Simple Plan for Fixing the Economy

There's no doubt in my mind that the following plan, passed by Congress and signed by the President (either one, but the sooner the better) would not only fix what's ailing the U.S., but the world economy as well. Here it is:

1) Cut corporate tax rate to 0%.
2) Cut capital gains tax rate to 0%

Have these measures expire in, say, 4 years.

Instant boom.

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Also from James Taranto's column today:

You want credentials? Joseph Pflanz has credentials. Ideas, too. Innovative, cutting-edge ideas. About the only thing Joseph Pflanz doesn't have is a job. Thank goodness for the rest of us, because that means Joseph Pflanz has plenty of time on his hands to write letters to the editor. And the editors of the Tallahassee (Fla.) Democrat have seen fit to publish a letter of his, putting forward an innovative, cutting-edge idea on how to get someone like Joseph Pflanz a job:

Unemployment is about to go through the roof, just when we need people to be productive and increase consumer spending to aid the economy.
My suggestion is for all employers to put a moratorium on hiring already employed people. Only hire the unemployed.
Rather than moving a "hole" around by just making another opening to be filled, and never getting to full staff, get the position filled and help the economy.
If you are mentoring or grooming an individual, then go ahead and promote that person first, and then post that person's old position as open. If you have a job, give the rest of us a break, and let us compete for openings.
I have three college degrees, 25 years of experience, and I cannot get a job in Tallahassee.

Betcha none of those degrees are in economics.

(From BNF: Betcha all three of those degrees say "FSU" on them too!)

...and Finally

The inestimable James Taranto has this piece from his "Best of the Web Today" column:
Don't Know? Vote O.

A new poll from Zogby International shows Obama voters to be shockingly ignorant of political trivia involving their own candidate:

83% failed to correctly answer that Obama had won his first election by getting all of his opponents removed from the ballot, and 88% did not correctly associate Obama with his statement that his energy policies would likely bankrupt the coal industry. Most (56%) were also not able to correctly answer that Obama started his political career at the home of two former members of the Weather Underground.
Nearly three quarters (72%) of Obama voters did not correctly identify Biden as the candidate who had to quit a previous campaign for President because he was found to have plagiarized a speech, and nearly half (47%) did not know that Biden was the one who predicted Obama would be tested by a generated international crisis during his first six months as President. . . .
57% of Obama voters were unable to correctly answer that Democrats controlled both the House and the Senate.
Wait, it gets worse. The test was multiple choice!

Most Obama voters did recognize John McCain and Sarah Palin, respectively, as the guy who didn't know how many houses he owned and the lady with the pricey clothes.

And it's not as if these questions were really hard, like asking Obama's middle name. Even we don't know the answer to that one.

...And Another Thing

(I think I'm doing this backwards for those of you reading here...)

In this article "Ignore the Stock Market Until February", Andy Kessler lays out several very strong reasons for the market's recent (and future?) gyrations. Hint: Few of them involve fundamentals - most are the result of players being forced to sell by various circumstances.

My own emphasis is this: don't sell if you're not forced to. This is the absolute worst time to "get out" if you won't need the money for years and years.

Great Articles from the WSJ This Morning

First was this editorial by Daniel Henninger entitled "Mad Max and the Meltdown". The conclusions are interesting, and debatable, but it's nice to see them in print and think about the proper role of government in the financial markets. (In short, regulation from outside isn't enough - the actors need to have moral compasses themselves for the system to work properly).

My favorite quote was tangential to the main point, but chilling nonetheless:

"The answer echoing through the marble hallways of Congress and Europe's ministries is: regulation failed. In short, throw plaster at cracked walls. Trusting the public sector to protect us from financial catastrophe is a bad idea. When the Social Security and Medicare meltdowns arrive, as precisely foretold by their trustees, will we ask again: What were they thinking?"

SEC Championship Game

From Tony Barnhardt's "Mr. College Football" weblog at ajc.com:

3. This is the toughest SEC championship game ticket ever: During the weekend in Gainesville, Fla., I took an informal survey of people I knew would be getting calls for tickets for the SEC championship game. They all said the same thing. This will be the toughest ticket since the event started in 1992. Never has there been a conference championship game where the winner was guaranteed a spot in the BCS title game. If Alabama beats Auburn and Florida wins its last two against The Citadel and Florida State that is exactly what will happen. Except for the Super Bowl and the opening ceremonies to the 1996 Olympics, this could be the toughest ticket in the history of Atlanta sports.

