Peter Yastrow's Blog

Obama Errs Again 8/30/10

We waited with bated breath to hear what his highness Barack Obama had to say about the economy. The markets practically stopped, as participants eagerly awaited our president’s Rose Garden Address.
The president’s address will be counter-productive. He talked of several possible steps the government might take going forward in order to stimulate the economy. This was foolish. More uncertainty was created, and now we have to await his “economic team’s analysis”. The president was trying to bully and embarrass the Senate into passing another partisan piece of Team Obama legislation, and the speech was his opportunity.
It is really dreadful that Obama continues to pound his fist, and point out all of the scapegoats, but on top of it, he adds more confusion and uncertainty to a market that is already on edge. Once again, our government fails us. We need the political leaders to eliminate all of the confusion and uncertainty from our decision-making. In the least, they could stop adding to it.

peter

CNBC – Trading Block

Airtime: Fri. Aug. 20 2010 | 6:34 AM ET

Discussing oil, markets and currencies, with Carl Larry, Oil Outlooks and Opinions; Boris Schlossberg, GFT Forex and Peter Yastrow, Yastrow Origer.

Sleepless in Chicago

Difficult situations never bothered me much. Hard times seem to always bring out the best in people. To be courageous, or compassionate, requires we be in less than ideal circumstances. I also always assumed that the hard times would eventually pass, that the world would turn, and we would see good times again. This outlook allowed me to continue to plow forward even under the darkest of hours.

The situation facing us as Americans is so terrifying, that I can’t sleep. The scariest factor is the amount of ignorance about economics and business within our populace. People who consider themselves “experts” about the economy continue to cite statistical evidence that supports their views. I listen to neighbors and relatives as they discuss possible solutions to our economic woes, all of these people arguing about what our government should do next to jumpstart the economy, and I get physically ill.

The statistics are worthless. Please don’t quote what happened in the 1990s or 1980s or 1930s and point out the commonalities. Unless you can perform the manipulations to the data, and account for everything that is different with respect to innovation, population, globalization, et al. then it is really a lot of noise. Don’t tell me that recessions typically last 18 months, or that employment is always a lagging indicator. Don’t start complaining about how those people in India and China are taking your jobs, and that it is all this president or the past president to blame. Don’t be confused into thinking that democrats are bad and republicans are good, or that republicans are evil and democrats are saints. The economy rolls on, as decision makers adapt and adjust to their new reality.

The tax cuts that made Reagan a hero coincided beautifully with the arrival of computers and high tech printers. Businesses quickly jumped at the chance to invest in the new technologies before the tax break window closed. To now conclude that tax cuts are always good is erroneous. Clinton is credited with a period of enormous economic prosperity, so intoxicating that we overlooked his unbelievable dereliction of duties and Oval office escapades. But Clinton did nothing, nor did Al Gore except be lucky enough to be president during the Internet boom. For the democrats to take credit for the country’s prosperity during the 1990’s is comparable to a flea on the back of an elephant taking credit for a stampede.

The key was that Clinton never tried to push through any agendas. He even got Hilary to get off the health care bandwagon and do nothing as well. Bill Clinton rode the wave, and didn’t screw anything up. Now we are in the exact opposite situation economically. As opposed to being in the midst of an amazing technological boom, we now are in the aftermath of the credit bubble bursting. We are saturated with technology, and most of the country is burdened with debt. Decision makers are extremely unsure of what Washington will throw at them next, as Obama rams through his personal and unpopular agendas.
I am very worried. Most people still don’t understand what happened to our economy. They are still pointing fingers and trying to place the blame. The people who should be forging ahead are paralyzed with too much government. The government which should be trying to minimize obstacles for businesses, continues to erect more and more legislative hurdles and create more and more confusion. The fact that we cannot agree on solutions is not the scary part. The scary part is that we can’t agree on the facts.

peter

Fed Shifting Away From Monetary Policy? – FOX Business News

August 10, 2010
Yastrow Origer’s Peter Yastrow argues all the government spending was poorly conceived and did not stimulate the economy.

