A few quick thoughts

Sydney M. Williams




Thought of the Day

A few quick thoughts

February 10, 2010

Yesterday, the President once again appeared before the Press. It has become a daily routine. Whether his appearances are meant to encourage the people during this time of “Great Depression”, or whether they are designed to boost his own sense of self esteem, I will leave to others.

Healthcare reform was resurrected yesterday (or at least its prospect was), as the President invited Republicans to attend a bipartisan meeting to discuss ideas, but emphasized he would not return to the “starting line”. The cynic in me wonders that this may be more a political ploy, than a true attempt at bi-partisanship. His obstinacy reminds me of the words in the song by Keely Smith, “The music stopped, but we were still dancing.” Resurrections are generally associated with divine events, not a category in which I would put healthcare, despite the obvious necessity for doing something about rising costs. The problem is that Republican proposals (including eliminating frivolous lawsuits, permitting cross-state competition and increasing the role of the consumer in the process) are very different from those of Democrats, whose center piece is some sort of a public plan and includes adding new bureaucracies to oversee both choice and information – with the emphasis on the state rather than the individual.

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The President also spoke of his desire to double exports over the next five years, a commendable, and not unrealistic, goal. In 2003, U.S. exports approximated $1 trillion or 9.5% of GDP. By 2008, exports were $1.8 trillion. This happened during a time of a declining dollar. But, as I pointed out on January 19, exports as a percent of GDP have risen from 5.3% in 1968 to 13.1% in 2008. And exports rose during the 1990s from under $800 billion in 1995 to just under $1 trillion in 2000, while the U.S. Dollar Index rose from 82 to 115! Certainly, a lower dollar might jump start exports, but history would indicate that encouraging and maintaining free trade agreements are more important. Signing the trade agreements with Colombia and South Korea would be a sensible start on the part of the President.

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Mike Terranova on the sales desk pointed out a new commerce index – the Ceridian-UCLA Pulse of Commerce Index. The index is based on an analysis of real-time diesel from over the road trucking and mirrors the Federal Reserve’s Industrial Production Index, but issued days before that index. The numbers suggest that the economy fell in January after a large increase in December. The “more reliable” three-month moving average indicates a 3.3% gain following an exceptional 14.6% gain in December. It suggests to me that recovery, as is widely expected, will be modest, reflecting a consumer who sensibly seems focused on restoring his balance sheet.