It was a dreary, drizzly day in Los Angeles. My wife and I and all of our dogs decided to go down to Rancho Mirage. Before we left, I had a nice morning reading sad stories about the economy, especially one about how banks had so much cash, so much more cash than they had good uses for, that they were discouraging people from saving. Interest rates on deposits are trivial, as we all know. Now, the New York Times reports that some banks are actually charging customers to allow those people to deposit money with them.
That means interest rates are negative. As far as I am aware, the last time this happened was in the worst days of the Great Depression. We are in a classic Keynesian "liquidity trap." That means when the Fed pumps more money into the system, it doesn't get used for new plants or expansion, but just stays in the most liquid form, like the shortest term Treasury instruments.
Again, this is exactly what Keynes said would happen when an economy reached stasis at a level well below full employment.
Kids, I hate to break this to you, but it sure looks as if Keynes had this part of the present-day situation nailed down. The part about what you do about it--well, that part is still a bit of a sticky wicket.
I doubt if most Americans, even very learned Americans like Wlady, know that the Great Depression only ended with Pearl Harbor. Not until we got full national mobilization and unlimited war production did the Great Depression end. Unemployment was well into double digits as of late 1941. That was after every kind of New Deal program. Only stupendous national government spending got us going.
No chance of that now, right? No, wrong. It's worse than that. We are already having massive deficit spending and it's truly massive. We spend about $40 billion each day more than we take in at the federal level. We still have 9 percent unemployment and a prostrate housing sector.
Either Keynes was wrong about that deficit spending or we have to do it at a full mobilization level, where we quadruple federal spending deficits or something like that.
That's not going to happen.
What do we do? Monetary policy just will not work when there is zero enthusiasm in the business world. Neither will deficit spending.
A friend suggested that we make it illegal to be unemployed. If you are still unemployed, while in good health, after six months, you will be assigned a job as sorter of books at a postal facility or a trash picker-upper at Zuma Beach or a schoolteacher in Brentwood Park. You won't get any more unemployment comp. unless you take the job.
This sounds like a good idea to me, but probably most people would consider it too severe.
I go back to what I keep saying: for some of the unemployed, the fault genuinely is theirs. They are just not looking to work. For others, obviously not. They really are suffering. Their pain is in no way their own fault. But compulsory work? Is that a bad idea? I guess sometimes, yes, sometimes, no.
What about housing? Here, it's just a catastrophe. What on earth will we do? Surely, the solution is not to take away the tax deduction for mortgage interest. That makes no sense at all.
Before my wife and I set out, Phil DeMuth and I had lunch at Nonna, a great Italian café. We had unbelievably good pizza. Most of the time we talked about my favorite novel, The Great Gatsby.
Topics: Was Gatsby Jewish? I think he must have originally been in Fitzgerald's mind. "Gatsby" or "Catesby" is often a cover name for Katz. Gatsby had the very Jewish combination of superficial toughness and extreme sentimentality we Jews often have. Plus, he was great pals with the notorious fictitious mobster Meyer Wolfsheim, and I wonder if Wolfsheim would have trusted a Gentile with his highly secretive business.
Other topic: Is The Great Gatsby about money or about love? Or is it about the worship of money, which in Fitzgerald's eyes was the American religion? Isn't Fitzgerald really all about money?
Other topic: Do today's students even read Fitzgerald? If not, what can they read that remotely compares with Fitzgerald? Or does asking the question show a hopeless antiquity in taste on my part?
Other topic: Why does anyone even bother to write novels when none of them can come even close to Fitzgerald? Well, that's not true. Philip Roth and Saul Bellow and Herb Gold at their best are awfully good. Still, the decline in novel-writing skills is palpable and pitiful.
It's fun talking to Phil. He's smart and extremely well informed.
Finally, we dragged our carcasses out of the house and headed for the open road. Or, sort of open.
We made excellent time getting down to Rancho Mirage, but I am bound to say that when we got to our favorite shopping center here, it was a depressing sight. There is so much empty storefront it scares me. There are so few shoppers that it's worrisome. It's getting really sad.
Then, swimming at night under the stars. That was nice. I was up a lot of the night feeling ill, maybe from some ancient leftovers I had. Well, who cares? I am a one percenter, destined for the ash heap of history. My stories are stories of the discredited parasites and looters of the rapacious free market system, where the freedom is just slavery for the poor students. I just hope before I am shot I can help the students get their loans canceled.
That might atone for my having a swimming pool.
UP AND OUT to a dermatologist to have some moles and skin tags removed. I think this guy might have been working with Adbusters, the anti-Jewish group who started OWS, that says it's just anti-Israel. ("Tell me another," as Diane Keaton says when her Arab terrorist lover says they aren't anti-Semitic in the movie, the great movie, The Little Drummer Girl.)
This doctor left me with four fewer blemishes (I hope) but with searing pain all over my neck. That's not good.