Fiscal Stimulus: SIZE and SCOPE

The Romans built roads. They started building roads over 2200 years ago. Using concrete and stone the Roman senate conceived of roads that would connect all of the territories of the vast empire. This would allow for trade and provide a way to move troops quickly. Roads hundreds of miles long. The great pharaohs of Egypt built the great paramids over 2 thousand years ago- literally changing the horizon with their incredible height and size. These man made mountains required great planning and enourmous vision.
There are many famous Gothic cathedrals in Europe. The gothic cathedrals are famous for the long thin windows and flying buttresses. The style evolved from the fact that the town’s people could only carry stones that were of certain size. With smaller stones, it is impossible to create wide windows, so they made the windows very tall to allow as much light as possible into the cathedral. The walls needed to be high, for the tall windows, and required more support. 13th century engineers designed systems of external piers called flying buttresses which could support the massive walls.
Notre Dame Cathedral in Paris was started in the early 1100s and was not finished for more than 200 years, with different kings responsible for the ongoing project.
They really thought big back then. Egyptian kings tried to build mountains, the European kings built fantastic structures that still inspire and awe us today. What will our leaders create? What type of vision and planning are we engaged in today as we seek ways to stimulate our economy. Those hundred year projects provided people with careers, and trades. A mason, his son and his grandson may have all worked on a cathedral. Those hundred year projects gave direction and shape to the society. It allowed people to plan a future, gave them a path to happiness.
A huge plan would be a great thing for the United States, a multigenerational project of immense size and scope that would galvanize our society and give us some hope and direction. Imagine how the country might have responded to a declaration of gasoline independence, or a national project to completely revamp the transportation system. One project that I am particularly fond of would take more than 40 years to build. We would connect a giant platform in low geo-synchronous orbit directly to the earth with an elevator. This elevator could then lift payloads into orbit in a matter of a few hours, and thus would be assuring us the ability to access space easily, and with proper vehicles, could allow global travel times to be cut down to a matter of hours. Imagine taking the East-Coast elevator at 8:00 a.m. – being in orbit by 11:00, and being in Australia by 11:45 by way of shuttle. Imagine the cost of energy being almost free to us as U.S. citizens because of our awesome solar collection facility-orbiting overhead. We need to think big. We need a 21st century equivalent to long roads, stone mountains, and giant cathedrals.

j.o.y. to the world

peter

Tags: stimulus public works

DON’T FRET THE DEBT

I am a fiscal conservative. I prefer a small government that has a very limited role. So it may seem extremely irrational to take the attitude that the deficit that has mushroomed to nosebleed levels is not a key concern. At first blush, one may wonder if I have lost my way, siding against the Republicans as they scream about the deficit. However, if we think about the problems that face our nation, and the goals we need to set, reducing the deficit should not be in the top 5.

Our government blew it. They are in the process of spending one trillion dollars of money on pork and payback. They labeled it a stimulus package, but it really amounted to nothing more than repaving roads, and building parks. There was no chance that we would stimulate the economy, and there was so little money spent on research and development, that any hope of future benefits was also lost. It was the single biggest fiscal mistake ever in the history of the world.

No use crying over spilt milk. What’s done is done. We still need to help our economy and help our citizens. The need is still just as great as ever. The jobless rate has been creeping steadily higher, and the risk of deflation is looming. We still need a stimulus plan; the first one was a corrupted joke that Obama and company invented to make their campaign contributors more powerful. So lets get going on a real stimulus plan, that is forward thinking and more comprehensive than the shot gun blast of tax payers monies they are in the process of spewing all over their cronies.

A real stimulus plan would address the education, training and long-term goals of our workers. A real stimulus plan would address worker productivity, and would focus on enhancing and improving their output. This will require more deficit spending. If the Republicans want to fix the economy, they are going to have to increase the indebtedness, and allow the democrats to increase the indebtedness as well.

Don’t FRET the DEBT. We are making way too much out of the fact that we have spent more money than we have collected. Deficit calculations are really simple, and similarly really useless. We make no distinction between spending a million dollars on a fireworks display or on a new bridge. We do not have a balance sheet that shows all of our country’s assets. How much mineral wealth, how much land, how much natural resources are owned by the United States, is not even part of the debate. Could you imagine evaluating any entity without looking at the asset valuations? Our country is quite wealthy, and given our 30-year bonds yield only 4%, apparently the world is not too concerned with our ability to pay our bills.

The fiscal conservatives are needed now more than ever. We need to make sure that the next stimulus package is a legitimate economic concept. We need to make sure that the money is not wasted or squandered or earmarked. However we must all understand that we need a stimulus package, a real one, and now is not the time to stand on our stumps and complain about the debts. The money that was spent is gone. The money was wasted on the wrong types of projects. Now we need to spend money on the right projects. The biggest mistake would be to try to shrink the deficit at this time. Cutting government spending and increasing taxes will only strengthen the economic headwinds that already are at gale force. Austerity will not help our economy. The drop in aggregate demand will not be offset by an increase in the global market, and we will only hurt our own companies who rely so much on government business.

It is unfortunate that we will have to spend another trillion, but we really don’t have a choice. If we take a hard line approach, we will drive the economy into a depression. Winston Churchill said, “ If you find yourself going through hell, keep going.” If we want to stimulate, keep spending. The worst-case scenario is a little inflation, and that would be a welcome sign to all of those defacto homeowners out there.

Joy to the world

peter

CNBC – Monday’s Market Moves

Airtime: Mon. Aug. 2 2010 | 6:30 AM ET

Insight on futures, with Kathy Lien, GFT Forex; Carl Larry, Oil Outlooks & Opinions; and Peter Yastrow, Yastrow Origer.

Tags: double dip