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Economic Solutions

Thoughts on how to have a productive American economy and on the economic issues of the day.

Thursday, April 28, 2016

Be Afraid, Be Very Afraid If You're Investing for the Long Run - Bloomberg

Be Afraid, Be Very Afraid If You're Investing for the Long Run - Bloomberg



Turning 30 just got a lot scarier.
A coming collapse in investment returns means that people that age today will have to work seven years longer or save almost twice as much to end up with the same nest egg as those of roughly a generation ago.
QUICKTAKERetirement Redesigned
So says the research arm of McKinsey & Co. in a new report that argues that investors of all ages need to resign themselves to diminished gains.
Posted by Bruce Birkett at 3:57 AM No comments:

World's Biggest Windmills Now Make Jumbo Jets Look Tiny - Bloomberg

World's Biggest Windmills Now Make Jumbo Jets Look Tiny - Bloomberg



...wind turbines got bigger and stronger than ever anyway. The next generation are even larger and designed to withstand an Arctic battering. 

The granddaddy of them all is a machine with rotors that cut a 164 meter (538 foot) swath made by a Vestas Wind Systems venture with Mitsubishi Heavy Industries. A single blade is 80 meters, about the entire wingspan of an Airbus A380 jumbo jet. 


...As they got bigger, the units became more efficient, boosting global installations 23 percent last year to a record 63.5 gigawatts, which at full tilt would be about as much as what flows from 63 nuclear reactors. ...

...The average turbine installed in Europe was 4.1 megawatts last year, 28 percent larger than in 2010, according to the London-based researcher, which expects 6.8 megawatts to be the norm by 2020. Harries said Siemens has hinted it’s working on a 10 megawatt turbine....



...The blades rotate to face the wind and limit downtime. During gales of 12 meters per second (27 miles per hour or 43/kph), motors restrict the turbine from spinning too fast. When it gets more violent, the turbine can switch off.
Posted by Bruce Birkett at 3:11 AM No comments:

Tuesday, April 26, 2016

Four consequences of a $15 minimum wage - LA Times

Four consequences of a $15 minimum wage - LA Times



...In California, the bottom 10% of wage earners made on average $9.48 an hour last year, a 20% increase since 2005, unadjusted for inflation. Workers in the top 10% of wages earned on average $53.08 an hour, a 35% jump from 2005, according to data from the Bureau of Labor Statistics.

The upshot is that the difference between the bottom and top 10% of wages in the state has widened over the past decade, to $43.60 an hour from $31.35. The trend is almost exactly the same for New York....

Posted by Bruce Birkett at 6:05 AM No comments:

Monday, April 25, 2016

An Oil Fix for a Prince and a President - Bloomberg Gadfly

An Oil Fix for a Prince and a President - Bloomberg Gadfly
Posted by Bruce Birkett at 4:25 PM No comments:

Sunday, April 24, 2016

Obama in Arabia by Bernard Haykel - Project Syndicate

Obama in Arabia by Bernard Haykel - Project Syndicate



...

If Iran does as Obama hopes, the US will be able to reduce its military presence in the Gulf. And if Iran’s leaders stop promoting terror, another important foreign policy achievement will be added to Obama’s legacy.
Unfortunately for Obama – and for the Middle East – his strategy is failing. As America’s shadow has receded, Saudi Arabia and Iran have become more aggressive, even irresponsible, in pursuing their interests. Iran remains the principal backer of both Syrian President Bashar al-Assad and the Shia-led government in Baghdad, making it a leading contributor to the humanitarian tragedy in both countries, where Sunni Arabs comprise the majority of the victims of violence.
Posted by Bruce Birkett at 9:26 AM No comments:

Mario Draghi and Germany’s Fiscal Fetish by Hans-Helmut Kotz - Project Syndicate

Mario Draghi and Germany’s Fiscal Fetish by Hans-Helmut Kotz - Project Syndicate



comment:

  1. Comment bruce birkett APR 24, 2016

    Let's just recognize that with high VAT rates (23% in Portugal) not only do goods get less attractive to purchase (i.e. less consumption) but also, any new business has a higher hurtle rate (economic-utility function) to reach to get buyers.

    Maybe not directly a Laffer Curve relationship, but clearly close. 

