budgeting post script

Time to whip out the Excel charting function one more time.

Apparently, according to Reuters, top Federal Reserve official Bill Dudley was trying to relate to the common man. I suppose he gets props for effort; at least he mentioned something the average American has heard of in a question and answer session that involved more questioning than stenography.

Answer:

"Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said referring to Apple Inc's (AAPL.O) latest handheld tablet computer hitting stories on Friday.

"You have to look at the prices of all things," he said.

Now, there are a number of interesting questions that might elicit such a response. Something about technology, or innovation, or business strategy, or upsetting Reggie Middleton, or when your real question is censored so all you can ask is Mac or PC.

However, here's the actual Question to which Dudley responded:

But in Queens, New York, on Friday, William Dudley was bombarded with questions about food inflation, and his attempt to put rising commodity prices into a broader economic context only made things worse.

"When was the last time, sir, that you went grocery shopping?" one audience member asked.

So, a questioner asks about this part of the budget (food):


And he answered with this (computers):


What a perfect illustration of how people ask questions about the important things and our leaders talk about the trivial items. And of course, my personal budget probably puts more emphasis on computing than the average household budget.

Keep that in mind the next time some Important Serious Person says they can balance the budget (or any budget, for that matter). It's really not that complicated. Individual households need decent wages and affordable housing, food, healthcare, education, transportation, and energy. Federal and state governments need some combination of increased taxes on the wealthy and reduced spending on the military, financial industry, fossil fuels, prisons, agribusiness, and healthcare. The final combination of those options is determined by the particular political economy we wish to deliver; there's no one 'right' solution to fiscal responsibility.

But talking about much else, from iPads to public broadcasting, from the NEA to the NEA, is a combination of ignorance and malice, varying in relative proportion from pundit to pundit.

By the way, did you notice the typo in that Reuters quote? I don't know how English teachers can possibly compete for students when the corporate media itself has been busy dismantling all writing standards from ethics to proofreading. Reuters is one of the Good Guys of our traditional media outlets, and it appears they pay about as much attention to an article as I do to a blog post.

Maybe they'd have more advertising dollars and readers if the media had spent more time the past couple decades making our leaders answer serious questions with serious answers.

fed rally sports trifecta

I'm actually home enough now to a put a few thoughts down! The past couple weeks have been fantastically busy.

DC was absolutely gorgeous this past weekend. Warm for Halloween, brilliantly clear skies, perfect backdrop against the Capitol. We overwhelmed the city; literally. There were people waiting so long for the subway in the morning that they didn't make it to the mall by the time the rally was over. It took Doug over half an hour just to buy a ticket at 9 in the morning. Oh, and Jon, there are bees in DC in October. One was buzzing around our section of the crowd for about half the rally.

The Federal Reserve is even more anxious and insecure than I imagined. They're so afraid now that they openly view the public as the enemy, personified beautifully by how they handle their flagship building, the Eccles building. One of the great structures to come out of the Great Depression, it's built in dignified stone and marble on Constitution Ave overlooking the northwest end of the mall. We just don't build like that anymore. Unlike many other government buildings in the area, this structure is built back from the road, allowing a simple public plaza area between the steps and the street. Fountains and stone benches flank the sides, while stone pathways and open grassy areas comprise the middle.

Bernanke has instructed his security guards to chase off American citizens having the audacity to use this public plaza, far away from the actual entrance to the building. On a Sunday afternoon. With the Marine Corps Marathon running along Constitution Ave. I never knew how powerful a scrawny white dude was to confront our failed and fraudulent financial crooks until I was literally chased away from their HQ. I can't think of anything that would better symbolize what is going on in our country right now.

Except maybe college football voters. Just totally bizarre. Nebraska is ranked 6th by the computers, 10.5 by the humans. LSU tied Nebraska for 6th in the computers, but has an 11.5 by the humans. The machines have Michigan State at 10; it's 15.5 for the humans. Missouri is number 4 in the computers, 14.5 in the human polls. Of course, Alabama and Ohio State work the other way: 15 and 16 in the computer rankings, 5 and 8 in the human polls.

This is getting to the point where it's hysterically funny. Michigan State is number 1 in the Big Ten right now, except the humans think they're number 3. Missouri and LSU both lost to much better teams than Alabama, so of course the humans think Alabama is having a much better season. Forget playoffs. We should just select the BCS participants from the preseason prognostications. Playing the games seems to be an irrelevant waste of time. I can't wait to see how this weekend turns out. And I do wonder if Nebraska is going to get the Missouri treatment. What if Missouri wins out, Nebraska loses in the Big 12 Championship, and then the BCS selects Missouri over Nebraska the way Kansas was chosen over Missouri a couple years ago?

thanks tom

Okay, I'm not exactly on a first name basis with anyone from the Fed, let alone a Regional President.

But there's a great writeup in BusinessWeek about the approach of Thomas Hoenig, the President of the Federal Reserve Bank of Kansas City. Well worth the read. The observations are really pretty straightforward when you boil them down. And they're getting into the mainstream corporate media.

1. There's a difference between rescuing the banking system and rescuing big banks. Community banks are who have good business plans that add value to the economy.
2. The Fed isn't equipped to handle the present situation; monetary policy simply doesn't do much when the problem is too much credit. In fact, Greenspan and Bernanke are responsible for precisely some of the conditions that have created booms and busts over the past couple decades.
3. We should break up any entity deemed 'too big to fail'.

Or as the article writes

The hard truth, in his view, is that there just isn't much more the Fed can do to help, and we all ought to admit that.

We've had a Treasury Secretary from Goldman Sachs (GS) under a Democratic President and a Treasury Secretary from Goldman Sachs under a Republican President. The outcomes were not good,"

"What I took from that," says Hoenig, "was that it followed a period of very easy credit. It followed a period when people felt prices could only go up." Feel-good rates, in other words, led to excessive leverage and crisis. "I find it very interesting today," Hoenig continues, "how many people don't remember the late 1970s-early 1980s."

When community banks stumble, he adds, they are allowed to fail. When Wall Street collapsed, it got a heroic rescue. "I would break them up," Hoenig says of Citigroup (C), JPMorgan Chase (JPM), and Bank of America (BAC). "They're too big. They have too much political influence. When they get in trouble again, the temptation to rescue them because they are 'too big to fail' will be very strong."

the SF Fed exists in another dimension

I have decided that aliens abducted the Federal Reserve Bank of San Francisco and replaced it with a drab building that could be anything but an illegal secret conspiracy aimed at controlling the world.

I find this the only possible conclusion after being thoroughly disappointed. The location is perfect; you hop off the BART and you are in the heart of the financial district, literally at the gates of the SF Fed. You just don't know it. There's no gleaming white marble and stone structure. No statue ideal for the casual picture. I have generally thought San Francisco to be a far superior city to Atlanta. But I may have to reorient my whole worldview now. They've got the western kingdom of the rulers of the free world holed up in a bunker.

You almost feel sorry for the suckers.

i have a new project

Let's get real, while it would be cool to eat lots of green leafy vegetables and workout every day for one year, that ain't happening. A few years ago, I made my new year's project about ties. Specifically, getting rid of them.

I've got a project for this year.

I want to see how many Fed branches I can get my picture taken in front of. I've actually kind of thought this through accidentally. You see, Doug's condo overlooks the Atlanta Fed. Julie's work is right next door to the St. Louis Fed. My parents happen to live within decent driving distance of the KC Fed. Julie's sister happens to live near the Minneapolis Fed. We happen to be visiting San Francisco this February. That's like half the list right there.

It'll be fun!