The governor of CA has a plan, rather than layoff state workers, he plans to cut their pay to minimum wage. (The state controller didn't pay attention to him, and wrote the paychecks when they were due). The McCain plan sounds eerily similar. TO begin one has to accept the role of government as the employer of last resort.

CA is now almost two months without a budget. However if you layoff state workers, and pay them unemployment benefits, you have a lose-lose situation. Business doesn't get done, private contractors are shut out, and the workers draw benefits, which puts a further drag on the economy.

Better to give them an AHDUR! GID BAGCK TA WUHRK! US history is replete with examples of this, when Unions and collective bargaining breaks down. Back to work orders have been used to force all sorts of private employees back on the job, but they have never been forced to take a humiliating pay cut at the same time. If the paycut approximates the package benefits, would voters support this kind of indentured servitude?

As an aside the Bush Immigrant Worker Program, the old Brasero program, forced the worker to reapply for a visa, if they wanted to change employers. Gotcha! Of course Americans went through this in WWII, the government controlled who you worked for, and hey, this war in Iraq is at least as big as that one, and is still going on, much to the benefit of the people who would abuse the laws to compromise your freedoms.

The precendents need only a bit of tweaking to make it fit the economy of the 2000's, for John McCain and his rich Republican pals. Rather than pay you unemployment, while you do nothing, we pay you unemployment and you stay on the job. Is that the McCain plan too?

The new, or service economy apparently isn't picking up the slack. One of the stalwarts of the service industry is the restaurant business. Restaurants are sometimes considered recessionproof. (The banks closed in 1930, but the diners stayed open) The national chains have overbuilt, competing for a declining number of consumer dollars. Profit margins are sufficent to keep them going a while longer. If you wonder why headline inflation hasn't shown up as core inflation, that's how the process works. Food producers, suppliers, and restuarants, are living off profit margins, which is as it should be. When a few of these chains start closing outlets, and reducing expansion, things will change, and quickly. High enders like PF Changs seems like good sells to me. The typical high end customer pads their bill with alcoholic beverages, which have huge markups. The first thing diners cut back on is drinks and tips. Places like McDonalds seem well placed, with an overseas footprint, beware of a resurgent dollar, and of course if those overseas outlets start closing, the support staff based here will get layoff notices. When the service economy implodes we have a recession or worse.

the buzz on the financial channels is that Bernanke is afraid to move, (Gross wants Fannie and Freddie cleaned up pronto or he won't buy any more government debt) without a clear indication of where his political anchor was moored. Paulson will soon be gone, (unless McCain wins and reappoints him) and Bernanke and the Fed are a rudderless ship without the government interlopers.

hmmm?

Is Gross putting in an application for the job. Personally I think he would be a terrific choice, someone who cares more about the bond market and rates, and the socalled rate guru's Greenspan and his clones.

But a little bird tells me its sell the rumor and buy the news. When the Republicans throw in the towel, the market will dive, a bit, and then buy it. At that point all doubt is removed, and Wall Street hates doubt, and while they say they don't care much for Democrats, take a brief look at Mr Market under Clinton, and under Bush. Whoops.