    We are looking at starting a business and, before any other costs of goods sold, we are looking at handing over 23% to the government. 



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        Comment bruce birkett APR 24, 2016

        Let's just recognize that with high VAT rates (23% in Portugal) not only do goods get less attractive to purchase (i.e. less consumption) but also, any new business has a higher hurtle rate (economic-utility function) to reach to get buyers.

        Maybe not directly a Laffer Curve relationship, but clearly close. 

        We are looking at starting a business and, before any other costs of goods sold, we are looking at handing over 23% to the government.
      Posted by Bruce Birkett at 9:08 AM No comments:

      Sunday, April 17, 2016

      Cyborgs Aren’t Just For Sci-Fi Anymore - The Daily Beast

      Cyborgs Aren’t Just For Sci-Fi Anymore - The Daily Beast



      The world’s first Olympics for cyborgs, the Cybathlon, will take place this October in Zurich, featuring athletes with “assistive technologies” in six different events.
      Posted by Bruce Birkett at 3:52 AM No comments:

      Saturday, April 16, 2016

      In Ukraine, Expats and Romantics Are Out - Bloomberg View

      In Ukraine, Expats and Romantics Are Out - Bloomberg View
      Posted by Bruce Birkett at 10:08 AM No comments:

      Friday, April 15, 2016

      Three Big Airlines Just Trashed Your Cheap Fares - Bloomberg

      Three Big Airlines Just Trashed Your Cheap Fares - Bloomberg



      ...low-cost entrants disrupted traditional shibboleths: No longer is a Saturday-night stay mandated, a round trip is frequently more expensive than purchasing two one-ways, and a fare to fly tomorrow can be just as cheap as one bought three weeks before the travel....
      Posted by Bruce Birkett at 10:47 AM No comments:

      The Morning Ledger: How Negative Rates Are Playing Out for Firms, Economies and Individuals - btbirkett@gmail.com - Gmail

      The Morning Ledger: How Negative Rates Are Playing Out for Firms, Economies and Individuals - btbirkett@gmail.com - Gmail



      German lifeÂ!  insurers, for instance, are caught in a pinch that could eventually threaten their survival. Regulators are forcing them to boost capital levels at the same time that low rates make it hard to make money with their investments.
      It has been nearly four years since Denmark entered the world of negative monetary policy, and borrowers and lenders alike are still trying to make sense of the upside-down world it has brought. In some cases, homeowners are getting paid interest on their mortgages. The European Central Bank and the Bank of Japan, grappling with stagnant economies, are also using subz! ero rates to stimulate growth. Japan’s two-month experiment with negative rates is producing some unexpected results. Trading has withered in Japan’s money markets, where big banks and others usually park their excess cash hoping to receive some interest—despite predictions from the Bank of Japan that its latest easing of monetary policy would spark more activity.
      Posted by Bruce Birkett at 4:01 AM No comments:

      Monday, April 11, 2016

      Tale of Two Chinas Is Emerging as Economy Slows, Fidelity Says - Bloomberg

      Tale of Two Chinas Is Emerging as Economy Slows, Fidelity Says - Bloomberg



      Regions of the country where businesses focus on "moving up the value chain, greater innovation, higher wage growth, and all of that supports the China consumer story" are flourishing, with growth rates above 6 percent,  Rikkerink said. "The areas that are very heavily dependent on resources are struggling more as demand declines and capital spending is cut."
      Yunnan province, a popular tourist destination in the south of the country, achieved 8.7 percent growth last year, well above the national average of 6.9 percent. In contrast, Liaoning in the northeastern rust belt managed just 3 percent.
      Posted by Bruce Birkett at 3:24 AM No comments:

      Sunday, April 10, 2016

      Europe’s Generational War by Harold James - Project Syndicate

      Europe’s Generational War by Harold James - Project Syndicate





      The focus on the present has far-reaching consequences. The impact is particularly severe in a context of labor mobility, where the losers at the ballot box – the young – wield another weapon: their feet. In countries dominated by gerontocratic politics, young people typically try to leave as quickly as possible. And because young people receive extensive subsidies in the form of education, when they leave, they take with them resources that could otherwise have been used to pay for other people’s retirement. Put another way, they leave behind a debt burden that will be much more difficult to reduce without them.



