AskDong

My postings have been even more meager than usual, and as much as i would like to blame the difficult economic times, I really can’t.   I don’t get paid to write this blog (except for the $50 I collect a year from advertising - a problogger I am not).   I’m getting paid as much as ever which is about nothing.  However, I do want to comment on the state of the job market.   The recent unemployment numbers have been encouraging, but I would probably tend to agree with Jeff Frankel that overall unemployment is ultimately less important than hours worked.

Anecedotally, I’ve seen many people I know who have either been furloughed or had others at their place of work furloughed.   I didn’t see this duing the last recession (2001), and don’t necessarily think it’s a such a bad thing.    On a human level, coworkers are often quite selfless.  They rather have their own wages cut rather than see friends layed off.   The other advantage of furloughs is that because people are keot on the payroll when good times come again, it’s much easier to pick up work.  I’m a fan of the flexible job market.  I think a well functioning society is dependent on both workers willing to move and change their work, and employers being able to change the parameters of work when circumstances force it.  As in baseball, long term employee contracts are an albatross around the neck - just as GM and Chrysler found with it’s legacy retiree benefits.

While I believe in the flexibile labor market, and encourages others to believe in one as well, American society as whole is not particularly well prepared for it.  We are a society of grasshoppers rather than ants.  We do not prepare for the winter, and most of us have not prepared for this winter.  Ideally we would have saved up the long days of summer for the coming winter.  If that were so then workers would be better able to deal temporarily reduced hours and pay.

Yeah, I’ve been a slouch on my investment update.   I’ve kept my own files up to date, but haven’t posted an update in a long time.  The markets have treated me well, though not as well as the indexes in the last few months.   I’m not fully invested, and still have a few outstanding hedges in place.  I’ll take what I can get though.

While I have trailed the indexes in this recent upswing, I’ve managed to stay ahead of them ever so slightly for the year.  I didn’t swoon as bad earlier in the year.

If GM files bankruptcy as expected today,  Ford will be the only U.S.  carmaker left standing.  This is not to say Chrysler or GM will cease to exist.  They may both likely survive bankruptcy, or the shotgun marriage (in the case of Chrysler and Fiat), however Ford is the lone US automaker escape the current economic crisis relatively unscathed.

There is continuing debate on how much the Government should’ve been involved if at all with the bailing out the automakers.   Would it have been better that both Chrysler and GM collapsed on their own six months ago?  It’s always impossible to say.  Personally, I prefer an ordered transition to abrupt change as the economic impact is likely more favorable in an ordered transition. 

I’m not, however, particularly estatic at the notion of the Government owning 60% of GM after bankruptcy for any great length of time.   I’ve been supportive of bailouts (bank and auto) because I believe that Government has a role to ensure a smooth economic recovery.  I’m less supportive of the auto bailout both because a single manufacturing industry (even one as large as the Auto industry) has a smaller impact on the econmic system than widespread bank failures.  

The Government has entered a tricky position in having takenownership responsbility of what were private companies.  Only a quick return to private ownership can be ruled a success.  The worst possible outcome would be one such as Amtrak in which the Government effectively nationalized the passenger rail system.  That is not what I or anybody else should want.   I hope for the best and fear for the worst.