THIRD RAILS - PROCESS VS. PRODUCT: Dalibor Rohac and Matthew Sinclair: Preparing Another Meltdown - WSJ.com
I recall the Ivy League discussions going back to the 1960's of "process vs. product".
Basel II and now III are clearly of the 'process' variety - i.e. don't use judgment, everyone is the same, happiness of lemmings and no one has to lose.
Clearly sovereign debt is emblematic of the idea of socializing outcomes without any requisite inputs from the recipients of income transfer, high tax benefits.
Another way of describing a bubble is too much for nothing.
As the year winds down, there are many talking about the unsavory outcomes that may await; but, as long as there's a way to finance a 'free lunch', who wants to call a halt?
Governor Christie was recently interviewed and said that the 'third rails' of decision-making are clearly now the only choices for many governors.
Tuesday, December 28, 2010
Saturday, December 25, 2010
Beneficial Manipulation - Barrons.com
IS SOMETHING MISSING?: Beneficial Manipulation - Barrons.com
To build things or provide jobs, it takes capital. And, capital is exactly what gets swallowed up by government consumption based entitlement programs.
The platform economy concept has enabled Americans to benefit from the very things that Donlan mentions - but these are jobs that take education and training.
Simple math shows that the US is not accumulating the capital (or the reward system) to create the jobs everyone would like to have for a middle class lifestyle.
The liberal establishment and unions believe the rich can be taxed to provide the wherewithal for everyone to have the cushy UAW type jobs of years gone by. However, these were years where the US was the dominant economic power and had a vastly disproportionate share of the world's resources. Now there is competition for those resources.
The goal to create jobs is noble; but, a high tax, union mentality economy isn't the needed investment climate needed.
Another question would seem to be if the GDP has supposedly recovered what was lost during the recession, I don't recall productivity statistics to justify the same production with what is now effectively 21% unemployment (add in post 2 weeks and 6 months (9.7, 17, 21%)?
To build things or provide jobs, it takes capital. And, capital is exactly what gets swallowed up by government consumption based entitlement programs.
The platform economy concept has enabled Americans to benefit from the very things that Donlan mentions - but these are jobs that take education and training.
Simple math shows that the US is not accumulating the capital (or the reward system) to create the jobs everyone would like to have for a middle class lifestyle.
The liberal establishment and unions believe the rich can be taxed to provide the wherewithal for everyone to have the cushy UAW type jobs of years gone by. However, these were years where the US was the dominant economic power and had a vastly disproportionate share of the world's resources. Now there is competition for those resources.
The goal to create jobs is noble; but, a high tax, union mentality economy isn't the needed investment climate needed.
Another question would seem to be if the GDP has supposedly recovered what was lost during the recession, I don't recall productivity statistics to justify the same production with what is now effectively 21% unemployment (add in post 2 weeks and 6 months (9.7, 17, 21%)?
Friday, December 24, 2010
Pensions Push Property Taxes Higher - WSJ.com
DEBT AND ENTITLEMENT BUBBLES: Pensions Push Property Taxes Higher - WSJ.com
It's interesting how unions are all 'gimme, gimme, gimme' with no thought for long-term sustainability.
Clearly the US needs to invest in its future, not sell off the proverbial family silver to pay for current consumption.
As for the 9 innings it will probably take to truly turn the US economy around, it would appear to clearly be stuck in Inning 3 - where government hopes that it can keep squeezing more cash (taxes or borrowing) to pay for current entitlement and social consumption and continue to put off both investment into new and the replacement of worn-out or depreciated economic necessities for growth.
Clearly the debt bubble that is building is tied to the entitlement bubble. Since they are both growing bigger....
It's interesting how unions are all 'gimme, gimme, gimme' with no thought for long-term sustainability.
Clearly the US needs to invest in its future, not sell off the proverbial family silver to pay for current consumption.
As for the 9 innings it will probably take to truly turn the US economy around, it would appear to clearly be stuck in Inning 3 - where government hopes that it can keep squeezing more cash (taxes or borrowing) to pay for current entitlement and social consumption and continue to put off both investment into new and the replacement of worn-out or depreciated economic necessities for growth.
Clearly the debt bubble that is building is tied to the entitlement bubble. Since they are both growing bigger....
Thursday, December 23, 2010
Jamie Whyte: Despotic Taxation - WSJ.com
A TWO-ENDED PUSH: Jamie Whyte: Despotic Taxation - WSJ.com
This article touches on a basic disconnect that many liberals have with business economics and investing - i.e. many liberals think that business will invest and create jobs without regard for the hurtle rates mentioned in this article.
The codicil to the above issue of liberal disconnect is that they somehow think the same investment will come about whether the business or investor keeps 100% of the return or maybe just 50% or less.
The lack of basic common sense (or math) is reminiscent of the Mark Twain saying, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."
Liberals do truly have a problem. They want to spend more money than the economy can afford to give them while remaining robust and growing.
Part and parcel of this is the fact that many people feel no need to keep working and as a result, high taxes discourage productivity from one end and high benefits discourage work and investment from the other end.
England is clearly not alone in this - the US has the same dilemma.
This article touches on a basic disconnect that many liberals have with business economics and investing - i.e. many liberals think that business will invest and create jobs without regard for the hurtle rates mentioned in this article.
The codicil to the above issue of liberal disconnect is that they somehow think the same investment will come about whether the business or investor keeps 100% of the return or maybe just 50% or less.
The lack of basic common sense (or math) is reminiscent of the Mark Twain saying, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."
Liberals do truly have a problem. They want to spend more money than the economy can afford to give them while remaining robust and growing.
Part and parcel of this is the fact that many people feel no need to keep working and as a result, high taxes discourage productivity from one end and high benefits discourage work and investment from the other end.
England is clearly not alone in this - the US has the same dilemma.
Wednesday, December 22, 2010
The Euro-Zone Crisis is Speeding up - WSJ.com
LIBERALS ON HUMAN BEHAVIOR AND BASIC MATH: The Euro-Zone Crisis is Speeding up - WSJ.com
It would seem an opposite perspective could be gleaned from the latest census results in the US, which highlight that overspending and overtaxing states in the US are losing population. Do we talk about the dollar breaking up with states like New York, California and Illinois running unsustainable budget deficits?
Let alone the US.
Some people are talking about an early 2011 global liquidity squeeze. After all, the banks and institutions have been funding unsustainable government entitlement policies that constrain growth.
But, to tell a liberal that someone might work less if taxes go up or that somehow there will be less investment if there is less money left to invest with after taxes - well, liberals just don't understand this kind of behavior or math.
It would seem an opposite perspective could be gleaned from the latest census results in the US, which highlight that overspending and overtaxing states in the US are losing population. Do we talk about the dollar breaking up with states like New York, California and Illinois running unsustainable budget deficits?
Let alone the US.
Some people are talking about an early 2011 global liquidity squeeze. After all, the banks and institutions have been funding unsustainable government entitlement policies that constrain growth.
But, to tell a liberal that someone might work less if taxes go up or that somehow there will be less investment if there is less money left to invest with after taxes - well, liberals just don't understand this kind of behavior or math.
Tuesday, December 21, 2010
U.S. Regulators Mull New Push to Shape Bank Pay - WSJ.com
BLAMING THE HORSE INSTEAD OF THE JOCKEY: U.S. Regulators Mull New Push to Shape Bank Pay - WSJ.com
I'm not that familiar with European rules other than that there was an apparent happy marriage between the Basel II requirements (which effectively let banks transfer the assessment of risk to the credit rating agencies) and the American Congress' push to have Fannie and Freddie give loans with looser credit conditions to expand the rate of homeownership.
Republicans tried to rein in Fannie and Freddie, but the Democrats in Congress (like Barnie Frank) refused to curtail this lending.
The rating agencies didn't have any competition and thus were able to act in a lemming fashion with no logical consideration of the fact that housing prices were going up much faster than salaries - while, at the same time, there were few constraints on the supply of new housing. (Obviously the study of supply and demand had been missing in their socially-minded economics courses.)
So, we had an apparent process-oriented reaction in Europe supplied by inane policies coming out of government in Washington (plus of course the Fed's support for low interest rates).
Now that there is Basel III and the new financial regulatory act in the US, I'm missing something in each case addressing the above-noted causative factors for the bubble and crash?
Somehow all this blame on bankers seems misdirected - sort of like blaming a horse for running in a race (the banks being the horse and the government and regulators the jockey).
I'm not that familiar with European rules other than that there was an apparent happy marriage between the Basel II requirements (which effectively let banks transfer the assessment of risk to the credit rating agencies) and the American Congress' push to have Fannie and Freddie give loans with looser credit conditions to expand the rate of homeownership.
Republicans tried to rein in Fannie and Freddie, but the Democrats in Congress (like Barnie Frank) refused to curtail this lending.
The rating agencies didn't have any competition and thus were able to act in a lemming fashion with no logical consideration of the fact that housing prices were going up much faster than salaries - while, at the same time, there were few constraints on the supply of new housing. (Obviously the study of supply and demand had been missing in their socially-minded economics courses.)
So, we had an apparent process-oriented reaction in Europe supplied by inane policies coming out of government in Washington (plus of course the Fed's support for low interest rates).
Now that there is Basel III and the new financial regulatory act in the US, I'm missing something in each case addressing the above-noted causative factors for the bubble and crash?
Somehow all this blame on bankers seems misdirected - sort of like blaming a horse for running in a race (the banks being the horse and the government and regulators the jockey).
Thursday, December 16, 2010
HEARD ON THE STREET: Washington Taxes Own Credibility - WSJ.com
Caution from a lack of leadership and mixed messages: HEARD ON THE STREET: Washington Taxes Own Credibility - WSJ.com
Let's see?
The president and Keynesians are worried that everyone gets to consume by redistributing wealth.
Supply siders believe people need to get to keep a certain amount of what they produce in order to support production and growth.
There is clearly a disconnect between America's ability to pay for all the entitlements and benefits that the liberals want while providing a fair return (18-19% of GDP max to government) to producers.
As the administration and the Republicans appear to be unwilling to confront this great policy divide, the lack of leadership becomes more acute.
So one question might be whether the cautionary response to the lack of leadership will be greater than the modest stimulus (actually just to consumption, not really long-term returns to capital and investment)?
Oh yes, and this is tied part and parcel to the Administration going against the oil companies in the Gulf for an oil spill, at the same time its wants to tout having spent 4 hours the same day listening to business leaders. Can we say another mixed message day?
Let's see?
The president and Keynesians are worried that everyone gets to consume by redistributing wealth.
Supply siders believe people need to get to keep a certain amount of what they produce in order to support production and growth.
There is clearly a disconnect between America's ability to pay for all the entitlements and benefits that the liberals want while providing a fair return (18-19% of GDP max to government) to producers.
As the administration and the Republicans appear to be unwilling to confront this great policy divide, the lack of leadership becomes more acute.
So one question might be whether the cautionary response to the lack of leadership will be greater than the modest stimulus (actually just to consumption, not really long-term returns to capital and investment)?
Oh yes, and this is tied part and parcel to the Administration going against the oil companies in the Gulf for an oil spill, at the same time its wants to tout having spent 4 hours the same day listening to business leaders. Can we say another mixed message day?
Tuesday, December 14, 2010
Caution With the Cash is Wise Policy - WSJ.com
LEMONADE AND PRUDENCE: Caution With the Cash is Wise Policy - WSJ.com: "- Sent using Google Toolbar"
This article is too kind to the Obama Administration and it and Congress' misguided policies.
Clearly the administration and its Democratic allies are guided by Keynesian liberal thinking that assumes business and investors are there to serve the needs of the underprivileged and disadvantaged.
History is replete with the failures of this thinking; but, as Mark Twain said, there is nothing more dangerous than someone who believes something that is clearly wrong.
As such, businesses need to be as conservative as possible with their resources. (A recent read of the history of the success of C. Vanderbilt in building his fortune in the 19th c. shows the wisdom of such conserving of cash).
Some waiting time bombs are clearly the government deficits in the US and Europe. The debt bubble the administration is ignoring is getting more and more attention from those willing to look at the obvious.
There are so many positive things the administration could be doing to support investment and risk taking - but, frankly one sees almost none; and, those seen are overwhelmed like a tsunami by the anti-business policies.
A major reassessment of the priorities of government spending are needed (e.g. the drug war and open-ended entitlements) - none of which are seen by the liberals and the administration.
On the opposite side, the conservatives and Republicans let their myopic social values (and hate) stand in the way of progress (e.g. the vote on repealing 'Don't Ask, Don't Tell').
And, while the platform economy (e.g. manufacturing in China) may have worked and been working, a capital reserve in case of something going wrong (at the same time the capital markets freeze up with a liquidity squeeze (as noted yesterday by a commentator on Bloomberg, Dec. 13) likely in the first quarter of 2011) is absolutely requisite and prudent.
One somehow can't help but think of Obama as going up to little kids trying to earn a bit of money selling lemonade and asking them why they bother - and, instead recommending playing and asking for an allowance (entitlement) from their parents?
This article is too kind to the Obama Administration and it and Congress' misguided policies.
Clearly the administration and its Democratic allies are guided by Keynesian liberal thinking that assumes business and investors are there to serve the needs of the underprivileged and disadvantaged.
History is replete with the failures of this thinking; but, as Mark Twain said, there is nothing more dangerous than someone who believes something that is clearly wrong.
As such, businesses need to be as conservative as possible with their resources. (A recent read of the history of the success of C. Vanderbilt in building his fortune in the 19th c. shows the wisdom of such conserving of cash).
Some waiting time bombs are clearly the government deficits in the US and Europe. The debt bubble the administration is ignoring is getting more and more attention from those willing to look at the obvious.
There are so many positive things the administration could be doing to support investment and risk taking - but, frankly one sees almost none; and, those seen are overwhelmed like a tsunami by the anti-business policies.
A major reassessment of the priorities of government spending are needed (e.g. the drug war and open-ended entitlements) - none of which are seen by the liberals and the administration.
On the opposite side, the conservatives and Republicans let their myopic social values (and hate) stand in the way of progress (e.g. the vote on repealing 'Don't Ask, Don't Tell').
And, while the platform economy (e.g. manufacturing in China) may have worked and been working, a capital reserve in case of something going wrong (at the same time the capital markets freeze up with a liquidity squeeze (as noted yesterday by a commentator on Bloomberg, Dec. 13) likely in the first quarter of 2011) is absolutely requisite and prudent.
One somehow can't help but think of Obama as going up to little kids trying to earn a bit of money selling lemonade and asking them why they bother - and, instead recommending playing and asking for an allowance (entitlement) from their parents?
