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.
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.
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.
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.
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.