I like it.  The home construction industry will like it.  Home Depot and Lowes (mentioned in the speech) are really going to like it.  Local building supply retailers are going to like it.  Most importantly the American home owner is going to like it–a lot I suspect.

Here are some of the items he spoke about:

Homeowners are going to be given an incentive to make their most important possession (usually) more energy efficient with a ‘rebate’ of up to $3,000.  The rebate will be calculated by giving back 50% of the cost of applicable ‘raw materials’ needed to accomplish the goal.  The program is tilted towards things like windows, doors, insulation, roofing and such.

All of that is good enough, but Obama has shown his true potential here with the  way he is going to handle the details.  And, in this case the approach is unique, vary creative and a major step in simplifying the process.

Let me say here that I used the old program last year to get a $1300 tax credit for buying new highly insulated windows . . . but I had to search carefully for the right ones, get all kinds of details on efficiency, keep records of the entire project, calculate only the actual window costs and then apply those to my taxes to get the credit some 8 months after the project started.  Yechh!

But this new program is a giant leap forward in government thinking and execution.  It helps the consumer, it helps the construction industry, small business, local contractors (all hurting in this recession) and big box and local home suppliers alike.

The rebate applies to things like roofing, insulation, windows and doors–all things that are usually made in the good ‘ol USA — oh yeah, baby.  Those things are all going to be installed by local contractors and sold by local stores.  The program is actually going to create jobs, save consumers $ over the long term and short term, and stimulate the economy (get us consumers to spend).

But, the greatest and most unique part of the program (and don’t ask me how the government is going to do this ) is that you and I, if we chose to improve our home’s efficiency will get the ‘rebate’ right at the cash register.  No waiting.

Now, that is thinking Mr. President.   You’ve made this program appealing and easy.  That doesn’t sound like something government would typically create.

So I congratulate you President Obama.  You are finally showing that you have the capacity to live up to your ‘hype’ and push change that is beneficial all the way around.  I just wish that this kind of focus had been forthcoming earlier in the recession.  Think of what the $758 billion stimulus could have accomplished if this kind of program had been used and multiplied by 10 fold.

Fantastic.  Private sector type thinking goes a long way to making me, and a few hundred million others, believe we just might be able to improve our trust in government and stimulate our confidence . . . 70% of the U.S. economy just got a little more positive in their outlook.

Great job Mr. President.  Hoorah!

Too many politicians and far too many economists have been wearing monetary policy blinders for the last year or so.  They do seem to be working.  but that isn’t enough today.

Sure interest rates are too low, sure there is no more expansionism the FED can do right now, and sure the ‘quants’ have been spending far too much time at their computers modeling what future rate policy will do for/against economic growth.

We all pretty much get that.

But, what about the current White House administration whose present worries seem  limited to the problem with employment?  I think they are leaning too much on the FED’s liberal current views of expansion.  They need to act unilaterally.

The problem is that with so much apathy in the White House (apathy to real action in their own front yard that is) no one is paying any attention to the mood of small businesses and hopeful entrepreneurs.

Why?  Doesn’t take a bunch of polls to tell us that most Americans in those two categories are cautious . . .  and that they are cautious due to lack of direction in terms of fiscal policy.

Anyone with a payroll knows that employment and business taxes are too big of a burden right now.

Uncertainty regarding the administration’s views on the subject are restricting growth (particularly in all-important employment).

What to do?

Announce soon, as in this week Mr. President, that the former administration’s tax cuts are going to be allowed new life rather than an early death.  Don’t let those tax cuts die President Obama.

Too many of the potential ‘hirers’ in the economy are waiting–even though they see obvious signs of economic growth–waiting to hire, waiting to expand, waiting to add to inventories, waiting to take a flyer an new products focused at the consumer.

You, Mr. President can change all that.

Continuing (and maybe adding to) the Bush tax cuts would very likely calm the nerves of businesspersons (nearly half of them are women afterall) and consumer (more than half) alike.

Take a flyer on American intelligence and ingenuity President Obama.  I am pretty sure that if you took such action, we would see a surge in the economy and in stock markets within a few weeks (at most).

I’m ready to pile back on and a bunch of others will be too–if you calm our fears of imminent tax hikes.

thanks to flickr’s wonderlane for the photo

This one I read.  I am not going to rate it but I will say that the headline caught me and the story was one I would not attribute to an economist.

Let me set the record straight.