Saturday, December 11, 2010
Blame the Fed - Barrons.com
Several Thoughts on Modeling: Blame the Fed - Barrons.com
(from the article):
"In three forthcoming academic papers, Brown University economist Jerome Stein shows there were early-warning signals in 2005 that financial institutions were overleveraged. The tool he uses is one used by NASA to guide rocket trajectories, with the daunting name of stochastic optimal control.
Stein argues that optimal debt and leverage are not one-size-fits-all numbers but rather constantly changing variables that can and should be tracked and optimized...
...There is a Hebrew saying that clever people can extricate themselves from disasters but wise people avoid them."
The alarm bells on the debt bubble should be ringing - but, sort of as you say, its a sound too harsh to bear.
So this weekend Germany says it won't let the improvident banks go bust for lending to the improvident EU periphery countries; and, the Administration and the Republicans hope the bell doesn't toll on their entitlement wonderworld.
As said, it would appear 'cleverness' is the hope and prayer of those administering the economy.
(comment: let's remember that after the dot.com bust, many were worried about a Japanese deflationary scenario, and justifiably so.)
It's true that Bush didn't really understand the needed changes to the economy - other than, he did get tax rates lower (maybe in retrospect, especially for corporations, not low enough); but, the other aspects of making American friendly to business instead of unfriendly (e.g. immigration policies) weren't there.
Now of course we have the entitlement bandwagon going full blast with even less understanding of turning around the economy.
It's sort of like the housing bubble - i.e. how can house prices go up at a rate faster than incomes, esp. when there is no barrier to supply more houses.
Likewise today, how can an economy have the wherewithal to grow when Administration policies are anti-business and anti-capital formation and pro-union so labor remains mis-priced?
Let basic logic prevail over stochastic modeling (not that the modeling isn't helpful and nice) - etc.
(from the article):
"In three forthcoming academic papers, Brown University economist Jerome Stein shows there were early-warning signals in 2005 that financial institutions were overleveraged. The tool he uses is one used by NASA to guide rocket trajectories, with the daunting name of stochastic optimal control.
Stein argues that optimal debt and leverage are not one-size-fits-all numbers but rather constantly changing variables that can and should be tracked and optimized...
...There is a Hebrew saying that clever people can extricate themselves from disasters but wise people avoid them."
The alarm bells on the debt bubble should be ringing - but, sort of as you say, its a sound too harsh to bear.
So this weekend Germany says it won't let the improvident banks go bust for lending to the improvident EU periphery countries; and, the Administration and the Republicans hope the bell doesn't toll on their entitlement wonderworld.
As said, it would appear 'cleverness' is the hope and prayer of those administering the economy.
(comment: let's remember that after the dot.com bust, many were worried about a Japanese deflationary scenario, and justifiably so.)
It's true that Bush didn't really understand the needed changes to the economy - other than, he did get tax rates lower (maybe in retrospect, especially for corporations, not low enough); but, the other aspects of making American friendly to business instead of unfriendly (e.g. immigration policies) weren't there.
Now of course we have the entitlement bandwagon going full blast with even less understanding of turning around the economy.
It's sort of like the housing bubble - i.e. how can house prices go up at a rate faster than incomes, esp. when there is no barrier to supply more houses.
Likewise today, how can an economy have the wherewithal to grow when Administration policies are anti-business and anti-capital formation and pro-union so labor remains mis-priced?
Let basic logic prevail over stochastic modeling (not that the modeling isn't helpful and nice) - etc.
Friday, December 10, 2010
Companies Keep Tight Grip on Cash - WSJ.com
Scylla and Charybdis: Companies Keep Tight Grip on Cash - WSJ.com
All of this reminds me of a recent reading of how the original Cornelius Vanderbilt held onto cash through the 19th century with all of its financial upheavals. It let him take advantage of the over-leveraging of others.
One can't help but be concerned when governments in Europe and the US have promised benefits they can't afford and feel as though taxing business and investors won't really impact job growth.
It's like Mark Twain said, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."
And here we have Republicans supporting a tax bill that makes no sense (e.g. who does investment planning with a 2-year time horizon, knowing tax rates could explode after 2 years, along with vastly higher interest rates) and Democrats thinking that more taxes on upper earners will support job creation. These people are all ignoring the basic recommendations of the recent Deficit Reduction Committee - and, here today, we find them restoring what are unequivocally 'earmarks' such as the ethanol subsidy.
These politicians don't get it. Luckily some corporate leaders are smart enough to see the snake pit that is the economy of either the Dems or Republicans - sort of like Scylla and Charybdis.
All of this reminds me of a recent reading of how the original Cornelius Vanderbilt held onto cash through the 19th century with all of its financial upheavals. It let him take advantage of the over-leveraging of others.
One can't help but be concerned when governments in Europe and the US have promised benefits they can't afford and feel as though taxing business and investors won't really impact job growth.
It's like Mark Twain said, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."
And here we have Republicans supporting a tax bill that makes no sense (e.g. who does investment planning with a 2-year time horizon, knowing tax rates could explode after 2 years, along with vastly higher interest rates) and Democrats thinking that more taxes on upper earners will support job creation. These people are all ignoring the basic recommendations of the recent Deficit Reduction Committee - and, here today, we find them restoring what are unequivocally 'earmarks' such as the ethanol subsidy.
These politicians don't get it. Luckily some corporate leaders are smart enough to see the snake pit that is the economy of either the Dems or Republicans - sort of like Scylla and Charybdis.
Wednesday, December 8, 2010
Package Would Give Obama Stealthy Stimulus - WSJ.com
FINGER IN THE DIKE: Package Would Give Obama Stealthy Stimulus - WSJ.com
Let's see?
More money chasing more or less the same goods plus what is shipped in from Asia?
A two-year window of perhaps lower taxes followed by? (1) even bigger tax increases; (2) much higher interest rates; etc. - how many businesses have a net return in a 2-yr cash flow projection?
Aren't we still avoiding dealing with making the economy and the US business-friendly?
What about the idea of another (can we say the 3rd) year of extended unemployment benefits while certain firms like Google are doing across-the-board raises to retain staff? Is no one seeing the disconnect?
More debt ($900 billion in the SS stimulus) and only a short-term tax break (2 yrs). Didn't we all learn that people only modify behavior (i.e. add jobs, expand businesses) when there are permanent changes?
Perhaps this is a 'finger in the dike' economic program, but it sure seems as though we really need some major economic restoration and rebuilding - all of which appear to be ignored!
Let's see?
More money chasing more or less the same goods plus what is shipped in from Asia?
A two-year window of perhaps lower taxes followed by? (1) even bigger tax increases; (2) much higher interest rates; etc. - how many businesses have a net return in a 2-yr cash flow projection?
Aren't we still avoiding dealing with making the economy and the US business-friendly?
What about the idea of another (can we say the 3rd) year of extended unemployment benefits while certain firms like Google are doing across-the-board raises to retain staff? Is no one seeing the disconnect?
More debt ($900 billion in the SS stimulus) and only a short-term tax break (2 yrs). Didn't we all learn that people only modify behavior (i.e. add jobs, expand businesses) when there are permanent changes?
Perhaps this is a 'finger in the dike' economic program, but it sure seems as though we really need some major economic restoration and rebuilding - all of which appear to be ignored!
Tuesday, December 7, 2010
Obama Attempts to Quell Democratic Unrest on Tax Deal - WSJ.com
GOLDEN GEESE: Obama Attempts to Quell Democratic Unrest on Tax Deal - WSJ.com
Yes, customers are good; however, the producers of typical goods are likely to be Asian or Chinese.
As for American producers, the incentive is still to produce offshore (e.g. tax rates on corporations, etc.).
If you think of the 'platform' business model, it still doesn't support adding jobs to the US.
All the things the US needs to do to create jobs are being left alone with a blind attempt at Keynesianism.
The question guiding all these tax policies should be will it improve conditions for investing and building businesses in the US?
Somehow the Democrats think the credit lines will last indefinitely so, like taxpayers with credit cards, they buy what they want - all the time. Never do they consider the end game of paying off the cards!
As an insightful commentator mentioned on tonight's news - by breaking the relationship between social security taxes and social security benefits, the Republicans have just handed the Democrats a golden apple - i.e. all taxes can be used for social benefits and social benefits come first.
No one is looking at the example of where the Democratic social model policies have been in effect.
The most outrageous examples were communist states in Eastern Europe. Then there are the socialist states - let's particularly look at Greece.
It's clear the Republicans have really lost this round.
Job seekers have also been dealt a harsh blow. Most of them will probably buy into Obama's claim that the 2% savings in SS employee withholding will encourage jobs. As a result, things will have some negative surprises.
As Einhorn said, the US avoided dealing with the problem in the last round and pushed a solution forward. Thus, the solution will be more difficult and the events to force the solution will have to be that much more severe.
But heck - believe the glass is half-full and Obama has it right or not. But, an objective look around at where these policies have been tried before should raise eyebrows. There is no place I know of where socialism has added jobs and improved living standards.
It's like children are taught with the goose that laid the golden egg - i.e. you may think killing the goose will get you lots of eggs, but instead you get none.
The US should want to have golden geese want to be in America; yet, instead, it is doing everything to chase them away.
Yes, customers are good; however, the producers of typical goods are likely to be Asian or Chinese.
As for American producers, the incentive is still to produce offshore (e.g. tax rates on corporations, etc.).
If you think of the 'platform' business model, it still doesn't support adding jobs to the US.
All the things the US needs to do to create jobs are being left alone with a blind attempt at Keynesianism.
The question guiding all these tax policies should be will it improve conditions for investing and building businesses in the US?
Somehow the Democrats think the credit lines will last indefinitely so, like taxpayers with credit cards, they buy what they want - all the time. Never do they consider the end game of paying off the cards!
As an insightful commentator mentioned on tonight's news - by breaking the relationship between social security taxes and social security benefits, the Republicans have just handed the Democrats a golden apple - i.e. all taxes can be used for social benefits and social benefits come first.
No one is looking at the example of where the Democratic social model policies have been in effect.
The most outrageous examples were communist states in Eastern Europe. Then there are the socialist states - let's particularly look at Greece.
It's clear the Republicans have really lost this round.
Job seekers have also been dealt a harsh blow. Most of them will probably buy into Obama's claim that the 2% savings in SS employee withholding will encourage jobs. As a result, things will have some negative surprises.
As Einhorn said, the US avoided dealing with the problem in the last round and pushed a solution forward. Thus, the solution will be more difficult and the events to force the solution will have to be that much more severe.
But heck - believe the glass is half-full and Obama has it right or not. But, an objective look around at where these policies have been tried before should raise eyebrows. There is no place I know of where socialism has added jobs and improved living standards.
It's like children are taught with the goose that laid the golden egg - i.e. you may think killing the goose will get you lots of eggs, but instead you get none.
The US should want to have golden geese want to be in America; yet, instead, it is doing everything to chase them away.
Obama Attempts to Quell Democratic Unrest on Tax Deal - WSJ.com
NO CLOSER TO THE 4TH INNING: Obama Attempts to Quell Democratic Unrest on Tax Deal - WSJ.com
Hope everyone saw Charlie Rose's interview with Einhorn tonight.
Anyone who thinks the Administration is even on the right planet in terms of guiding the economy of the country should get a good shake-up.
Except of course, died-in-the-wool Keynesian's can't imagine producers need incentives. They just want to goose consumption.
So, I guess we can look forward to the worst of both worlds - i.e. more debt for consumption and short-term incentives for capital preservation - but nothing long term to encourage investments in job creation back in America.
As said many times, we haven't left the third inning yet and the fourth inning - the longer it takes to get there, will likely be all that more horrific.
Hope everyone saw Charlie Rose's interview with Einhorn tonight.
Anyone who thinks the Administration is even on the right planet in terms of guiding the economy of the country should get a good shake-up.
Except of course, died-in-the-wool Keynesian's can't imagine producers need incentives. They just want to goose consumption.
So, I guess we can look forward to the worst of both worlds - i.e. more debt for consumption and short-term incentives for capital preservation - but nothing long term to encourage investments in job creation back in America.
As said many times, we haven't left the third inning yet and the fourth inning - the longer it takes to get there, will likely be all that more horrific.
Wall Street Journal: The Obama Administration Should payroll taxes be reduced for one year to stimulate the economy?
700 vs 900, did everyone fail math?: Wall Street Journal: The Obama Administration Should payroll taxes be reduced for one year to stimulate the economy?
clearly this is more of the give the average taxpayer some extra money to spend - and, maybe (Keynesian thinking) this will add jobs in America (vs. China).
One comparison immediately comes to mind: By extending the upper bracket Bush tax cuts (which were credited with 'increasing' the percentage of income taxes paid by the top brackets from '48%' to '52%') at a cost of $700 billion, the administration is now going to try and put more spending money in taxpayer pockets at a cost of $900 billion.
The biggest joke (or blatant lie) is that this $900 billion is supposed to support job creation.
As shown elsewhere in today's paper, American kids still rank below other countries in math skills - so perhaps an excuse; but:
1) 2% of what the employee pays (i.e. 2% vs the 15% it costs the employer). Can anyone really see this as a meaningful number to the employer? (clearly it's just money in the worker's pocket)
2) Can one really in one's wildest dreams think that incentivizing basic (average taxpayer $800 per year) consumption is going to be more job creating - in the US (vs. China, etc.) - than giving corporations and investors a reason to expand in America?
Clearly this is a sign that the people running the US economy from Washington are Keynesians with no clue about how to turn around the unemployment problem.
clearly this is more of the give the average taxpayer some extra money to spend - and, maybe (Keynesian thinking) this will add jobs in America (vs. China).
One comparison immediately comes to mind: By extending the upper bracket Bush tax cuts (which were credited with 'increasing' the percentage of income taxes paid by the top brackets from '48%' to '52%') at a cost of $700 billion, the administration is now going to try and put more spending money in taxpayer pockets at a cost of $900 billion.
The biggest joke (or blatant lie) is that this $900 billion is supposed to support job creation.
As shown elsewhere in today's paper, American kids still rank below other countries in math skills - so perhaps an excuse; but:
1) 2% of what the employee pays (i.e. 2% vs the 15% it costs the employer). Can anyone really see this as a meaningful number to the employer? (clearly it's just money in the worker's pocket)
2) Can one really in one's wildest dreams think that incentivizing basic (average taxpayer $800 per year) consumption is going to be more job creating - in the US (vs. China, etc.) - than giving corporations and investors a reason to expand in America?
Clearly this is a sign that the people running the US economy from Washington are Keynesians with no clue about how to turn around the unemployment problem.
Monday, December 6, 2010
Bernanke on CBS’s ‘60 Minutes’ - Real Time Economics - WSJ
BAILING WATER VS. FIXING THE CRACKS IN THE HULL: Bernanke on CBS’s ‘60 Minutes’ - Real Time Economics - WSJ
One of the old sayings I used to like is that "its the net not the gross".
