Labor Confidence First

I have listened and read with great interest the debate on the Economic Recovery Act. It seems to me that we have missed the point once again. The Act started as a job stimulus plan and then morphed into lots of other things and now it has so much in it that no one feels good about supporting it. Seems that pragmatism gets lost in bill writing doesn't it? If we would stop for a moment and recognize that consumer confidence actually lags Labor Confidence (the confidence that I will have a secure job over the next 12 months with a wage that meets my expectations) then we would be spending our time and money on creating Labor Confidence first and consumer confidence second. Creating jobs is like motherhood and apple pie. It can't be argued against. We all would support, without a blink of an eye, a plan that for every dollar spent a dollar of wages was created. We might even support that for every three dollars spent a dollar of wage was created. What we have done is lost the line of sight to the issues at hand and then nothing gets done. I am more convinced than ever that we have to solve the labor and jobs issue first and the rest can follow. We can still get infrastructure built, etc. but only through the filter of jobs created. BTW, 4MM jobs created isn't enough. That only brings us up to parity with what we have lost. Our economy demands that we create an additional 1MM plus jobs a year on top of what we had before. We need a serious refocus on the issues. Let TARP monies clean up the bad assets and bad debt. Let's pass a true Job program that creates real jobs. There was a reason that FDR called it the "Works Progress Administration". It started with work that created works. That is how we create Labor confidence....giving us Consumer Confidence as the outcome.

Stimulus Plan II To Bring Back Consumer Confidence

This surely looks like it is in the works. Stimulus One didn’t work, so let’s try again? In my opinion, if we feel that we need to put the power of stimulus in the hands of the consumer, which seems ill-fated since the first package didn’t work, then we need to provide the consumer with the tools to help right the ship. The two best ideas I have heard of to date, is first to let the consumer help shore up and fix the bank’s liquidity issues so that they will lend again more freely. This could be done by allowing consumers to buy short-term tax-free certificate of deposits from the banks and let the banks compete on what interest rates they will pay. All of those people who pulled their money out of the stock market need a better place than their mattresses to put the money, so give them 3-6-9-12 month tax-free CDs and when those mature the money made from those CDs will roll back into the consumers pocket and will be money to be spent. Part of the consumer confidence issue right now is that I won’t spend because we don’t know what is going to happen with our ability to make any money from our savings and investments. Bang, go remove that worry. Second, to set everything right with the housing market, the government can offer across the board 4% 30-year fixed mortgage rates. Making the interest rate low enough that those who are upside down can refinance and hold onto their homes and know that they are locked into a 30 year low rate mortgage will go further to return consumer confidence than anything else I know. If we no longer have to worry about the roof over our heads, then we may spend again. And, these should be offered to everyone at all levels. Those with wealth can refinance and that extra monthly money freed up will flow back into the economy to buy a car or take a vacation again. And for sure, the banks and lenders should get leeway to charge up on origination fees, etc. This would be a windfall for consumers, so why not let the banks and lending institutions also gain a bit from this. So, Congress, please consider these ideas. Don’t send another $1500 check out. It will only end up sitting in a pass book savings account to pay for heating or pay down credit card debt. Give the American people what they need, a way to regain their confidence. FYI, these ideas are not nearly as big of an idea as putting America back to work with planned infrastructure improvement projects, but since that is trying to eat the elephant/donkey all at once, let’s make some forward steps while we can to at least get true stimulus.

Chinese Democracy

No, this is not about the elusive Guns ‘n Roses album, although I do wish Axel would get the darn thing out and let’s be done with it. No, this posting is about the $586B Chinese Stimulus Plan that was detailed today in the news. The Chinese government is starting their version of the Works Progress Administration. They are putting their talent to work to build things that last; infrastructure, dams, transport systems, buildings, etc. Hmmm, wonder where they got this idea from? I tend to think that they are on the right path. We have learned over the last few months that putting money in the pockets of Americans doesn’t translate to the economy being stimulated. What has occurred is that we have taken our fear and uncertainties and let those force the stimulus money into savings accounts and mattress stuffing. And, why wouldn’t any of us do this if we were worried about our job being lost tomorrow? It’s actually quite rationale and I’m surprised that the economists didn’t think that this is exactly what was going to happen. So, here we sit wondering what would stimulate our lagging economy and the Chinese reached the economic moon before we did. Of course, stimulus starts with job security and job creation. This really isn’t that hard is it? And, as we drive on crumbling roads and bridges, send our children to antiquated school buildings, drive our cars because there is no viable national transit system, we are arguing over the next check amount that should be handed out. How about we take that money and we create jobs to lead us to energy independence? Last week we passed in California Proposition 1A to fund $10B of development for a west coast high speed rail system. Now we find out that the project needs another $10B injection from the Federal government (yes, those are earmark funds and depending upon how they are structured, pork) and the project won’t even start until 2020. That’s 12 years from now. Our roads will be long over-crowded and we will be that much further in the hole with our dependence on oil for travel. Come on, let’s take this project and start creating jobs to clear the way for the rail program. Let’s put people to work now and shorten the time frame to build the railway. Let’s get people excited and galvanized around progress programs. Let’s get people off of the streets and worried about where they will work tomorrow and let’s really stimulate America. If the Chinese can get the joke, so can we! It’s just a shame that we have to follow versus lead.