      A better approach would be to reverse the exodus of the young through better policies, as Ireland did in the late twentieth century, with rapid economic growth leading many of the skilled workers who had left in the 1980s to return – and spur even faster growth. In order for such a reversal to take place, however, young people’s countries of origin must become more open and more innovative – no small feat, especially when the elderly are in political control. In short, there are many feedback loops that make the gerontocracy self-reinforcing.


      Posted by Bruce Birkett at 5:51 AM No comments:

      BMW just jumped into the U.S. car-sharing biz, with the help of YC alum RideCell | TechCrunch

      BMW just jumped into the U.S. car-sharing biz, with the help of YC alum RideCell | TechCrunch
      Posted by Bruce Birkett at 5:51 AM No comments:

      Saturday, April 9, 2016

      Bill Gross: Why Interest Rates Must Rise - Barron's

      Bill Gross: Why Interest Rates Must Rise - Barron's



      I begin with the premise that money returns nothing at the moment. There’s an old song that goes “Nothing from nothing…
      “…leaves nothing.”
      That’s right. The song is about a relationship, not money, but the fund is positioned with that in mind. If you start at zero and aim to deliver a 4% or 5% annual return, you’ve got to lever your assets to some extent. The positions in the fund are primarily volatility-related, because volatility has the lowest amount of risk, relative to return, of the elements I mentioned.
      Years of easing by central banks mean that interest rates in most of the developed world will fluctuate narrowly. That offers an opportunity to sell volatility to create return. If you bought a 10-year Treasury bond today and nothing changed, you would get a 1.9% yield. If you bought a seven-year German Bund, you’d get zero. If, however, you sold a three-month call or three-month put on that same Treasury with a 20-basis-point [hundredths of a percentage point] variation—in other words, the yield stayed in the range of 1.7%-2.1% for three months—the trade would produce an annual return of 6%, as opposed to 1.9%.
      The risk is that interest rates will go up or down by more than 20 basis points over a three-month period. But my premise is that central bankers will do anything possible to contain interest-rate fluctuations. The sale of volatility is producing the predominant amount of return in my fund.
      ...Think of the old Monty Python movie, The Meaning of Life. A grotesque, rotund guy keeps eating to demonstrate the negatives of gluttony, and finally is offered one last thing, a“wafer-thin mint.” He swallows it and explodes. It’s pretty funny. Is our financial system, with $58 trillion of credit, to the point of a wafer-thin mint? Probably not. But we’re to the point where every bite is less and less fulfilling. Even though credit isn’t being created as rapidly as in the past, it doesn’t do what it did before.
      Central banks believe that the historical model of raising interest rates to dampen inflation and lowering rates to invigorate the economy is still a functional model. The experience of the past five years, and maybe the past 15 or 20 in Japan, has shown this isn’t the case.
      So where does that leave our economy?
      In the developed financial economies, as a bloc, lowering interest rates to near zero has produced negative consequences. The best examples of this include the business models of insurance companies and pension funds. Insurers have long-term liabilities and base their death benefits, and even health benefits, on earning a certain rate of interest on their premium dollars. When that rate is zero or close to it, their model is destroyed.
      To use another example, California bases its current and future pension payments to civil workers on an estimated future return of 8% or so from bonds and stocks. But when bonds return 1% or 2%, or nothing in Germany’s case, what happens? We’ve seen the difficulties that Puerto Rico, Detroit, and Illinois have faced paying their debts....
       When interest rates get to zero—and that isn’t the endpoint; they could go negative—savers are destroyed. And savers are the bedrock of capitalism. Savers allow investment, and investment produces growth....
       If the Fed raises rates, the euro and yen could weaken. That would mean rates in Europe and Japan don’t have to go negative, or to extreme lows. In a sense, the Fed is driving everything. But it can’t raise rates too much without threatening a country like Brazil, whose corporations have tons of dollar-dominated debt....
      The concept, again, is letting corporations borrow for you to produce a return higher than the 1% to 2% return the bond market gives you today.
      You’ve had an extraordinary career. Who, among today’s younger bond managers, might become the next Bill Gross?
      I don’t think there will be another, and that’s not because I’m some kind of Babe Ruth. My career coincided with a unique period in which credit expanded from $1 trillion to $58 trillion, and returns justified that growth. That isn’t going to happen again. The Earth is fully formed now; it isn’t in a molten stage anymore. In other words, the system itself has matured.