For the small business person noted by Mr. Bernanke, the fact that interest rates might be low isn't as material as the present value of net after tax return for taking on risk and work. This also applies to big businesses and international corporations - who have options outside their local community and the US.
Bernanke may be making a valiant effort to overcome the fiscal drag from Democratic (and some Republican) policies, but, if it is 'pushing on a string' - then the outcome will be more like the 1970's in the US than the 1980's.
Clearly the states are in a whole over too much spending and too much given to public employees via unions. The Feds are borrowing (and would like to tax) a greater share of GDP. This reduces the funds to support education and economic investment.
Clearly cheap loan money isn't the answer to what is ailing the US economy. The Democratic expansion of government is also clearly exacerbating the lack of jobs rather than helping to ameliorate it. But, the Democrats haven't a clue that they and their policies are part (a big part) of the problem.
So, Bernanke may be trying to get a bucket brigade going to bail out an economic ship with a number of major breaks in its hull, but the Administration captaining the ship is deluded to think the structure of the ship is in good shape.
If the high tech and platform corporate economy may be doing OK, it may be because they are on the top deck of the ship where there are lifeboats and it may also be that they are already moving away from the ship in these lifeboats. Again, the Administration/captain may not like to see these people leave, but the Administration doesn't understand that the water is building up in the ship and it makes no sense to stay on board a boat that's effectively wallowing in the water making little headway.
One of the old sayings I used to like is that "its the net not the gross".
For the small business person noted by Mr. Bernanke, the fact that interest rates might be low isn't as material as the present value of net after tax return for taking on risk and work. This also applies to big businesses and international corporations - who have options outside their local community and the US.
Bernanke may be making a valiant effort to overcome the fiscal drag from Democratic (and some Republican) policies, but, if it is 'pushing on a string' - then the outcome will be more like the 1970's in the US than the 1980's.
Clearly the states are in a whole over too much spending and too much given to public employees via unions. The Feds are borrowing (and would like to tax) a greater share of GDP. This reduces the funds to support education and economic investment.
Clearly cheap loan money isn't the answer to what is ailing the US economy. The Democratic expansion of government is also clearly exacerbating the lack of jobs rather than helping to ameliorate it. But, the Democrats haven't a clue that they and their policies are part (a big part) of the problem.
So, Bernanke may be trying to get a bucket brigade going to bail out an economic ship with a number of major breaks in its hull, but the Administration captaining the ship is deluded to think the structure of the ship is in good shape.
If the high tech and platform corporate economy may be doing OK, it may be because they are on the top deck of the ship where there are lifeboats and it may also be that they are already moving away from the ship in these lifeboats. Again, the Administration/captain may not like to see these people leave, but the Administration doesn't understand that the water is building up in the ship and it makes no sense to stay on board a boat that's effectively wallowing in the water making little headway.
Saturday, December 4, 2010
Should You Believe Paul Volcker or the Happy Days Crowd? - Barrons.com
THE BIFURCATED ECONOMY AND JOB CREATION: Should You Believe Paul Volcker or the Happy Days Crowd? - Barrons.com
It is true that the tail can wag the dog and, in the current circumstances (should we be in a debt bubble), the debt balloon is certainly feathering the nest of its minders – i.e. the banks and financial houses (oh yes, hedge funds, etc. too).
And, with governments and much of the benefit receiving public in denial that anything could really be wrong with an ever-expanding credit-card consumption model, it’s no wonder that the banks are feeling again well.
But is all this debt bubble and concentration on the financial sector really creating wealth? Or, in other words more productive capacity that needs workers?
Apparently, the answer continues to look like ‘no’.
(A simple thought would be, if every world-class economic job in the US takes as much capital as it used to (and likely much more), then the Obama administration model of more capital being consumed by government (and given to non-producers) would clearly translate into ‘fewer’ jobs with the same capital requirement.)
(Another stab at the same issue would suggest that if more and more education is required to fill the needs of the Googles of the world for workers (and Friday on Richard Quest a headhunter admitted that new job skills were needed for the jobs now open), then this also takes capital – i.e. savings from consumption.)
So in either of the above scenarios, it would appear that the administration’s policies are anathema to job creation or the move of the economy into the new demands of a global economy in which the US can retain its above-the-mean standard of living.
It would appear as though lots of people are voicing solutions to job creation, but they can’t co-exist with an attempt to return to an old model where a high school education guaranteed a middle class lifestyle and when that didn’t work out, government would raise taxes from industry and thrift and give away a middle class lifestyle by depriving the economy of the very capital and rewards for effort that economic success requires.
Just a thought; but, it sure seems we’re on the wrong track.
It is true that the tail can wag the dog and, in the current circumstances (should we be in a debt bubble), the debt balloon is certainly feathering the nest of its minders – i.e. the banks and financial houses (oh yes, hedge funds, etc. too).
And, with governments and much of the benefit receiving public in denial that anything could really be wrong with an ever-expanding credit-card consumption model, it’s no wonder that the banks are feeling again well.
But is all this debt bubble and concentration on the financial sector really creating wealth? Or, in other words more productive capacity that needs workers?
Apparently, the answer continues to look like ‘no’.
(A simple thought would be, if every world-class economic job in the US takes as much capital as it used to (and likely much more), then the Obama administration model of more capital being consumed by government (and given to non-producers) would clearly translate into ‘fewer’ jobs with the same capital requirement.)
(Another stab at the same issue would suggest that if more and more education is required to fill the needs of the Googles of the world for workers (and Friday on Richard Quest a headhunter admitted that new job skills were needed for the jobs now open), then this also takes capital – i.e. savings from consumption.)
So in either of the above scenarios, it would appear that the administration’s policies are anathema to job creation or the move of the economy into the new demands of a global economy in which the US can retain its above-the-mean standard of living.
It would appear as though lots of people are voicing solutions to job creation, but they can’t co-exist with an attempt to return to an old model where a high school education guaranteed a middle class lifestyle and when that didn’t work out, government would raise taxes from industry and thrift and give away a middle class lifestyle by depriving the economy of the very capital and rewards for effort that economic success requires.
Just a thought; but, it sure seems we’re on the wrong track.
Friday, December 3, 2010
Retailers November Sales Show Healthy Start to Holiday Season - WSJ.com
ARE DRUGS REALLY ILLEGAL FOR STATISTICIANS?: Retailers November Sales Show Healthy Start to Holiday Season - WSJ.com: "- Sent using Google Toolbar"
Let's see?
We have a bifurcated economy with the educated, high-tech sector needing more workers than it can find and paying raises.
On the other hand, we have the regular economy which is being hit with ever more indirect costs for employment which further raise the gross cost of labor to the employer without increasing the salary of the employee (all thanks to the benevolent, yet malicious government).
And, while big companies can access cheap loans, small companies can't and all investment and equity dollars are going to be much more expensive - thanks to the Democrats.
So, somehow the math doesn't work?
We have a debt bubble building (more demand by government in the US and Europe for loans but no encouragement for savings), a need for massive investments in education and businesses to keep the jobs we have - and, they are saying the economy is turning around????
Oh yes, and, the unemployment rate just went up?
Didn't they say drugs were illegal? Maybe not for everyone!
Let's see?
We have a bifurcated economy with the educated, high-tech sector needing more workers than it can find and paying raises.
On the other hand, we have the regular economy which is being hit with ever more indirect costs for employment which further raise the gross cost of labor to the employer without increasing the salary of the employee (all thanks to the benevolent, yet malicious government).
And, while big companies can access cheap loans, small companies can't and all investment and equity dollars are going to be much more expensive - thanks to the Democrats.
So, somehow the math doesn't work?
We have a debt bubble building (more demand by government in the US and Europe for loans but no encouragement for savings), a need for massive investments in education and businesses to keep the jobs we have - and, they are saying the economy is turning around????
Oh yes, and, the unemployment rate just went up?
Didn't they say drugs were illegal? Maybe not for everyone!
Economy Added Fewer Jobs Than Expected in November - WSJ.com
WHY PUNISH SUCCESS?: Economy Added Fewer Jobs Than Expected in November - WSJ.com
Wouldn't it be nice if the US would focus on supporting and building the businesses of the future (rather than supporting old-line unions and public employment).
This will mean cutting back on lots of sacred Democratic wealth-transfer programs.
In the meantime, the debt bubble (as Peterson discussed today on Bloomberg) is building across the developed world (particularly the US and Europe); and, as he said, no one knows when it will burst - but, it could be very quick and nasty.
The unemployment rate would seem to attest to the fact that the Pelosi-Obama administration went down the exactly wrong track in terms of turning the economy around. And, the open question would appear to be even more apparent that the country won't embrace the job and wealth creating policies without some type of seminal event. Will we have to wait until the debt bubble bursts and interest rates start to skyrocket (or the Fed just prints money like crazy as an interim step)?
As noted elsewhere in today's WSJ, the Democrats thought they could take the Federal government's share of GDP to 25% and higher. One does wonder if they even thought of the logical consequences?
Because if they did, supporting more consumption and more tax driven redistribution of production and investment gains surely should have suggested less investment and less jobs. But, then again, logic seems to exclude the fact that producers like to keep what they produce, along with investors and that taking too much (the old number used to be about 19% of GDP in the 1980's) of GDP by government brings about stagflation.
Clearly the society is bifurcating into the educated, information-based society that is globally competitive and the un- or under-educated part that is not competitive. Right now policies are trying to punish the successful parts of the educated society for their successes. This wouldn't seem a very bright idea?
Wouldn't it be nice if the US would focus on supporting and building the businesses of the future (rather than supporting old-line unions and public employment).
This will mean cutting back on lots of sacred Democratic wealth-transfer programs.
In the meantime, the debt bubble (as Peterson discussed today on Bloomberg) is building across the developed world (particularly the US and Europe); and, as he said, no one knows when it will burst - but, it could be very quick and nasty.
The unemployment rate would seem to attest to the fact that the Pelosi-Obama administration went down the exactly wrong track in terms of turning the economy around. And, the open question would appear to be even more apparent that the country won't embrace the job and wealth creating policies without some type of seminal event. Will we have to wait until the debt bubble bursts and interest rates start to skyrocket (or the Fed just prints money like crazy as an interim step)?
As noted elsewhere in today's WSJ, the Democrats thought they could take the Federal government's share of GDP to 25% and higher. One does wonder if they even thought of the logical consequences?
Because if they did, supporting more consumption and more tax driven redistribution of production and investment gains surely should have suggested less investment and less jobs. But, then again, logic seems to exclude the fact that producers like to keep what they produce, along with investors and that taking too much (the old number used to be about 19% of GDP in the 1980's) of GDP by government brings about stagflation.
Clearly the society is bifurcating into the educated, information-based society that is globally competitive and the un- or under-educated part that is not competitive. Right now policies are trying to punish the successful parts of the educated society for their successes. This wouldn't seem a very bright idea?
Thursday, December 2, 2010
The Bright Side Hides a Darker Reality - WSJ.com
LURKING QUESTIONS: The Bright Side Hides a Darker Reality - WSJ.com
It would certainly seem to be an open question as to how all of this over-lending to and over-borrowing by governments (and, lets be honest, their social welfare systems) will work out.
The money that could have gone into new productive capacity, technologies, better education, etc. has instead gone to overly generous benefits to public employees, retirees and those who never work.
At some point, there has to be a limit as to how much money there is. We all know Bernanke is printing money and the ECB is buying government debt that no one else will buy.
But government is hard put to cut back enough.
So what will it be: More printing to meet the needs of all these governments (the US of course included - both federal and state)?
Luckily the Chinese are still supply goods at low prices.
There doesn't seem to be any ability of government to cut back on expenditures without raising taxes. And, all tax increases effectively diminish the investment needed for economic growth.
China, etc. is moving up the technological sophistication scale in a society that consumes less and much less is given to non-producers.
Europe and the US are relatively blind to the need to aggressively increase the level of investment and of education (see U. of Chicago Rajthan? on education).
It would certainly seem to be an open question as to how all of this over-lending to and over-borrowing by governments (and, lets be honest, their social welfare systems) will work out.
The money that could have gone into new productive capacity, technologies, better education, etc. has instead gone to overly generous benefits to public employees, retirees and those who never work.
At some point, there has to be a limit as to how much money there is. We all know Bernanke is printing money and the ECB is buying government debt that no one else will buy.
But government is hard put to cut back enough.
So what will it be: More printing to meet the needs of all these governments (the US of course included - both federal and state)?
Luckily the Chinese are still supply goods at low prices.
There doesn't seem to be any ability of government to cut back on expenditures without raising taxes. And, all tax increases effectively diminish the investment needed for economic growth.
China, etc. is moving up the technological sophistication scale in a society that consumes less and much less is given to non-producers.
Europe and the US are relatively blind to the need to aggressively increase the level of investment and of education (see U. of Chicago Rajthan? on education).
Thursday, November 25, 2010
European Crises Preclude Reserve Status for Euro - Barrons.com
LET'S NOT BE SO QUICK TO FEEL DOLLAR SUPERIOR: European Crises Preclude Reserve Status for Euro - Barrons.com
It would seem as though the global (read: Europe/US) problem is profligate government spending abetted by the banks (lest we say they should be investing their depositors' money instead of supporting profligate governments).
The banks are apparently beyond apoplectic (lest we say starting to recognize the errors of their ways - but, as the old saying goes, "in for a ounce, in for a pound" (or something like that)).
They are looking for the governments they've helped to bail themselves out - but, should the banks really be bailed out?
Isn't this just an impossible balloon?
Don't the US and many European countries really need to invest in competitive, productive jobs and societies?
Maybe there is no crunch-time pending, but as shown in the US by states like California - the US surely shouldn't be doing any gloating!
(Let's see if fiscal rectitude can start to be demonstrated in Washington. It's hard to believe the words have any meaning for Obama or Pelosi - other than with higher taxes driving down investment and job creation.)
It would seem as though the global (read: Europe/US) problem is profligate government spending abetted by the banks (lest we say they should be investing their depositors' money instead of supporting profligate governments).
The banks are apparently beyond apoplectic (lest we say starting to recognize the errors of their ways - but, as the old saying goes, "in for a ounce, in for a pound" (or something like that)).
They are looking for the governments they've helped to bail themselves out - but, should the banks really be bailed out?
Isn't this just an impossible balloon?
Don't the US and many European countries really need to invest in competitive, productive jobs and societies?
Maybe there is no crunch-time pending, but as shown in the US by states like California - the US surely shouldn't be doing any gloating!
(Let's see if fiscal rectitude can start to be demonstrated in Washington. It's hard to believe the words have any meaning for Obama or Pelosi - other than with higher taxes driving down investment and job creation.)