The dollar is weak and has been for years.  In fact though, it is not even as low (particularly against the Euro) as it was a year ago.  Heck, all you need to do is travel outside of the Americas to know that this is true.  I paid the equivalent of $8 for a Whopper Combo in Turkey not too long ago.  Before that there was the $5 one scoop (tiny at that) ice cream in Rome (they call it Gillato so they can charge more — who says they Europeans haven’t learned American marketing techniques?).

But that was over a year ago.  Long before the FED and the Goverment started printing money and whaling on our debt structure.

Of course you would expect the dollar to be weak and continue so when the government is creating money out of whole cloth ( ad nihilo I think the philosophers call it . . . out of nothing).

The sad fact is that this doesn’t seem even close to ending.  Money will be pouring out of the proverbial presses for months, if  not years to come. The government thinks it has to do it to spur the economyl

If you have forgotten, or never paid attention to your Econ classes let me tell you how this works.

Right not there is one main way.

First, the FED creates money by buying bonds from the Treasury (in March they announced plans to buy at least $300 billion over the next year or so).  The government needs money to spend on stimulus packages (two at least and more likely to come) so they sell a few billion $$ of short term or long term bonds to the FED who pays for them with $$ they don’t have.  It is really all an electronic transaction but it works.  Say, $30 billion last month in 6 month notes purchased by the FED.

What does the government do?  They get that $30 billion electronic transfer and then spend it by sending it to the states or individuals in another transfer.  At the end of this loop the electronic transfer goes into someone’s (like you or me) account at a bank and we draw on it (usually with electronic spending with credit cards).

Bingo $30 billion into the economy.  But wait, there is more, if you spend it now you also get, this one time only — or actually everytime it happens . . . yes you get PUBLIC DEBT!  The government now owes $30 billion more to someone (often foreign government buy the debt . . . like China, which is a whole nother story).

I think you probably get the idea now.

The problem is that now our PUBLIC DEBT is becoming an increasing portion of total GDP.   Public debt was only 37% of GDP only two years ago and this year it is going to be north of 55%.  Sure interest rates are low and so the government doesn’t have to spend that much to pay the interest  . . . but what happens when the economy really turns and the FED has to raise rates?  Crippling debt coupled with crippling debt service (interest) bring . . . a bust.  But there is a way out.

President Obama is starting to recognize this and you should too.

The debt has to be paid and there are limited ways for the government to raise $$ . . . think taxes (by any name . . . excise fees on tires from China or increases in individual tax rates).  Tax receipts were down nearly 17% for the year ended Sep. 30 due to the economy (people stop spending) and corporate receipts were down nearly 55% (companies stop making profits . . . and how!).

Weak Dollar?  Jeez Louise!  Of course it is weak and it is going to get weaker.

What you need to know is that this can’t let this happen without planning ahead.

Saving money under the mattress is throwing it away as $$ weaken and are worth less (Germany in the 1920’s, Argentina in the 1980’s and Zimbabwe as you read.

So, like I pointed out last week, one great answer is to spend to stimulate the economy (buy things or invest).  That is what is beginning to happen but not nearly enough!

Markets are up, retail figures are not as disappointing as expected and consumer confidence is artificially low right now. A great time to invest or spend!

Spending turns that $30 billion mentioned above into $60 or $90 billion in the marketplace by something called the ‘multiplier’ (something for another day).  This helps the economy which puts tax $$ in the governments coffers and lets them pay of debt.  It also helps businesses put $$ to the bottom line and that means jobs.

Bottom line.  Weak dollar, shmaller . . .  the answer is to spend (wisely) or perish (not really quite that bad but you get the idea).

Start Christmas spending now.  Beat the rush and support our spendthrifty government!

Oh I can’t wait for 2010!

Thanks to flickr’s chego101 for the photo

Apparently I am one of only a few that feels this way.

The preliminary consumer confidence number is out — 66 — lower than 71 expected by the average economist (a frightening prospect since no economist I have ever met is average.)  This 66 is lower than the 70.6 for October.  A decline in consumer confidence is certainly not welcome at this point.

On top of that our trade deficit is widening.  August showed a $30+ billion deficit.  September (the number released today) revealed a deficit of $36+ billion.

Taken together the sum is a worsening economy.  At least on the surface.

Consumers are less willing to shop (or at least buy).  Moreover when they do buy they are buying the cheaper stuff that is imported from countries with steeply lower labor costs . . . mainly China.