      Posted by Bruce Birkett at 5:27 AM No comments:

      Friday, April 8, 2016

      The Right Way to Regulate Prostitution - Bloomberg View

      The Right Way to Regulate Prostitution - Bloomberg View



       The German approach of allowing the sex industry to operate openly, studying its workings and regulating away the most unsavory aspects of the business is more realistic than the French one which, coupled with overworked police officers' reluctance to spy on people in a generally permissive sexual culture, is unlikely to be effective.
      Posted by Bruce Birkett at 3:05 PM No comments:

      Why U.S. Infrastructure Costs So Much - Bloomberg View

      Why U.S. Infrastructure Costs So Much - Bloomberg View



      ...To put these numbers in global perspective, New York's Second Avenue Subway will cost roughly eight times more than Tokyo's Koto Waterfront line and 36 times more than Madrid's Metrosurtunnels on a per-kilometer, purchasing power parity (PPP) basis....



      ---I’m not so sure, though, that labor laws and regulations and the accompanying heavy unionization of public-transportation infrastructure construction aren’t a factor. A Moody’s report last month on the New York, London and Paris transit systems found that New York’s had an operating cost of $4.11 per ride compared with $2.61 in London and $1.93 in Paris. Part of the reason is that New York’s Metropolitan Transit Authority operates commuter trains that require higher staffing levels -- but as Smith wrote in another 2012 Bloomberg View piece, those higher staffing requirements are the result more of union rules than of necessity. Another big difference is the cost of health and retirement benefits, which according to Moody’s add up to almost $1 a ride in New York but “are provided primarily by the sovereign governments for the London and Paris systems.”...

      ...the strength of unions in the public sector and among government contractors, coupled with their weakness everywhere else, may be leading to the perverse result that infrastructure projects that would benefit everybody don’t get built.

      1. Yes, I’m exaggerating for effect. But the view really is widely shared, although there’s 
      Posted by Bruce Birkett at 3:01 PM No comments:

      Thursday, April 7, 2016

      Corporate Tax Inversions Are the Least of It - Bloomberg View

      Corporate Tax Inversions Are the Least of It - Bloomberg View
      Posted by Bruce Birkett at 6:33 AM No comments:

      Wednesday, April 6, 2016

      Wind and Solar Are Crushing Fossil Fuels - Bloomberg

      Wind and Solar Are Crushing Fossil Fuels - Bloomberg
      Posted by Bruce Birkett at 2:13 PM No comments:

      Sunday, April 3, 2016

      No Country for Young Men (and Women) by Paola Subacchi - Project Syndicate

      No Country for Young Men (and Women) by Paola Subacchi - Project Syndicate
      Posted by Bruce Birkett at 8:18 AM No comments:

      Thoughts from the Frontline - Open Letter to the Next President, Part 4 - btbirkett@gmail.com - Gmail

      Thoughts from the Frontline - Open Letter to the Next President, Part 4 - btbirkett@gmail.com - Gmail