Wednesday, November 24, 2010
Trading Inquiry Widens to Big Firms - WSJ.com
TYPICAL ANTI-BUSINESS DUMMING DOWN:Trading Inquiry Widens to Big Firms - WSJ.com
What in the world can be wrong with using experts to gain knowledge?
The fact that some people seek knowledge and others want it to be blasted into their ears while they do nothing seems a typical mantra of the uneducated and lazy (read: Democrats who want equal outcomes instead of equal opportunities).
After all, what are 'research analysts' for - but to gain knowledge and make use of it.
This isn't insider information since almost all information is available online - if you know where to look for it and you have the educational and learning skills to make use of it.
Since so many Americans have limited reading skills, those that have these skills shouldn't be penalized.
This is just another blatant example of the liberal predilection for mediocrity and regression to the lowest possible mean. After all , the liberals have dummed-down education and the need to achieve and then they wonder about a big pay gap between achievers and non-achievers.
The Federal employees pursuing this insider training should at best be fired or, even better, put in jail for hurting the economic growth of the country.
What in the world can be wrong with using experts to gain knowledge?
The fact that some people seek knowledge and others want it to be blasted into their ears while they do nothing seems a typical mantra of the uneducated and lazy (read: Democrats who want equal outcomes instead of equal opportunities).
After all, what are 'research analysts' for - but to gain knowledge and make use of it.
This isn't insider information since almost all information is available online - if you know where to look for it and you have the educational and learning skills to make use of it.
Since so many Americans have limited reading skills, those that have these skills shouldn't be penalized.
This is just another blatant example of the liberal predilection for mediocrity and regression to the lowest possible mean. After all , the liberals have dummed-down education and the need to achieve and then they wonder about a big pay gap between achievers and non-achievers.
The Federal employees pursuing this insider training should at best be fired or, even better, put in jail for hurting the economic growth of the country.
Sunday, November 21, 2010
History Is Uncertain Guide for Fed Chairman - Barrons.com
THOSE HIDDEN ROCKS: History Is Uncertain Guide for Fed Chairman - Barrons.com
As Donlan writes:
"IN AUGUST, 1992, THE CRUISE SHIP Queen Elizabeth II struck a rock in the waters south of the little island of Cuttyhunk, Mass. There are many rocks on the charts of Buzzards Bay and Vineyard Sound; the QE2 found one that was previously unknown, and it cost the Cunard Line $20 million.
The captain and the pilot testified that they hadn't been worried about the ship, 963 feet long with draft of 32 feet below the water surface, because it was crossing an area charted to be 39 feet deep at low tide.
Unfortunately for them and their ship and their passengers, no other ship so big had ever navigated those waters. What was worse for them, the 39-foot sounding had been taken in 1939 by a method that sampled the depth every quarter-mile. The 39-foot sounding on the chart was accurate, but there was a rock at a depth of 31 feet less than a quarter-mile away."
One does ponder the comment, "If it works, the Fed will later withdraw the cash from the economy by selling the Treasury bonds it purchased in QE1 and QE2."
The world (especially many socialist countries in Europe)seem to believe (as of course their public unions do) that you can borrow 3-10% + of GDP each year while growing 1% or less and that this can go on indefinitely.
At some point, one does have to wonder if the magic liquidity to fund this borrowing isn't going to run a bit short!
And, should this happen when Ben decides to sell back to the public all that Treasury paper, one wonders if the interest rates of the 1970's won't look like bargains (yes, we're talking 20% plus).
One then wonders what will happen to our heavily indebted government and our economy - i.e. just one of those potential rocks.
As Donlan writes:
"IN AUGUST, 1992, THE CRUISE SHIP Queen Elizabeth II struck a rock in the waters south of the little island of Cuttyhunk, Mass. There are many rocks on the charts of Buzzards Bay and Vineyard Sound; the QE2 found one that was previously unknown, and it cost the Cunard Line $20 million.
The captain and the pilot testified that they hadn't been worried about the ship, 963 feet long with draft of 32 feet below the water surface, because it was crossing an area charted to be 39 feet deep at low tide.
Unfortunately for them and their ship and their passengers, no other ship so big had ever navigated those waters. What was worse for them, the 39-foot sounding had been taken in 1939 by a method that sampled the depth every quarter-mile. The 39-foot sounding on the chart was accurate, but there was a rock at a depth of 31 feet less than a quarter-mile away."
One does ponder the comment, "If it works, the Fed will later withdraw the cash from the economy by selling the Treasury bonds it purchased in QE1 and QE2."
The world (especially many socialist countries in Europe)seem to believe (as of course their public unions do) that you can borrow 3-10% + of GDP each year while growing 1% or less and that this can go on indefinitely.
At some point, one does have to wonder if the magic liquidity to fund this borrowing isn't going to run a bit short!
And, should this happen when Ben decides to sell back to the public all that Treasury paper, one wonders if the interest rates of the 1970's won't look like bargains (yes, we're talking 20% plus).
One then wonders what will happen to our heavily indebted government and our economy - i.e. just one of those potential rocks.
Saturday, November 20, 2010
U.S. Pursues Sweeping Insider-Trading Probe - WSJ.com
HOW NOT TO CREATE PRIVATE SECTOR JOBS: U.S. Pursues Sweeping Insider-Trading Probe - WSJ.com
Can we say the government is over-reaching and over-reacting?
Some how this all wreaks of the old story of a young guy getting a job at a union-run factory .
The first thing he is taught is to not work too fast, not to show too much initiative and not to try and make changes.
Somehow all of this insider-phobia of the government just seems to have gone way too far - clearly information is gathered and being put together by intelligent people. To say there is something wrong with this is anti-business, anti-thought, anti-job and anti-economic development.
But, then again, it does support government jobs - need more be said!
Can we say the government is over-reaching and over-reacting?
Some how this all wreaks of the old story of a young guy getting a job at a union-run factory .
The first thing he is taught is to not work too fast, not to show too much initiative and not to try and make changes.
Somehow all of this insider-phobia of the government just seems to have gone way too far - clearly information is gathered and being put together by intelligent people. To say there is something wrong with this is anti-business, anti-thought, anti-job and anti-economic development.
But, then again, it does support government jobs - need more be said!
Friday, November 19, 2010
Bernanke Takes Aim at China - WSJ.com
70'S VS. NOW: Bernanke Takes Aim at China - WSJ.com
There were also comments on Bloomberg this morning that Bernanke is criticizing Administration fiscal policies (but no details or quotes).
The comparison with the 70's should be frightening.
In both cases the country was faced with tax and fiscal policies (% of GDP spent by government over 19.8% - a number which Reagan finally corrected) that were negative to growth.
In the 1970's however we had unabashed inflation, housing started low and the country was basically reasonably healthy economically - the 1960's had been a good time.
Now, 2010, we had a good 1990's, but economically the country didn't do what it needed past 2000 and was deluded with the advent of financial engineering and the housing boom to think wealth was being created - but, it was paper wealth.
The Democrats still don't think they are doing anything wrong by favoring high taxes and consumption - with huge amounts of wealth transfers via entitlements from producers (both here and abroad) to non-producers at home.
They are ignorant of making the US a business-friendly environment. This is something the Bush Administration also failed to do with its pandering to the anti-immigrant policies of the Republican right and the willingness to spend whatever revenues government could take in to support special interests in hopes of packing the Supreme Court to have it overrule Roe vs. Wade.
One look at the elections just past in California and one has to see that the Democrats that got the state into its economic mess were re-elected and thus there is little apparent awareness by average people of what to do to change things for the better.
Meanwhile, the Fed runs the money presses. Are there English bookmakers taking bets on outcomes?
There were also comments on Bloomberg this morning that Bernanke is criticizing Administration fiscal policies (but no details or quotes).
The comparison with the 70's should be frightening.
In both cases the country was faced with tax and fiscal policies (% of GDP spent by government over 19.8% - a number which Reagan finally corrected) that were negative to growth.
In the 1970's however we had unabashed inflation, housing started low and the country was basically reasonably healthy economically - the 1960's had been a good time.
Now, 2010, we had a good 1990's, but economically the country didn't do what it needed past 2000 and was deluded with the advent of financial engineering and the housing boom to think wealth was being created - but, it was paper wealth.
The Democrats still don't think they are doing anything wrong by favoring high taxes and consumption - with huge amounts of wealth transfers via entitlements from producers (both here and abroad) to non-producers at home.
They are ignorant of making the US a business-friendly environment. This is something the Bush Administration also failed to do with its pandering to the anti-immigrant policies of the Republican right and the willingness to spend whatever revenues government could take in to support special interests in hopes of packing the Supreme Court to have it overrule Roe vs. Wade.
One look at the elections just past in California and one has to see that the Democrats that got the state into its economic mess were re-elected and thus there is little apparent awareness by average people of what to do to change things for the better.
Meanwhile, the Fed runs the money presses. Are there English bookmakers taking bets on outcomes?
Wednesday, November 17, 2010
U.S. Sets 50 Bank Probes - WSJ.com
Q & A: WHAT ABOUT BANKERS SALARIES? :U.S. Sets 50 Bank Probes - WSJ.com
Question:
It's easy to blame Fannie and Freddie.
But, who wrote those bad loans? The bankers who walked away with multi-million dollar bonuses and severence packages?
Answer:
Gee, did you check what the top execs at Fannie and Freddie made in salary and bonuses?
And, if you recall, there were warnings to people about the housing bubble - after all, incomes weren't going up - just housing prices and lots of new houses.
It was a ponzi scheme that many people chose not to look at.
Plus, with Basel II, etc. the idea of bankers actually having to think about investments they might make was obviated by just buying AAA rated instruments to ease reserve requirements.
With Basel III, it's gotten worse. All the European banks are flooded with sovereign debt that it is illogical could ever be repaid (e.g. with socialist entitlement costs of 3 to 5 to 15% of GDP (after already heavy taxation) and little or no economic growth (again, with anti-business and anti-growth tax and regulatory policies), it is hard to see how piling up debt year after year can't end anything but badly!
Oh yes, these are Obama policies as well.
And, frankly, they are the result of government policies, not banking policies per se.
Those bankers who can find a way to make huge sums on this stupidity on the part of government and the electorate should receive accolades. They aren't hiding what is going on - rather, they are calling attention to it.
And, as the European governments are trying to legislate out of existence such attention by constraining hedge funds and others who trade against the debt bubble these governments are creating.
Question:
It's easy to blame Fannie and Freddie.
But, who wrote those bad loans? The bankers who walked away with multi-million dollar bonuses and severence packages?
Answer:
Gee, did you check what the top execs at Fannie and Freddie made in salary and bonuses?
And, if you recall, there were warnings to people about the housing bubble - after all, incomes weren't going up - just housing prices and lots of new houses.
It was a ponzi scheme that many people chose not to look at.
Plus, with Basel II, etc. the idea of bankers actually having to think about investments they might make was obviated by just buying AAA rated instruments to ease reserve requirements.
With Basel III, it's gotten worse. All the European banks are flooded with sovereign debt that it is illogical could ever be repaid (e.g. with socialist entitlement costs of 3 to 5 to 15% of GDP (after already heavy taxation) and little or no economic growth (again, with anti-business and anti-growth tax and regulatory policies), it is hard to see how piling up debt year after year can't end anything but badly!
Oh yes, these are Obama policies as well.
And, frankly, they are the result of government policies, not banking policies per se.
Those bankers who can find a way to make huge sums on this stupidity on the part of government and the electorate should receive accolades. They aren't hiding what is going on - rather, they are calling attention to it.
And, as the European governments are trying to legislate out of existence such attention by constraining hedge funds and others who trade against the debt bubble these governments are creating.
Why an Outbreak of Inflation Isn't Likely - WSJ.com
Why an Outbreak of Inflation Isn't Likely - WSJ.com
This is about the most hollow article I've seen on inflation.
The only focus is on the demand side. Unless something is done to change the anti-business, anti-investor fiscal policies of the country (at both the local, state and national levels), the supply side in the US will continue to be in decline.
Yes, that will mean fewer and fewer jobs created and additional jobs lost; but, at the same time, with a declining dollar (as money is printed to try and overcome fiscal drag), the cost of imported goods will go up.
If there wasn't the huge fiscal drag on the economy, there would be some domestic replacement but that will really require the fiscal policy changes that are problematic at best as they seem utterly opposed by (and not even comprehended) by the President and the left wing of his party.
The prognostication of a few years back to see an inflationary depression is clearly still on the table based on over-spending, over-taxing and over-regulation by government.
This is about the most hollow article I've seen on inflation.
The only focus is on the demand side. Unless something is done to change the anti-business, anti-investor fiscal policies of the country (at both the local, state and national levels), the supply side in the US will continue to be in decline.
Yes, that will mean fewer and fewer jobs created and additional jobs lost; but, at the same time, with a declining dollar (as money is printed to try and overcome fiscal drag), the cost of imported goods will go up.
If there wasn't the huge fiscal drag on the economy, there would be some domestic replacement but that will really require the fiscal policy changes that are problematic at best as they seem utterly opposed by (and not even comprehended) by the President and the left wing of his party.
The prognostication of a few years back to see an inflationary depression is clearly still on the table based on over-spending, over-taxing and over-regulation by government.
Tuesday, November 16, 2010
Teacher Training Is Panned - WSJ.com
TEACHING PROCESS VS. PRODUCT: Teacher Training Is Panned - WSJ.com
Isn't this just making excuses for the 'process' vs. 'product' focus of liberal thinking?
If the teachers unions still run education on a 'seniority' basis, then what is the encouragement of a capable young person to enter the profession?
The profession gets what it looks for - hacks that know they will be protected and, as with other unionized jobs, the 'lowest' common denominator is what gives the union its strength.
Anyone who 'outperforms' is anathema to the vast majority of union members.
If 'excellence' and 'performance' were fairly rewarded (and 'not' rewarded) - which of course is again anathema to the teachers unions - then all of the regulatory crap wouldn't be needed.
The basics of rewarding quality and performance would mean all of these 'credentials' for teaching again would be unnecessary as it would be performance that was rewarded.
If someone is a good teacher and 25 years old, why shouldn't that teacher receive the same pay as a 40 or 50 year old teacher who is no more skilled?
Isn't this just making excuses for the 'process' vs. 'product' focus of liberal thinking?
If the teachers unions still run education on a 'seniority' basis, then what is the encouragement of a capable young person to enter the profession?
The profession gets what it looks for - hacks that know they will be protected and, as with other unionized jobs, the 'lowest' common denominator is what gives the union its strength.
Anyone who 'outperforms' is anathema to the vast majority of union members.
If 'excellence' and 'performance' were fairly rewarded (and 'not' rewarded) - which of course is again anathema to the teachers unions - then all of the regulatory crap wouldn't be needed.
The basics of rewarding quality and performance would mean all of these 'credentials' for teaching again would be unnecessary as it would be performance that was rewarded.
