One Important Paragraph

The most important decision for the decade is at hand. Deciding to
withdraw government infusion from the economy or to apply more
infusion is the single most important decision you have to make. It
affects America’s destiny. Premature pull back of monetary and fiscal
infusion will return to recession and possible deflation.
Over-applying monetary and fiscal infusion leads to inflation and
possible stagflation. Recession and inflation are skids but deflation
and stagflation are when things are out of control and the government
has no remedies. Much has been made of deflation, you must get Paul
Volcker to write about how to identify the pre-conditions of
stagflation and how to avoid it. He was there. The information to
make the decision is in three parts, the economic data which is
historical, the infusion in the pike but not yet in effect and
projected economic conditions. You must spend more time making this
decision than what to do in Afghanistan.

The Federal Reserve is acutely aware of the situation. They
scrutinize the data and will be very judicious in wielding their
tools. You are in charge of the fiscal part of the economy, and must
have an infra-structure in place to vet the information and fully
control fiscal spending. There are systemic problems with the
framework of your economic team to thread the needle. You must change
the systemic problems in the structure of your economic team.

You need a Supreme Economic Council. They will scrutinize the data,
and then react to the activities of the Federal Reserve. This council
is mediated by Jim Baker and the esteemed members are Alan Greenspan
and Paul Volcker., America’s best. They will convene three days after
each Fed meeting to determine how changes in monetary policy require
changes in fiscal policy.

You need an uber-czar who controls all government spending including
Treasury. That uber-czar should be Rahm Emnual. Nobody will cross
him and cheat on their spending. He will be disciplined when it comes
to spending.

From the outside, your economic structure is worse than the
anti-terrorist security structure.
There are too many councils with too many opinions, and there is no
accountability for the actual economic policy. It looks like a no
fault economic policy where you are left holding the bag.

Let’s start with the kind of information you are getting. Clinton had
his personal set of economic indicators, so he had his own set of eye
glasses, no matter what the official numbers wanted to spin.
Greenspan mentioned that he was heartened to be able to share with
Clinton, personal financial indicators because it meant Clinton,
himself, had a sound command of economics. It is obvious you don’t
know enough to formulate your own indicators and you are too trusting
of the numbers fed to you. Someone recently clarified to me that my
concern about the rising cost of bread (tripled) and milk (doubled)
are not inflationary but have to do with the standard of living. You
need ask about indicators about main street (you are a family of
five), for example if their standard of living is dropping, it means
they are hurting. This should help give you the human and political
interpretations of economic statistics. You must resolve to sharpen
your personal grasp of economics. You are far from being credible if
you were to give a fire side chat on the economy. You must be
prepared to explain to the American public how we find ourselves in
another recession or how your government will combat inflation.

Like the anti-terrorist agency, you have so many economic voices that
important actionable events either are not handled in time or not even
identified. What have Austan Goolsbee, Cecilia Rouse done for this
country, besides tying up your agenda? What is the benefit of the
Economic Recovery Advisory Board and the Council of Economic Advisors?
How about getting actionable advice out of the National Economic
Council? You are spending more money on advice than helping the
guy/gal on the street!

Then there is the performance of your Administration. I never fail to
mention how Geithner has failed you. Geithner has pressed on the gas
pedal with a heavy foot, oblivious of the amount of gas in the tank
(the national debt). He has not fixed the engine (toxic assets in the
banks) so we use more gas than we need to and we risk to have another
break down. Geithner’s wage czar has not yet recognized that Emnual’s
salary should be quadrupled considering his import to the country.
What a stupid idea – wage czar… you can give Emnual a big bonus he
worked really hard and successfully.

It is also now clear that the Bush Administration ravaged the Justice
Department as badly as the economy. The stupidity of the prosecutors
in the Blackwater trial is a reflection of the management structure
Bush put in place. My burning issue in Justice is the sleepiness of
the Anti-trust division. I know nothing about law but do like the way
Patrick J. Fitzgerald, US Attorney for the Northern District of
Illinois, works. I would like to see him head the Anti-trust division
in Justice. Is there any way you could put in a good word with Eric
Holder? If the anti-trust laws need to be sharpened up to address the
Bullies of Wall Street, I would like to see a guy like Eliot Spitzer
help draft such laws. Geithner is a wimp, but these two boys will
find justice.

Don’t take your eye off the ball this year, and hit the books on economics.

I told you so.