Garcia Media Life

History has shown us that it is not a wise thing to bet against America. It’s a pretty resilient country. And though millions are still without work, the housing crisis continues and Europe may yet be unable to contain its debt crisis, Friday’s unemployment report has significantly surpassed most economist’s expectations and offers more than a glimmer of hope that a recovery is actually taking hold.

The job gains were impressive and across all sectors of the American economy. There have now been five consecutive monthly drops in the national jobless rate and the 8.3% figure represents a three-year low in the unemployment number. Wall Street seems impressed and the Dow Jones is now flirting with the 13,000 mark.

The political implications are huge. It’s estimated that if the current monthly gains of over 200,000 new jobs continues until election day, the jobless rate in November may well come in at just under 8%. It’s a significant number. No incumbent President has ever been re-elected with a jobless rate over 8%.

For Republicans seeking the presidential nomination and centering their campaigns on a cratering American economy, there are still enough weak points and looming threats to the nation’s finances to make a case but there’s also a political danger. It is not an advantageous position to appear to be rooting for the continuing demise of the American economy. It is not a “morning in America” message and it threatens to make President Obama the optimist and Republicans the party of gloom-and-doom.

There is an obvious pivot that can be made to other issues and they are also important ones to be settled in a campaign. The debate over the size of government. The arguments of over-regulation versus government protection of consumers and the environment, for example. There’s the continuing danger of massive budget deficits.

But there’s a ritual that occurs on the morning of the first Friday of every month. The current leader of the Republican party, House Speaker John Boehner, releases a public statement on the latest jobless report. For five straight months now, he’s had to say, in essence, we’re glad things are looking up but the situation is still dire. How long that message continues to resonate if the string of positive economic news continues, could well end up determining who gets to live in the White House for the next four years.

Even the lawmakers who say they “get it” don’t really “get it.” For them it’s an abstraction. They think they know what those poor middle-class people care about.

They are advised by their aides and consultants that the failure to extend something like the payroll tax cut would hurt the finances of the regular people. But they don’t really know because, by any standard- our lawmakers are very wealthy people who live in a world far different than most of their constituents.

Here are the figures. There are 535 members of Congress; 100 Senators and 435 members of the House. Between them, there are 261 millionaires. Last year, the Center for Responsive Politics found that the median wealth of a House member was $765,000. The median wealth of a U.S. Senator was $2.38 million. And during the worst of the Great Recession, lawmaker’s median wealth increased 16% between 2008 and 2009.

For a $50,000 a year income, repealing the payroll tax cut costs that worker $160 monthly or $40 a week.

So what‘s $40 to somebody worth a million or ten million or a hundred million? Not even couch change. It’s nothing.

- Half a tank of gas for an SUV? They wouldn’t know. They don’t drive cars, they have drivers.

- A little extra money to buy prescription drugs? They wouldn’t know. Congress has the best health care coverage in America. They’ve never had to use an HMO and they certainly don’t have to worry about paying out of pocket for medications.

-Eight roasted chickens at Costco? They wouldn’t know. Forty bucks barely covers the tip for a couple of steak dinners and several cocktails at Morton’s.

-Nine gallons of milk/ Ten 20-ounce loaves of bread? Actually, they do know these figures because they get briefed on them by aides so they won’t get embarrassed if some wise-ass reporter asks them.

- Half the price of a one-way ticket on Amtrak’s Northeast Regional for the holiday visit to grandma’s in New Jersey? They wouldn’t know. They take the Acela. 1st Class.

- A really cheap pair of shoes? They wouldn’t know. A pair of Ferragamo men’s shoes goes for about $600. The low end of Manolo Blahnik’s for women go for about $700.

Don’t get me wrong. I wouldn’t mind being rich myself. But when they fight for us regular people, it’s usually because doing so helps ensure they remain on the pathway to power and wealth. After all, it’s the little people who elect them. I’m not saying they don’t care. It’s just that when they consider the tough times most people are going through, they have to imagine that world. They certainly don’t inhabit it.

Some would accuse me of waging class warfare. I would respond that it’s not war when one side has all the weapons. But it is class cluelessness.

On one hand, I want people to shop. Consumer spending boosts the economy and helps create jobs. On the other hand, the materialism is just so disturbing on so many levels. On the third hand- who’s to begrudge folks down on their luck looking to find stuff they can actually afford? I am obviously conflicted.

