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Who does the economic crisis really hurt? Some politicos claim they are not hurt, that they have yet to see a recession. Maybe that is because they are somehow insulated from “main street”, as I frequently see people in pain due to our ailing economy. So, what is the face of a person hurt by our current economic crises?

First, we have the unemployed father of six children, who recently lost his job due to a “slow down”. He is a single dad since his wife was killed In a automobile accident ten months ago. How will he survive, how can he earn enough money to feed and clothe his children, pay for rent and utilities, and gas for the car? He knows that on unemployment compensation he cannot meet his obligations.

Then there is the teacher who was let go and no longer has a job because of low funds in the school district. He may survive on his job at a fast food restaurant. It is his students, now in a much larger class, whose education is suffering. One of his classes needed to be eliminated. so the students who can no longer take the subject he once taught are the ones whose education is hurting.

Others are the fireman and rookie police officer fired because the city budget can not afford their salaries. Yes, both are having some financial problems, but it is the city than suffers. Without an adequate force some

homeowner’s house may burn down. With fewer police the crime rate may increase. Due to budget problems caused by a lowered tax base, the city is not as safe.

Finally, workers nearing retirement are losing their nest eggs. Many, after decades of carefully building for their retirement have had their funds nearly eliminated. People who planned on retiring in the next few years now face long delays in their planned retirement. A few may need to work the rest of their lives.

So, I doubt that many politicians are really experiencing difficulties due to the recession as their salary and benefits are not sensitive to the economy. Some bankers lost their jobs but most left with huge bonus payments. Many companies went bankrupt but only the small business owners are in dire condition.

Typically it is those in poverty, the homeless, and the middle class who have real problems in a recession. If our politicians do not see that then they are not really in touch with the majority of the voters.

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.

The political arguments fly back and forth concerning how to pull out of our economic mess. Some suggest we learn from FDR and how he led the US out of the great depression. Others insist that it was not FDR’s “New Deal” that lifted us from depression, but World War II. Who is right?The best measure of our economy is the gross domestic product (GDP), which measures our national income and output. Another measure is the percent unemployment, which was not considered vital before the depression and so until 1930 was estimated rather than measured. Let us look at the GDP and unemployment data for the years in question. The data is in the table at the bottom of the page.Historical data (arrayed in the table below) indicates that the effects of stock market crash of 1929 were gradually felt by most people. The depression took time and the recovery was slow.As I view the data, it seems clear that FDR’s new deal was leading the US out of the depression. The GDP in 1929 was 103.6 billion dollars. The GDP hit a bottom of 56.4 billion in 1933, but rose to 101.4 billion dollars by 1940. The trend of the GDP is clearly positive before our involvement in WWII. By 1937, well before the war, GDP had increased 61% from its low point, and, of course, by 1940 the GDP had regained most of the loss.

Unemployment, not clearly measured before the depression, was estimated at 3.5 percent in 1929, it was 8.9 percent in 1930 and struck a low point of 24.9 percent in 1933. By 1941, before the war, it had improved to 9.9 percent. The trend of unemployment shows that it had returned to 1930 levels before the war began for the US on December 7, 1941.

Some people note that, before we entered the war, our industry produced the supplies necessary for Britain and the Soviet Union to fight the war. That observation is true, but irrelevant. Technically the war started for Europe in 1939 when Germany invaded Poland. The Lend Lease program that US industry used to manufacture and supply equipment to Europe did not begin until March 1941, so it could not account for the 1940 and early 1941 GDP.

Those who reject FDR’ efforts miss that the US had 17.86 million of our citizens who served in the military during the war. At the end of 1945, 14.32 million were still in uniform. Most service members were released by June 1947, more than 9 million new workers. If our economy was still not recovered, why didn’t unemployment skyrocket after the war? Unemployment in 1946 and 1947 was 3.9 percent, in 1949 5.9 percent, and was mostly in the 5 percent range during the years of the 1950s.

Yes, the GI bill helped our economy after the war by financing higher education and housing for our veterans. Yes, the Marshall Plan, which essentially rebuilt war damaged European countries, stimulated our economy to 300 billion in the 1950s. And yes, the Eisenhower administration sponsored the building of interstate highways which also assisted the economy. But all of those were government sponsored and funded programs, just like the “new deal.”

So, I think the information is clear that the great depression was over for the United States before WWII. If this is true, why don’t we learn from FDR and get ourselves out of this mess?

YEAR GDP* UNEMP*

1929     103.6      3.5

1930      91.2      8.9

1931       76.5    15.9

1932      58.7      23.6

1933      56.4      24.9

1934      66.0      21.7

1935      73.3      20.1

1936      83.8      17.0

1937      91.9      14.3

1938      86.1      19.0

1939      92.2      17.2

1940      101.4      14.6

1941      126.7      9.9

1942      161.9      4.7

*GDP = Gross Domestic Product in Billions

*UNEMP = Unemployment as Percent of Workforce

** US Department of Commerce and US Bureau of Labor Statistics data

Robert Samuelson, in a recent Newsweek article, complains that Obama’s “stimulus” is “stunted”. He makes several points: according to the Congressional Budget Office (CBO) much of the spending will not come until 2010 or later; again, according to CBO, for some projects, like the electronic health records, the progress will be slow, hence of very little help as stimulus; third, it is too little help for state governments, according to Center on Budget and Business Priorities (CBBP); and finally, he says that the bill Obama signed was very political. My first problem are his sources. The CBO is an analyst group who take numbers and make estimates. The are neither prominent economists nor political experts. They make estimates based upon assumptions, and they assume that the proposed actions will take a long time. Their assumption is unwarranted. CBBP is no different, they are analysts, not project experts, and their judgments are based upon the information provided them, and that information does not come from the project’s planners.

Let us take the electronic health records plan. It will take as long as Obama’s people decide it will take. There is a current program already working extremely well in the Veterans Administration. The VA system has computerized health records, inventory, and instant connection to orders for medical tests and prescriptions. After a brief review by computer experts, the entire country could have electronic health records in less that a year. All we must do is copy what works.

Samuelson has sufficient training to realize that the key element in any economic stimulus is confidence. Credit is not flowing well enough because wealthy investors are afraid of losing more money. When they are confident they are willing to take risks on loans. Samuelson, despite any “good intentions” is, of course, helping to undermine any confidence that could be gained from Obama’s effort.