Layaway: Pay Now (And More), Get Later

Some time back, I mentioned the layaway programs of the thirties as a precursor of "buy now, pay later," the extension of consumer credit to those with modest incomes. Today's New York Times has an article putting layaway in its historical context. The article explains why Wal-Mart's recent announcement that they are reinstituting layaway is not good news for consumers.

Some economists are describing the recent economic downturn as a "balance sheet recession." This means that people are spending less not only because they are unemployed or underemployed (as last Friday's jobs report shows), but also because wages are declining, along with the value of the most valuable household asset, the home itself. So banks and corporations are rolling in dough, but won't lend to consumers. And consumers, in turn, are desperately trying to pay down debt instead of incurring new obligations.

So Wall Street's excesses are hurting Main Street and indeed contributing to the reduction in aggregate demand that is contracting the whole economy. No wonder demonstrators have decided to occupy Wall Street.

Voter Registration for Municipal Elections

Just a reminder: voter registration books in Pamlico County close this Friday, October 14 for municipal elections. Voters in three towns, however, will be able to register and vote during "one-stop" early voting, which begins October 20 and continues until 1:00 P.M. Saturday, November 5. Election day is November 8th.

Voters in municipalities that have opted to provide absentee voting (which includes "one-stop" or early voting at the court house in Bayboro) are allowed to register as well as vote during one-stop.. This applies to voters from Alliance, Bayboro and Oriental.

Voters who have been temporarily displaced by hurricane Irene need not change their registration, so long as they intend to return to the same abode.

Don't forget: there are no unimportant elections.

Voter Fraud?

I want to share an editorial in today's New York Times entitled "The Myth of Voter Fraud."

As the article points out, there are almost no occurrences of voter fraud in the United States. The George W. Bush administration unleashed their Justice Department to vigorously pursue voter fraud, even to the point of firing their own appointed US Attorneys who were unable to find evidence of such fraud.

There are instances of mistakes, but the numbers are so small that if the government were run like a business, the owners would spend no money trying to reduce the vanishingly small numbers further.

But that isn't the real agenda.

Wake County Board of Education Elections

Interesting article in today's News and Observer: "Wake Voters Should Check Districts." 

Tomorrow is the election in Wake County for the board of elections. The problem is that board of elections districts have been redrawn to reflect results of the 2010 census. Usually, the Board of Elections would have sent voter cards to registered voters notifying them of their new districts.

The Wake County Board of Elections asked the Board of Commissioners to appropriate sufficient funds to do the mail out, but the County Commissioners declined.

Part of the problem is that there would have to be another mailing, in any event, after redistricting is completed for state offices and the US Congress. No one knows how long that will take.

So many Wake County voters may show up tomorrow at the wrong polling place.

Fortunately, we have no such problems in Pamlico County.

Double Ten: China's Revolution

Today is the one hundredth anniversary of the beginning of the uprising that overthrew the Manchu Dynasty and established China as a republic under Sun Yat-sen.

The Republic of China (Taiwan) celebrates "Double Ten" as China's national day, as do many overseas Chinese in other countries. The event truly was crucial to China's eventual modernization and its transformation from a source of luxury goods (silk, tea and porcelain) to a modern industrial nation.

There were many obstacles and detours along the way, including the Opium Wars with England (1838-1842 and 1856-1860), the Tai Ping Rebellion (1850-1864), the Sino-Japanese War (1894-95) and the Boxer Rebellion (1898). These events led to the partition and control of China (at least the trading centers) by Western and eventually Japanese imperialist powers.

One of the goals of the 1911 uprising was for China to eventually reestablish control of her own territory and people.

It took a long time, but few can dispute that China has finally achieved that goal.

Re Shoring

For a long time now American manufacturers have been moving their operations off shore. Many have moved to China.

It seems fair to ask whether these manufacturers are American at all. Most of us would at least hope that American businesses would do everything in their power to continue operating from American soil and contributing to American prosperity.

I have talked about this with an industrial designer who visits Oriental from time to time. He and I share the view that many manufacturers have moved offshore for very minor benefits.

Last Thursday's Financial Times reports that the trend may be reversing itself. Some factories whose products in recent years were entirely manufactured in China are now moving back to the US.


Among the factors supporting such a move: US producers are becoming more competitive; US-based factories can respond more quickly to customer desires; products are freed from shipping delays; customs issues do not arise.

FT calls the process "re-shoring." I would have thought "on-shoring" (opposite of "off-shoring") would be more appropriate.

This might be good news. One reason China works so hard to control their currency exchange rate is to try to prevent companies from returning to the US. But China's labor costs are rising.

Chinese Acrobats

A bill is working its way through the US Senate that would retaliate for Chinese currency manipulation by raising tariffs on certain Chinese manufactured products. The bill has raised the usual cries of alarm: "Awk! Free Trade!" opponents shout.

A bit of history is in order.

From the end of World War II until the 1970's, exchange rates for currency used in world trade were fixed. That is, they were firmly set. The Japanese Yen, for example, traded at an exchange rate of 360 yen to a dollar. That was the rate for years.

We would hear from time to time about a "balance of payments" problem or a "gold flow" problem. That might be caused by a country persistently buying more goods and services abroad than it sold abroad. That caused a balance of payments deficit. Another country might have a balance of payments surplus.

It was the intent of the Bretton Woods system established near the end of World War II that such a circumstance would be addressed by adjusting the relative value of currencies. The country with a persistent surplus would increase the value of its currency and the country with a persistent deficit would reduce the value of its currency. Trade would then more readily approach balance.

This almost never happened. In practice, only the country with a persistent deficit would adjust its currency by a devaluation. One day, for example, a British Pound might be worth 2,000 Italian Lira and the next day worth 2,200 Lira.

Fortunes could be made speculating in currency. Suppose you had one day converted two million Lira to pounds. If you timed it right, the next day the thousand Pounds you bought would be worth two million two hundred thousand Lira. More interestingly, the very fact that you had bought the thousand pounds (and other speculators did so as well), put pressure on the Lira, increasing the likelihood that the Italian central bank would devalue the Lira.

George N. Halm, my professor of international economics, was one of the leading economists who advocated doing away with fixed exchange rates, replacing them with flexible rates. Under the flexible rate system, it was thought, more gradual adjustments would allow the foreign exchange market to make continual adjustments. This would do away with the instant fortunes to be made by speculators.

But what if, instead of speculators, a large government with (practically) unlimited resources were to manipulate the market to give their industries a significant trade advantage?

It seems clear that is exactly what China is doing.

Here's a graph provided by economist Jared Bernstein, illustrating what China is doing.

Closed Town Meeting October 4

After completion of the agenda, Commissioner Bohmert moved to close the meeting for "personnel."

I think I have mentioned this before, but the relevant provision of NC General Statutes has no general "personnel" exception to the Open Meetings Law. There are in fact four separate purposes relating to personnel, and the motion to go into closed session must specify which one. They are:


a: To establish or instruct the staff or agent concerning the negotiations of the amount of compensation or other terms of an employment contract.
b: To consider the qualifications, competence, performance, condition of appointment of a public officer or employee or prospective public officer or employee.
c: To hear or investigate a complaint, charge, or grievance by or against a public officer or employee.
d: To plan, conduct, or hear reports concerning investigations or alleged criminal conduct.

Neither I nor anyone else attending tonight's meeting has any idea which of the above authorized purposes was effected by the closed meeting.

The meeting was, therefore, improperly closed.

If any member of the Board of Commissioners is interested in making a correct motion to go into closed session, I recommend the model motion posted on the web site of  Western Carolina University here.