But not to fear!

Lately I have ridden a black horse to every blog written (a magnificent steed fed by the faux hay of unemployment).

Today, however, I arrived on a white horse that is thin and appears to be starving . . . but white none-the-less.

Why?

Well, the number are not good true.  I have had to look far and wide to generate even a modicum of positive feelings.  Yet, I have found something to encourage me.

My wife, the perfect model for America’s stay at home mom, has changed from the window shopping mode of the past year to a genuine ‘let’s go shopping today and spend some money’  mode that makes me shiver and shake in my ‘boots.’

Years ago when we were fist married and money was scarce, our dates were mostly ’shopping’ dates.  Lots and lots of shopping but never any buying.  We would drive, or walk. around and pretend to be shopping for things we desired.  There were couches, TV’s, kitchen appliances and much more that were chosen but never bought.  It was fun since we actually believed we were preparing for a more prosperous future.

As you might imagine, that fake shopping mode has been the trend in our household for the last year or so.

Now it has changed.  Judy is ready to spend . . . convinced we can afford to be more generous this year.  It has worked too.  There are Christmas gifts filling a corner of our bedroom and today she wants to find some more.

Why the change?

Great bargains are out there and she wants a bunch of them.

Retailers are lowering prices(and here I mean really lowering) to attract customers and there are some fantastic deals out there!  With Black Friday (when retailers finally get their ‘net’ into the black) weeks away you would be shocked to know how many great prices are lining the aisles.  Customarily the best deals are after ‘Black Friday’ when stores are forced to get rid of everything left so that their inventories are low and they can start ordering next years favorite products.

Not this year.

The standard seems to be 50% off on most end-caps (the valuable display space at the end of each aisle).  We have seen 70% some places.  Even I am getting excited.  Maybe there is a good golf-cart cover out there at a really good price (hint, hint).

My wife is like a kid (or me) in a candy shop: too many good deals to pass up.  “Maybe we should get a little extra for each of the kids and grandkids” she says, “you know, because we were so stingy last year?”  And then the ‘holy grail’ for retailers: “We might even want to buy this for later, even though we don’t need it now.”  Holy Mackeral!

Fact is I agree.  We WILL spend more this year than last (lots more if Jude gets her way).

So the real good news?

I think as reality sinks in (the 2nd great depression failed to appear and is no longer a concern) others will start thinking the same.  The pain of last year is a still vivid memory but the future looks brighter.  Stock markets are way up.  Government spending is starting to have the intended affect and President Obama  is calling for a “jobs’ conference next month.  Unemployment might finally get the attention it deserves.

All of a sudden there is HOPE!

Bottom line?

Get out and spend, don’t go crazy but spend all the same.  Buy two Christmas presents instead of one for those you love and care about.  Buy something for yourself while you are at it.  Take advantage of the best prices on toys, electronics, stylish clothes and golf stuff (any of my family reading this can take notice . . . please).

We, the people, can take the final step to pull ourselves out of this recession.  Spend this Holiday season.  That alone will create jobs, increase confidence, and increase profits at our domestic companies so that they will start hiring again.

Can’t wait for 2010 — only two years away from the end of the world: spend some $$ and go see the blockbuster(?) movie ‘2012′ this weekend . . . and get candy as well as popcorn.

Remember spend what you can and do it wisely but for heavens sake lets do our part and start spending our way out of the recession!

This message is brought to you by all the mothers and grandmothers who can never buy enough ‘cool’ stuff for their kids and grandkids

thanks for the photo to flickrs  allybeag

Everyone wants to know where it will go from here with the great earnings reports of the last few weeks.

The real question is what do reports from companies that are subject to consumer whims tell us.  Not what the net income is but what gross revenues and future forecasts tell us.

The answer to these questions provide a good map of the market’s direction in the next month or so and those answers are not good.  Forecasts are cautions at best and worrisome to the bulls, though they talk around them.

On top of this, add the recent consumer confidence number put out by the University of Michigan (90 or above indicates growth).  At 47.7  (for early October) this was significantly lower than the 53.4 number in September, showing a real decline in confidence, and lower than economists had expected.

Wow!  Economists got this wrong?

And another part of the puzzle fits right in.  More bad news.

All of the above tells us that the retailers all important Christmas season is not going to turn out as positive as many hope.

Another huge negative.

Does this mean that the 10,100 plus that was reached on the DOW is not just a step up in the continuing steep incline?  Is it possible that the market has it wrong too?

