Some not-so-random thoughts on the state of the economy:
WHAT'S HENRY PAULSON SMOKING?
The Treasury Secretary just held a press conference to announce that instead of dumping another 350 billion big ones into the banking industry he'll see that billions go to "support household and business spending".
To do that he wants to get lending going again. He's apparently not pleased that the banks that have been recipients of the billions of taxpayer dollars redistributed by the government have been spending too much on executive compensation and dividends for stockholders.
Does he really think that the problem with the economy is that we're all just dying to borrow more money so we can buy stuff? Granted, a number of businesses need credit to survive. And that should be addressed. But consumers are, IMHO, more worried about keeping what they've got - a job, a house - than they are about buying things.
Remember when "simplifying your life" was a trend? Now it's a necessity.
Didin't Paulson learn anything from last spring's stimulus program? What did most people do with that money? Buy a flat screen television to keep Circuit City from going under? No. Most people did the wise thing and used it to pay down debt.
(I like the suggestion from somewhere that the next President pick his Tresury Secretary now and the current President appoint him immediately so we can just move on.)
DO THE BIG THREE DESERVE A BAIL OUT?
President-elect Obama urged President Bush to act now to throw a financial lifeline to GM, Ford and Chrysler.
The current President says he'll only do so if Congress passes the trade pact with Colombia he so covets.
The soon-to-be President isn't ready to cut that deal. Organized labor hates the idea of another NAFTA. Plus there's the issue of human rights. Colombia apparently deals with union folks the way the old regime in El Salvador dealt with nuns and priests it didn't like.
Looks like the Big Three will have to wait until January 20th. At that point the automakers will also have to decide if they're willing to get greener to get the billions they say they need to survive. Here's where it gets sticky. The United Auto Workers want the bailout without any preconditions like raising mileage standards or building more efficient vehicles.
Something's going to have to give. Will the UAW see the forest for the trees?
SPEAKING OF ORGANIZED LABOR
Over the weekend the head of the U.S. Chamber of Commerce, Thomas Donahue, provided me with some much-needed comic relief. He told the NY Times that Congressional support for the Employe Free Choice Act is "payback" that unions are hoping to get in return for supporting Democrats. The Act would make it easier for workers to force an election on union representation.
Was Donahue serious? The Chamber doesn't play the "payback" game? Big business doesn't support the aspirations of certain politicians to assure some "payback"? Like defeating the Employe Free Choice Act?
Meanwhile here in Oregon, the President of Stimson Lumber, Andrew Miller, tells the Oregonian, "If you want a depression, pass that act."
Wait a minute. Let's complete the circle here. Paulson wants to support household spending to kick-start the economy. Household spending has been depressed by the growing wage inequality between most households and households like those being enriched by the first blast of bailout billions - banking executives and bank shareholders. Wouldn't union representation have a strong positive impact on wages and thus support household spending? Since when is "earn and spend" rather than "borrow and spend" such a bad idea?
Personally, I will continue spending my time figuring out what NOT to spend money on. Especially borrowed money. It's called discipline.