What is the US Economic Position? I

Is what has driven our economic success starting to erode?

GET THE FACTS BEHIND THE NEWS

While our immediate goal is to halt the present economic recession, we must be careful to be sure that the measures that are taken will lay a foundation for economic growth and prosperity.

Diogenes believes most people do not realize how far our economy slipped in relation to the other nations and economies we compete with. Noted Harvard School of Business Professor Michael Porter believes” a series of policy failures have offset and even nullified “US “ strengths just as other nations are becoming more competitive”.
1) “An inadequate rate of reinvestment in science and technology is hampering our feeder system for entrepreneurship. Research and development as a share of the GDP has declined, while it has risen in other countries”. This is well recognized but policy makers have failed to act.
2) Our belief in competition is waning. “A creeping relaxation of antitrust enforcement has allowed mergers to dominate markets”. “We are seeing more interference in competition with protectionism and favoritism.”
3) US colleges and universities do not have a serious plan, such as GI Bill or National Science Foundation programs, to improve access to them. The US now ranks 12th in educational attainment for 25 to 34year olds. For 30 yrs we have not improved ourselves in this area. This is an “ominous trend in an economy that must have the skills to justify our high wages.”
4) At a time when job insecurity and turnover are high the US gov’t has not taken responsibility to provide a transition safety net for US working people. The job training system is ineffective and receives less funding each year. Pension security is declining. Social security is not being adjusted and strengthened. Access to affordable health insurance is a major worry to most people. The gov’t could equalize the tax deductibility of individuals purchasing insurance to assist those not covered by their employers, but has failed to do so.
5) The US is energy inefficient. Public policies fail to promote energy conservation.

6) “Trade and foreign investment are fundamental to the success of the US economy but the US has lost its focus and credibility in shaping the international trading system.” “With no strategy the US has failed to work with other advanced countries to assist poorer countries to feel confident about opening markets and internal reform.” “Our foreign aid is still tied to the purchase of US goods rather than the actual needs of countries.”

7) “The federal gov’t has failed to recognize and support the decentralization and regional specialization that drives our economy.

8) Lack of regulatory oversight combined with lack of a strategic plan has resulted in a hodge-podge of policies that have driven up the costs of doing business. TO SUM UP WE HAVE HAD POOR ECONOMIC MANAGEMENT.

9) Is good strategic economic plan possible considering our political system?
It requires political parties and private leaders to come together and chart a long term plan. Prof Porter recommends a bipartisan joint planning group to coordinate priorities,

Does the new Stimulus Bill help solve these problems?

Irresponsible Journalism--Dick Cheney

GET THE FACTS BEHIND THE NEWS

Chicago Tribune headline read “Cheney: Obrama puts US at risk”. The Tribune and CNN and others seem to headline any criticism of Obrama whether, it be a former VP or an unknown senator or representative, like it is the definitive opinion on the subject. The headlines fail to mention that the public was exposed to Obrama’s opinions and republican opinions and choose Obrama’s. Obrama won the presidential election. Basically Obrama is following his campaign platform.

Constantly repeating rejected republicans programs appears to be beating a dead horse. One of the reasons the Republicans lost is they kept repeating the same old programs that most of the public felt have failed. In the case of Cheney he has a very low approval rating with the public. His program has been soundly rejected. With his latest speech one might think he has hardening of the arteries. It’s almost word for word the same thing over and over. It never changes. In the last presidential campaign his own party’s candidate did not want him to campaign.

Cheney and Senator Claghorn deserves to be heard but not treated as gospel in headlines on the front page. This is UNHELPFUL AND IRRESPONSIBLE NEWS REPORTING.

The Danish Mortgage System

Our current mortgage system has broken down because the originators of mortgages have not retained any part of the credit risk. They are motivated to maximize their fee income. As agents, their interests
are not identical with the interests of the ultimate owners.

In the Danish system, the service companies retain the credit
risk--they have to replace the mortgages that are in default.
In contrast to our reliance on government sponsored
enterprises (GSEs)--namely Fannie Mae and Freddie Mac--
the Danish is an open system in which all mortgage originators
participate on equal terms, and it operates without government
guarantees. Yet Danish mortgage bonds are traditionally very
highly rated; often they yield less than government bonds.

This could not be replicated in the United States at present
because of the demoralized state of the market, but it may be
achieved later. Danish mortgage bonds are highly standardized, and their distinguishing feature is that they are identical to and interchangeable with the underlying mortgages.
House owners can redeem their mortgages at any time by purchasing t
the equivalent mortgage bond in the market and exchanging it
for the mortgage. Since bond prices and house prices normally
move in the same direction, this feature--called the
principle of balance--reduces the chances of householders
having negative equity in their houses.
The mortgage originators are strictly regulated, and their interests are closely aligned with those of the bondholders. They pass on only the interest rate risk to bondholders, retaining the credit risk. That is why the bonds are so highly rated. The U.S.Treasury has supported this plan in certain situations.