The DOW is down 3-4% from its intraday high of a week ago and down 1% today as I write.

All of this bad news is undoubtedly driven by the high unemployment that folks are finally realizing is critical to our country’s health.

What with 15 million unemployed and another 10 million or more that have quit looking for non-existent jobs (or taken low paying part-time jobs), it is no wonder that confidence in our economy is beginning to decline once again.  Furthermore, this does not feel like just a ‘blip’ on the overly optimistic upward charge.

How could it be with nearly 20% or 1 in 5 of our citizens out of work or underemployed?

Barring real government action this feels like a substantial decline is in the works.

Are they (the government) on top of this?

Not really.

I read today that the government will release figures this week to show that the economy is out of depression and will show a GDP that is growing at a 2-3% rate for the third quarter.  The White House and Congress focus only on this positive and don’t seem to be forward looking.  A real danger.

GDP may be positive for the third quarter but if so it is probably the ‘blip’ I talked about earlier.  I don’t think GDP growth is sustainable unless something concrete is done about unemployment.

I wrote months ago that I expected the DOW to hit 10,000 by early summer and then take a big dip before continuing on to 13,000 by early 2010.  So I was a few months ahead of things.  This scenario is still possible but just doesn’t feel right.

Too much bad news is going to push the market down.

A 20% drop in the markets could well reflect the sentiment on the street and might be necessary to force Obama and his economic crew to focus primarily on unemployment rather than the other  ‘optional’ legislation they are pursuing now (you know, the kind of things that have no IMMEDIATE impact on this long and drawn out recession — the worst since WWII).

It would be a good thing if Obama and the Dems pick up on this but if not done right away it could prove too late to help.  Unless Unemployment is addressed very soon and directly we could see this recession turn into a “W’ with a double-dip back down to recession level GDP #’s and with the DOW dropping back to the 7000 range.  Worse, this might cause further contraction by consumers and  really lengthen the recession.

Not very good news but the prospects are real unless addressed tomorrow!

What are the chances with this President who seems so reluctant to make important decisions that might affect his popularity?  Or a Congress that is consumed with maintaining a democratic majority?

You figure that out (and once again think about term limits).

As for me?  I sure hope our ‘celebrity’ President figures this out right away and that he gets Harry Reid and Nancy Pelosi on the employment train!

You had better hope so too.

Thanks to flickr’s doctor who for the photo

How about soon??

My bold prediction (see blog of feb 13) was intended to document my belief that our markets (stock) had about bottomed out.??I said that the next week would begin a real rise in prices (stock).? But, and here I ask for some lenience — or at least some sympathy, the one week predicition was not as significant as the prediction about where markets would be in a few months or at the end of the year.

Our talking heads in Washington are all we need to stiffle any progress.? All they have to do is open their mouths (the image here should be Pandora’s box) and we all know what comes out.? Nothing good, most of the time.? Our cheer leaders have become ‘boo birds’ and that doesn’t help anything.?

Today we hear that comsumer confidence is at an alltime low.? In the 20’s!? No wonder.? Obama and his minions have nothing good to say . . . ever!? And if we hear it from them (the collective we) then we believe it and boom– down go the markets, real-estate values, paychecks, confidence, emotions . . . .

BUT . . .?I stick with my longer term predictions and I’ll tell you why.? Confidence is at an all time low.? The markets (as measured by the dow and s&p) are at levels we haven’t seen since 1997.? Unemployment is at 7.6% and climbing.? Advertising rates are way off.? Retail sales are plummeting.? Oil is way low compared to a year ago, but gas prices are not so low.??I could go on.? There is NO reason to be positive.

Except.? this is AMERICA.? When things get bad, we get together.? When things are worse, we look around and do what we can to help.?

Take a conversation?I overheard the other day.??A nieghbor who has lost his job has been frustrated in his search for a new one.? During a conversation,?I heard first one other neighbor, and then yet another, offer some encouragement and even some suggestions as to where the unemployed guy could look.? Then, yet another guy joined in and said that his company had an opening and promised to arrange an interview (which by the way he did).? Now, this is no fairy tale with a beautiful princess or handsome prince at the end.? It is just real life in AMERICA.? Turns out the job was only temporary and at a much lower wage than expected . . . but (and here is the great AMERICA part) if the guy did a good job then he would probably get offered a?fulltime thing at a much higher wage.?

