Thursday, October 16, 2008
Third presidential debate
I was satisfied with McCain's performance, it was nice. Obama is an OK speaker but a lot of things he says are deep misunderstandings. If politics learns as much from experience as Obama does, people are pretty much bound to repeat all of their mistakes all over again.
The example of taxes is typical. In this tough economic atmosphere, it is very obvious that it is mainly the companies and the rich who are in trouble (and loss) from the beginning. The trouble may spread as they become less able to support an active economy. A regressive tax policy would be clearly much better an option for job creation and job preservation.
In plain English, typical employers have to have a lot of money to pay for salaries while the typical employers have to be thirsty to get them. That's the setup that keeps the motors running. The inverse setup would slow the machine down: the 2.8% month-on-month drop in manufacturing could be just a modest beginning. One of the easiest-to-see bad symptoms of the recent mortgage bubble was that wealth - the real estate - was distributed directly to the poorer people, instead of being trickled-down from the top. It can't work like that because no actual big wealth is directly created at the bottom.
Obama's left-wing populist remarks about the advantages for the middle class are completely off the mark. Egalitarianism itself won't help the societies to survive these periods. Let me just mention that Iceland was the fourth most egalitarian country in the world, with CIA Gini index at 25 in 2005.
By the way, this is the worst period for the U.S. dollar to be strong. With the weak local consumers, the U.S. producers will have to rely on exports but at this level, most of the products are unexportable. Much like in all such early recessions, the troubled countries should naturally try to talk their currency down. It's crazy that no one in the U.S. is doing so these days.
Also, both McCain and Obama are completely wrong if they want to simplify cashing of 401(k)'s for the people to "meet short-term obligations" (by canceling fees). For most people, 401(k) is the only resource negatively affected by the recent turmoil and it doesn't influence life now - so which obligations are threatened?
Such cancellations would lead to escalating panic, dropping equity prices, locked-in losses for the people who do it, and generally dark future. Quite on the contrary, the policymakers should do everything they can to encourage investment and to return the parameters - such as the general equity prices - closer to where they were when the economy looked more healthy. I don't say that this should be achieved directly by some social engineering. But the atmosphere must be such that it will happen naturally.
You have surely more relevant observations about the whole debate and I want to hear them.
Meanwhile, oil price dropped below USD 68 for a while, increasing the loss from the July peak above 50% - a factor of 2+ decrease. The eighth newest posting on Alexander Ač's blog has the following title:
EU climate plans close to death
A good long-term consequence of the turmoil is that it helps the crazy plans to "fight climate change" to die. See Times Online. Italy, Poland, together with Bulgaria, Hungary, Romania, Slovakia, Latvia, and Lithuania, oppose the deal. Welcome to New Europe, Silvio, ciao! ;-)
These countries' leaders are inventing various bizarre procedural tricks to explain why they don't have to follow their countries' previous positions. (The Czech Republic would probably benefit from the deal - because the goals talk about a 20% decrease below the 1990 levels which we have more than done around 1991 - which is probably the reason why our guys don't openly oppose it. See the tables of CO2 output per capita in countries.)
Nicolas Sarkozy who has emerged as an important European mujahideen against climate change begins to panic because he wants these crazy regulations to be approved before the Czech Republic takes over the EU in January. We are likely to scale back the centralized demands on the member states. I guess that Sarkozy will lose but the battle is not yet over.