Wow, am I glad I took the leap and bought last week. At the time I thought the tickets were expensive (they weren't as costly as the National Championship tickets in 2006, but they weren't chump change either).

I think the Alabama fans will be rolling into Atlanta starting that Tuesday. (Having seen this before, my advice to all of us who live here is this: stay away from Phipps!!!)

The Economy

From Rich Karlgaard of Forbes Magazine:

I am reminded of something Steve Jobs said during Apple’s grim days following his return to the helm in 1997: "We will have to innovate our way out of this."

Fascinating Map - Election vs. Cotton Production

In this post, the blog "Strange Maps" overlays the 2008 election results on a map showing Cotton production in 1860. The conclusions make sense, but are quite interesting (especially in light of my earlier post about genealogy - it's amazing how, despite our mobility as a culture, so many of us stay near where we started...for generations and generations).

A Great Application

My friend Joe showed me Tadalist last week on his iPhone. I put together a quick "Things to do Around the House" list and shared it with my wife yesterday and she *loves* it. (Upon reflection, this may not have been such a great idea).

You can view these lists on the web or on your phone, share them with whomever you like, and anyone can update them. It's free, of course.

Massive Action

Sitting here looking at a new week ahead of me, this type of advice is just what I need.

How to Save the Economy

Let's everyone have a huuuuuge Christmas!

Only SUV's Can Save Us

From Instapundit.com:

CHALK ONE UP FOR THE FALLEN ANGELS SCENARIO: Earth would be heading to a freeze without CO2 emissions. "Scheduled shifts in Earth's orbit should plunge the planet into an enduring Ice Age thousands of years from now but the event will probably be averted because of man-made greenhouse gases, scientists said Wednesday."

Margaret Thatcher...and Barack Obama?

One of the books I'm reading now is "There Is No Alternative: Why Margaret Thatcher Matters" by Claire Berlinski.  It's a fascinating read for those who want to know more about Dame Thatcher and what she faced upon taking over the government of the UK in 1979.  To give you some perspective as to what that country looked like in 1979, here are a couple of quotes from the book:

  "...you couldn't send things by mail very easily"

  "...all the electricity went off in the hospital.  In the middle of giving birth...That kind of thing happened all the time.  Every day."  

  "...it took six months to get a telephone line..."

  "The top marginal tax rate at that time was 98%."

One major reason that the UK was so dysfunctional was the grip trade unions had on the economy.  In addition, much of the economy was owned by the government.  (At the beginning of her administration, 68% of British workers were under a collective bargaining agreement.  Now, it's 34%.)

Thatcher's policies were not initially successful.  In fact, much of Great Britain went up in flames (literally) during the first 2 years of her Prime Ministership.  But she stayed the course.  For an overview of what she did, this quote explains it very well:

"What we mean, in simpler terms, is this:  Thatcher took a sledgehammer to a dysfunctional semi-command economy, stepped back, and waited for the rubble to reassemble itself - sans government direction - in a more efficient configuration.  It took many years for the dust to settle, and the collateral damage was considerable.  But in the end, the restructured economy was, as she had predicted it would be, leaner and meaner."

British per capita income was 46% below that of West Germany and 41% below France's in 1979.  Now it is 6% higher than that of unified Germany, and 8% higher than that of France.  At the time the book was published Britain is Europe's fastest-growing economy, and the fourth-largest in the world.  

Even her successors in Labour governments have known better than to disrupt her policies of monetary control and supply-side reforms of the labor market.   A famous quote from Gordon Brown goes "...we're all Thatcherites now".

For me, these facts are fascinating enough.  But what really interests me is how one woman, with courage of her convictions, stared down a powerful, well-entrenched established order (including her own party), and kept the courage of those convictions when it looked like her policies had absolutely devastated the British economy.  Riots were widespread, unemployment was rampant and growing, and British manufacturing was imploding.  But she kept on.  