If someone is a good teacher and 25 years old, why shouldn't that teacher receive the same pay as a 40 or 50 year old teacher who is no more skilled?
Monday, November 15, 2010
Paychecks for CEOs Climb - WSJ.com
Q&A: Paychecks for CEOs Climb - WSJ.com
Question:
But don't you think these pay packages are just a little overblown?
Answer:
You should read Art Laffer's article on total labor cost as an input to production (was available last week through Sunday in the WSJ).
Government likes to have people believe they are getting all the benefits that flow through government (including but not limited to social security, medicare, unemployment insurance, etc.) for free or at low cost, but many employers will tell you the gross wage paid to an employee is only 20-25% of the total cost to the employer of having that employee.
Thus, an employer has to look to sell a product at a competitive price - if not, they go bankrupt.
Then the employer has to look at the combination of his labor input costs, his capital input costs and his raw material input costs.
As you read the news, you're aware that the Obama administration has been increasing all three of these costs (Obamacare is a direct increase to labor costs; the deficit, tax increases and bank and investor regulatory policies directly increase the cost of capital; and, the depreciation in the value of the dollar directly increase raw material costs).
The pro-union policies of the administration also hurt domestic job creation (witness how blithely the UAW bled GM and then expected a taxpayer bailout and how the public employee unions have extorted obscene benefits).
Both parties have supported immigration policies that prohibit top university graduates from foreign countries from staying in the US.
So, from what I see, the public is supporting policies which run directly counter to the long-term economic health of the country and, since the government can't admit the failure of its socialist policies, it is trying to blame business and the banks.
But, business needs to survive and the decks are stacked (by government, etc.) against it.
It is ridiculous to criticize greed when it is generally what drives everyone. What should be criticized is anything that prevents an individual from coming up with a new idea or a better idea to go into business for him or herself.
After all in a supply and demand relationship (which is really all that there is), when either side of the balance is distorted, disequilibriums occur.
Question:
But don't you think these pay packages are just a little overblown?
Answer:
You should read Art Laffer's article on total labor cost as an input to production (was available last week through Sunday in the WSJ).
Government likes to have people believe they are getting all the benefits that flow through government (including but not limited to social security, medicare, unemployment insurance, etc.) for free or at low cost, but many employers will tell you the gross wage paid to an employee is only 20-25% of the total cost to the employer of having that employee.
Thus, an employer has to look to sell a product at a competitive price - if not, they go bankrupt.
Then the employer has to look at the combination of his labor input costs, his capital input costs and his raw material input costs.
As you read the news, you're aware that the Obama administration has been increasing all three of these costs (Obamacare is a direct increase to labor costs; the deficit, tax increases and bank and investor regulatory policies directly increase the cost of capital; and, the depreciation in the value of the dollar directly increase raw material costs).
The pro-union policies of the administration also hurt domestic job creation (witness how blithely the UAW bled GM and then expected a taxpayer bailout and how the public employee unions have extorted obscene benefits).
Both parties have supported immigration policies that prohibit top university graduates from foreign countries from staying in the US.
So, from what I see, the public is supporting policies which run directly counter to the long-term economic health of the country and, since the government can't admit the failure of its socialist policies, it is trying to blame business and the banks.
But, business needs to survive and the decks are stacked (by government, etc.) against it.
It is ridiculous to criticize greed when it is generally what drives everyone. What should be criticized is anything that prevents an individual from coming up with a new idea or a better idea to go into business for him or herself.
After all in a supply and demand relationship (which is really all that there is), when either side of the balance is distorted, disequilibriums occur.
Saturday, November 13, 2010
Heard on the Street: The Economics of Jobless Recoveries - WSJ.com
BASIC JOB ECONOMICS: Heard on the Street: The Economics of Jobless Recoveries - WSJ.com: "- Sent using Google Toolbar"
Other questions, which would seem to also apply to the US, relate to the skills needed and the capital required to provide a new job?
The University of Chicago economist Rajan makes a big point of the overall increase in the level of education required by information based economies (which after all is where good standards of living can be earned). With respect to education, this becomes an investment that both the society and the individual makes - as well as companies when they provide ongoing training courses.
If the less-skilled jobs (and many of the skilled) are taken by individuals in countries with a lower 'total labor cost' (see Art Laffers good article on the subject in this week's Wall Street Journal), then developed economies may have to rethink all the social benefits that are tacked onto the actual pay labor receives (e.g. workmens comp., early retirement, healthcare, etc.).
There is also of course the cost of the actual plant and equipment (a recent Malaysian clean energy plant cost roughly $1 billion for 1,000 jobs).
In light of the above, one wonders about how much thinking is going into understanding these critical factors? It would seem as though the UK is coming up with policies to drive bankers out of the UK (which would seem to be exactly the wrong move!
Other questions, which would seem to also apply to the US, relate to the skills needed and the capital required to provide a new job?
The University of Chicago economist Rajan makes a big point of the overall increase in the level of education required by information based economies (which after all is where good standards of living can be earned). With respect to education, this becomes an investment that both the society and the individual makes - as well as companies when they provide ongoing training courses.
If the less-skilled jobs (and many of the skilled) are taken by individuals in countries with a lower 'total labor cost' (see Art Laffers good article on the subject in this week's Wall Street Journal), then developed economies may have to rethink all the social benefits that are tacked onto the actual pay labor receives (e.g. workmens comp., early retirement, healthcare, etc.).
There is also of course the cost of the actual plant and equipment (a recent Malaysian clean energy plant cost roughly $1 billion for 1,000 jobs).
In light of the above, one wonders about how much thinking is going into understanding these critical factors? It would seem as though the UK is coming up with policies to drive bankers out of the UK (which would seem to be exactly the wrong move!
The Weekend Interview with Hector Murguia: Can Mexico Be Saved? - WSJ.com
STUPID DRUG WARS: The Weekend Interview with Hector Murguia: Can Mexico Be Saved? - WSJ.com: "- Sent using Google Toolbar"
America's moralistic anti-drug policies are to blame for too much misery around the world.
If there is a single war the US should give up on it's the 'drug war'!
All those supporting the drug war are guilty of all that goes down in Mexico, Columbia, etc. where populations are suffering from the insanity of telling people how to live their lives.
Perhaps it's the flip side of socialist entitlement policies that people don't need to be responsible for anything. I'd rather see an emphasis on individual responsibility which would include very liberal drug laws and much less social spending.
Gee, that would put a huge dent in government employee unions and we might be able to save enough in taxes to get the economy growing again?
America's moralistic anti-drug policies are to blame for too much misery around the world.
If there is a single war the US should give up on it's the 'drug war'!
All those supporting the drug war are guilty of all that goes down in Mexico, Columbia, etc. where populations are suffering from the insanity of telling people how to live their lives.
Perhaps it's the flip side of socialist entitlement policies that people don't need to be responsible for anything. I'd rather see an emphasis on individual responsibility which would include very liberal drug laws and much less social spending.
Gee, that would put a huge dent in government employee unions and we might be able to save enough in taxes to get the economy growing again?
Thursday, November 11, 2010
Karl Rove: Obama Has a Listening Problem - WSJ.com
THE DEMOCRATS PHILOSOPHICAL QUANDARY: Karl Rove: Obama Has a Listening Problem - WSJ.com
Clearly Obama comes from the school that believes people are 'entitled' and 'deserving' and thus they should have - all of which has to be paid for; no matter what the consequences to those who produce.
This is the flip side of the basic economic quandary it would appear Obama and the Democrats are in. Coming from a socialist-type (or communist-type) social view, they don't understand how incentives to produce, save, invest work. All they know is to divide up what there is and hope the supply is there. Because - someone else is doing the providing.
The opposite group of people - the producers - weigh the advantages of taking risks, foregoing immediate gain for future gain, etc. But, these people don't want to see their future gain taken to support non-producers.
This is the quandary: As Art Laffer has pointed out, higher and higher taxes may have been the actual cause or the tipping point cause of the prolonging of the 1930's recession.
The idea that it was monetary policy is certainly an appealing alternate view, which has been picked up by Bernanke and Obama.
Logic however would support the fiscal/tax policy argument - i.e. too much of the rewards for growing the economy were taken by government for redistribution, so those who can grow the economy decided to sit this tax round out.
Clearly Obama comes from the school that believes people are 'entitled' and 'deserving' and thus they should have - all of which has to be paid for; no matter what the consequences to those who produce.
This is the flip side of the basic economic quandary it would appear Obama and the Democrats are in. Coming from a socialist-type (or communist-type) social view, they don't understand how incentives to produce, save, invest work. All they know is to divide up what there is and hope the supply is there. Because - someone else is doing the providing.
The opposite group of people - the producers - weigh the advantages of taking risks, foregoing immediate gain for future gain, etc. But, these people don't want to see their future gain taken to support non-producers.
This is the quandary: As Art Laffer has pointed out, higher and higher taxes may have been the actual cause or the tipping point cause of the prolonging of the 1930's recession.
The idea that it was monetary policy is certainly an appealing alternate view, which has been picked up by Bernanke and Obama.
Logic however would support the fiscal/tax policy argument - i.e. too much of the rewards for growing the economy were taken by government for redistribution, so those who can grow the economy decided to sit this tax round out.
Monday, November 8, 2010
As Global Economy Shifts, Companies Rethink, Retool - WSJ.com
WHAT NO ONE WANTS TO TALK ABOUT: As Global Economy Shifts, Companies Rethink, Retool - WSJ.com
Let's see?
If the US wants to dampen down US consumption, it could do what Europe does - put up the price of everything with a VAT tax and cut wages.
Then, to ask the Europeans to consume more, it could ask them to cut social benefits and the taxes to support them so that the individual consumers would have both more money in their pockets and lower priced goods.
Does anyone expect either to be advocated (at least publicly) by Mr. Obama or Mr. Geithner?
Let's see?
If the US wants to dampen down US consumption, it could do what Europe does - put up the price of everything with a VAT tax and cut wages.
Then, to ask the Europeans to consume more, it could ask them to cut social benefits and the taxes to support them so that the individual consumers would have both more money in their pockets and lower priced goods.
Does anyone expect either to be advocated (at least publicly) by Mr. Obama or Mr. Geithner?
Statistics don't help in the battle between stimulus and austerity - WSJ.com
THE GEITNER, LAGARDE OSTRICH: Statistics don't help in the battle between stimulus and austerity - WSJ.com
One is either an ostrich or not.
What does one mean by 'ostrich'? Well, think of the two farmers.
Each farmer knows that he/she has to save 10% of each crop as seed for the next crop.
However one farmer (say Greece) just can't save 10%, it wants to consume more.
Another farmer, say China, decides it wants to grow and so it saves 20% and goes a bit hungry.
According to Geitner, et al, something is wrong with China, it's producing too much at too good prices.
Over time, the high cost of goods in Europe makes it hard for European individuals and businesses to be able to afford to be competitive and to be competitively productive. This can include featherbedding and work rules in Greece, etc.
So much of Europe and the US ignore the need to reward producers and savers and instead concentrate on social benefits, etc. - ignoring the long-term cost to society of doing so! The ignorance of an ostrich hiding its head in the sand.
One is either an ostrich or not.
What does one mean by 'ostrich'? Well, think of the two farmers.
Each farmer knows that he/she has to save 10% of each crop as seed for the next crop.
However one farmer (say Greece) just can't save 10%, it wants to consume more.
Another farmer, say China, decides it wants to grow and so it saves 20% and goes a bit hungry.
According to Geitner, et al, something is wrong with China, it's producing too much at too good prices.
Over time, the high cost of goods in Europe makes it hard for European individuals and businesses to be able to afford to be competitive and to be competitively productive. This can include featherbedding and work rules in Greece, etc.
So much of Europe and the US ignore the need to reward producers and savers and instead concentrate on social benefits, etc. - ignoring the long-term cost to society of doing so! The ignorance of an ostrich hiding its head in the sand.
Fed Governor Doubts Program - WSJ.com
UNDERUTILIZED OR OVERPRICED RESOURCES?: Fed Governor Doubts Program - WSJ.com
What seems to be unduly glossed over (or totally ignored by Bernanke, et al) is that certain inputs - be they labor or capital are being mispriced or having their prices distorted by fiscal policies coming out of Washington and state governments.
Thus, the comment "We see an economy which has a very high level of under utilization of resources and a relatively slow growth rate" may not in any way be 'underutilizing' what are 'overpriced' assets.
The country and its policy makers should be talking about how taxes and entitlements and the drug laws (amongst others) are providing distortions that hurt competitiveness and entrepreneurial incentives and create major global political upheaval (esp. the drug laws).
What seems to be unduly glossed over (or totally ignored by Bernanke, et al) is that certain inputs - be they labor or capital are being mispriced or having their prices distorted by fiscal policies coming out of Washington and state governments.
Thus, the comment "We see an economy which has a very high level of under utilization of resources and a relatively slow growth rate" may not in any way be 'underutilizing' what are 'overpriced' assets.
The country and its policy makers should be talking about how taxes and entitlements and the drug laws (amongst others) are providing distortions that hurt competitiveness and entrepreneurial incentives and create major global political upheaval (esp. the drug laws).
Thursday, November 4, 2010
Daniel Henninger: Unlock the American Economy - WSJ.com
A SIMPLE ECONOMIC PRO-JOBS MODEL:Daniel Henninger: Unlock the American Economy - WSJ.com
Right on - and, perhaps a suggestion for an even clearer focus - is to say jobs are number one and for them to be number one, the US has to make itself the best place in the world to locate and grow a business.
This means unequivocally that social programs come second - not first. They get funded out of what's left, not what there is to take!
Whether one thinks of the farmer that knows he has to save 10% of his crop to provide the seed for the next crop (and to grow needs to save maybe 12% or more);
Or, one thinks of the employer who has lots of itinerant family members who have their hands out and would like to be 'given' some money before the employer pays his own workers and consultants,
These are the models we need - save and grow and pay producers first!
Right on - and, perhaps a suggestion for an even clearer focus - is to say jobs are number one and for them to be number one, the US has to make itself the best place in the world to locate and grow a business.
This means unequivocally that social programs come second - not first. They get funded out of what's left, not what there is to take!
Whether one thinks of the farmer that knows he has to save 10% of his crop to provide the seed for the next crop (and to grow needs to save maybe 12% or more);
Or, one thinks of the employer who has lots of itinerant family members who have their hands out and would like to be 'given' some money before the employer pays his own workers and consultants,
These are the models we need - save and grow and pay producers first!
In Washington, an Awkward Triangle of Power - WSJ.com
BASIC CORRELATION ANALYSIS AND THE CURRENT COUNTER-REFORMATION SOCIAL PROGRAMS: In Washington, an Awkward Triangle of Power - WSJ.com
It would seem as though even the President is starting to at least talk as though he needs to consider the needs of business if business is going to create jobs. But the true correlation is likely well-beyond his ability to understand it.
