U.S. Economics 101: Frugalville vs. Consumption City

This was an answer to a post and comment made by Yobachi from his blog Black Perspective:

I struggled with this one, but here goes:

1) The airline industry is far, far different from the automotive industry. Barriers to entry, a service sector versus a manufacturer, lease of planes, hangers and in essence, people vs. ownership of huge fixed assets that dwarf even the Mall of America. The list can go on, but bankruptcy for the car industry is not a neat package. (Hooters ran an airline for a minute – that should tell you everything about the ease of starting an airline.

You got some money? AND have good credit? Go get some leased planes, and a terminal lease, a maintenance crew, jet fuel contract, hotshot pilot(s), boring booking agent, and hot stewardesses, and you’ll be flying in no time…)

2) In fact, they (the big 3, maybe only 1) may never come out – due to contractual obligations, liquidations of assets at a % of actual value (in a deflationary economy) and the damage to the brand. You might not notice, but Toyota, Honda, Kia and other foreign brands have ramped up their marketing of products to take more market share from these failing companies…The big 3 need to reorganize and merge, and innovate, innovate, innovate, but they may be done for.

I just don’t want to hasten their demise…and you shouldn’t either.

3) There is a forest called America that is hurting very badly under an enormous debt of barren trees. ALL total we have now, and its growing, over 52.7 Trillion in debt, public and private. (I.O.U.S.A. -by Addison Wiggin (Author), Kate Incontrera (Author), David Walker (Foreword) )

4) Warren Buffet, Barack’s unofficial financial adviser, relates a story of how China is going to take over America.

Call it: Frugalville versus Consumption City.

The story goes, Consumption City once produced things but after it grew in size and wealth and credit worthiness, it got into consumption of all things from Frugalville. Frugalville made all types of things and save its money received from Consumption City…Soon though, Consumption City no longer had actual wealth, but bought on credit, sending more and more money for those wonderful things…Eventually, since Consumption City had to pay off its debts, it went back to production, however, Frugalville now owned the means of production in Consumption City since it invested in all money received from trading with Consumption City. 

This is what is happening…while we think we can think our way out of this mess, we have to start making things others want and get back our money, our wealth in America. While I want this country to be a World Citizen, I also want us to be a producer of items.

5) This is not (completely) about the BIG 3 automakers, but it is about the idea of having a manufacturing base exist still in America. We have shipped off furniture, electronics and other industries solely based on labor cost. Idiocy to believe we can just “think” and “finance”  things to make money. People always want products – it is our job to do it competitively.

6) George W. Bush has destroyed our economic vitality under his watch. While these problems existed prior to his administration, no administration has reeked more havoc, across the board, as this one has. This from a Harvard MBA.

Harvard should go out of business if this is what they are still producing…

My goals in this response were:

1) Literally Fly-by-night Airlines are very different from a 100-year old automotive company

2) The United States of America still needs a manufacturing base

3) China is a threat to our national economic security – our trade deficit is outrageous

4) Bush did the most damage in our recent memory to financial dealings

5) Harvard isn’t producing many good minds – unless they are named Barack Obama (I hope.)

Winning now and in the future: Celebrate, Consider, Communicate and Connect

As I write this post, with the 1st step now complete, the road to the White House built, it is a brief moment to celebrate the improbable run and overwhelming support and sacrifices of a grass roots organization. President-elect Obama’s team of advisers proved a technologically advanced election strategy and utilizing the net to the best level, can change an election.

Brief though can be the celebration as we all now need to do the next step: Consider what are not only the mantras of the campaign, but the priorities of these United States of America. As it stands, no one can ignore the economic news spinning out of Wall Street. Auto makers, steel companies, retail stores and construction outfits are all in a harsh environment. We all have a connection to those places everyday, and we must stem the tide of the downturn in order to put Americans first again. It will take months & years, but it can be done.

Determining an economic plan immediately in concert with the financing of and fine details needed to fix a nation that is hurting severely is a top consideration.

