Lessons from Detroit

As Southerners, we often have a lot of pride about the South. In the case AGAINST a bailout of the Big 3 automakers it's difficult to have much sympathy. How many NEW plants have been built in the backyard of the UAW up North? While you're working on that answer, let's talk about Toyota in Georgetown, KY, BMW in Spartanburg, SC (both have been expanded numerous times), Mercedes and Honda in Alabama (coming soon-KIA) and several others built throughout the South. What's the big deal? Well, in the rust belt, average hourly wages run around $74 per hour. In the South, they run under $50. Why did the bailout fail? The UAW would not think of taking wage concessions under the bailout plan! Sure, I know that the fat cats at the top (who can afford to take cuts) have lived high on the hog long enough--and will continue to do so. They are certainly not without fault. However, I find it tough to sympathize with unions. There, I said it. My Libertarian thoughts come out at last! Every time the UAW stared down the Big 3, management eventually blinked. Wonder what would be going on now if the B3 had pulled a Caterpillar on them (look it up-management did not capitulate to the unions and the company is stronger than ever). I also think back to the end of Eastern Airlines. They went on strike, the company failed (I wonder how Delta and Northwest will fare if they keep playing that game by the way?). In any event, the bailout failed and even though it will be bad for the USA in the short-term, I think that it will be better for the industry as a whole.

While I'm on my automotive soapbox, I have seen hot European models for years--no, not Heidi Klum, autos that are built/sold only in Europe. Ford's European Focus is hot, the US version is not. Saturn's homerun Aura is based on a euro-platform. The Big 3 are getting the idea to a degree but where are the diesels? Why can't a Ford pickup have dual-element turn signals (translation: brake light/tail light and turn signal are all in the same bulb-if you have hazards on, brakes 'cancel' the flashing, etc)? No, we don't want "A" cars (those tiny city cars like the Smart Cars) but there are hot cars that we should have here. But no, we keep getting bloated SUV's (mainly b/c we keep buying them). What do I lust for? Yes, an Aston Martin would be nice, but I'd REALLY like a Mercedes ML or GL 320 Diesel (24.5 MPG) for Christmas (with a new lawfirm, not a chance this year : )

Political Rant

This is an excellent article about our next President. On one hand, the Republicans had full control and BLEW IT but on the other, when the Democrats take over the Oval Office as well as the full Congress, God help our country. Work for a living? You will have to pay for someone who is not. Why is this on my Economy blog? Because the policies that will be implemented in January 2009 will more or less put a halt to any growth that this country will expect to see for the next few years. Again, I am NOT a fan of what the Republicans did. Shame on them for the largess, shame on them for the out of control spending. Iraq or not, they wasted more of our money than any other administration... ever! I continue to be impressed with Obama's oratory; despite the double talk, his talking points are actually seem believable. However, no amount of spin will take away the fact that he will put his hands into my pockets and give money to someone else. No, I don't make $250,000 a year (and having McCain won't guarantee that either) but take note of the fact that the $250K figure keeps dropping. What is your definition of rich? For many people, it's someone who makes more than they do. Not me; we live in America, the once-greatest country in the world. We read stories all the time about someone coming up with a great idea...and getting paid for it! That is so incredible and when I hear a 'rags to riches' story I smile to myself and mutter "God Bless America". Well, continue to add layers of regulation and restrictions, don't expect anything great out of America any time soon. Libertarians sometimes have the best ideas (keep your government out of my life, etc.) but they are too 'on the fringe' for my tastes (and for many other Americans). You may be surprised; take this quiz to see if you're truly left/right/center.

Again, I am no fan of what the "Republicans" (emphasis added, as they no longer represent true Republican ideology) did to our country. Likewise, the continued political partisanship bantering around sickens me. Actually, what have the Democrats done since taking over? No, I don't know either... I fear what will happen over the next four years--We'll plot that course this Tuesday I guess. Future generations will judge our actions: CHOOSE WISELY.

Economy a Mixed bag...

