Wednesday
Wow. A lot has happened since we
last spoke, dear diary.
I have been on the road. Last week I was in Boston speaking to
some really smart people, and then to New Orleans to speak to J. W.
Roth and Dave Lavigne’s group, and to have a fantastic meal at Mr.
B’s. Now, I have been to New Orleans many a time. I have been to
many cities. I have stayed at many hotels. But the rooms my wife
and I got for this trip to New Orleans at the Ritz Carlton were off
the charts. They had the most amazing antiques and antique art I
have ever seen anywhere in my life. It was like staying in a super
high end antique store. (Frankly, I like the Phoenician better
because the rooms are so big and bright, but the furnishings at the
hotel in N.O.La. were breathtaking.)
However, I do not feel well. Somewhere, I picked up a cold or
flu and I really feel pretty tired. Going out to Bourbon Street and
getting mobbed by fans was not a good health move either.
So, now I am back from my trip, in my office in Beverly Hills,
and I definitely do not feel well. My brain is sort of racing right
now, though. (As I write this, the phone is ringing. I won’t answer
it because this is the witching hour at which the various arms of
the GOP call me to ask for money and I have already given enough.
They are real pests.)
I was just lying in bed thinking about the year 2005, when I
bought the home I love so very much at Morningside C.C. in Rancho
Mirage. Times were great then. Money was pouring in. Mortgages were
easy to get. I used to just call my woman at B of A, tell her the
price of the home, tell her when I wanted to close, and bang, it
was done.
Now, that seems like ancient history. Now, although my life is
still pleasant, the days of easy money are over. I can recall
asking my brilliant and wonderful late father-in-law, war hero
extraordinaire, what life was like in the Great Depression. He said
something like, “It was all right except that there was no
money.”
That’s sort of what it’s like now in the world of housing
credit, only worse.
Yes, Americans can still get credit for cars and trucks and
refrigerators, and those businesses are doing well. But just try to
get a home loan now. The banks are not lending, at least from what
I see. They were so wild and reckless back in the good times that
they got burned terribly.
“Once burned, twice shy,” as the saying goes. That’s the way it
is now. Yes, the banks will borrow from the Fed at zero percent and
relend to the Treasury at 2.8 percent. That business is working
well for the banks. But if you want to know why the housing market
is kaput, look no farther than banks that won’t lend.
But if you want to see why the economy is so stubbornly weak,
you have to look a little farther.
Warren E. Buffett, probably the smartest man of business that
there has ever been, told me last year and the year before that he
would start hiring in large numbers, or in any numbers to speak of
at all, when the demand revived and there was more purchasing.
He is probably doing just the right thing for his
stockholders.
But there is slack demand for some excellent reasons:
(1) Americans are terrified because so many of them have been
laid off in recent years and months and they fear that they may be
next. Even if they have not been laid off or have not known anyone
laid off, they definitely know someone who has lost his home. That
scares people into not buying anything they can avoid buying.
(2) Much of the demand for durable goods comes from people
buying new homes or buying existing homes and refurnishing them.
This just is not happening at all.
(3) The news media has Americans in a state of perpetual terror
with stories about catastrophes in Greece and Italy and Portugal.
The media is endlessly scaring us. Just perpetually. They are like
a nonstop horror movie.
So, somehow, we just have to get past the fear, wait for
resourceful Americans to find ways to get jobs, to grow their
businesses, as the phrase (grammatically incorrect ) goes, to draw
upon their savings, to cajole loans, and little by little, the
train will leave the station.
But in the meanwhile, for the first time in my life, I have the
slightest whiff—and I do mean a SLIGHT whiff—of what life must
have been like in the Great Depression. There is just too much fear
out there and too much suffering. Fear is itself a form of
suffering. It is a painful form of suffering.
What should the government do? Not much. Certainly not more
regulation. Not, at this juncture, either raising taxes or cutting
spending on the military. Just try to keep calm there in Washington
and little by little, maybe things will get better.
I keep thinking of David and Julie Eisenhower’s fantastically
great book, Going Home to Glory, about David’s illustrious
grandfather, Dwight David Eisenhower. His aim, he said, was to
restore some serenity to the nation after decades of lurching from
crisis to crisis in the Depression, World War II, and the Cold War,
and then the horror of Korea.
That is and was a fine goal. That would be a good book for the
power players to read.
Saturday
This has been a day of good and
bad. The bad is that I have to pay my quarterly taxes. I HATE IT. I
know I am always saying we need higher taxes, and we do. But I hate
paying them.
