Economics for dummies Monday, Oct 6 2008 

Last week, the politicians and bureaucrats in D.C. told us if we didn’t understand the need for a $700 Billion bailout of nation’s financial markets, we were dumb.

Last Monday, when a majority of the House of Representatives listened to us dumb mullets they voted down the bailout.

The proponents of the bailout were quick to point out how terrible it was that the Congressmen who voted nay weren’t statesmen enough to do what’s best for America.

Gloom and doom

We were told the 401k and other retirement portfolios of the widows, orphans and elderly was crashing.   The old folks would soon be unable to buy food to eat and would have to live in the streets.

Following the failed vote, last Monday, the bailout the stock market dropped over 700 points.  The politicians were quick to say “I told you so.”  Yet, the next day the market rebounded and almost wiped out all the losses.

Happy days

The threat worked.  Last Friday, Congress, following the lead of the smart folks in the “upper chamber,” voted to pass the bailout.

Following the bailout passage the stock market which had risen by about 400 point earlier in the day, suddenly went down the tubes.  Say what!

Today, as I write this (1:45 PM CDT) the market has dropped over 700 points.   The market is currently at its lowest ebb in years.

Questions

The stock market nose dive begs questions for which we need answers from the geniuses who caused the mess and who also concocted the Rube Goldberg bailout:

– Now, what’s going to happen to the widows, orphans and elderly now that their retirement portfolios are continuing to sink?  Will we build poor houses?

– How is repeal of the 39-cent Excise Tax on wooden arrows made for children (part of the bailout plan) going to benefit the retirement portfolios of widows, orphans and elderly and free up the credit market?  Is this an effort by the anti-gun folks to move our children from guns to bows and arrows?

– How is a tax break for race-track owners (part of the bailout plan) going to benefit the retirement portfolios of widows, orphans and elderly and free up the credit market?  Will they now be able to buy lunch at a race track on credit?

– How is a tax break on rum imported from Puerto Rico,(part of the bailout plan) going to benefit the retirement portfolios of widows, orphans and elderly and free up the credit market?  Will the drinking age be lowered so the kids can forget their sorrows on cheap rum?

– How is a tax break for worsted wool makers, (part of the bailout plan) going to benefit the retirement portfolios of widows, orphans and elderly and free up the credit market?  Will it keep them from itching because of wearing “unworsted” wool?

– How is a tax break for Hollywood film and television production companies (part of the bailout plan) going to benefit the retirement portfolios of widows, orphans and elderly and free up the credit market?  Will their cable bills and the price of movie tickets go down?

I admit, I’m too dumb to answers to these questions.  I look forward to the geniuses in Washington enlightening me.

C.B.

The elephant in the room Wednesday, Oct 1 2008 

Below is a copy of a column that appeared in Tuesday’s Shreveport newspaper.

One may argue with some of the conclusions and one may argue with the suggested solutions, but the numbers are easily checked and we definitely have a problem.

New ethics laws, more government, more studies, more commissions, higher lege pay and wishful thinking aren’t going to change this disastrous trend.  It is going to require some sacrifice by government in order for the state to survive.

This is the “elephant in the room” about which nobody in LA government is even mentioning much less looking for solutions.

C.B.

“Grow or Die”: Lessons From 200 Years of Louisiana Population History

When the 2010 Census is conducted and completed, 200 years of Louisiana’s population history will have been recorded, and many remarkable aspects of “who” Louisiana was and is are in that record. Included among these are our 228% population explosion in the 30 years before the Civil War, the near-halving of our black population from 1890 (50% of our population) through 1980 (down to 29%), and the relatively minor impact of Hurricanes Katrina and Rita on our population trends.

Also dramatically documented is Louisiana’s descent to the bottom of national rankings in population growth for the past 25-30 years, with stagnation likely to soon turn to unprecedented loss. As important as that fact is on its very face, what is even more striking is that our recent such history is the opposite of the record of growth in our first 150 years.

Although Louisiana was not a state until 1812, we were nonetheless included in the 1810 Census, the third Constitutionally mandated enumeration conducted by our federal government. That census reported 7,239,881 residents of America’s then-17 states and assortment of official “territories.” Included was the Territory of Orleans - soon to be Louisiana - the home of 76,556 souls.
Between 1810 and 1950, the population in the United States multiplied 21-times, from 7,239,881 to 151,325,798, but Louisiana’s growth blew that away, multiplying 35-times - from 76,566 residents to 2,683,516.

We would never again experience such growth.

Between the 1950 Census and the most recent official Census estimates of July 1, 2007, the U.S. population nearly doubled, growing 99.3%, from 151,325,798 to 301,621,157. Louisiana’s growth during the period - from 2,683,516 to 4,293,204 - was a notably smaller increase of 59.98%.

The picture further worsened after 1980. As most of us living in Louisiana since the mid-1980s remember only too well, Louisiana and a handful of other states took the brunt of the decade’s oil-patch-dry-up. The damage to our economy spread quickly from our oil fields to our financial-service and real estate sectors, and within a very few years, a massive out-migration was underway. By the time of the 1990 Census, Louisiana was solidly in the teeth of the severe and extended downturn. Between that 1990 Census and the most recent data of July 1, 2007, Louisiana’s population barely grew at all, from 4,219,973 to 4,293,204, an increase of only 1.7%. During the same period, the national population grew more than 12-times as much, an increase of 21.3%, from 248,709,873 to 301,621,157. Our state’s 1.7% growth ranks us 48th among the 50 states in the period, with West Virginia and North Dakota faring worse.

