps. IOW, there’s greater than necessary participation in market swings regardless of direction because of a herd mentality. That was never more obvious than last week — with its early sell-off of stocks and rush on gold, then vice versa later in the week. Regardless, there’s not a direct correlation between the irrationality of panicked buying or selling on Wall Street and the state of the full economy.
6. If your own investments are down, you can’t blame anyone but yourself. You should invest for whatever tolerance level you have for risk:reward, and you should vote accordingly. Let me use the same example I gave in point 3 above (taken from this GOP strategist’s site with a few more interesting points, like consumer confidence and gasoline prices):
The DJIA closed at 12,400 on 5 January 2007 when the Democrats took control of the Congress. As of today it’s fallen back near 11,000. Shall I also post the same data for pre- and post-GOP control of Congress in 1994?
The most important factor facing our economy right now isn’t the collapse of the capital markets (except to the extent taxpayers will wrongly be on the hook for a trillion dollars of bad debts plus whatever other stupid bullshit the Democrats try to stick in this bill), it’s the rising cost of energy. The Democrats haven’t done a damn thing to relieve that problem. If anything, they would exacerbate it by imposing windfall profits taxes on the energy sector — further increasing prices to consumers and possibly having the effect of reducing supplies (as happened when the same fucked up policy was attempted in the 1970s). Their presidential candidate has no energy policy except $150 billion in corporate welfare for hippie technologies that won’t make a dent in prices for the fuels we use today — just cost us taxpayers more. If you have a solar or wind-powered car or can afford $5-8/gallon gasoline until those are widely available, go ahead and vote Democrat. If you need gasoline/diesel at a cheaper price, you might want to vote GOP even if you have to hold your nose to do it.
In summary, this economy has proven resilient enough to grow despite problems with energy prices and a collapsing capital market. Neither problem is fatal in and of itself, but “solutions” for either or both could hurt more than help. Unfortunately, the tendency of government is to intervene too much and make things worse (never trust someone with a political science or law degree!). The best intentions of government always yield the worst results.
EDIT: Oh yeah, I’ll use abiword again when it can be compiled without libgnomethis and libgnomethat. I know, I know — these are GTK-related libraries and not part of GNOME-bloat. I don’t care; I just want to add as few things to my system as possible. Allow a more streamlined installation option so users who don’t need or want libfribidi don’t have to add a library for one application (yours) only.