(An aside:  a group of 364 prominent economists signed an open letter to her in 1981 protesting her economic policies.  Almost immediately afterwards her reforms took hold and the long upward path began for the UK economy.  This led a later Finance minister to state in public that "...an economist is someone who knows 364 ways to make love to a woman, but doesn't happen to know any")

It's impossible to overstate the contributions of one visionary politician, in the right place and at the right time, to make her country, and the world, a better place.  

What I wonder is this:  is our next President going to be Margaret Thatcher (and take sledgehammers to the worst parts of our government and economy), or is he going to create a platform for one of his successors to do that?  I know which way I'd bet, but I'm hoping that he'll surprise us all.

Easy, Free, Fun Genealogy Tool

Genealogy is another of my interests.  I liken it to a giant jigsaw puzzle in many ways; it's stimulating but not terribly intellectually demanding, it's fun to see the "picture" develop, and you can stop and start any time without losing the "thread".  (And there's no way the kids can sneak down into that room in the basement and mess the whole thing up).  

Anyway, this tool is a really interesting way for those of us with certain origins (mainly Western European, Indian and Japanese) to get a high-level overview of where we came from.  Simply plug in a last name, and the tool will search public directories for people with that same last name all over the world.   Zoom in down to county level, and you can see where large concentrations of people with that last name are currently living.  (Which usually corresponds to where that name originated, or where it took root here in the U.S.)

I tested the last names of all of my grandparents, and learned something new (or confirmed something I already knew) every time.  First, my mom's father's family (with a fairly common last name) is still most concentrated in the South Carolina County where they first appeared in the late 1700s.   The largest concentration of people with my last name is still in the county in Ireland where legend says we originated as a branch of the Ui Neill family.   

I also ran my friend Roy's last name, and saw the largest concentration of his family in Australia - Tasmania, to be specific.  Now, what does that tell me about Roy?  Well...isn't Tasmania where they sent British convicts a long time ago?  Now Roy's an upstanding guy, with no convictions on his record (Arrests?  Sure.  But never convicted).  Based on the evidence that he comes from a family with an inclination towards criminality, I may want to watch him around my wallet more closely in the future.  (See, this thing's paying for itself already.)

Anyway; try this out and see if you don't find something interesting.

http://www.publicprofiler.org/worldnames/Main.aspx

"Hate Speech" from John Thain?

NEW YORK (Reuters) - Merrill Lynch & Co (MER.N: Quote, Profile, Research, Stock Buzz) Chief Executive John Thain said the global economy is in a deep slowdown and will not recover quickly, and the environment recalls 1929, the advent of the Great Depression.

Let's imagine for a moment that John Thain had used the same platform to say something else.  Something like "we aren't going to be hiring any more __________ (insert a disadvantaged minority) at Merrill.  They're terrible workers, and we find that ___________ (insert advantaged minority here) tend to do much better work for us."  

Can you imagine the fallout?  It's certainly Mr. Thain's constitutional right to utter a statement like that, but in his position as the Chairman of one of the largest Wall Street brokerage firms, he'd certainly be cleaning out his office the day after such a statement left his lips.  And rightly so.

But what true impact would such a statement have on the hiring prospects for _________?  Not much, really.  Most of us would dismiss his statement as the ravings of an unhinged business executive, and not a single __________ would go unhired.  In short, John would lose his job and would probably never work again, but nothing much else would happen of real significance.  

A Quick Detour - Market Economies

Market economies, for all their power, operate entirely on human emotion.  When we expect things to be better in the future, we make investments intended to capture a return.  When we expect them to be worse, we try to pull our capital out of the market and put it somewhere "safe".  

When a panic grips financial markets, it's usually the result of one thing; money simply stops changing hands.  Our economy is built on money flowing from one hand to another.  When panics happen, they're inevitably the result of most players in the economy simultaneously thinking that they can CUT CASH OUTFLOW and PRESERVE THEIR CAPITAL.  Almost everybody and every business I know, myself included, is following that exact course right now - trying to save money to protect against future calamity.   

But let's examine that "logic" in more detail.  As most of us remember, almost every asset that we can buy (gold being the most notable exception) is worth a sum of its future cash flows.  An investment in UPS stock only has value to the extent that people keep shipping packages.  If the world completely stops shipping packages (unlikely, but stay with me here), the value of that investment is practically zero.  