The wars we are waging must be handled effectively. With recent Syrian actions, Pakistani incursions and an Afghan war forgotten, the Middle East theatre is wrought for new judgments and immediate concerns. Russia is now taking offensive steps to rebuild an old wall.

Communication and Connection will be the key to solving those areas. We have to re-engage the world. Specifically, our allies of many many years going back to WWII must be included in policy crafting.

These are among my hopes for the next few months for President Obama. As he’ll have to wait to take office, he should look to communicate and connect to those willing and able on the opposing side to ensure bipartisan cooperation on many issues. Sell the vision to his opponents and reinforce it with his friends.

Maybe someday, will only disagree on the details of plans and not the overriding objectives in our American policies.

Comment on a favorite blog: The Far Right Agenda vs. Obama’s, A Place in American History

It all about agenda.

It may sadden us, but the Conservative agenda, and puppets of it, did plenty “right” to accomplish their credos.

Engage in a faulty-logic war. Mission complete. Cost: $1 Trillion- 3 Trillion.

Insert conservative judges & lawyers and politicize every issue as an “attack on freedom” and ramp up “fear mongering.”

Huge Tax cuts (or no taxes) on the top-end earners during war time. But those people can fund their campaigns and share in the “free-market” idealogy. (Until The Crash hits – 1 year fall of 40%.)

Remove sane regulations from financial markets. (Or make things so complex that no one can figure out how to regulate market instruments.) Ignore rational arguments for a managed growth of investment or minimal benchmarks for creditworthiness.

Ensure Corporate Profits were at all-time highs in 2007. (% wise nearly equal to 1929, familiar?)

Inject fear in people. Fear terrorists. Fear anyone with weird name. Fear taxes – without the caveat that you pay for fire, police, education, infrastructure and courts with those taxes.

It isn’t that governments can’t do things right. At many points in our history, they undoubtedly did do things right. (WWII, for example.) It has only been in the last 30 years that a grand divide has been worked, playing politicians and regular Joe, the plumber (without any real knowledge of Joe’s work), against a concept that any Government intervention must be bad or is “socialistic” in origin.

Funny though, I was taught badly that we should be respectful of the government and put faith in it. (Even though, I am not in action or word.) But these very people who at one turn think we should unrestrain the markets, but think they have rights to monitor what I do regularly in my private areas, are the destructive forces we must finally stop from ruining America and its institutions.

Whatever Socialistic agenda Barack would deem to put forth would be a far cry better than the abject failure of 30 years of ruining ordinary Americans lives. He could be just “middle of the road,” but that is better than a Panamian-sized ditch where these neoconservative gutter snipes have driven us to the brink of Great Depression, part II.

How a nation that was at least 40% of World GDP in 1945, had the armaments of all others put together, and an overriding mandate on freedom could come to the point where China has more creditability (aside from human rights, those sticky little things) on a host of issues. Which begs the question, “what the fuck when so wrong?”

Leadership.

It goes to that always.

A majority of American People will follow anyone with a impressive title and parrot their ideas. And the greater the divide between the top and bottom, and the more insistent the top guy is about what the bottom guy should be doing, the more likely confusion, resentment, ignorance and apathy will transpire down.

And it has.

In my 36 years, with about 30 years of awareness of how people are, when they suffer and who the blame for that is, I can point to my awakening to when America flushed its future: Reagan.

Lauded for his speeches, charisma and “policy” stances, but never examined too closely for what he did to set things in motion, Reagan gave conservatives their in to power. They claimed it, and ran with it.

As a result, Reagan wrecked or starting the process of wrecking FDR programs, talked about reduction of government interference in our lives, while maintaining or increasing significantly government (and military spending, thus increasing the National Debt), and ignored responsibility to real people, while talking to “a class of people” to continue voting strongly against the upheaval of the 1960’s.

Civil Rights. African Americans. Liberals. Non-white. Non-religious.

Nevermind he really didn’t care for those people either. (That class of people.)

But it worked.

Our American history may be defined by how this episode came to be known as,“The Downfall of the American Empire.”