Particularly damaging is the degree to which populations in regionally competitive states jumped past us during the period: Mississippi grew 13.4%, Arkansas 20.6%, Alabama 14.5%, Georgia 47.3%, Florida 41.1%, Tennessee 26.2%, and Texas 40.7%.

It is tempting to believe Katrina and Rita are largely the cause of our stagnation, but that is not the case. When data are analyzed for the period 1990 to July 1, 2005 - two months before Katrina and Rita hit - we find that Louisiana’s population growth-ranking improves only to 43rd rather than 48th. Specifically, as of July 1, 2005, Louisiana’s population had grown 6.53% since 1990, while the nation’s growth was nearly 3-times that, 18.97%. Again, we lagged our neighbors dramatically: the Mississippi population grew 12.72%, Arkansas 17.93%, Alabama 12.35%, Georgia 40.59%, Tennessee 22.8%, Florida 37.09%, and Texas 34.48%.

“Grow or die” and “demographics is destiny” are axiomatic in this context. The risk of sliding into irrecoverable non-competitiveness is clear, as is the underlying cause of our worsening condition. Simply put, far too many residents leave Louisiana, and far too few move in. The simplest test a city, parish, state or nation can face arises in the choice people make about where to live. How does the place in question compare and compete? It is this test Louisiana consistently fails.

There are but three population characteristics to be studied in drawing such conclusions: births, deaths and migration. As detailed in latest Census data for the period Census 2000 through July 1, 2007, Louisiana’s ratio of births-to-deaths is now below the national ratio, but not dramatically so: the national ratio is 1.69-births-to-a-death (1.69:1.00), and Louisiana’s is 1.51:1.00. Among all states, 27 have a better ratio than Louisiana, 20 have a worse ratio, and 2 have the same.

The clear and present danger for Louisiana is “net migration”- the number of people who move into Louisiana, minus the number who leave. Between the 1980 Census (reported in 1981) and the most recent Census estimates of July 1, 2007, Louisiana has averaged the net loss of 30,555 people per year, or about 84 residents each day, or 3½ each hour - for over a quarter-century. Again, if the impact of Katrina and Rita is a question, the period of Census 2000 through July 1, 2005 provides the answer: during that pre-hurricane period, Louisiana’s net migration rate ranked us 48th of 50 states, precisely the same as our 48th-of-50 ranking in the most recent July 1, 2007 data.

To complete this stark picture, consider Louisiana’s young people, who - in our dearth of in-migrants - must rescue us. In the quarter-century between 1980 and July 1, 2005 (pre-Katrina and Rita), our total population weakly rose 7.6% while the nation’s grew more than 4-times that much, 30.8%.

Stunningly, our young people aged birth-to-24 dropped -14.6%, from 1,926,000 to 1,645,389. (Not that we see ourselves as competitive with Texas, but its population 24 or younger during that period increased +38.95%.) No rescue from our young people and their birth-rates is in the pipeline.

Certainly, there is nothing resembling a quick-fix for our systemic and threatening condition. Neither, however, is the remedy difficult to identify and implement. Simply, our leaders must recognize that our tax structure guarantees this defect. Louisiana must have a new tax structure specifically designed to reverse our worsening out-migration, and induce in-migration.

The elimination of the state income tax - with revenue loss off-set by a combination of a “renter’s tax,” a consumption tax on certain major purchases, and business tax changes - might start the debate. Regardless of the content of that debate, the debate must start immediately, and that new tax structure must result. Otherwise, Louisiana’s destiny is, inarguably, anything but bright.

Elliott Stonecipher
evetsmanagement@msn.com
318-424-1695

What and who should we believe? Tuesday, Sep 30 2008 

Yesterday, we were told by the politicians who created the country’s current financial mess if they weren’t given $700 BILLION to fix their mess there would be financial Armageddon in American and around the world.

The media breathlessly reported that the Dow Jones average plummeted by 777 points.  That’s the single biggest point drop in the history of the Dow!  So.

What’s it mean?

The 777 point drop was a loss of 6.98%.

On October 19, 1987 the market lost 22.61%.

On October 26, 1987 the market lost another 8.04%.

In one week the market lost over 30%.

I don’t recall hearing about a financial Armageddon.

On October 27, 1997, the Dow dropped by 7.18%.

On September 17, 2001 the Dow dropped by 7.13%.

Apparently, we, as country, weathered those earlier downturns in the stock market without the collapse of civilization as we know it.

As 9:15 AM, the Dow has climbed over 250 points.  That’s a 2.6% gain.  So far, in two days the Dow has suffered a net of less than 5%.

More info needed

The sky may fall one day, but we need more evidence from our public officials before we agree to give them $700 BILLION to implement some Rube Goldberg bailout plan.

We don’t need to be told that we are too dumb to understand the Rube Goldberg bailout.  We need politicians who are smart enough to explain it to us. We are their bosses!

Have you ever told your boss that you have made a mess of his business; that he’s not smart enough to understand the problem,  but you can fix it if we will just give you more money.  If you had that kind of nerve, what was the result?

A proposal

We also need a plan that holds those who created the problem responsible.  That includes those in the White House and Congress.

Include in the next bailout plan a provision that until we see the long term results of the plan, the pay of the President, his advisors and Congress is suspended.

I wonder what the outcome of the vote will be in Congress if the Congressmen actually have something at stake.

C.B.

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