As I lay in bed afterward, contemplating my (well-deserved for being pro–free market) pain, I looked out at my sleeping dogs, and beyond them at the pool and the golf course. How I wish I had the power to allow Occupy The Desert protesters to camp there, leave their feces there, bang drums all night. That's the kind of work that builds a great world.
But to return for just a moment to sanity, or a heartless one percenter's view of sanity (actually, I take that back… Warren Buffett told me recently that by his measurements I am barely middle class…), the economy is in such a mess for retirees in particular it's genuinely cruel. The Fed's worthless cheap money policy means zero interest for savers. That hits us old people very hard. Plus, only a very confident man or woman counts on the stock market for gains right now.
Our homes, once the rock of our retirement hopes, are now essentially worthless. They have an appraised value. Yes, that is true. But they never sell. So, basically, they are worthless.
Most of us don't get company pensions. That was the previous generation. Only civil servants get really juicy pensions now--and that won't last.
So, as my neck feels as if a vampire bit it (no more than I deserve), I had a sudden revelation. Two sudden revelations:
One, you can still find stocks that will do very well even when unemployment is high. In fact, the whole index can do fine when unemployment is high. We know that, because it's happened. It's happening right now.
The second thing I thought of in my haze of pain is that you can still earn 3, 4, or 5 percent on your savings by using them to pay off your mortgages. You earn every dollar less of mortgage interest you pay just as if you had it in the bank. So, there. (I am doing ads for a company that helps you do that. Paid ads.)
I felt pretty good about thinking of that.
I slept while listening to Mozart, swam, and then headed off to Pavilions to shop for groceries. The whole immense cathedral to American plenty was deserted. Just empty. Just like a warehouse. I looked for Le Sueur canned peas. Baby little peas. TWO FIFTY A CAN!
Can you even believe that the government says there is no inflation? Earth to the Bureau of Labor Statistics…have you tried shopping at a grocery store lately? Or is this just a one percenter's evil grocery store? No, it's a great grocery store, so now, let's add "stagflation" to our problems.
But here's the good part. If the government cannot solve our problems, we can solve them ourselves. The government has used all of its "mojo," all of its "magic." Now, the "magic" has to be our own hard work and frugality and imagination. But we have plenty of magic, so let's rock and roll. As a government, we're tapped out. As a nation of 308 million energetic people, we can do anything. Even with 100 million energetic, creative people, we can do anything. Look at tiny Israel, with only 7 million people, and a super industrial powerhouse--and that's with a lot of them just "dovenning" all day. We can do it. If Israel can do it, we can do it.
I AWAKENED and for some reason, my sister--I have the best sister on the planet--had sent me a poem about working and love and Wagner and Cadillacs. It made me truly sob, partly because my grandfather had worked at Ford Motor in Highland Park in the '20s and partly because I am not sure you can truly know what love is until you know what work is. As I read it, I realized that I have to write a book about what life was like with RN, back in 1973-74 in the Watergate days. The main reason I have to write it is because we all worked like demons and we all loved each other like brothers and sisters.
That was the best job I ever had. We were committed. I am still extremely close with the man who worked next to me, John R. Coyne, Jr., and the man who worked next to us, Aram Bakshian, but also with Ken Khachigian and Dave Gergen. I wish I saw more of Pat Buchanan and Ann Morgan and Ray Price. I am still close to Julie and David Eisenhower and I can never describe how much I admire them.
I pity the poor haters in the media and the left who will never know the feeling we hard-working brothers had at the White House back in those days, when we struggled to keep in place The Peacemaker, Richard M. Nixon.
(My delightful niece, Emily, said there were so many tears in the Stein family when Nixon was in trouble that she assumed RN was my father's brother--and she was right.)
"What Work Is" by Philip Levine
We stand in the rain in a long line
waiting at Ford Highland Park. For work.
You know what work is--if you're
old enough to read this you know what
work is, although you may not do it.
Forget you. This is about waiting,
shifting from one foot to another.
Feeling the light rain falling like mist
into your hair, blurring your vision
until you think you see your own brother,
and of course it's someone else's brother,
narrower across the shoulders than
yours but with the same sad slouch, the grin
that does not hide the stubbornness,
the sad refusal to give in to
rain, to the hours wasted waiting,
to the knowledge that somewhere ahead
a man is waiting who will say, "No,
we're not hiring today," for any
reason he wants. You love your brother,
now suddenly you can hardly stand
the love flooding you for your brother,
who's not beside you or behind or
ahead because he's home trying to
sleep off a miserable night shift
at Cadillac so he can get up
before noon to study his German.
Works eight hours a night so he can sing
Wagner, the opera you hate most,
the worst music ever invented.
How long has it been since you told him
you loved him, held his wide shoulders,
opened your eyes wide and said those words,
and maybe kissed his cheek? You've never
done something so simple, so obvious,
not because you're too young or too dumb,
not because you're jealous or even mean
or incapable of crying in
the presence of another man, no,
just because you don't know what work is.