I have a view of a Pentagon City Mall from my apartment balcony. On Thanksgiving morning I noticed tents had been pitched outside the closed doors to said mall. Could these be Black Friday maniacs? So I took a walk and confirmed my suspicions. Some folks had, indeed, chosen to spend their entire Thanksgiving Day waiting for Best Buy to open at midnight. The line kept growing throughout the day. People were festive. I realized this had become some sort of deranged sport.

Because my son visited me for Thanksgiving and as a starving college student, needed a couple pairs of shoes, we braved the throngs and actually went into the even larger Pentagon City Fashion Mall- a gigantic five-story complex about three city blocks wide. I hate shopping so much- on a normal day, much less BLACK FRIDAY. It was every bit the crowded, aggressive experience I imagined. Except I forgot about the tedium and boredom of the long lines, the unpleasantness of surly customers like me. My son, I must admit, is much more mature and patient than I. Then again, he was the one getting the free shoes.

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So now it’s the Cyber Monday after Black Friday and I have just scoured the World Wide Web for interesting, violent shopping stories to validate my intense dislike of crass commercialism.

Found some!

From Yelp.com, two interesting accounts of a Black Friday shopping experience from, apparently, the same Best Buy mob scene at the same California mall. The first one from Chris “Chrispy” B:

About thirty minutes before opening time everyone became one huge mob around the front door. They tried to limit the number of people allowed in at once but the mob just pushed through. My chair got bent in half somehow, still not really sure how. Probably has something to do with my swollen knee.

Apparently, he’d run into Joe the Wizard “K” :

Someone hit me so hard with a chair that he nearly bent it in half. Enjoy your television.

Then there’s the story of 61 year-old, Walter Vance, a pharmacist with a heart condition who collapsed in a West Virginia Target store. Shoppers reportedly stepped over him to get to their sale items.

And my personal favorite: Turns out the woman who pepper-sprayed fellow shoppers at a California Wall Mart in order to clear a path to a crate of X-Box video game players- has turned herself in. But according to police, the moment she walked into the precinct she invoked her 5th amendment right against self-incrimination.

I’m not sure exactly how this conversation went but it could have been something like this:

Pepper-Spraying Shopper: I’m turning myself in.
Cops: What for, lady?
Pepper-Spraying Shopper: I can’t say.

?????????

Already less popular than Venezuelan dictator, Hugo Chavez, BP during the oil spill, Nixon during Watergate, lawyers, the IRS and Paris Hilton, Congress seems intent on finding a new bottom in the hearts of the public. The so-called congressional Super Committee’s failure to find even modest savings and revenues to address the federal deficit is just one more example why people seem to really despise Congress.

There is plenty of blame to go around on both sides and this is not an opinion forged out of a need to sound non-partisan. The combination of cowardice and partisanship is very, very powerful and both Democrats and Republicans are proving that, in this Congress, playing politics trumps national interest every time.

Democrats have not been serious about addressing the cause of much of our deficit-spending- entitlement programs like Social Security and Medicare. Why? Because the choices are painful and politically unpopular. Republicans, to their credit, finally gave in a tiny little bit and for the first time in recent memory, agreed to a modest rise in tax revenues but then sabotaged the whole thing by demanding that the Bush tax cuts not be allowed to expire at the end of the year- without identifying ways to pay for them.

With this failure, Congress has now opened the door to more failures over the next couple of months. Extended unemployment benefits may not happen. Keeping payroll tax cuts going into next year are, inexplicably, at risk.

Worst of all, Congress is expected to debate over the weeks ahead, whether to water down, delay or eliminate the triggered cuts that were supposed to take place if the Super Committee failed to do its job. The idea was that these cuts, many of them amounting to deep slashes in Pentagon spending, would surely pressure lawmakers into making a deficit deal. After all, who wants to be blamed for weakening America’s military?

If they try to weasel out of those triggered cuts, you can kiss even our AA+ S&P rating goodbye.

Clearly, no one cares up there on Capitol Hill. They don’t care if America is downgraded by credit agencies. They don’t care about endangering national defense. They don’t care about the unemployed. They don’t really care about reducing deficits. They give all the above considerable lip service- but the results tell the real story about the priorities of our politicians. They care about only two things; immediate political survival and getting on the gravy train when they leave Congress so they can continue to enrich themselves.

