HOUSING BUBBLE?

Housing Bubble? I don't think so. As much as this little phrase has spun out across the country as the source of all our money woes, it is not true. This is the sequence of events:

1. Intelligent people believed that corporations would self-regulate. Is it impolite to laugh now? Instead companies began the quest of squeezing ever more profit out of businesses. They began laying off hundreds of thousand people beginning in the early '80's and before. A reasonable white-collar work week was 37 hours in 1970. Now people do the jobs of 2 and 3 others. And regulating slid off a well-planned track.
2. Lobbyists became ever more prevalent on Capitol Hill until Representatives and Senators found themselves swimming with the sharks, particularly the special interests species. It was exhilarating. Our representatives felt cossetted by the attention. But they forgot two things. First sharks can turn on you in a second and with disastrous consequences. Second our elected officials were supposed to be swimming over here with the myriad of fish that we are. I can see how it happened. Who wants to say they work for fish? But they do.
3. Then NAFTA was born and soon began to make that sucking sound Ross Perot told us would pull our jobs south of the border. He was right. Over the past 8 years, we have seen manufacturing, customer service, and even IT head off shore. Then employers realized that it was a buyers market. They could lower the going rate for all jobs.
4. Nearly everything we consume from food to footballs is now, "Made in China", or "Proudly distributed in Wherever City and Whatever State". Translation: Made in China. We learned about the terrible manufacturing processes that killed our pets and killed China's babies. Quality Control of imports is essentially nonexistent.
5. Gasoline shot up to over $4 a gallon, which jump-started a rip tide of price increases. A package of cookies costs more than $5.00. Coffee is $12+. And the increases bleed into all other manufactured items.
6. Nearly 7 years ago, a friend was layed off from a Fortune 100 company. He had been a mid-manager in IT, but after looking for a job 2 years and losing their home, he finally got a job - in Iraq.
7. No jobs. No purchases. It doesn't take a genius.
8. People used credit cards and home equity to get along. But those two wells eventually dried up. We aren't in this money mess because people used their credit cards too much or bought houses they could ill afford. Nonsense! High credit cards and foreclosures are not the problem. It wasn't a housing bubble. Don't blame the symptom of the disease. Name the real source of the economic problem.

Who Are You?

If I met a man named, "Sucker!", or "Thief", or "ThisIsAStickup", I wouldn't give him my money. Although it is certainly not a given, I believe people tend to live into their names. Dr. Bones is a surgeon, and Dr. Looney is a psychiatrist. Mr Sweet is a pastry chef. Dr. Learner is a teacher. You get the idea.

So regardless of recommendations, people might want to hesitate when they are asked to give money to a guy names, "Madoff", pronounced, made-off, before he makes off with billions.

OUR CARS, OURSELVES

If the auto industry goes bankrupt, it will rip a massive hole in our economy. It is hard to imagine why anyone in the Senate would go on record to endorse the certain tsunami of job losses that will pour into that hole. First the 3 million employees who work for the Big 3. All the car dealers. Then the millions upon millions of people who work for suppliers to the auto makers, manufacturers ranging from from batteries to seat covers. And there are those who provide raw materials, machinery, supplies & quality systems to all of them.

And we know the demise of the auto industry would leave us bereft of a manufacturing core that could be converted into building other needed vehicles, ending unknown possibilities. One last point. Should the Big 3 go bankrupt, that gargantuan hole in our economy will also trigger an emotional backlash. Our cars represent ourselves. We grew up with these automobile icons, interacted with them intimately by making purchases laden with passion, anticipation & even a little fear. But we make that leap into the unknown, confident that the Big 3 will always be there to catch us. So the question becomes, can we afford to sever this part our personal histories, the part that beats near our hearts?

Computerized Patient Records Flaw

Hurrah! I am looking forward to a makeover of our health care system. Finally! We pay more for our health care than any other country. The bad news is the quality of our health care ranks 37th in the world, just below Costa Rica. But the good news is that we rank right above Slovenia*.

I notice that part of our makeover includes streamlining patient records by computerizing them. Everyone is excited about this: the governors, our newly elected administration and the computer software companies especially.

I invented and implemented the first commercial computerized patient chart. And I was an original board member of an organization committed to bring affordable, accessible health care to Kansans. So I am entitled to point out something that has been overlooked. There is a fatal flaw in the foundation of the patient records system's architecture.

*Source: World Health Organization (WHO)

And A Problem Built for Two

The boss gives Pete the Project Manager $700 billion for his project. Pete knows his boss will want a milestone-studded timeline with clear goals and objectives, close oversight with weekly reports. And subcontractors must sign detail-encrusted contracts.

But Pete decides that he will use the money for another project. So he leaves his on-vacation boss a note on his desk. Pete wades into the new project tossing dollars here and there. He has a thing against timelines, milestones, goals, and objectives so he just buries the forms under one of the piles on his desk. And then Pete decides to bring in a buddy, because well, the buddy is short on cash, and Pete likes him. Besides, who needs a contract between friends? When 20 of his employees come to him for direction, he tells them to do their own thing. And since is the boss is on vacation, he gets to skip the weekly reports for 4 weeks.

Let's say the boss is Congress. And Pete is Secretary of Treasury Paulson. Congress wants an infusion of cash to buy toxic assets and mitigate foreclosures. Paulson decided the financial institutions needed stabilizing instead and let Congress know after the fact.

Congress should have hauled Paulson into its office to make his case for changing projects in mid-stream. Congress should have set strict parameters for Paulson's original project including efficiencies and requested weekly updates from the man sitting on half of $700 billion.

Big banks are using the big money to buy up smaller banks. Paulson can't trace the money. And there is a credit freeze that is killing our economy. No money for student loans. No money for people's credit cards. No money for small business. And no money to stop home foreclosures. Never mind that in small business no jobs mean no purchases nor economic stimuli. Never mind that it is common sense for banks to get a better financial deal when people stay in their homes.

No money for automobile loans. So no automobile dealers. No money for suppliers to keep their businesses well-oiled. So no jobs for 1 in 10 people in the country. And as a result the Big 3 tilt on the edge of the economy leaning closer toward a cold, cold death.

But it isn't too late. Paulson and Congress can work in tandem and solve a big problem.

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Who Gains from Loss of Big 3 ?

There seems to be a sticking point in Congress regarding the negotiations between those who favor bankruptcy for the Big 3 and those who favor a short-term loan with heavy monitoring by a negotiator, a Car Czar. This morning a Congresswoman making the case for Chapter 11 said that it isn't really bankruptcy, just a reorganization. What? Last time I heard, Chapter 11 is indeed bankruptcy.

But to the more important point, who gains from the loss of the Big 3 ? I believe there are two groups. The first advocates for Chapter 11 have an interest in a far-reaching reduction in the power of the unions. The second group of pro-bankruptcy promoters yearn for the $$$ saved by cutting the jobs of those who bathe in the evening (blue collar vs. those who bathe in the morning or white collar). And I believe that at the root of both groups is what I call the Policy of Avarice, which is the rule of extracting and retaining money while dehumanizing those from whom they extract the profit.

WHY SAVE THE BIG 3 ?

REASON 1: The Big 3, flawed and ingrown as they are, still headquarter in the US instead of in a building along with hundreds of other corporations on a balmy tax-free isle. The Big 3 pay their taxes. They still provide health-care for their employees. And they honor their commitments to those who worked decades in their plants. US manufacturing, a dying breed. Maybe we should at least give the Big 3 the honor of relatively modest [as compared to the $700 billion] strings-attached loans.