The operative word in the above definition is, of course, "flows".  Now let's re-examine the course most of us have embarked upon over the past few months; on one hand, most of us are stopping as many cash flows as possible.  On the other, we're trying to preserve the value of our earning assets.  

See the disconnect?  In a market economy, one cannot expect that all players will do both simultaneously.  Without people spending money, the value of all of their capital must inevitably decline.  As an example; as a business manager, I start to worry about the future and cancel some capital spending to preserve my cash.  But at the same time I've got customers who have their customers doing the same thing.  So they stop buying as much.  All of a sudden, my decision to cancel those projects seems prudent.  But things are getting worse so I cut more.  And my customers, under the same pressure, do the same.  

Soon, we're all out of business.  Was this caused by anything "fundamental"?  Not at all.  It was caused by everyone doing the same thing in an irrational attempt to have cash available for investment when things "turn around".  

How's that again?  Waiting for things to "turn around" means not spending until everyone else decides to start spending again.  In other words, every player in our economy is waiting to be the last one to start spending again.  At the same time, everyone's capacity for spending gets smaller and smaller as the economy deteriorates.  It's a classic vicious cycle, and it's an inevitable feature of a market economy.

Back to "Hate Speech"

Mr. Thain's gloomy assessment of the economy, especially from someone in his lofty position, takes on the form of a self-fulfilling prophecy.  If all the rest of the players in the economy think a guy as smart and well-positioned as John Thain thinks things are going to get worse....they will inevitably get worse.  In short, Mr. Thain's words are going to cost all of us real money, and will delay the inevitable turnaround by a measurable amount.  People are going to lose their jobs, including a whole bunch of those poor __________ folks, as a result of that statement.  

But will Mr. Thain be clearing out his desk later today as a result of that article?  Not a chance.  He's simply being "prudent".  

Which form of "hate speech" is more damaging?  Why do we protest the one and let the other pass unchallenged?  

How We Get Out of This

Confidence.  Greed.  We need people to think "things are so cheap now that I HAVE to buy".  They have to see a glimmer of hope on the horizon.  

It's the job of people well-placed in this economy to provide that hope.  Or, at the very least, to avoid killing it.  Mr. Thain should know better, and if I were Ken Lewis (his boss), I'd have that discussion with him as early as possible this morning.  

(I might even ask him to clear out his desk.) 

From Michael Lewis, "The End of Wall Street"

Michael Lewis wrote "Liars Poker" and "Moneyball".  Here, he reviews what's become of Wall Street and (mainly) how it got there.   

An unwritten portion of this story needs to be considered, though.   The appetite for these securities was created by Congress, who mandated that banks make loans that they ordinarily would not have based on credit scores and other criteria.  

Part of my business over the past dozen years, especially in the late 90's, was helping banks with major compliance projects.  I remember very well the anxiety of bank officers who were about to have their CRA (Community Reinvestment Act) compliance reviewed by government regulators during that time. The regulators made it very clear that if a bank's CRA house wasn't in order they wouldn't be allowed to acquire any other financial institutions - in effect a death sentence during that period of time when banks were gobbling each other up.   So this isn't entirely a story about Wall Street...but it's great reading anyhow.

Baconnaise - Two Kinds of Good

This is immediately going to the top of my Christmas wish list.  (From the looks of it, I'd even bet it was low in carbohydrates.  Genius!) 

There's Absolutely No Political Meaning Behind this Post At All

It's all about this. 

Yeats for Monday

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

— William Butler Yeats

One more from the Weekend

Pictures from the Weekend

Some Scathing Thoughts on Conservatism

"We Blew It"; an election postmortem from PJ O'Rourke.  

Tournament Golf

I participated in another golf tournament yesterday.  This one consisted of a large Ryder Cup-style competition between the "Northern" and "Southern" members of the club.  (The quotations are there because the categories were pretty amorphous; there are more Southerners at the club because of its location in Georgia.  "Northerners" included the English and German guys, etc.)  We had a team competition on Saturday and an individual match on Sunday.  