Representatives from both sides took to the Sunday talking-head shows to blame each other and finger point. No last-minute emergency negotiations. No burning the midnight oil. No college try. Nothing.

They are, however, working on the statement expected today- describing their failure to reach a deal. Maybe they won’t find a way to agree on that either.

There is a card for every occasion and so it seems only appropriate Hallmark is tapping into the recession market to offer a little sympathy to those suddenly facing unemployment. I’ve been there.

Some of these cards are fairly amusing.

“Don’t think of it as losing your job….think of it as a time-out between stupid bosses.”

Or: “I just dare somebody to steal my identity now.”

There are somber ones too, though I think the humorous ones would have been nice to get while I was in my own state of panicked limbo just a couple of years ago. This does open a fairly large potential arena for other cards that address all the possible nuances of economic distress people are feeling these days.

There’s also rampant underemployment:

“So sorry about your new job as a Wal-Mart greeter!”

“Now you can have fries to go along with that new, tiny little paycheck!”

There’s the long-term unemployed:

“Don’t worry! Congress is working on the off-setting cuts to pay for your extended unemployment benefits…in between fundraisers and golf outings with lobbyists!”

There’s the couple hundred thousand folks who were ripped off by Bernie Madoff:

“Oooh. Heard about that whole Madoff thing…join the club! Price Club!”

There’s losing your job to outsourcing:

“Sorry your job went overseas! Have you considered moving to suburban Shanghai???”

And two all-purpose recession-oriented sympathy cards dripping with irony:

“Imagine someone trying to make a profit from your unemployment! If you’re reading this- we just did!”

“Look on the bright side, you could be writing Hallmark Greeting cards!”

I need to see a psychiatrist. BPSMW syndrome has gotten the best of me. Doctor, I keep glancing at MarketWatch and Bloomberg every three minutes. I can’t take it anymore.

When the Dow drops 600 points, I get all depressed and panicky and want to come home and kick the dog. When it rises 423 as it just did today, I get all giddy and happy and skippy (that’s a condition in which you start skipping suddenly, rapidly and uncontrollably).

I’ve tried to wean myself off the market cold-turkey. It’s not working. I pass a TV and shoot a quick, secretive glance to see if there’s a red arrow or a green arrow in the corner of the screen. I actually now hate anything that’s the color red.

I’ve started enjoying long meetings at work because I have, as of yet, not loaded any market-alert apps on my phone and suddenly three hours go by and I remember what life used to be like before my life savings and supposed retirement evaporated before my eyes every other hour.

When the market goes in the crapper, I slap myself for not having taken my money out and invested in gold bullion. When it rockets upward, I congratulate myself for being so calm and level-headed when the truth of the matter is I am actually suffering from Bi-Polar Investment Paralysis, a secondary condition characterized mostly by extreme fear and uncertainty of doing anything remotely financial.

A friend of mine recently recommended Chart Therapy. This is where you pull out a ten year chart of Wall Street’s gyrations and realize these current antics are but tiny little blips even though they look like gigantic Swiss mountains when you’re monitoring them by the minute.

This I know. I am exhausted and weary and I trust those poor men and women on the floor of the exchange must be as well. I think by now we are all longing for the magic words, “The Dow Jones Industrial Average today, was unchanged on low volume and no particularly newsworthy events.”

Lucy Nobbe from Kirkwood, Missouri decided to take matters into her own hands. She rented a plane and a banner and flew over Standard & Poor’s Manhattan offices Tuesday with this message: “Thanks for the downgrade- you should all be fired.”

Representing the outrage felt by tens of millions of Americans over S&P’s downgrade of the United States to AA+ status last Friday, Lucy had enough. She says she initially planned to fly over the Capitol building with the same message for our nation’s gridlocked lawmakers, but realized airspace restrictions over Washington, D.C. would have resulted in an escort from F16 jet fighters and an interview with the Secret Service so she did the next best thing.