But, as with all sorts of projections - the old econometric analysis projection game - everything ends up dependent on key variables and factors that are included in the math.
It would seem rather obvious that the correlations between taxes that are too high end up creating job losses and a lack of job-creating vigor - one can't help but think of Michigan and California.
Yet, this basic correlation in which too much is taken by government is unlikely to the starting point.
But, we already know what the outcome of the current political framework and government programs at a national level is showing - and that is a lack of jobs.
Going back and tinkering with the inputs of the linear progression model could perhaps show why; but, it's pretty obvious that there is something holding back (if not eating into and destroying) the potential of the US to grow, evolve, change and create jobs.
Somehow, the banter back and forth in all these articles misses the idea of blatantly obvious correlations.
I guess if the goal is to focus on benefits and care for the poor and elderly, it's like the counter-reformation - i.e. you fight change so hard you hold yourself back.
It would seem as though even the President is starting to at least talk as though he needs to consider the needs of business if business is going to create jobs. But the true correlation is likely well-beyond his ability to understand it.
But, as with all sorts of projections - the old econometric analysis projection game - everything ends up dependent on key variables and factors that are included in the math.
It would seem rather obvious that the correlations between taxes that are too high end up creating job losses and a lack of job-creating vigor - one can't help but think of Michigan and California.
Yet, this basic correlation in which too much is taken by government is unlikely to the starting point.
But, we already know what the outcome of the current political framework and government programs at a national level is showing - and that is a lack of jobs.
Going back and tinkering with the inputs of the linear progression model could perhaps show why; but, it's pretty obvious that there is something holding back (if not eating into and destroying) the potential of the US to grow, evolve, change and create jobs.
Somehow, the banter back and forth in all these articles misses the idea of blatantly obvious correlations.
I guess if the goal is to focus on benefits and care for the poor and elderly, it's like the counter-reformation - i.e. you fight change so hard you hold yourself back.
Wednesday, November 3, 2010
Gridlock Isn't as Bullish as Markets Think - Barrons.com
CORRELATIONS, LINKS AND THE 'OLE' INEXORABLE: Gridlock Isn't as Bullish as Markets Think - Barrons.com
Could these perhaps be 'naked' correlations?
In other words, rather than leave these out in the open, what would the correlations be if paired with say 'percent of GDP being spent by government'?
Another interesting correlation would be the 'direction of housing prices over the past year / past 2 years / 3 years'.
As the old project, correlation game goes, it all depends on whether things have changed.
And, it would seem as though the inexorable is clearly marching on - and, one suggestion for the 'inexorable' would be the growing sense of 'unearned and unfunded entitlements'.
Could these perhaps be 'naked' correlations?
In other words, rather than leave these out in the open, what would the correlations be if paired with say 'percent of GDP being spent by government'?
Another interesting correlation would be the 'direction of housing prices over the past year / past 2 years / 3 years'.
As the old project, correlation game goes, it all depends on whether things have changed.
And, it would seem as though the inexorable is clearly marching on - and, one suggestion for the 'inexorable' would be the growing sense of 'unearned and unfunded entitlements'.
Ari Fleischer: Lessons From the Last Republican House - WSJ.com
START WITH MAKING BUSINESS THE FAVORITE UNCLE: Ari Fleischer: Lessons From the Last Republican House - WSJ.com
It would seem to be worthwhile to consider totally turning around the way entitlements and benefits are approached - i.e. to deal with these matters as a family would - based on income.
Right now the idea is to borrow and soak the rich - or, as the French unions recently demonstrated, any business with profits can always pay more toward early retirement benefits.
Bottom line would be that American should start by figuring out what it will take to make America the best place in the world to start and maintain a business (reading loud and clearly, "this means jobs").
Off the top of the list, the corporate tax rate is too high; immigration restrictions are a disaster (businesses need to be able to easily bring in employees from all parts of the world); tax rates on entrepreneurs (the old $250,000 are too high and all the extra taxes for the healthcare bill are crazy high).
People need to feel the US will treat them fair (and better than other countries) on taxes and regulations.
Sure the teachers unions and public employees need a major reorientation and the some states will go BK if they can't get their own taxes, etc. under control.
Business needs to be treated as the 'favorite uncle' not a 'black sheep'.
The black sheep should be those who feel 'entitled' to take more from society than they are giving back (let's start with some of these public employees who spike their benefits) and yes, Medicare and Medicaid - cap it and adjust benefits.
The end result of making the US 'business friendly' will be that there isn't the money for all these benefits!
It would seem to be worthwhile to consider totally turning around the way entitlements and benefits are approached - i.e. to deal with these matters as a family would - based on income.
Right now the idea is to borrow and soak the rich - or, as the French unions recently demonstrated, any business with profits can always pay more toward early retirement benefits.
Bottom line would be that American should start by figuring out what it will take to make America the best place in the world to start and maintain a business (reading loud and clearly, "this means jobs").
Off the top of the list, the corporate tax rate is too high; immigration restrictions are a disaster (businesses need to be able to easily bring in employees from all parts of the world); tax rates on entrepreneurs (the old $250,000 are too high and all the extra taxes for the healthcare bill are crazy high).
People need to feel the US will treat them fair (and better than other countries) on taxes and regulations.
Sure the teachers unions and public employees need a major reorientation and the some states will go BK if they can't get their own taxes, etc. under control.
Business needs to be treated as the 'favorite uncle' not a 'black sheep'.
The black sheep should be those who feel 'entitled' to take more from society than they are giving back (let's start with some of these public employees who spike their benefits) and yes, Medicare and Medicaid - cap it and adjust benefits.
The end result of making the US 'business friendly' will be that there isn't the money for all these benefits!
Jim DeMint: Welcome, Senate Conservatives - WSJ.com
TAX RATES IMPACT ON JOB CREATION:Jim DeMint: Welcome, Senate Conservatives - WSJ.com
What might help bring back jobs? Start with fair tax rates:
Yes the middle class is hurting - but sadly, its a reflection of the results of 'why' we are in the economic fix we are in and 'not' the solution.
Did you ever work for someone who also had a lot of family that he or she was taking care of that weren't working or had 'needs' that became your bosses 'priority'.
And then when it came time to get paid, the boss said, "sorry we are out of money, cash flow is short"; and, you well knew it was because the money had gone to relatives?
Well, this is what you are suggesting is the right policy for the country!
In other words, why not think - heck, if you work and save and invest and educate yourself and constantly work to improve your skills and capabilities, the society has a limit (percentage) it can take of what you make?
I'd say 15%! Anything beyond 15% is robbery and definitely a 'disincentive' to ork and save and invest and educate yourself and constantly work to improve your skills and capabilities.
With this 15%, society can do all the things you might want it to do; but, as with any family budget, you have a choice of living within it or borrowing and living beyond it. Right now the US is taxing success at way more than 15% in most cases and not living within its budget!
As a result, those who could provide jobs find it doesn't pay to do so, etc.
What might help bring back jobs? Start with fair tax rates:
Yes the middle class is hurting - but sadly, its a reflection of the results of 'why' we are in the economic fix we are in and 'not' the solution.
Did you ever work for someone who also had a lot of family that he or she was taking care of that weren't working or had 'needs' that became your bosses 'priority'.
And then when it came time to get paid, the boss said, "sorry we are out of money, cash flow is short"; and, you well knew it was because the money had gone to relatives?
Well, this is what you are suggesting is the right policy for the country!
In other words, why not think - heck, if you work and save and invest and educate yourself and constantly work to improve your skills and capabilities, the society has a limit (percentage) it can take of what you make?
I'd say 15%! Anything beyond 15% is robbery and definitely a 'disincentive' to ork and save and invest and educate yourself and constantly work to improve your skills and capabilities.
With this 15%, society can do all the things you might want it to do; but, as with any family budget, you have a choice of living within it or borrowing and living beyond it. Right now the US is taxing success at way more than 15% in most cases and not living within its budget!
As a result, those who could provide jobs find it doesn't pay to do so, etc.
Obama Is Dealt a Tough Hand - WSJ.com
THE ANTI-JOB MAN WHO DOESN'T KNOW IT: Obama Is Dealt a Tough Hand - WSJ.com
In terms of jobs, if you are familiar with the expression "regression to the mean" - the US has been doing exactly that. We have an excess share of the world's resources and lived a better lifestyle.
But, to keep that share of resources and/or the lifestyle, the US has to be able to give something comparable back.
Instead, the US is blaming business and looking for government to provide what the average American wants but can't pay for - whether early retirement, greater health benefits, etc.
So, the productive sector is being bled to provide it. Of course, not benefit receiver wants to see this and since these people vote, why tell them something they won't want to believe.
The Tea Party is far more up front than most Republicans. (I don't know if you saw the interesting yardstick discussion in this paper a few months back where at either end of a yardstick were left and right viewpoints. While the Dem's were at 36", the Republicans were put at 28".
The other problem the Republicans have is their pandering to the religious right. Those of us in the middle think of these people as 'crazy' (not too dissimilar from crazy Muslims). And, the religious right loses elections. Witness California just yesterday!
So, the problems aren't really being addressed and perhaps will be brought closer to the surface - thus, maybe we are getting closer to the end of the 3rd of 9 innings. But, we'll have to see.
If you get a chance to read the Steele biography of Cornelius Vanderbilt, he has good comments about how the US changed by the 1870's with the vast expansion of railroads and the building up of large corporations with their myriad workforces.
A not dissimilar momentous change is occurring with respect to information technology. I can do my job from any country I want, work when I want, do several different types of jobs at the same time.
Thus, there is no reason for me to be in a place with crime, high taxes, pollution, political risk, etc. All of which companies have to consider; but, with modern communication and transportation systems, they also have to serve their shareholders/owners and maximize returns.
The US is largely blind (certainly all Democrats) to what happens when the above factors impacting business are negative.
It may be unpleasant when a company decides to relocate (the list out of California a friend just sent went on for page after page), but government doesn't ask why or what it could do to change it. The workers blame the business, they don't blame the government (or sometimes a union).
So, as they say in science and problem-solving, the first thing to do is to figure out what the real problem is to identify.
At least the Republicans are able to identify the tax issue. Sadly, they make up for their good sense with their bad views on immigration policy. Yadda, yadda....
In terms of jobs, if you are familiar with the expression "regression to the mean" - the US has been doing exactly that. We have an excess share of the world's resources and lived a better lifestyle.
But, to keep that share of resources and/or the lifestyle, the US has to be able to give something comparable back.
Instead, the US is blaming business and looking for government to provide what the average American wants but can't pay for - whether early retirement, greater health benefits, etc.
So, the productive sector is being bled to provide it. Of course, not benefit receiver wants to see this and since these people vote, why tell them something they won't want to believe.
The Tea Party is far more up front than most Republicans. (I don't know if you saw the interesting yardstick discussion in this paper a few months back where at either end of a yardstick were left and right viewpoints. While the Dem's were at 36", the Republicans were put at 28".
The other problem the Republicans have is their pandering to the religious right. Those of us in the middle think of these people as 'crazy' (not too dissimilar from crazy Muslims). And, the religious right loses elections. Witness California just yesterday!
So, the problems aren't really being addressed and perhaps will be brought closer to the surface - thus, maybe we are getting closer to the end of the 3rd of 9 innings. But, we'll have to see.
If you get a chance to read the Steele biography of Cornelius Vanderbilt, he has good comments about how the US changed by the 1870's with the vast expansion of railroads and the building up of large corporations with their myriad workforces.
A not dissimilar momentous change is occurring with respect to information technology. I can do my job from any country I want, work when I want, do several different types of jobs at the same time.
Thus, there is no reason for me to be in a place with crime, high taxes, pollution, political risk, etc. All of which companies have to consider; but, with modern communication and transportation systems, they also have to serve their shareholders/owners and maximize returns.
The US is largely blind (certainly all Democrats) to what happens when the above factors impacting business are negative.
It may be unpleasant when a company decides to relocate (the list out of California a friend just sent went on for page after page), but government doesn't ask why or what it could do to change it. The workers blame the business, they don't blame the government (or sometimes a union).
So, as they say in science and problem-solving, the first thing to do is to figure out what the real problem is to identify.
At least the Republicans are able to identify the tax issue. Sadly, they make up for their good sense with their bad views on immigration policy. Yadda, yadda....
Tuesday, November 2, 2010
Pressure Builds on Obama to Shake Up Inner Circle - WSJ.com
BLAME THE GUY WHO WANTS A PAYCHECK: Pressure Builds on Obama to Shake Up Inner Circle - WSJ.com
Blame the guy who wants to keep what he earns!
Sadly, the White House, Pelosi and many Democratic voters still believe in the free lunch - i.e. they can tax, berate, regulate and fail to support business and support expanded entitlements that are all over the ballpark (but in particular retirees, healthcare and unions) and that somehow this will help make a more competitive business climate in the US to keep jobs here.
Are they in a real life or a real world or a real planet?
They are like the employer who has lots of itinerant family members who always get a handout from the boss before he pays his employees and consultants. Then the boss wonders why his business isn't doing to well (can we say outsourcing and moving jobs abroad)!
Blame the guy who wants to keep what he earns!
Sadly, the White House, Pelosi and many Democratic voters still believe in the free lunch - i.e. they can tax, berate, regulate and fail to support business and support expanded entitlements that are all over the ballpark (but in particular retirees, healthcare and unions) and that somehow this will help make a more competitive business climate in the US to keep jobs here.
Are they in a real life or a real world or a real planet?
They are like the employer who has lots of itinerant family members who always get a handout from the boss before he pays his employees and consultants. Then the boss wonders why his business isn't doing to well (can we say outsourcing and moving jobs abroad)!
Opinions Are Split on Fed Policy Move - WSJ.com
THE MICRO-LENDING PARALLEL: Opinions Are Split on Fed Policy Move - WSJ.com
Why does the micro-lending (Gameen Bank) come to mind?
Well, it does seem as though the Fed is thinking of trying to boost the amount of lending (or money) in the economy.
But, is this 'non-micro' loan facility going to support the start of a business or an investment or just consumption?
Logic would say that as long as the US is 'not' the location of choice for business growth and expansion, the funds will just go to consumption - including overpaid public (union) employees, entitlement programs, unionized teachers that can't and don't know how to teach, early retirees (that should be paying for their own early retirement), overly generous healthcare programs, etc.
None of these are investments for the future and, as with a micro-loan that went for a 'wedding' vs. a 'business', the chances of payback are slim longer term.
Why does the micro-lending (Gameen Bank) come to mind?
Well, it does seem as though the Fed is thinking of trying to boost the amount of lending (or money) in the economy.