It will be written by our decendents of the world with imperfect information – our maybe perfect, how can I really know what 200-500 years future hence will bring? – but written with an eye to how quickly the mighty fell over a period of years.

But what may be possible is to rewrite that history over the next 30 years. Fix those economic, social justice and idealogical problems. And come to terms with ourselves.

Otherwise, I think I’ll dislike the next 30 winters of discontent.

Ideas drawn from Vanity Fair article by  Joseph E. Stiglitz, a Nobel Prize–winning economist, is a professor at Columbia University.

Patience, Grasshopper: The Fukudome Effect on the Chicago Cubs

As the Cubs swept the Arizona Diamondbacks (ah, sweet revenge), and took care of the Padres last night (12-3), one can begin to see the ‘Fukudome effect’ on the philosophy at the plate of the Cubs. This 2008 team has made a healthy living on the bases on ball (2nd in MLB at 183 in 38 games), taking many more pitches per at bat than they ever did in Dusty Baker era.

 

Cubs Offense	Runs	Rk	OBP	Rk	SLG	Rk
2002	706	22	0.321	22	0.413	17
2003	724	20	0.323	23	0.416	19
2004	789	16	0.328	23	0.458	3
2005	703	20	0.324	20	0.440	6
2006	716	28	0.319	29	0.422	22
2007	752	18	0.333	17	0.422	15
2008 (38 G)	223	1	0.375	1	0.441	4
Projected Runs	951
2007 Yankees	968
2004 Red Sox	949
2003 Red Sox*	961
* Set Record for highest slugging average in baseball history

 

As the Cubs lead the NL in on-base percentage (.375) and runs scored (223), cause-effect mind you, they are suddenly piling up the wins (23). Their plate appearances are becoming a sight for joyful eyes, seeing pitchers work and work, and well, throw bad pitches that become either hits or all-access passes to the base-paths.

Opposing teams are being fukudomed to death by the pitch counts. Nearly every game, I see Mr. Fukudome run a count to 3-2, foul off 2 or 3 balls, and either walk or make decent contact. (He’s 3rd in the NL in pitches per at-bat -4.33) He’s not hitting ropes around the park, but Fukudome is leading the Cubs away from the hack-if-you’re-lonely-and-want-to-sit-down at-bats the 2002-2007 Cubbies took. (Teammates Reed Johnson, Derrek Lee, Aramis Ramirez, Mark DeRosa and Geovany Soto are all in the top 40 in this particular statistic.)

The mantra then was to hit a dinger with no one on base. It looked cool – if you liked the long ball, and that’s all – but it didn’t garner much in the way of wins. No patience, grasshopper. No taking the pebble, or the baseball, from the master’s hand. No walking on rice paper to achieve balance of purpose, or achieving spiritual unity with the 95-MPH fastball. No Kung Fu that worked.

Aside from the Fukudome effect, the catching of Don Giovanni Soto, with his slugging and backstop play, has been a well received gift after the struggles to get both hitting and fielding skills at the catcher’s spot. The Cubs have two rookies doing well from the start. (Fukudome is not really a rook; Kosuke spent more time in Japanese baseball than Barack Obama has in major U.S. politics. But both have had enormous effects on their respective professions.)

Now, the patience of the hitting has to translate to the operation of the pitching staff, aside from Big Z, The Dump Truck and Carlos ‘Captain’ Marmol. As I see it, nearly a quarter done with the season, the Cubs are 1 starter short of being a team to be reckoned with in October. They can survive on Carlos Zambrano’s days, maybe get by with Dempster, but Lilly has to sharpen or they need to acquire a solid #2 or be destined to bow out. (I am speculating on the World Series.)

No trade prospects – at least ones I would mention publicly, and know all the particulars – come to mind, yet. The fact that most divisions are still very competitive, and not runaways, means that will have to check back in late June, and see if the optimism expressed is an exclusive right of the Chicago Cubs, and not duly prohibited for rebroadcast, redistribution or dissemination to the rabid faithful. By then, some team of low ability, might be looking to deal a starter of worth. Maybe not.

Patience, grasshopper.

Patience, Cub fans. (100 years!!!)