Federal Deficit Reducing

Aug 27, 2011
  • A basic economic FACT every story about the current budget deficit glosses over: All EVERY plan focusing on spending cuts does IS SLOW THE RATE OF INCREASE in the budget deficit. Unless the government takes in more money than it spends (what we call a “budget surplus”) not only is the budget deficit not reduced, it will continue to increase. Further, every cut in taxes or tax rates, if not accompanied by a larger spending cuts (or more revenue), only increases the deficit further. The model for this situation is not 1980 and President Reagan, it’s 1930 and President Hoover. In the face of a catastrophic stock market drop and pullback in business and consumer spending, President Hoover – following the “conventional wisdom” of the times – directed cuts in government spending to “balance the budget” at all costs. That’s exactly what’s happening worldwide today as cuts in consumer and business spending are matched by cuts in government spending. The best outcome in this situation is a generation of slow growth. The worst outcome is a depression matching that of the 1930s.
  • The opposite of that is what we’ve got at the moment, blowing cash like it’s going out of fashion.

    The other point about ‘austerity’ and living within your means is this – EVERYONE CAN STILL GET WHAT THEY WANT. All governments have to do is this -

    1. By next month ALL budgets are cut my 10%. Now, tell me this everyone, if you were forced to cut your own budget by 10% could you a) easily do it, and b) chances are it would have little effect. See?

    2. Tackle government waste. Hire crack teams of accountants and managers with REAL BUSINESS EXPERIENCE and pay them a damn FORTUNE. Also, publish their results to see how they earn their money.

    Do both of those and like I said EVERYONE CAN STILL GET PRETTY MUCH EVERYTHING THEY WANT. continue reading »

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Wall street drame

Aug 27, 2011
  • This is just another case of the “new American way” – where leaders who make mistakes and damage businesses decide who gets fired from the top down (and get large bonuses for “restoring profitability” if they throw enough innocent workers under the bus), while people who worked hard to implement the ideas of these geniuses in boom times are cut loose or forced to work double duty, and loyal customers who got bad advice (or were victims of outright double dealing) are forced to pick up the slack.
    I’m waiting for a Board with more stones than comp consultants in their pockets to start a layoff from the bottom up, by asking workers to weed out the useless jerks in the ranks of their supervisors, the remaining supervisors to weed out middle managers, remaining middle managers to weed out executives, and remaining executives to decide on whether to retain the CEO. This strategy should result in savings that are a multiple of those from a top down headcount reduction, due to the leverage provided by identifying the greatest amount of dead wood at the highest salary levels.
  • As a kind gesture, I would also offer people at each succeeding rung up the corporate ladder the option to waive their bonuses and take a proportionate cut in compensation to save their fellow employees’ jobs – not because any of them would ever take it, but because it would be fun to see them experience the acrimony, fear, bitterness and survivor guilt which so far seem to have been reserved for working people who are given that “generous” offer when their bosses need cost reductions to hit their bonus targets and option strike prices.
    At least the executives, traders and deal makers would understand the importance of keeping their compensation packages strong in the face of layoffs so that the ones left behind would not all jump ship, unlike lower level workers who somehow think that it’s fair for everyone to make less money when the firm makes less. And with the leverage of weeding the numbers of these people out from below, the firm would still save more money than by keeping them ALL on at comp levels disconnected from performance. continue reading »
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