Wednesday, June 10, 2009

Random Thoughts

Today is one of those days when I have several things I'd like to write about, and they all kind of lead me in the same direction, but you have to follow a long and winding road to reach the common destination.

So I'll resort to a tactic often used by the late Blackie Sherrod in his sports columns for the Dallas Morning News and do some "scattershooting:"
  • The Virginia governor's race: Rosalind Helderman reports, in the Washington Post, that Attorney General Bob McDonnell, the Republican candidate for governor, congratulated Democrat Creigh Deeds on his victory in yesterday's gubernatorial primary.

    That, of course, is the kind of thing that is expected in American politics. McDonnell beat Deeds in the race for attorney general four years ago, and, as I understand it, the campaign was vicious. It seems to be understood in Virginia that the two men don't like each other, and neither man made much of an effort to change that impression in 2005.

    "The campaigns will also almost certainly become personal," writes Helderman.

    Nevertheless, common courtesy dictates that you congratulate the winner of the opposing party's primary, and that is precisely what McDonnell did.

    And he also seemed intent on setting a different tenor for this campaign than we've been accustomed to from Republicans in the first half of 2009.

    The GOP has been dubbed "the party of no," but McDonnell apparently wants to change the language — and, with it, the drift of the debate — in the gubernatorial race.

    "This campaign is saying yes to new jobs for our citizens," McDonnell said. "Yes to offshore drilling and more energy. Yes to charter schools and performance pay and to real education reform, and yes to greater access and affordability at our colleges and universities to serve our young people better."

    Does that mean the "party of no" is now the "party of yes?"

    In a word ... no.

  • Car loans: They say that the credit freeze is thawing, but if it is thawing in the realm of auto loans, it's doing so very slowly.

    Mina Kimes writes in Fortune.com that car dealers have managed to get more people into their showrooms with "rebates, discounts and other incentives," but it's still tough to get financing.

    In 2007–2008, Kimes reports, "loan approval rates for prime applicants, who have credit scores above 750, fell from 95% to 84%. ... Subprime applicants were far worse off — just 17% of them were approved last December, down from 66% in 2007."

    Kimes says there has been a "slight uptick" in loan approvals in 2009 "with 89% of prime applications and 20% of subprime borrowers receiving loans in May."

    But Greg McBride, a senior financial analyst at Bankrate.com, observes, "The days of showing up with nothing but a smile on your face are over. Today, stories are legion of people who have great credit and still can't get car loans."

    I worked for many years in the auto loan industry. I knew at the time that many loans were being approved that could not possibly be repaid. But I was merely a cog in the industry. I had no authority to approve or disapprove of loans. And I knew only too well that those who did have that authority were under intense pressure to approve damn near everything that crossed their desks.

    From that perspective, it's a good thing that lenders are being more responsible. But I fear the pendulum may have swung too far in the other direction.

    As long as lenders are saying no to loan applicants, there will continue to be problems in the auto industry.

    And with them, problems in the economy.

    Cash flow is the fuel of the economy. Few things generate cash flow like car payments.

  • "Saved" jobs: Perhaps nothing has been subjected to as much spin in recent months — from both the right and the left — as the stimulus package and its impact on the economy.

    The monthly jobs reports continue to tell a tale of hundreds of thousands of jobs that are being lost each month, and that is something the right seizes upon. Then the left insists that things are getting better because we aren't losing as many jobs each month as we were, which — supposedly — is because of the stimulus package.

    But, as I mentioned in this blog last week, news that is less bad is not the same as news that is good. So Barack Obama feels compelled now to speak about the jobs that are being "saved" by the stimulus package. He claims that 150,000 jobs were "saved" in the first 100 days of his presidency.

    Thus, that which appeared on the surface to be less bad news is transformed into good news.

    I have to think about that one.

    See, that presents me with a similar problem. I mean, maybe there are some jobs that are being saved because of the stimulus package. But, if that is true, is that the same thing as creating jobs? I don't think so.

    If Person A's job doesn't disappear, Person A doesn't wind up being one of the millions of unemployed Americans, and that's good. But how does that help Person B, who has been out of work since last summer? Or the millions of others who have lost their jobs in the last year or so? How does that help Person C, who is about to lose his/her job through no fault of his/her own?

    As much as I hate to give Rush Limbaugh credit for anything, I have to admit he makes a good point when he says there is no reliable way to prove that jobs have been saved.

    It seems to me that, if you claim to have saved jobs and then the numbers show jobs have been lost during the time period in question, you can then claim that the number of jobs lost would have been greater if not for your efforts — without having to substantiate your claim.

    How can you establish which jobs definitely are going to be cut? There is no rhyme nor reason to it, as nearly as I can tell. And, once you have arrived at that number, how can you calculate the ones that were saved?

    How does one prove or disprove a negative?

    The entire concept of "saving" jobs is troublesome for me — and so is the notion being floated by the Obama administration about more than half a million summer jobs that will be created by ratcheted–up stimulus spending.

    I wasn't anywhere close to being the best student in my class in math so it's hard for me to get a handle on the logic supporting this claim.

    But the part that I can get a handle on raises some red flags in my head.

    I've heard nothing that suggests that these jobs will be anything more than temporary, make–work jobs. Maybe I've missed something. I admit, I'm hardly a mathematician so, if you can explain to me how it is possible to determine how many jobs have been saved in a given period of time, I'd appreciate it.

    Because it would be encouraging to be able to look at some daunting figures and spot the daylight at the end of the tunnel.

    And, while losing 350,000 jobs in May isn't as bad as the 520,000 lost jobs that were predicted, it's still hard to find the silver lining in that cloud.

1 comment:

otin said...

The whole creating jobs, saving jobs thing is Bull, in my opinion. It is just political jargon!