I played pretty badly on Saturday, as my transition to a "better" swing sometimes left me exactly halfway between the old and the new golf swings.  This, as anyone who has tried to play the game seriously will understand, is death.   Especially in competition.  

My teammate and I struggled valiantly but lost all three points to the Northerners on Saturday (we took them to the last hole, anyway).  I then proceeded to lose all three points to my Northern opponent on Sunday in singles (while again reaching the last hole).  Considering my 0-6 lifetime points record, I will never again mock, from my couch, any Ryder Cup golfer with a bad record in competition.  This stuff is hard.

While I can honestly say I didn't feel much more pressure than I do in an ordinary round of golf before I teed off, my frustration level certainly spiked higher during the round.  Maybe it's the feeling that "this matters to other people, not just yourself".  When I can't execute the way I want to in an ordinary round I can fall back on the thought that "this will help my handicap" or, "it's just one hole, and 7 is a high as you can record anyway".  But when you're in a competition these consoling thoughts aren't available to you because every hole matters.  I found out that when you get down a few holes, it almost feels like suffocating - especially when your opponent isn't making any mistakes.  

The South lost the team competition as well, overwhelmingly as it turned out, after a victory the year before.  My only consolations were that my dismal showing did not represent the margin of victory for the other team, and that I met some really nice guys during the tournament.  It's hard getting to know a membership of a club so far from your home, and these tournaments are a great way to interact with other members in a way that you wouldn't get to ordinarily.  

You're Stretching Wrong Before Workouts [Exercise]

 

via Lifehacker by Adam Pash on 11/7/08

We all know that you're supposed to get in a good, long stretch before a workout, right? Unfortunately most of our commonly held beliefs regarding stretching are dead wrong, according to the New York Times—at least in the way you may be doing it.

Researchers believe that some of the more entrenched elements of many athletes' warm-up regimens are not only a waste of time but actually bad for you. The old presumption that holding a stretch for 20 to 30 seconds—known as static stretching—primes muscles for a workout is dead wrong. It actually weakens them.

But with static stretching out the door, how do you warm up your muscles before a workout without damaging them?

According to the article:

THE RIGHT WARM-UP should do two things: loosen muscles and tendons to increase the range of motion of various joints, and literally warm up the body.

To do this, they suggest starting with a light warm-up jog to raise your body's temperature. Make sure to keep it light, and to do it immediately before you plan on a more intense workout.

After you've warmed up, the article suggests ditching your static stretches for more dynamic stretches, like lunges, leg kicks, or the "Spider-Man"—a drill in which you "drop onto all fours and crawl the width of the court, as if you were climbing a wall." Whether you're an occasional exerciser or a fitness freak, check the article for more detailed options on how to warm up in a healthy manner.

Stretching: The Truth [NYT]

Video Hilarity

Wow, this is funny.  (An episode of "Long Distance Relationship" from YouTube.  Slightly risque - consider it PG)

One of My Favorite Pictures

2008-06-06 17-03-05_0145
Originally uploaded by TomATL

Our daughter rehearsing for a dance recital. She hates this one, but I think it's awesome.  When she gets her own blog (and it won't be long now, I assure you), she can post goofy pictures of me there.  

Good Coaches Can Teach Us All About Management

I think sports coaches have one of the toughest jobs in the world.  Their sucesses and failures are discussed openly by a great deal of (generally) uninformed fans.  (How'd you like to be the salesperson who loses a big RFP to a competing firm, then hears yokels talking about what you did to screw it up on the radio on the way home?  Ugh).

Anyway, the ones who do it consistently well can teach us all a few things.  Here's a good article about Jeff Fisher's approach.  

Checklists are Sexy!

As an aspiring pilot, I have the necessity of "consulting the checklist" drummed into my head at every turn.  Checklists eliminate the weakest link from a complex system - that of a human brain, overwhelmed with sensation, trying to remember a number of important things.  They're effective and necessary, and save lives every day in the air.  

I believe that they have a lot of uses outside of flying that we're not exploiting right now.  Like in critical business functions, or like this.  

Whether or Not Obama Governs From the Center, Here's the Problem...

Powerful Congressional Committee Chairmen

(From the Wall Street Journal)

Spain

Monica and I just returned from a weeklong trip to Spain, where we celebrated our 10th wedding anniversary.  I was absolutely blown away - Spain is my new favorite destination.