This article from the Wall Street Journal notes that home inventories are shrinking across the country (even though Atlanta still has a bit over a year's worth of inventory, where 'normal' rates should be in the 6-7 month range). Yes, we've had some price increases of late and some decent sales but we're still not out of the woods yet. I know that unemployment is up across the US and in Georgia and that does not bode well for housing. Unlike the go-go subprime times of late you now actually have to have a JOB as well as INCOME to support a home purchase/loan. Most loan programs require you to have some downpayment as well so it's rough out there for the average buyer. I can also wonder aloud about people who were planning to sell some stocks to come up with their down payment but the answer lies in the continued roller coaster that won't stop until the election at the earliest. It's not all doom and gloom (and I still bet that the media will say "hey, it's not all that bad" on November 5th, regardless of the winner!) and our country (State? City?) has persevered before. I can likewise opine that our current generation(s) will not be as likely to "step up" as strongly as "The Greatest Generation" did during WWII (not that we have that type of threat today, thank God). And one other ramble-FDR's New Deal (and all the public works projects) did not get us out of the Great Depression--WWII did. I can only hope that we don't have to have something that horrible occur to jump start our country!

Like Lipstick on a Pig!

Yes I know that politicians have hijacked that phrase but it's relevant to this posting, I swear! Looks like August's home price declines slowed slightly! Yes, they still fell, but LESS than in prior months! Okay, okay, so a .02% improvement is not that great but I'm just looking for any positives here! And for all you info geeks, we are right around the same price level as in Sept. 2005. So all you 'bubble' fans can see that we did have some major appreciation; likewise we have had some declines. At the end of the day, we still have oversupply, especially with foreclosures, but the major source of that oversupply (new homes) will continue to fall as unfortunately we have lost a lot of builders (or they stopped building spec homes).

Full disclosure--the same article I read noted that prices may still fall an overall 10% additionally (over the next 18 months) from the peak of 2006 so we're still in for a ride; hoping for a slow ride down a hill versus a jump off a cliff! Data is listed here if you're curious.

Economic Ramblings for the day

"How's your tummy?" could be a nice subtitle as we've really had a rollercoaster ride in the past month or so! I saw a headline this morning that oil has dropped under $70. It seems actually crazy to see gasoline under $3 after paying almost $5 after Hurricane Ike! I wonder how people are doing out there-did 'habits' really change over the past month? People parked or sold their SUV's and trucks and bought fuel-efficient vehicles. Will there now be a mad rush at the Hummer dealership again? What about actual driving habits? People took mass transit, cancelled optional trips, didn't go to the mall, etc. What's happening now? I'd be interested to see current trends!

One comment on the election-I truly feel that regardless of the winner next month, we will all be surprised at the media reports on November 5th that "Hey, it's not that bad out there". Regardless of your candidate, they NEED bad news right now. For example, Obama can blame Bush/McCain for the current economy. McCain can say that Obama's taxes will kill the economy. Barr? Well, he can just bug both candidates as an 'outsider'. Mark my words-the economy will miraculously 'get better' after the election. Oh, by the way, yes, I AM a cynic!

What's next for the Fed? Wow, seems like they want another round of economic stimulus checks. I would love to have some extra spending money for Christmas shopping, but I don't think that a) that is the answer and b) that I'll see a penny! How about you? Uncle Sam says SPEND!

A Visual Representation of the McCain/Obama Tax Cuts

The proposed tax cuts are interesting to say the least. Looks like everyone gets a cut under McCain, but Obama's are higher for people who earn less and he NAILS people who make a lot of money. Takes me back to my heavy metal rock-n-roll days of a band called Krokus. Their 'hit song'? "Eat the Rich"

The most entertaining? NEITHER one truly talks about how they'd pay for these cuts (well, big O pays for many of his cuts by socking it to those evil rich people). I really suggest you get out there and buy ATLAS SHRUGGED by Ayn Rand. Written in 1957; coming to the United States in 2008???

The hits keep coming! Now we're Socialists???

I was amazed to read this article. A TOTALLY different perspective than I had contemplated. Likewise, this one takes the Libertarian point of view of "Hands Off" and more or less says "too bad", thinking that Bankruptcy may be the best (inevitable?) course of action. And in a more partisan-ish (my word) article this one pretty much refutes Madame Pelosi's "Democrats are not to blame" concept. What do you think? I'm at a loss actually. First we drop over 700 points; then we rise almost 500. Even though today's loss on the Dow was a mere 19 points, I almost feel that the markets are saying "so what" to these proposals. It's a "Boy who cried wolf" situation in some respects, but at the end of the day, credit is still quite TIGHT. What would you do?