But, is this 'non-micro' loan facility going to support the start of a business or an investment or just consumption?
Logic would say that as long as the US is 'not' the location of choice for business growth and expansion, the funds will just go to consumption - including overpaid public (union) employees, entitlement programs, unionized teachers that can't and don't know how to teach, early retirees (that should be paying for their own early retirement), overly generous healthcare programs, etc.
None of these are investments for the future and, as with a micro-loan that went for a 'wedding' vs. a 'business', the chances of payback are slim longer term.
Question: Isn't the Falling Money Supply the Problem?
Answer:
Hi Alex,
The key is cause or effect. I think your money argument is still part of the effect (although in its own right causative).
The causes would seem more all-encompassing (e.g. we need to have an absolutely world-class, most-friendly business climate - which we don't have). This means the Republicans have to open up on immigration. The Democrats on being pro-business and anti-entitlements.
You are right that things are going to take huge amounts of capital to support the highest paying future jobs (e.g. Malaysia is building a billion dollar plant to support 1,000 jobs).
We also need to get rid of teacher unions. We can't afford to pander to their seniority and lack of performance.
Having made America immigration open and educationally strong, we also (for example) need to have competitive corporate and personal income tax rates (again, which we don't).
So money supply to me is more of an effect of having an anti-business climate which both keeps entrepreneurs and businesses from coming to the US and drives those there away.
Hi Alex,
The key is cause or effect. I think your money argument is still part of the effect (although in its own right causative).
The causes would seem more all-encompassing (e.g. we need to have an absolutely world-class, most-friendly business climate - which we don't have). This means the Republicans have to open up on immigration. The Democrats on being pro-business and anti-entitlements.
You are right that things are going to take huge amounts of capital to support the highest paying future jobs (e.g. Malaysia is building a billion dollar plant to support 1,000 jobs).
We also need to get rid of teacher unions. We can't afford to pander to their seniority and lack of performance.
Having made America immigration open and educationally strong, we also (for example) need to have competitive corporate and personal income tax rates (again, which we don't).
So money supply to me is more of an effect of having an anti-business climate which both keeps entrepreneurs and businesses from coming to the US and drives those there away.
Rebel Movement Takes Center Stage - WSJ.com
OBAMA AS AN EMPLOYER OF RELATIVES FIRST: Rebel Movement Takes Center Stage - WSJ.com
Somehow, watching Obama these last few days, I reminded of the employer with a good business, lots of relatives and unpaid employees.
The employer (Obama, Pelosi, et. al.) have a good business (the US economy); but, they also have lots of relatives (i.e. those on entitlements, esp. Medicare, Medicaid and other welfare programs) who don't work at all, but need money and support.
So, the employer keeps telling its employees that "sorry, I don't have any money to pay you this week!" (When in fact, everyone knows the money to pay salaries and commissions is going to the relatives who mostly don't work.)
Needless to say, the business starts to go down. The actual workers are less and less productive; and, gee, they leave for other jobs (can we say 'outsourcing' and moving plants offshore).
And, as with Obama, the employer doesn't see what the problem is - after all, relatives come first (i.e. non-producers) - they have needs. The employees (i.e. producers) just need to wait and get by on less. Isn't that more fair Obama states.
What is incredible is that he and the Democrats really believe their management of the economy is the right approach.
(Oh yes, there's a comparable story for unions.)
Somehow, watching Obama these last few days, I reminded of the employer with a good business, lots of relatives and unpaid employees.
The employer (Obama, Pelosi, et. al.) have a good business (the US economy); but, they also have lots of relatives (i.e. those on entitlements, esp. Medicare, Medicaid and other welfare programs) who don't work at all, but need money and support.
So, the employer keeps telling its employees that "sorry, I don't have any money to pay you this week!" (When in fact, everyone knows the money to pay salaries and commissions is going to the relatives who mostly don't work.)
Needless to say, the business starts to go down. The actual workers are less and less productive; and, gee, they leave for other jobs (can we say 'outsourcing' and moving plants offshore).
And, as with Obama, the employer doesn't see what the problem is - after all, relatives come first (i.e. non-producers) - they have needs. The employees (i.e. producers) just need to wait and get by on less. Isn't that more fair Obama states.
What is incredible is that he and the Democrats really believe their management of the economy is the right approach.
(Oh yes, there's a comparable story for unions.)
Sunday, October 31, 2010
Flawed Math Seen in Job Losses Tied to China - WSJ.com
Flawed Math Seen in Job Losses Tied to China - WSJ.com
Maybe something is wrong - as in California - where taxes are so high that they discourage business so that a deputy police chief in San Francisco can earn a salary of over $500,000 per year with a 50% pension after 20 years!
I guess the public employee unions don't want to see state and local tax rates as a discouragement to building businesses in the US, so they have to find someone else to blame.
They should clearly look in the mirror!
Maybe something is wrong - as in California - where taxes are so high that they discourage business so that a deputy police chief in San Francisco can earn a salary of over $500,000 per year with a 50% pension after 20 years!
I guess the public employee unions don't want to see state and local tax rates as a discouragement to building businesses in the US, so they have to find someone else to blame.
They should clearly look in the mirror!
Saturday, October 30, 2010
QE2 to Navigate Uncharted Waters - Barrons.com
NET VS. GROSS: QE2 to Navigate Uncharted Waters - Barrons.com
The Fed and Obama would appear to be ignoring the old saying about the 'net' and the 'gross' - wherein it's the 'net' to the investor, entrepreneur, etc. that matters; and, with high taxes and increased risks, the adjusted projected net is clearly not being constrained by (at least) current interest rates.
But, as shown by the poster-state for Obama and Pelosi policies (we are of course talking about California), the indications are clear that businesses are leaving the state and the unemployment rate is notably above the national average.
And, based on weekend poling results, the Democrats may end up staying in power in the state - strongly backed by public employee unions.
Somehow, the tea leaves seem a bit dicey. Here the Republicans had a chance to defeat Barbara Boxer in the Senate (but apparently blew it) and the overspending and high taxes of the state's democrats appear to have been endorsed by the electorate.
The investment picture would appear to be clear for global businesses - i.e. they need to and are being forced to look outside the US (after all, they have to compete for both talent and investment capital on a global basis and they have to be able to competitively price their products; and, these are matters that Democrats seem unable to comprehend).
Even American investors are putting money overseas as they feel they can get higher 'net' returns.
The Fed and Obama would appear to be ignoring the old saying about the 'net' and the 'gross' - wherein it's the 'net' to the investor, entrepreneur, etc. that matters; and, with high taxes and increased risks, the adjusted projected net is clearly not being constrained by (at least) current interest rates.
But, as shown by the poster-state for Obama and Pelosi policies (we are of course talking about California), the indications are clear that businesses are leaving the state and the unemployment rate is notably above the national average.
And, based on weekend poling results, the Democrats may end up staying in power in the state - strongly backed by public employee unions.
Somehow, the tea leaves seem a bit dicey. Here the Republicans had a chance to defeat Barbara Boxer in the Senate (but apparently blew it) and the overspending and high taxes of the state's democrats appear to have been endorsed by the electorate.
The investment picture would appear to be clear for global businesses - i.e. they need to and are being forced to look outside the US (after all, they have to compete for both talent and investment capital on a global basis and they have to be able to competitively price their products; and, these are matters that Democrats seem unable to comprehend).
Even American investors are putting money overseas as they feel they can get higher 'net' returns.
And End to the Great Bond Bull Market - Barrons.com
MEG WHITMAN AS EVIDENCE: And End to the Great Bond Bull Market - Barrons.com
As Meg Whitman has shown in California, one wonders if the Republicans will have the guts to tackle one of the great constraints on growing the old economic pie - i.e. to recognize the US needs a non-putative immigration policy that encourages the best and the brightest to come and stay and work in America at will.
Clearly QE2 hopes to have people invest and do cutting edge work; but, one wonders if it isn't pandering to a union and Administration belief that even with high taxes (especially on investors and business) that America will rebuild factory jobs for those with high school at best educations or technical jobs where the fiscal policies of the US support moving those jobs offshore as well.
Clearly the Democrats don't get what it takes to spur an information-based, leading edge economy; but, do the Republicans? - i.e. nothing much may change in the end.
As Meg Whitman has shown in California, one wonders if the Republicans will have the guts to tackle one of the great constraints on growing the old economic pie - i.e. to recognize the US needs a non-putative immigration policy that encourages the best and the brightest to come and stay and work in America at will.
Clearly QE2 hopes to have people invest and do cutting edge work; but, one wonders if it isn't pandering to a union and Administration belief that even with high taxes (especially on investors and business) that America will rebuild factory jobs for those with high school at best educations or technical jobs where the fiscal policies of the US support moving those jobs offshore as well.
Clearly the Democrats don't get what it takes to spur an information-based, leading edge economy; but, do the Republicans? - i.e. nothing much may change in the end.
Friday, October 29, 2010
Charles W. Kadlec: Gold vs. The Fed: The Record Is Clear - WSJ.com
REWARDS INDIVIDUALS WANT: Charles W. Kadlec: Gold vs. The Fed: The Record Is Clear - WSJ.com
What's the real issue? Is it gold or the amount of money in circulation? I'd say the answer is unequivocally 'No'!
After all, why to people work? They want to get paid for it; and, if government taxes most of the work away, then you work less. And, if by not working, you get free healthcare, food stamps, etc. - then all the more reason not to work.
Why do people create businesses? They certainly don't do it to hand the profits to government if they are successful, but have to bear the losses themselves if they fail.
Why do people save and invest? Yes, for a rainy day or a specific goal in life; but again, they want to know they'll be rewarded for not consuming today so they can consume tomorrow. Again, if the government taxes away the profits or takes too much of them, then people decide not to save, not to take risks, not to invest.
What government doesn't get is that people work hard, invest and create jobs because they want some personal reward at the end of the day.
And, with government unions showing obscene pay and benefits and ever greater tax demands, it's a wonder more businesses aren't moving out of the US!
What's the real issue? Is it gold or the amount of money in circulation? I'd say the answer is unequivocally 'No'!
After all, why to people work? They want to get paid for it; and, if government taxes most of the work away, then you work less. And, if by not working, you get free healthcare, food stamps, etc. - then all the more reason not to work.
Why do people create businesses? They certainly don't do it to hand the profits to government if they are successful, but have to bear the losses themselves if they fail.
Why do people save and invest? Yes, for a rainy day or a specific goal in life; but again, they want to know they'll be rewarded for not consuming today so they can consume tomorrow. Again, if the government taxes away the profits or takes too much of them, then people decide not to save, not to take risks, not to invest.
What government doesn't get is that people work hard, invest and create jobs because they want some personal reward at the end of the day.
And, with government unions showing obscene pay and benefits and ever greater tax demands, it's a wonder more businesses aren't moving out of the US!
Thursday, October 28, 2010
How Not to Prevent Another Greece - WSJ.com
SIMILAR PROBLEMS IN THE US: How Not to Prevent Another Greece - WSJ.com
One can only expect in the US that a return to a pro-growth (assuming growth is wanted) economic policy will probably require several states to go bankrupt and current public employee union benefits to be severely curtailed.
If something along these lines in the US doesn't happen, the country will continue to see a declining, shrinking economy as its financial wherewithal and investment capital is diverted to welfare, Medicare subsidies, Medicaid and generous and early public pensions.
One can only expect in the US that a return to a pro-growth (assuming growth is wanted) economic policy will probably require several states to go bankrupt and current public employee union benefits to be severely curtailed.
If something along these lines in the US doesn't happen, the country will continue to see a declining, shrinking economy as its financial wherewithal and investment capital is diverted to welfare, Medicare subsidies, Medicaid and generous and early public pensions.
Chinese Supercomputer Likely to Prompt Unease in U.S. - WSJ.com
MISPLACED PRIORITIES: Chinese Supercomputer Likely to Prompt Unease in U.S. - WSJ.com
As Zakaria discussed on Bloomberg with Charlie Rose this week, the US isn't investing enough in research.
In fact, the US isn't investing enough period. Zakaria points out that in a democracy like the US, thinking is 'short-term' and consumption oriented - especially when the poor and middle class are able to consume goods and services they don't have to earn or save for.
As a result, the productive part of society is tapped to pay for things they don't benefit from.
Wouldn't it be interesting to have a flat maximum tax rate (personal) of say 15%. If that tax rate doesn't afford fancy Medicaid or other social spending or big benefits under Medicare, then the benefits would have to be cut back?
As it is now, we sacrifice investment for 2 more years on a heart-lung machine for a 95 year old; plus, of course spending $60,000 a year to keep someone in jail, while not letting kids afford college; etc.
As Zakaria discussed on Bloomberg with Charlie Rose this week, the US isn't investing enough in research.
In fact, the US isn't investing enough period. Zakaria points out that in a democracy like the US, thinking is 'short-term' and consumption oriented - especially when the poor and middle class are able to consume goods and services they don't have to earn or save for.
As a result, the productive part of society is tapped to pay for things they don't benefit from.
Wouldn't it be interesting to have a flat maximum tax rate (personal) of say 15%. If that tax rate doesn't afford fancy Medicaid or other social spending or big benefits under Medicare, then the benefits would have to be cut back?
As it is now, we sacrifice investment for 2 more years on a heart-lung machine for a 95 year old; plus, of course spending $60,000 a year to keep someone in jail, while not letting kids afford college; etc.
Not the Time to Hamper Entrepreneurs - WSJ.com
PROCESS VS. PRODUCT: Not the Time to Hamper Entrepreneurs - WSJ.com
Spending time in Europe, one clearly sees the excesses of socialist preferences for process (to protect) vs. product (to grow).
Basel II basically said if you don't want to think, you don't have to. Just keep ... of AAA paper.
Well, we learned 'AAA' wasn't always AAA, nor would it remain so; but, again, those at S&P were also more process-oriented and the right 'i's' were doted and 't's' crossed.
Spending time in Europe, one clearly sees the excesses of socialist preferences for process (to protect) vs. product (to grow).
Basel II basically said if you don't want to think, you don't have to. Just keep ... of AAA paper.
Well, we learned 'AAA' wasn't always AAA, nor would it remain so; but, again, those at S&P were also more process-oriented and the right 'i's' were doted and 't's' crossed.
Wednesday, October 27, 2010
Fed Gears Up for Stimulus - WSJ.com
ZAKARIA: Fed Gears Up for Stimulus - WSJ.com:
"If you want to enjoy an interesting and insightful discussion of what the US should be thinking about, Charlie Rose on Bloomberg had Fareed Zakaria on Tuesday night.
http://www.charlierose.com/view/interview/11261
- Sent using Google Toolbar"
"If you want to enjoy an interesting and insightful discussion of what the US should be thinking about, Charlie Rose on Bloomberg had Fareed Zakaria on Tuesday night.
http://www.charlierose.com/view/interview/11261
- Sent using Google Toolbar"
Monday, October 25, 2010
Cameron Turns to Job Creation - WSJ.com
SOUNDS GOOD, BUT IS IT GOOD?: Cameron Turns to Job Creation - WSJ.com: "You are absolutely right David.