AMERICA — where people start humbly, prove themselves and move on to bigger and better things (and get a lot of help from freinds and neighbors along the way).

That is why my bold prediction stands.? Maybe not for last week in the market (‘cuz it was ugly I tell you) but still for the mid and long term.? go back and read it.??I may have been off on the short term by a week or two or so . . . but the rest stands.?

Don’t complain until the longer part has played out.?

I’m still confident.?

I’ve put my money where why words are.?

Come this summer, I’ll be right, just wait and see (if not I’ll be the one looking for help from my neighbors . . . and you know why I’m not worried sick?? I’ll get that help . . . that is what makes us great–that is why confidence will start to improve etc. etc. etc).

Bank on it!?

Just don’t bank with CITI, BofA, Wells Fargo or until the FED gives them some more of my (and your) money . . . that is a blog for another day.

Waiting for your?comments, just not earlier than June for any of the negative type!

Corporations, and by extension their executives and ceo’s, just got carried away (Even they mostly admit that).? They saw too many opportunities for lining their own pockets instead of paying attention to what they were really being paid to do–i.e. increase value for their shareholders and maintain jobs for their employees.? They cared more about their own future than that of those they should have been reporting to.?

Now you can say that the treasury dept., and the FDIC, and the?S.E.C. and any number of other government agencies dropped the ball, but the fact is that no amount of economicregulation is going to stop creative and greedy people from doing what they do.? Albeit, an honest and dedicated government couldn’t hurt it is really up to those that make decisions.

Obama got it right when he said?that? the $18 billion bonuses paid to financial executives in 2007 was shameful.? But it was a whole lot more too, it was at least immoral and it might have been illegal (don’t they have an absolute fiduciary duty to shareholders?).?

Who is going to watch the chickens if all the farmer’s dogs are playing with the wolves?

We are really in one heck of a mess in this country today.? Every week brings further information about obscene losses?from banks and financial institutions and revelations about more greed from executives.?

Where does it end?? Can we bail out these ‘evil-doers’ every time another bucket load of losses?is thrown at us?? Don’t think so.?

Some (and probably a bunch) of the corporations run by ‘evil-doers’ are just going to have to fail.? Some shareholders (who have their own culpability, especially since the lion’s share of them … don’t you like the metaphor?…are mutual funds and institutional investors who managed ‘our’ money and should have been paying more attention) are just going to have to pay the ultimate price.?

Let ‘em lose everything.?? Seems that here again, Adam Smith was right.? Let the market adjust as needed (sorry John Meynard Keynes).?

So what happens???A few big banks fail (the government picks our/your losses up to $500,000) and all the real estate that would hit the market at heavily discounted prices would sure help home sales for first time buyers!

It’s the leaders that caused this.? The ceo’s have to accept the blame . . . along with their top tier of executives.

What does it take to get good leaders?? Education? Sure.? Experience? Probably.? Selfish drive?? Heck no!!?? It takes integrity–moral strength.

We need men and women of integrity and courage in every executive office of every corporation in the land.? Washington D.C.?too.? Sounds biblical, but it would work,?I promise you.?

Lincoln had it right.? In his 1st inaugural address he said ” intelligence, patriotism, Christianity, and a firm reliance on Him, who had never yet forsaken this favored land, are still competent to adjust, in the best way, all our present difficulty.”?

That goes even more today than it did in 1861.

Let’s focus on the Christianity part of Lincoln’s address.? But it could just as easily be Judaism or Islam since?the Tanakh and the Q’uran also teach the same lesson ( its just that I’m more familiar with Christianity, though I’ve studied the others too).? The lesson there is that charity (the Greek word in the original?New?Testament was ‘agape’ which is really cool and??means powerful love for others) is paramount.? We all, particularly our leaders, have to think of others? first.?? Stop being selfish (that goes for you and?me too)?everything else will come along with that.?

Charity breeds self-respect and success, as well as intelligence, patriotism and a firm reliance on ‘Him who has never forsaken this favored land.’? Man, that lincoln was a cool guy, they even named some logs for him? (and I used to make some great cabins with them as a kid).

Kick out any leader who lacks charity.? Kick out any leader who is greedy.? Do it with our votes.? For politicians or for ceo’s.? none of them can be where they are with out a clear vote from the electorate or the shareholders.

Take control!

Charity vs greed.? The choice is easy.

?

thanks to??maha-online? for the flickr photo.