“The man of great wealth owes a peculiar obligation to the State, because he derives special advantages from the mere existence of government. Not only should he recognize this obligation in the way he leads his daily life and in the way he earns and spends his money, but it should also be recognized by the way in which he pays for the protection the States gives him”.
- Teddy Roosevelt, from a speech on the Estate Tax, April 14, 1906
We’ve been talking in the office this week about whether or not the Fed is gonna do another round of quantative easing (QE3) in the next few weeks. Minutes from a recent meeting of the Fed suggested this was a distinct possibility, and that sent the markets on a rally early in the week. According to the minutes of the meeting, which ended Aug. 1:
“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery,”[1]
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| My favorite thing about the Fed Chairman is his hair style, which I've tried to emulate. |
To which my friend Z__ replied, “Bring it on. If they do QE3, I bet we can get the S&P 500 to 1500 by the end of the year.” He went on to note that Ben Bernanke is apparently trying to push people out of Treasuries and into stocks by reducing the yields on Treasuries to the point where investors basically have no choice but to invest in stocks.
All I can say to that is that I sure hope they wait a while before they push the Panic Button again over there at the Fed. I mean, yeah, it’s been a long slow climb of a recovery, and lots of people are still out of work, but given that corporate profits are up, that seems more like a systemic problem than a problem of the economic cycle. Or, to put it another way, Corporate America has decided to move as much of its production overseas as possible because, bottom line, hiring foreigners is way cheaper than hiring Americans. And whether we like it or not, there is no amount of monetary stimulus that is gonna change that. We need to either change our tax laws to strongly disincent offshoring of domestic jobs—and by the way, that could easily degrade national competitiveness over time—or as a people, we need to accept a radically lower standard of living in exchange for our labor. Because while it’s still true that the American workforce is generally more productive than the overseas workforce, that’s only in absolute terms. In nominal terms (i.e. adjusted for costs), it’s much, much cheaper to build it there and bring it here on a ship. So at this point, that’s what companies are doing.
Granted, I suppose that enough quantative easing will eventually deflate the dollar against other currencies, leading to a cheapening of American labor in relation to its competitors. And to the extent that we can survive without needing to import overseas commodities, that might not even be all bad. But I say that as a guy whose main forms of transportation are the Train and the Bicycle. I don’t exactly buy a lot of gas.
None of which means that I am necessarily against QE3. In fact, I think Z__’s right. It probably is going to happen. But I also think that Congress isn’t gonna do anything else this session, which in turn is gonna push the country off the proverbial (but much talked about) Fiscal Cliff. And while the Fiscal Cliff is a potentially serious problem, it’s also exactly the kind of problem that monetary policy can generally help address. In other words, if we do hit the Cliff, and the Bush Tax Cuts expire at the same time that we cut domestic spending by three-quarters of a trillion dollars, well, at that point I think a little monetary easing will look like a necessary economic measure. It is therefore my hope that the Fed will wait and keep its powder dry for the time when it really needs to get some serious bang for its buck.
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I was shocked and maybe even a little dismayed when I read this week that chick-rocker Avril Lavigne has accepted a proposal of marriage from Nickelback frontman Chad Kroeger. Because let’s face it, Lavigne is a super-hottie whereas Kroeger is a classic ugly-rock-dude in the tradition of Ozzie Osborn and the members of The Steve Miller Band. I mean, the dude has a million hits, but he’s also got a distinct face-for-radio.
But then I read through Kroeger’s Wikipedia page, and I realized I’d been way too quick to judge. Like it or not, the guy is a major talent. His stuff for Nickelback is everywhere on the radio, and he’s been a hit-writing machine for other guys, too, for over a decade. For example, he wrote about half of Chris Daughtry’s first album and quite a bit of other stuff in a variety of genres, including Country and Rap. In fact, he and Lavigne met because he was helping her write her new album (Good choice there, Avril. That last album wasn’t good at all.), and well… Workplace romances can work. Right?
Anyway, regardless of the success of their marriage, hopefully Mr. Kroeger can help Lavigne get back to the tops of the charts. God knows we could use a stronger rock influence in my house’s increasingly tween-girl pop musical soundtrack.
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| Michael Strahan at the Giants' 2007 Super Bowl parade (from Wikipedia). |
While we’re talking pop stuff of no consequence, former Giants DE Michael Strahan has reportedly gotten the Live! co-hosting job opposite Kelly Ripa. That’s the job that Regis Philbin famously left last year, and the fact that Strahan got it is not nearly as much of a shock as it might seem at first glance. Strahan has done a ton of TV since he left the NFL, including a high profile gig with Fox Sports and headlining his own sitcom (Brothers). In fact, it was medium-sized news in NYC a few months back when the folks at Live! leaked the news that Strahan was in the final three for the co-hosting job, though at the time he was considered a longshot.
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Still on football, you might’ve heard that Philadelphia Eagles QB Michael Vick is already hurt. I didn’t watch the game, but he apparently played all of six snaps in the Eagles’ second preseason contest before he got pounded by New England Patriots linebacker Jermaine Cunningham. Supposedly, Vick’s not seriously hurt, and that’s good, but still... If you’re an Eagles fan, this has got to be maddening.
I bring all this up because of the sheer number of news outlets I’ve heard picking the Eagles to represent the NFC in the Super Bowl this year. Why? How is this year different than last year, save that the Eagles (wisely) dumped backup QB Vince Young? I grant you that the Eagles have a ton of talent on their roster. But they also have an injury-prone QB whose style of play, while enjoyable for fans, is at best hazardous to his health. It just seems like the Eagles win the offseason every year, that they’re always the darlings of the press before the games start, but sooner or later reality sets in, and they come crashing back to earth. Meanwhile, the Giants have won the Super Bowl twice in recent memory, they have essentially the same team as last year, and still somehow they’re not even favored to win the NFC East?
I get it. Write something controversial because that sells newspapers. I do that plenty myself. Plus, Vick is an exciting, dynamic player. I like watching him. But come on, the Eagles? Seriously? Their winning the East requires Vick to start and finish at least ten games. If I’m betting my own money, that is not the way I bet.
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That’s all I’ve got. I had some more crap about the Republican national political platform, but really, who cares? Either Romney ignores that crap (likely), or he gets blasted in the general election by the country’s moderate voters. Though to be fair, it seems like there aren’t all that many moderates left out there anymore, but still. I have this theory that Mr. Romney added Congressman Paul Ryan to his ticket specifically to steal the guy’s voters while simultaneously neutering his influence within the Party, and that if Romney’s elected, he’ll use the opportunity to stab the right wing of the GOP in the back in a uniquely painful and lethal way. But that’s just my theory, and it may well be motivated entirely by my simple hopes for the future of mankind. It could just as easily turn out that Romney’s a rich guy who’s gonna run the country in the best interests of other rich guys, and if you don’t like it, you can kiss his rich white ass. Personally, I’ll probably be fine either way, but my kids have to live here, too, and that whole class-warfare-from-the-right thing scares me on their behalf.
There. You wanted a little polemic, so there it is. You wanna know more, use Google.
Other than that, have a nice weekend.
[1] Annie Lowrey, “Many at Fed Ready to Act if Necessary,” The New York Times, August 22, 2012.
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