To many, many people, S&P’s actions last week smacks them as deeply unpatriotic. The symbolic downgrade has helped send the nation’s and the world’s stock markets into turmoil and caused millions of people sleepless nights as they watch their 401K’s sink into oblivion. S&P then promptly downgraded Freddie Mac and Fannie Mae, which should now make it more expensive for people to get home loans in an already depressed housing market. And they’re not done yet as S&P has now embarked on a downgrading spree; targeting states, counties and municipalities across the nation.

And even if S&P’s message about a dysfunctional American political system was painfully true- their mission is supposed to be grading companies and countries on their credit-worthiness. As their actions helped cause the markets to tank, their own case for the downgrade was belied by the fact the entire world went to the safest haven they could find- the very U.S. Treasuries S&P had just said were unreliable.

As it was there were two parts to S&P’s downgrade message; one economic and one about the political gridlock in DC. As they got the math wrong and overstated the size of the debt by $2 trillion, they admitted their error, dropped the economic argument and presented only the political one.

We don’t need to get into the fact S&P had given Enron a AAA rating until just about the day they went bankrupt, gave sterling ratings to companies who held worthless subprime mortgage loans four years ago, and missed the European debt crisis until it was well underway. It’s more primal than all that. They downgraded America.

And Lucy Nobbe, a single mom and broker who knows a thing or two about finance ended up spending $900 to rent the plane and the banner and make her voice heard over the offices of Standard & Poor’s, speaking for millions of others who continue to scratch their heads at the gridlock and the insanity of it all.

S&P may have questionable moral authority in downgrading the U.S. from its AAA rating but they have pointed out that if Republicans don’t back down from their anti-tax fervor and Democrats continue to maintain entitlement programs without significant reform- the gridlock will continue to kill us.

There are two other ratings agencies who still give the U.S. a AAA rating, Moody’s and Fitch. Both warn that may change but have also said they put less weight than S&P does on the politics of gridlock. But ironically, the political reaction to the S&P downgrade may change their minds on that. Instead of taking the downgrade as a warning shot across the bow, both sides have come out swinging against one another in response, making the very point S&P highlighted that these intractable political positions make us a riskier investment.

There are indications that the “Super” congressional committee of a dozen lawmakers representing the House and Senate will be every bit as deadlocked as the larger bodies were just last week. Standard and Poor’s and their fellow ratings agencies may have played a significant hand in our current crisis by handing out completely undeserved sterling ratings to the instigators of the subprime lending catastrophe four years ago, but they’re right to express serious concern about the state of our “take no prisoners” political climate.

But a downgrade may be taking it all a step too far. The U.S. economy, anemic as it is, is still way better off than it was, say in 2008 in the midst of the banking crisis and we didn’t get downgraded then. Downgrading the U.S. now carries the risk that interest rates will rise and make paying off debt an even more expensive task, not to mention the ripple effect on an already struggling economy as rates potentially rise for everything from small business lending to auto, credit card, and student loans.

It happened, though, and here we are. If the Congressional “Super” committee finds a spine and a sudden spirit of compromise, we’ll be alright. Given the toxic political environment of the moment, I wouldn’t exactly give that likelihood a sterling, risk-free AAA rating

Can we be realistic here? The debt ceiling “compromise” signed into law Tuesday fixes nothing and ensures continuing uncertainty in financial markets and more ideological warfare in the months ahead. But congratulations Washington for putting the matches away and not burning the house down.

As all sides hold their noses while they get a good look at this really ugly baby, here’s what has not been accomplished.

Deficit Reduction: A little bit- but not much. $2.4 trillion over ten years against a $14 trillion debt with most of the cuts still to be determined by a “Super” committee of 12 angry, feuding lawmakers who start meeting around Thanksgiving. This ought to give us that much more to be grateful for.

Reduction in Entitlement Programs: They’re responsible for most of the debt but even the draconian cuts that automatically take place if our angry, feuding lawmakers can’t come to an agreement- don’t address Social Security, Medicaid or Medicare recipients. Some think this a good thing with a reeling economy causing so much misery but for a so-called attempt to bring spending in line, not a smart move to ignore consideration of the major contributors to the national debt.

Revenue: Two major commissions that set about to solve deficit-spending in the past year both came to identical conclusions. It cannot be accomplished by cutting alone. This is not about partisanship- it’s about math. There were plenty of Republicans on both these panels who endorsed the concept of raising revenue as a part of balancing budgets. See this column in the Washington Post that discusses these commissions and their discoveries. Alan Greenspan, one of the last human beings on the planet you would expect to favor tax increases is now in favor of exactly that. Blogged about it a few months ago.

