June 9, 2010
In The Business Insider, The Money Game, there is a series of charts comparing the stock market numbers from 1929 crash and the 2008 market disaster. There are a good number of other charts, graphs and numbers demonstrating similarities between our situation and that of the 1930′s.
I have pointed out repeatedly to my classes of Business Law Students that the 1929 stock crash did not immediately result in the Great Depression. It was a spiral downwards that culminated in 1933. There were stock market rallies from time to time but the numbers never reached the previous rally high. That’s what I watch for. We started at around 14,000 in 2007. We dropped at the worst of the crisis to above 7,000 and then rallied back to around 10,000. If we continue to cycle down (if the crisis continues), we will fall to some disastrous number but never make it back to 10,000, and then we will fall again and rally and never make it back and so on. I am in no way confident that there is a sustainable recovery. Our government has never in any way fixed the problems in our banking system. I hope that we all do well and prosper but those individuals who have the power to defend the nation against disaster have failed in their duty and little more than luck defends us from another or a continuing financial disaster.
James Alan Pilant
June 9, 2010
Loren Steffy (Houston Chronicle) asks the rhetorical question: “Should BP be paying its shareholders a dividend?”
Ben Bernanke predict a sort of, kind of, maybe, might be, probable recovery. (I’m overjoyed.) Jon Talton feels the same way. Discussing Bernanke’s testimony before Congress, Talton writing for the Seattle Times laments the paralysis and stupidity of our political class. He points out the easily discernable budget busters and then points out there is no one willing to deal with them.
Jay Hancock of the Baltimore Sun argues that increasing taxes on manufacturing makes no sense in the light of the enormous losses of those jobs in the Baltimore area over the last years.
Edward Lotterman writing for Pioneer Press argues that even with a good number of bank closings, there are many choices left for those seeking banking services. I’m a little surprised he didn’t discuss the ramifications of his state of Minnesota losing six banks this year.
June 9, 2010
Professor MacDonald has an interesting post today (It’s dated June 9th.).
Here is an excerpt -
Professor Chris MacDonald
… there’s the fact that a boycott of BP gas stations won’t actually hurt the organization you’re trying to hurt. In practice, “boycotting BP” means boycotting BP-branded retail outlets. And as an editorial in the LA Times pointed out, “BP stations are independently owned, so a boycott hurts individual retailers more than London-based BP.” So, sure, boycott BP stations — that is, if your goal is to hurt a bunch of small businesses already operating on razor-thin profit margins. Put a few minimum-wage gas jockeys and cashiers out of work. The difference simply will not be felt at BP’s head office. (The same naturally goes for vandalism of BP stations, which is both unethical and criminal.)
I wanted to do something to hurt the company’s profits. But MacDonald is quite right. A boycott would be ineffective.
His reasoned argument is better than my emotional response but isn’t that the way it always is, reason defeats emotion if given time?
I can add to his argument, that Loren Steffy of the Houston Chronicle business page has been suggesting in his last three blog posts that British Petroleum is likely to wind up in bankruptcy or acquired by another company. What effect will a boycott have on that situation? None as far as I can tell. Not to mention that the enormous losses arising out of the current disaster are far more economically damaging then anything a boycott could approach. It seems likely that the company will perish on its own.