opa-opines.net

This is part of the continuing series on rewording confusing economic advice. I have found another expert who disagrees with other experts.

Next expert is Reid Hoffman, Chairman of LinkkedIn.com, a very sophisticated professional international network.

Reid says we should borrow to “invest not spend”. Further we should invest in small business that “create new products and services”. Reid counsels that we spend much more in “entrepreneurship”.

Reid Hoffman’s concept appears to be something in which we could all agree. Not being a soothsayer, however, I wonder where to “invest”. I also wonder how the “new jobs” will fit our growing unemployment problem.

I believe that Mr. Hoffman is suggesting we gamble a bit to energize the future economy. Reid seems to think can ferret out exactly which products and services will succeed in the world economy. Reid has a plan and suggests we take a chance.

 Are we ready to gamble?

This is part of the continuing series on rewording confusing economic advice. I have found another expert who disagrees with other experts.

Our next expert is Bill George, professor, Harvard Business School

Bill says that jobs are the most important indicator to watch for signs that the recession has bottomed.” * People without jobs do not spend. He predicts increased unemployment and claims it is unlikely that we will recover anytime in 2009.

George condemns the old democratic social programs as distracting. He also insists that our government needs to learn the difference between saving jobs and creating new ones. He says we should put our focus upon creating new jobs and allow the economy to retool.

So he is suggesting we stop trying to “save” jobs. What is important is the economy, not the people. So we must stop bailing out banks and ignore companies that are going bankrupt. Weak companies need to die to make room for the future. And, of course, new or retooled companies will create future jobs that are better than the old ones.

I can’t wait to inform my 2 year old grandson that he will have a job when he is ready to work in 2025.

Now aren’t you encouraged?

This is part of the continuing series on rewording confusing economic advice. I have found another expert who disagrees with other experts.

This time we focus upon expert Jeremy Siegel, professor of finance, Wharton School, University of Pennsylvania.

Professor Siegel is optimistic about recent indicators: several Federal Reserve actions; decrease in mortgage rates; stabilization of three indicators, retail sales, consumer sentiment, and housing.

The professor thinks Obama made two mistakes: first, having Treasury Secretary Tim Geithner brief the press with out details of his plan; and second, including tax increases in his long term plan. He believes that tax increases tamper optimism.

I think Siegel is telling us good news and bad news. Stable sales is good news but the bad news is that steady indicators are not really stable because they could change (if you understand that please explain it to me).

Further, Jeremy thinks tax increases for the wealthy will frighten them. So he prefers that instead of “tax and spend” or “spend and tax”, we should “spend and spend”.

Great idea. We can just print more money, it not worth as much as it was anyway.

Now don’t you feel better?

Lately I have read the opinions of a number of economists. Each giving strong advice concerning our current credit crises and recession. Each of them sound good, but as with most experts, it is very hard to understand them. And none of the experts actually agree with other experts. So I have decided to translate some for the benefit of my readers.

Next expert is Larry Lindsey, CEO of Lindsey Group

Larry advises that the effects pf the stimulus package will be short lived. He worries that since the government will have to borrow to fund the stimulus, it will put a huge strain on “global capital markets” and will therefore “crowd out” private sector activity. He further predicts that, because of government funding, costs in health care and education will rise, while private sector profit margins and wages will shrink. So we will be worse off in a year.

Larry is not suggesting that the stimulus will not create jobs, but that the jobs will be government controlled. He seems to believe that only private sector jobs are really worthwhile.

In summary, Lindsey says that private enterprise should be the ones stimulating the economy by investing in new research and development and creating jobs. I agree – they should have been doing so for the last decade.

So to translate Larry, our federal government and we taxpayers should turn this problem over to the private sector. Companies like General Motors, Chrysler, and Bear Sterns are better equipped to create more jobs and rescue our citizens from unemployment. Corporations like AIG, Morgan Stanley, and Citi Bank can do a much better job of sparking our economy.

Now doesn’t that sound better?

In my last two commentaries I mentioned that lately I read the opinions of a number of economists. Each expert gives strong advice concerning our current credit crises and recession. Each of them sound good, but as with most experts, it is very hard to understand them. And none of the experts actually agree with other experts. So I have decided to translate statements of economists for the benefit of my readers.

Our next expert is Allen Meltzer professor at Carnegie Mellon.

Allen suggests that the stimulus package that attempts to increase jobs is really just old democratic social programs that will not work. He claims that we should offer banks low interest loans if they raise their needed capital on the market. If they cannot raise the capital they should “reorganized”. He also says we should reduce corporate tax rates to encourage investment.

I think Meltzer is saying we should eliminate the current banking system and replace it with institutions designed by the government.

I also think he is really saying that we need to be Robin Hood in reverse.

We should rob from the poor and give to the rich.

Now doesn’t that sound better?

In my last commentary I mentioned that lately I read the opinions of a number of economists. Each expert gives strong advice concerning our current credit crises and recession. Each of them sound good, but as with most experts, it is very hard to understand them. And none of the experts actually agree with other experts. So I have decided to translate some for the benefit of my readers.

Our next expert is Mark Zandi chief economist, Moody’s Economy.com

Mark suggests that, to fix our crises, we need confidence among investors and the best measure of confidence is the DOW Jones industrial average. So he says we must give confidence to the stock market. Zandi further says the President must “fix” the banks.

So he is not suggesting a “bailout” of the banks because people do not like that. He is not saying that we should give lots of money to the rich bankers, since people do not like that either.

I think he trying to say that we should provide monetary assests to the trustworthy guards of our national wealth. We are rescuing our front line troops in the economic battlefield.

Now doesn’t that sound better?

Recently I read about an eminent economist, Paul Krugman, who condemns the Obama administration’s plan to assist our ailing economy. He complains that our entire system of banking and investments is fatally flawed. Krugman’s statements got my attention. Trouble is that as brilliant as he claims to be, he does not offer a good solution either. He appears to be a doom sayer.

What is it about economists that often make them so sure of themselves – even when they disagree with other noted economists? Maybe it is the “science” of economics itself. To me, economics is rather like history. You can study the past and learn trends. However predicting the future based upon the past is usually tricky.

Economics depends upon the behavior of large numbers of people. People are affected by emotions, so when they are afraid, they panic. And, of course, people’s fears are different. In other words there are too many variable factors for good prediction. Despite all that I have found seven economist, all with impressive credentials, that disagree about how to fix our economy. And, if that weren’t enough, their statements are usually filled with technical terms that most of us can not understand.

So, I intend to reword economists to help us understand. Krugman is the first of several.

Krugman says that the government must guarantee the liabilities of all the nation’s banks and “nationalize” the big “zombie” banks and do it fast.

I think Krugman is really saying that “we the people” need to put the banks on welfare. It is not the huge banks fault that they made bad loans to people who could not afford the payments. It is our fault for trusting the banks. So we just take them over and make the banks part of the government. Interesting idea. I just want to know which bank is mine.