Rational Process: We will forever more be holding future extensions of the nation’s debt ceiling hostage to the ideological flavors and fights of the day. This has nothing to do with party. Other than whichever party is out of the White House will, from now on, be pushing the nation’s economy to the brink in order to extract whatever it can from perpetually horrified future Presidents, Democrats and Republicans alike.

The Current Economic Mess: The 1,000 point Dow Jones meltdown that would have been expected had the debt ceiling not been passed was replaced instead by a 265 point meltdown out of fears stoked by today’s weak and struggling economy that the debt ceiling agreement does little to address.

But in the end, was it a good thing the debt ceiling bill passed? Well, as Alan Greenspan put it so eloquently in September of 2010, “Our choice is not between good and bad but between terrible and worse.”

Ok, I’m beginning to panic. The political system is broken but these people are gambling with our money- our retirement savings. Do I sit here like a moron, do nothing and just watch Wall Street collapse next week? Can we change to a Parliamentary system?

I’ve never seen anything like this. Congress is supposed to pass increases in the debt ceiling automatically. There’s been hardly a peep about this from lawmakers in the past. Oh, there have been a few symbolic votes against raising the debt ceiling by a handful of lawmakers including Barack Obama when he was a junior Senator. But the outcome was never in doubt and that’s why some took the liberty to make political points by voting nay.

But this time…is different. There are two proposals being floated right now; one by Democratic Senate Majority Leader, Harry Reid. No one thinks it has the votes to pass the House. Republican House Speaker, John Boehner, has a plan that can’t pass the Senate and has been rebuked by the Tea Party folks in his own party.

There is currently no plan that can pass. Yet- since 1962, the debt limit has been increased 74 times. It’s been raised ten times over the past ten years. Routine votes. Not even a news story.

Now, Pandora’s box has been opened. Attaching conditions to something as important as raising the debt ceiling means either party not holding the White House will be using this tactic for their respective causes every time the nation needs to increase the limit on the national credit card. Why didn’t this President insist on clean passage with no strings, like every President has before him? Why did he allow this to become a political football? Maybe he didn’t have a choice- I don’t know.

But you can’t run a country this way. Much less a country whose currency and economy have been the underpinning of the world economy for the past 70 years or so. This is a recipe for economic catastrophe. Even if they burn the midnight oil all weekend as they’re expected to do and maybe solve it this time…what about next time? Is this going to become an annual event? Or maybe we’ll be flirting with economic ruin every six months. Or we could make it weekly and turn it into a TV reality show.

A New Form of Government?

Could our Founding Fathers have messed up with this system of government? Were their assumptions that lawmakers would eventually reach compromise a silly, altruistic notion? Did they not foresee a time when divided government might utterly fail the people?

With a parliamentary system- you cannot have such deeply divided government. A party wins a majority and its legislative leader becomes Prime Minister. That person stays in power until the day comes they can’t preserve their majority on one issue or another then there’s a vote of no confidence and it’s off to new elections. Or if a party can’t reach a majority, the plurality party cuts a deal with a minority party and they form a coalition government. They only stay in power if they work together.

And under a Parliamentary system, you generally have fewer national elections too. The way our system works, the presidential campaign season is basically every two years- and now lasts for two years. Most true legislative progress occurs between a Presidential election and the mid-term election because everyone knows that once the calendar turns on the two year-mark- the day after mid-term elections-it’s political silly season; all posturing, no substance.

And we can Americanize it. We can call the Prime Minister “President,” keep the Supreme Court and do away with the House of Lords.

So based on the current tea leaves that point to economic calamity next week, I am poised to liquidate my mutual funds and stocks then write my Congressman and beg him to introduce a Constitutional amendment to change the American form of government which is not working so well at the moment.

Final Historical Footnote

I pointed out the day after the mid-term elections last November that the last two occasions in American history that the U.S. Senate was controlled by Democrats and the House of Representatives was controlled by Republicans, the following happened; the American Civil War and the Great Depression. Go ahead, look it up.

Looks like we’re sort of getting both. No bloodshed, but a deeply divided nation and a potential economic calamity.