We were in Madrid for 2 nights, and Valencia for 5 nights.   Here's what we liked most:

1)  The food:  Tapas are a fantastic idea.  We've experienced "American Tapas", but it's not the same as in Spain.  Most tapas seem to be consumed in bars where you may see 20 plates of different items.  You simply pick up the ones you like, eat them, and save the toothpicks.  When you leave, they charge you for your drinks and the number of toothpicks on your plate.  You get some great stuff, and some weird stuff, but you get to eat until you're full, enjoy the atmosphere, and go when you're ready.  

Spanish ham is also a new favorite of ours, especially the acorn-fed variety.  And paella.  But don't order calimari in Spain unless you have  strong stomach.  They tend to fry up the little squids whole, so their little fried-up eyeballs stare back at you when you're trying to eat them.  I'm not a terribly squeamish eater, but I do prefer the way we do it here.

The wine was awesome too.  The Vino Tinto from the Valencia area was generally very dense and robust.  I've been scouring the local wine stores for Valencian wine on and off since we got back, but without any luck.  (There's got to be some around here, I'll just keep looking. ) 

2)  The lifestyle:  There really is a siesta.  I'm not sure anyone sleeps during this period of time - I refer to it as "Grown Up Recess" (or "recesta"), but it's a nice break in the middle of the day where everyone can go see their families and/or take a long lunch.

The typical Spanish workday seems to be:  start at 7-8 with a coffee and a pastry.   Have a snack at 11am.  Have a BIG lunch at 2.  Have a snack and a beer or wine at 6-7.  Have dinner at 10pm.  Go to bed at midnight.   Even the kids seem to stay up late.  

Restaurants don't even open for dinner until 9pm, and everything except coffee shops closes between 2 and 4 (sort of randomly as well, there's no precision to that timeframe that I could see).  And I can't tell you how jet-lag-friendly it was to be eating dinner at 11pm local time (6pm Eastern Standard Time).  It made the transition much easier.

3)  The Scenery:  Madrid is a gorgeous city, with huge parks, tree-lined boulevards and history around every corner.  Valencia is a little newer for the most part, but there was still oodles of history there and a lot to see.   Both places are clean and seemed very safe.  In our typical fashion we walked at least five miles a day, much of it without a definite plan, and never found ourselves in a place where we thought "uh-oh, this is pretty scary".  (I'm not sure you can say that about any major US cities.)

4)  The Tourist Scene (or lack thereof):  There were certainly tourists in both places, but they weren't an overwhelming proportion of the people we'd see every day.  There also didn't seem to be any tourist-facing infrastructure (like tour buses, gimmicky restaurants, amusement facilities, etc.  Orlando, for example, is almost entirely tourist-facing infrastructure).   We like that.  It was nice to be "part of" another culture rather than transporting ours across the ocean with us.  

My high-school Spanish got a real workout, which is a good thing.

5)  The People:  Nice folks, helpful but not obsequious.  Nor were they snobby, or shy/reserved like you encounter in other European cities.  They generally seemed happy and accomodating, if a bit language-challenged.  ;-)

6)  Flamenco:  We attended a couple of impromptu Flamenco performances, in small smokey bars, and enjoyed them thoroughly.  The talent level was amazing, and the emotions of the style really came through in the performances (even though we couldn't understand a word).  

Drawbacks?  None that I can think of.  We'll definitely go back.

Introduction

Like many of you who do this, I've heard "you should have a BLOG!" so often that I finally gave in and started one.  I suppose that means I'm opinionated and somewhat articulate, but it remains to be seen whether that will translate to the pages you see before you.

I hope to update this fairly frequently with interesting links, commentary on events, and ruminations.  My platform is fairly simple; I'm a conservative and have been involved with small, fast-growing businesses for most of the last 15 years of my career.  My specific fields of endeavor are sales, finance and accounting, so many of my comments will be oriented towards those subjects.  

I'm also excited about politics, sports (football and golf), and reading, so there are sure to be comments about those subjects on these pages as well.

I'd enjoy your feedback about any subject you care to talk about, and thank you for visiting.