I hate writing out the checks. HATE IT. I totally understand
where the low-tax people are coming from. But there isn’t really an
option if we are to have civilization and freedom.
My father, who was about one million times more prudent than I
am, paid his taxes with gusto. I am always having to scramble to
try to figure out which account to take the money from and, again,
I HATE IT.
However, I get almost daily letters from friends in the military
in Iraq and Afghanistan, and I am bound to say that I feel like
scum for even mentioning my taxes compared with what they go
through. I see photos of Marines at Tarawa and Iwo Jima, and that’s
sacrifice.
I should be ashamed of myself—and I am.
This has also been a great day for my little brain because I
figured out something. My dear pal, Karl Rove, recently write one
of his usual fine columns for the Wall Street Journal
saying how important it was for the would-be GOP nominees to come
up with plans to lower unemployment.
But is it? Unemployment is highly concentrated in the Democratic
Party, from what I can figure. There are, of course, GOP
unemployed. But the unemployment at crisis levels is highly
concentrated in the African-American community. The difference
between white unemployment and black unemployment is startling.
Truly enormous. The level for white middle-aged men and young men
is too high, but nothing remotely like the level for black men or
even close to the levels for black teenagers and youth.
Those poor people are not Republicans. They must be helped—or
even better, must learn to help themselves—but they will not be
voting in the GOP primaries. Unemployment is a problem for
everyone, but much more for blacks than whites (again). But almost
all blacks are Democrats. The man or woman who gets the GOP vote in
the primaries will have to address slack demand and retirement
planning and possible inflation. And in the general, unemployment
will be a clear issue. But in the primaries on the GOP side,
unemployment is nowhere near the issue it is in the Democrats’
ranks.
Maybe I am wrong about this. I might be. But I’m not. No,
actually if I am on the other side from Karl, I am probably
wrong.
Sunday
Yea! Big day! A lovely family from
Redlands brought over my new dog. They are German short-haired
pointer rescuers and they came over with a beautiful eight-year-old
girl with almost all white fur and lots of adorable liver-colored
spots. She could not be sweeter. She is a bit fat and I have a hard
time lifting her up, but I love her like mad. She follows me
wherever I go and I just love her to pieces. Her name is Julie and
I love her. So, that’s good news.
Wednesday
I am still seething about the
economy, but I am just tickled pink (as my mother used to say) with
my Julie. She follows me everywhere. She sleeps next to me.
Sometimes when I am lying in bed, she will lie down between my feet
and just look at me, Sphinx like. She is my dream dog. The other
dogs, Cleo, Zelda, and Mopsy, are not happy about all of the
attention my Julie gets, but they are getting used to it little by
little. When they are unhappy, they show it in the usual way dogs
show it—by urinating indoors. This is very basic and it’s
something politicians and journalists do, too.
Mammals use their excretory functions to express unhappiness.
That’s basic. Just watch MSNBC.
Or anywhere else.
Thursday
A few more respectful words about
the economy: the postwar American economy was based on many
pillars, but two of the main ones were (1) Inflation in housing
prices, providing a predictable source of capital growth for
ordinary families, and (2) Economic growth which would lift all of
the boats except the ones that are under water (to coin a phrase of
my father’s).
Now, we have neither. Growth for the last many years has been
pitiful. The recession has both hurt growth and been a symptom
of the lack of growth. In manufacturing, we run up against the
double brick walls of China and our own demographic problems. We
are not assured of growth bailing us out in the future and this is
terrifying. As to housing, it’s a mess, and while housing cycles
come and go, and this one probably will enter a price rebound phase
at some point too, the drop has been so horrible this time that it
has devastated banks and all other lenders and, far more important,
ordinary citizens. This has been a true blow for way too many
decent people. What we do about it is unclear, but all of
us—especially me—have to be much more careful about our housing
spending from now on. (I am probably the worst offender in the
country.) But this in turn will inhibit recovery.
The good thing we have going for us is called “recession
fatigue,” which means that after a time, Americans get sick of
caution and go out and spend again, and this helps a great, great
deal. This “recession fatigue” may well be what turns the trick to
actually end the darned thing.
In the meantime, I see that Mr. Obama is attacking the oil
companies again and wanting to tax them more. This makes no sense
at all. Oil is America. Oil is a great, high energy relative to
weight and density fuel. It doesn’t leave radioactive waste. The
oil companies are owned by all of us in our retirement accounts.
The workers at the oil companies are our neighbors and friends. The
oil companies are not owned by neo-Nazis. They are owned by us. Why
on earth would we single out the most productive, most necessary of
American enterprises for punishment? It just makes no sense at
all.
I’ll speak to Julie about it.