      An Open Letter to the Next President, Part 4
      Dear Mr. or Ms. Future President,
      Last week we looked at what will happen to the budget deficit and national debt if we enter into a recession during your first term in office. I think you will agree that the picture looks ugly. As it happens, a whole host of economic analysts are worried about just that possibility. Their concern is summed up by this statement from Bill Gross:
      The reality is this. Central bank polices consisting of QE’s and negative/artificially low interest rates must successfully reflate global economies or else. They are running out of time. To me, in the U.S. for instance, that means nominal GDP growth rates of 4–5% by 2017 – or else. They are now at 3.0%. In Euroland 2–3% – or else. In Japan 1–2% – or else. In China 5–6% – or else. Or else what? Or else markets and the capitalistic business models based upon them and priced for them will begin to go south. Capital gains and the expectations for future gains will become Giant Pandas – very rare and sort of inefficient at reproduction. I’m not saying this will happen. I’m saying that developed and emerging economies are flying at stall speed, and they’ve got to bump up nominal GDP growth rates or else.
      You, as the next president, can help get GDP moving again. But let’s be clear, if we slog along in the same general direction, entrusting our national future to the same general policies we follow today, there will be a recession on your watch. If you wait until there’s a recession and then hope the Federal Reserve will do something to pull us out of a nosedive, it will already be too late. The good news is that there are policies you can enact during your first 100 days in office to radically alter the growth path of the United States. The bad news is that those policies are going to be politically difficult to effect and you are going to have to spend a great deal of the new political capital you have to do so. But it will be the most important thing you do in your first term. (If, on the other hand, you don’t act decisively, it may be your only term.)
      It is not news to you that there is political gridlock in Washington. Republicans and Democrats in Congress don’t agree on the economic policies I’m going to suggest. There are entrenched ideas on both sides of the aisle about the best way forward; and, to be generous, those ideas are mutually exclusive. Your problem is that you need to balance the budget. One side wants to do it by cutting spending, and the other side wants to do it by raising taxes and spending even more. The country seems to want a great deal more healthcare but doesn’t want to actually pay for it. How can you satisfy both Republicans and Democrats while at the same time creating a few million jobs in the very short term to forestall a recession?
      You are going to get Congress to compromise. That means giving each side something it wants badly enough to be willing to let the other side get something it wants and needs. Here is what I think you could do. Let me note that numerous economists and politicians will tell you that different pieces of what I am suggesting are impractical or are philosophically just plain wrong. It’s just that they won’t agree as to which pieces are the problem. Your task is to get them to compromise so that something can actually be done.
      Where to Find $1 Trillion of Free Money
      When there is another recession, the Federal Reserve is going to cut rates back to 0% and will likely enter into another round of aggressive quantitative easing. (Interest rates and QE are just the tools they have left in their bag.) They will do this even though their own economists don’t think quantitative easing works all that well as far as Main Street is concerned. QE is very good at propping up stock prices, but it didn’t do much for the economy and just made the rich richer, breeding a lot of resentment.
      The problem from the Federal Reserve’s standpoint is that they would like to pursue a different type of quantitative easing, but they are actually quite limited in what they can do by the Federal Reserve Act. In order for the Fed to buy other types of assets or move money more directly into the economy, Congress would have to amend that act. You may not have been paying much attention to the debate going on about the Federal Reserve, but I can tell you, there is zero appetite among the Congressional leadership to bring up anything like the Federal Reserve Act. Doing so has the potential to be a real circus. But you need Congressional leadership to do this so that you can accomplish your agenda, so you’re going to have to sit on the leadership and tell them to control their members. You need some amendments to the Federal Reserve Act.
      Specifically, what you want to do is to authorize the Federal Reserve, the next time they feel they need to use quantitative easing to stimulate the economy, to be able to issue 40-year 1% bonds that can be used to repair the infrastructure of states and municipalities all across the nation. These should be projects that would be self-liquidating and capable of paying off the bonds, just as any general revenue bond issuer would, over the 40 years. No boondoggles and no bridges to nowhere. Focus on water systems, electric grids, bridges, roads, public transportation, airports – things that everybody understands as basic infrastructure. Estimates are that we need to spend about $2 trillion (on the low side) to bring our infrastructure up to date.
      Understand, you don’t want to be seen as dictating policy to the Fed, which is supposed to be an independent entity. The Fed will guard that independence quite fiercely. No, you are merely giving them another tool to use. Now, they can still do QE in the same way they’ve done it in the past and never take up the new tool you’ve given them – that would be their decision – but I believe they are politically smart enough to take a hint.
      Of course, that doesn’t help you right away. We all remember the last time we tried to find “shovel-ready projects” in order to do stimulus. Turned out there weren’t so many. So what can we do in the meantime?
      We get creative. It turns out the Federal Reserve has added about $3 trillion to its balance sheet in the past few years. That money is sitting in US government bonds and government-guaranteed mortgage assets. As those assets are paid off, the Fed is reinvesting the money back into other bonds and mortgage assets.
      So-o-o-o, when you are authorizing those new infrastructure bonds, you give the Fed the right to begin to buy them today. As soon as the commission you create to oversee the issuance of the bonds is up and running, cities, counties, and states can begin to offer their projects for immediate funding.
      And those projects are going to create hundreds of thousands if not millions of jobs as they come online during the first few years of your first term. That is stimulus we can believe in, and it will help forestall a recession. Further, all those new jobs will carry salaries that will increase consumer spending in local communities and generate a wave of related private investment.
      From a political standpoint, this is probably the easiest thing you will get to do. You are starting with a few trillion dollars already available to boost the economy without raising that money by taxing US citizens. What politician is not going to love that? All you are doing is taking an asset that the Federal Reserve already has and that is basically useless and turning it into a productive asset. If only the rest of my suggestions were as easy.
      Making America Competitive Again
      The second easiest part of my proposal is to cut the corporate tax rate. Everyone in Washington, DC, on both sides of the aisle, pretty much agrees that US corporate tax rates are too high. The reason they haven’t cut them is that politicians want to make corporate tax cuts part of a larger tax reform plan. They all feel they’re being pushed to give up something on taxes, and they want corporate taxes to be part of the deal. Understandable, and you are going to have to offer them a bigger tax reform package, but this is the easy part.
      The hard part is that you need to go farther than they are thinking of going today. You need to get bold.
      Looking around the world, companies try to locate in countries that are the most tax friendly to their profits. That is why Apple, Google, and thousands of other American businesses have trillions of dollars in cash accounts overseas: if they brought the money back they would have to pay an outrageous 35% tax on it. What businessman in his right mind wants to reduce his working capital by 35%?
      Further, as nearly all of you candidates have noted, too many very large corporations in the US (and many more not-so-large ones that fly beneath the radar) are allowing themselves to be “acquired” by foreign competitors, because to do so significantly reduces their taxes and benefits their shareholders. Some of you have sat on the boards of public companies, and you know that you are supposed to put the shareholders at the top of the list of people you serve. Your job is to make sure they get the maximum benefit from their investment in the company. Reducing US taxes is regrettably one way to do so.
      Right now, the corporate tax rate in Ireland is 15%. The rest of Europe is pretty annoyed with Ireland for charging such a low rate, but their reaction hasn’t stopped Ireland from doing so. The country is seeing a massive benefit in terms of income and job growth, not to mention the increased travel- and housing-related income that comes with so many businesses locating in Ireland. Now, I have nothing against Ireland – the country of my forebears – but the reality is that, all things being unequal, the US would be a better place to locate your business. And the thing to do, then, is to make all things even better than equal.
      Why not propose and enact a 15% US corporate tax rate? Yes you could propose 20% or 25% and it would be better than what we have, but what we want is for all of those companies that left the United States and are no longer paying taxes to decide to come back and pay us that 15% tax. And that should be 15% on every dime they make above $100,000. The tax form should be very simple. Put the amount of money you made in Box A, subtract $100,000, and pay 15% of the amount in Box B.
      As a way to get politicians to go along with such a low rate, offer to enact a 10% rate on the international profits of all these companies, so that no matter where US corporations make their money, they are paying something to the US. A 10% rate isn’t going to change their investment decisions, and they are likely to just bring the money home at that point, putting it to work in our institutions and infrastructure (especially if we improve our infrastructure so that we are more competitive.)
      As part of this program, you’re going to offer to get rid of all deductions. Period. End of story. If it doesn’t fall under normal GAAP accounting guidelines as a deduction, it’s a profit and needs to be taxed. Get rid of the 3,000 or so special tax benefits for various and sundry corporations and industries. That means hedge funds don’t get carried interest, oil depletion allowances become subject to normal depreciation, new assets are written off over the useful life of the asset, and so on.
      You’re dropping their taxes to a point where companies will probably be just as well off and maybe even better off without the deductions, as they will no longer need to pay their lobbyists to work so hard to wheedle special favors out of Congress.
      Not only will this tax program make our companies more able to compete in an increasingly global environment, it will actually encourage them to bring a lot of their manufacturing back to the United States, thereby boosting our employment with jobs that pay well.
      And I know that dropping taxes from 35% to 15% might seem like it would result in a big loss of revenue; however, if you add in my proposed 10% corporate tax on international earnings, I think there will actually be an increase in revenue. In any event, the program will be much closer to revenue-neutral than you might imagine. Current corporate practices of maximizing deductions and squirreling money offshore really do make a difference.
      The above two suggestions are the “easy” parts of the proposal. Now we have to figure out how to cut income taxes to a low personal flat rate, make sure that you get enough increased revenue to balance the budget and still be able to fund the healthcare we want, and figure out how to get the lower-income portion of the population a big boost in their take-home pay. But let’s take up those stimulating challenges next week – along with a few structural changes we’ll need in order to make sure everybody decides to hold hands and cooperate.
      Posted by Bruce Birkett at 5:36 AM No comments:

      Thoughts from the Frontline - Open Letter to the Next President, Part 4 - btbirkett@gmail.com - Gmail

      Thoughts from the Frontline - Open Letter to the Next President, Part 4 - btbirkett@gmail.com - Gmail



      In trying to outline how we might proceed, I am reminded of a story about a small Baptist church in a rural area of Eastern Kentucky. The preacher decided to talk to his congregation about the evils of sin. He started out by declaring that he was against the sin of lying, the sin of adultery, the sin of theft, and the particularly pernicious sins that accompany dancing. As he was warming to his topic, he was getting a steady chorus of amens from the assembled, which of course stoked his enthusiasm.
      So he decided to get to one of the real big sins on his list. He announced that he was against the sin of making and drinking moonshine. At which point five members of the congregation, including two of his deacons, stood up and started to walk out. Somewhat baffled, he asked, “Where are you gentlemen going?”
      “Well, pastor,” drawled one fellow as he walked out the door, “it seems to me that you done stopped preachin’ and gone to meddlin’.”
      Posted by Bruce Birkett at 4:00 AM No comments:

      Saturday, April 2, 2016

      The top 5 startups from Y Combinator Fellowship’s Virtual Demo Day | TechCrunch

      The top 5 startups from Y Combinator Fellowship’s Virtual Demo Day | TechCrunch
      Posted by Bruce Birkett at 11:25 AM No comments:

      Europe's Banks Can't Do Draghi's Bidding - Bloomberg View

      Europe's Banks Can't Do Draghi's Bidding - Bloomberg View



      ...One sign of a changed banking environment is that bank deposits remain at their 2008 levels while banks notes in circulation have nearly doubled. The decline of banks as a repository for short-term cash has gone hand-in-hand with decreased lending to the real economy...



      ... Negative interest rates since have not helped; theyencourage banks to pursue higher reward (and higher risk) opportunities...



      ... NPLs are estimated at 4 percent in France, 7 percent in Spain and as high as 17 percent in Italy. This compares to NPL levels of 2 percent in Germany, and just over 1 percent in the U.S...
      Posted by Bruce Birkett at 9:32 AM No comments:

      Soaring Productivity Is Missing From the Numbers - Bloomberg View

      Soaring Productivity Is Missing From the Numbers - Bloomberg View



      ...However, based on nothing more than my own personal experience, and nearly everyone else I have asked about this, something quite different is happening -- productivity is soaring. Yet, there's nothing to be found in the official numbers. To paraphrase Solow, productivity gains are everywhere except in the productivity statistics...



      ...Rick Rieder, chief investment officer of global fixed income at BlackRock, calls today's slow productivity growth “a statistical mirage.” He further observes that “traditional economic metrics simply haven’t kept pace with fast-changing technologies geared toward greater efficiency at lower cost.”



      Others at BlackRock have looked at the productivity slowdown, exploring cyclical and structural reasons for the “missing” gains.Measurement error continues to be the leading culprit.
      Posted by Bruce Birkett at 9:25 AM No comments:

      Friday, April 1, 2016

      The Downside of the Minimum-Wage Fad - Bloomberg View

      The Downside of the Minimum-Wage Fad - Bloomberg View



      ...A 2014 Congressional Budget Officestudy concluded that a $10.10 minimum wage in the U.S. would lift 900,000 out of poverty but result in the loss of 500,000 low-wage jobs. Other studies say the employment effects would be smaller. There's little experience as yet with minimums as high as $15...

      ...
      Posted by Bruce Birkett at 7:56 AM No comments:

      ISIS Turns Saudis Against the Kingdom, and Families Against Their Own - The New York Times

      ISIS Turns Saudis Against the Kingdom, and Families Against Their Own - The New York Times
      Posted by Bruce Birkett at 12:21 AM No comments:
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