One can't help but think of Bill Gates in the 1970's having to have been picked by some bureaucrats to be successful versus the ideas, wherewithall and ability to do things on his own, as he saw fit.
Government types and union types just don't understand the mindset of creative types or entrepreneurs.
And, as with everything, the bottom line for risk taking is reward; and, this doesn't mean (as you say) high taxes to support the non-working, early retiring, bureaucratically burdensome that feel entitled to the same fruits of production as those who actually work and produce.
It may seem appealing to think that because one is from the UK (or, the same in the US) that you will or should feel committed to building a business there; but, when you pay a 50% tax on what you earn and someone with equal skills and energy pays a 20% or lower tax - then you just can't compete because the low tax payer can accumulate much more capital, much more quickly.
- Sent using Google Toolbar"
One can't help but think of Bill Gates in the 1970's having to have been picked by some bureaucrats to be successful versus the ideas, wherewithall and ability to do things on his own, as he saw fit.
Government types and union types just don't understand the mindset of creative types or entrepreneurs.
And, as with everything, the bottom line for risk taking is reward; and, this doesn't mean (as you say) high taxes to support the non-working, early retiring, bureaucratically burdensome that feel entitled to the same fruits of production as those who actually work and produce.
It may seem appealing to think that because one is from the UK (or, the same in the US) that you will or should feel committed to building a business there; but, when you pay a 50% tax on what you earn and someone with equal skills and energy pays a 20% or lower tax - then you just can't compete because the low tax payer can accumulate much more capital, much more quickly.
- Sent using Google Toolbar"
Sunday, October 24, 2010
U.S. Chamber Chief Slams Democrats on Taxes and Regulation - Barrons.com
THE 'ECONOMIC FAIRY': U.S. Chamber Chief Slams Democrats on Taxes and Regulation - Barrons.com: "- Sent using Google Toolbar"
Somehow the Democrats - Obama, Pelosi, Frank, etc. - seem to remind one of truly economic children.
Instead of believing in the 'tooth fairy', they believe in the 'economic fairy'. And, the results of their economic policies show it!
Somehow the Democrats - Obama, Pelosi, Frank, etc. - seem to remind one of truly economic children.
Instead of believing in the 'tooth fairy', they believe in the 'economic fairy'. And, the results of their economic policies show it!
Saturday, October 23, 2010
Emerging Nations Gain in G-20 Deal - WSJ.com
US HURTING ITSELF AND COMPLAINING ABOUT ASIA: Emerging Nations Gain in G-20 Deal - WSJ.com: "- Sent using Google Toolbar"
Barry writes:
...Whilst all the squabbling is going on in the USA on this side of the world there is no recessions, just massive growth, and it will continue with or without the USA it’s that simple.
Right on Barry!
It is disheartening to say the least to see US politicians think they can tell the world how to run itself to suit US interests which are anti-business, anti-work, anti-investment and pro-handouts, pro-laxiness, pro-non-production, etc.
I don't know if you saw that the deputy police chief in San Francisco makes over $500,000 a year with a 50% retirement benefit after working 20 years. How much of this could be plowed back into productive efforts if not taxed from the economy to pay an outrageous salary and benefit package?
And, when they complain about bankers (who don't get any fancy inflation protected pensions) making $300,000 a year and hoot and howl but say nothing about public union officials (except for Bell, CA where the mayor of the small town was making $800,000), one does wonder!
In fact one doesn't, one is just sick and understands why the US economy is standing still. But the politicians and a lot of the public don't realize they are taking too much from producers and savers and giving too much to non-producers and consumers.
Barry writes:
...Whilst all the squabbling is going on in the USA on this side of the world there is no recessions, just massive growth, and it will continue with or without the USA it’s that simple.
Right on Barry!
It is disheartening to say the least to see US politicians think they can tell the world how to run itself to suit US interests which are anti-business, anti-work, anti-investment and pro-handouts, pro-laxiness, pro-non-production, etc.
I don't know if you saw that the deputy police chief in San Francisco makes over $500,000 a year with a 50% retirement benefit after working 20 years. How much of this could be plowed back into productive efforts if not taxed from the economy to pay an outrageous salary and benefit package?
And, when they complain about bankers (who don't get any fancy inflation protected pensions) making $300,000 a year and hoot and howl but say nothing about public union officials (except for Bell, CA where the mayor of the small town was making $800,000), one does wonder!
In fact one doesn't, one is just sick and understands why the US economy is standing still. But the politicians and a lot of the public don't realize they are taking too much from producers and savers and giving too much to non-producers and consumers.
Thursday, October 21, 2010
Economic News and Analysis: Bernanke, Geithner Tread Carefully on Dollar - WSJ.com
ECONOMIC UTILITY: Economic News and Analysis: Bernanke, Geithner Tread Carefully on Dollar - WSJ.com:
"Tyler you might consider a study of 'economic utility'.
It might lead you to better understand that when government and unions promise benefits that are indirectly paid for, the money for these benefits has to come from somewhere (and the services provided by government will also be relatively more expensive and of a relatively lower quality - but that's another issue).
And, where this money comes from is directly out of workers potential paychecks in increasing the indirect costs of employment. Thus, as a spur to outsourcing and the substitution of equipment for labor, there are fewer jobs in the US.
As the money comes from capital (e.g. higher capital gains and income taxes), then the ability and willingness to take risks and put capital to work is both diminished and more costly. After all, capital is global and when the money goes to pay for foreign oil or interest on government bonds paid to foreigners or to buy inexpensive goods, it's no longer there for the US to spend and invest with.
As the money is taken by government, it is often doled out to favorite government projects - most of which again distort economic utility functions, etc.
You might read some of the insightful articles by Art Laffer to stop blaming the wealthy and see that its the average voter who is screwing themselves by being misled by politicians.
- Sent using Google Toolbar"
"Tyler you might consider a study of 'economic utility'.
It might lead you to better understand that when government and unions promise benefits that are indirectly paid for, the money for these benefits has to come from somewhere (and the services provided by government will also be relatively more expensive and of a relatively lower quality - but that's another issue).
And, where this money comes from is directly out of workers potential paychecks in increasing the indirect costs of employment. Thus, as a spur to outsourcing and the substitution of equipment for labor, there are fewer jobs in the US.
As the money comes from capital (e.g. higher capital gains and income taxes), then the ability and willingness to take risks and put capital to work is both diminished and more costly. After all, capital is global and when the money goes to pay for foreign oil or interest on government bonds paid to foreigners or to buy inexpensive goods, it's no longer there for the US to spend and invest with.
As the money is taken by government, it is often doled out to favorite government projects - most of which again distort economic utility functions, etc.
You might read some of the insightful articles by Art Laffer to stop blaming the wealthy and see that its the average voter who is screwing themselves by being misled by politicians.
- Sent using Google Toolbar"
Tuesday, October 19, 2010
Bondholders Pick a Fight With Banks - WSJ.com
MORTGAGES AND GOVERNMENT BONDS - HOW SIMILAR?: Bondholders Pick a Fight With Banks - WSJ.com: "- Sent using Google Toolbar"
A related question would seem to revolve around US government bonds. How would this work?
Start by considering the fact (not hidden but not highlighted either) that the Fed has been purchasing (or read "injecting") roughly a trillion dollars into the bond market. Not exactly the amount borrowed each year by the Obama Administration (but somewhat close).
Imagine what the cost of borrowing would be to the government should the Fed have not been trying to drive down interest rates?
When the inevitable hits the inevitable and inflation and interest rates go up...and, when investors in longer term treasuries start to see major losses, would a lawsuit against the Fed for distorting the market not be somewhat akin to the buyers of mortgage securities that anyone with half a reflective thought would see had to come to grief?
After all, housing prices can't go up forever far beyond any increase in incomes; and, likewise, there comes a time when interest rates have to go up to reflect more and more demand and at some point an exhaustion of the money to lend or the inflation that comes from an out-of-control printing of new money.
(One can't help but think of how many times in the 17th and 18th centuries the Spanish went BK on their Genoese bankers.)
A related question would seem to revolve around US government bonds. How would this work?
Start by considering the fact (not hidden but not highlighted either) that the Fed has been purchasing (or read "injecting") roughly a trillion dollars into the bond market. Not exactly the amount borrowed each year by the Obama Administration (but somewhat close).
Imagine what the cost of borrowing would be to the government should the Fed have not been trying to drive down interest rates?
When the inevitable hits the inevitable and inflation and interest rates go up...and, when investors in longer term treasuries start to see major losses, would a lawsuit against the Fed for distorting the market not be somewhat akin to the buyers of mortgage securities that anyone with half a reflective thought would see had to come to grief?
After all, housing prices can't go up forever far beyond any increase in incomes; and, likewise, there comes a time when interest rates have to go up to reflect more and more demand and at some point an exhaustion of the money to lend or the inflation that comes from an out-of-control printing of new money.
(One can't help but think of how many times in the 17th and 18th centuries the Spanish went BK on their Genoese bankers.)
Monday, October 18, 2010
Fate of Euro-Zone Economy Splits Optimists From Pessimists - WSJ.com
SOCIALIST DELUSIONS: Fate of Euro-Zone Economy Splits Optimists From Pessimists - WSJ.com: "- Sent using Google Toolbar"
Some how the simplest analogies are omitted as interest groups (let's start with public employee unions in France) struggle for things they want with no understanding of how growth is achieved, let alone basic economic productivity.
As an example, consider the story of a farmer.
The farmer knows he needs to save 10% of his crop each year for seed to plant the next crop. He knows too that if he works hard and either clears some new land (venture capital) or saves up and acquires more land from a neighbor (merger or acquisition), he can produce more.
Likewise, if he doesn't get to keep 10% of his grain, each year he/she will be producing less.
Now take the French unions. They want to retire but have someone else pay for them to not product (maybe from age 60 to say age 90). They don't think they are taking it from their farmer neighbor per se; but, they do expect the equivalent of that farmer to somehow keep producing more and more each year when left with less and less 10%.
Some how the simplest analogies are omitted as interest groups (let's start with public employee unions in France) struggle for things they want with no understanding of how growth is achieved, let alone basic economic productivity.
As an example, consider the story of a farmer.
The farmer knows he needs to save 10% of his crop each year for seed to plant the next crop. He knows too that if he works hard and either clears some new land (venture capital) or saves up and acquires more land from a neighbor (merger or acquisition), he can produce more.
Likewise, if he doesn't get to keep 10% of his grain, each year he/she will be producing less.
Now take the French unions. They want to retire but have someone else pay for them to not product (maybe from age 60 to say age 90). They don't think they are taking it from their farmer neighbor per se; but, they do expect the equivalent of that farmer to somehow keep producing more and more each year when left with less and less 10%.
Monday, October 11, 2010
Wall Street Journal: Market View Should the Fed take more aggressive action to reduce unemployment?
A TWO-FACED POLICY THAT'S ALL WRONG: Wall Street Journal: Market View Should the Fed take more aggressive action to reduce unemployment?: "- Sent using Google Toolbar"
The Feds printing money reminds me of the family that suddenly feels 'rich' because they got another credit card.
The income didn't change, the old credit cards aren't paid off or down, it's just a chance to accumulate more debt.
As well discussed in the media, the cash is likely to flow where the other Fed cash has gone - i.e. outside the US!
When one reads articles on Geitner and the Chinese - the idea is for the Chinese to increase consumption and the US to increase its savings. Help me out here? Is this Fed policy borrowed from what the Chinese are supposed to be doing?
The Feds printing money reminds me of the family that suddenly feels 'rich' because they got another credit card.
The income didn't change, the old credit cards aren't paid off or down, it's just a chance to accumulate more debt.
As well discussed in the media, the cash is likely to flow where the other Fed cash has gone - i.e. outside the US!
When one reads articles on Geitner and the Chinese - the idea is for the Chinese to increase consumption and the US to increase its savings. Help me out here? Is this Fed policy borrowed from what the Chinese are supposed to be doing?
Sunday, October 10, 2010
The Last Thing We Need Is a Global Agreement on Currencies - Barrons.com
CURRENCY ADJUSTMENTS WAY DOWN THE LIST: The Last Thing We Need Is a Global Agreement on Currencies - Barrons.com: "- Sent using Google Toolbar"
Currency adjustments or something else?
What should be the first concern of the US is why business doesn't want to grow in the US?
There are so many causes before you get to low cost outsourcing from China that it makes Americans advocating such currency adjustments look like buffoons or complicitous liars who are afraid to tackle the beliefs of the "entitled" generations that America has spawned from the 1960's onwards.
It's all well and good to think about nice long, leisurely and well funded retirements, but the cost to the US economy is jobs!
And, if one wants to see what's wrong with our welfare policies, take one look at how hardworking immigrants are who come to the US from Mexico are and how many of their kids don't work and may well be into crime!
Currency adjustments or something else?
What should be the first concern of the US is why business doesn't want to grow in the US?
There are so many causes before you get to low cost outsourcing from China that it makes Americans advocating such currency adjustments look like buffoons or complicitous liars who are afraid to tackle the beliefs of the "entitled" generations that America has spawned from the 1960's onwards.
It's all well and good to think about nice long, leisurely and well funded retirements, but the cost to the US economy is jobs!
And, if one wants to see what's wrong with our welfare policies, take one look at how hardworking immigrants are who come to the US from Mexico are and how many of their kids don't work and may well be into crime!
The Last Thing We Need Is a Global Agreement on Currencies - Barrons.com
FOREST AND TREES, SMOKE AND MIRRORS, BUILDING ON SAND: The Last Thing We Need Is a Global Agreement on Currencies - Barrons.com: "- Sent using Google Toolbar"
What the government sadly can't even begin to fathom is to question the policies it has in place (regulatory, tax, pro-union, entitlement, income redistribution, etc.) that inhibit, hold back or outright prevent business growth in the US.
Perhaps its the old problem of the forest and the trees - both Democrats, Republicans and the average American is so close up to the trees that the forest itself can't be embraced.
As with those who foresaw the last bubble (real estate), there are those who are giving out warnings. But, to heed a warning one might have to act; and, to act would run into opprobrium from all those who like things the way they are.
As seen in the latest California budget deal - smoke and mirrors and hope are all that's there. There is no substance - like building on sand (as the old saying goes).
What the government sadly can't even begin to fathom is to question the policies it has in place (regulatory, tax, pro-union, entitlement, income redistribution, etc.) that inhibit, hold back or outright prevent business growth in the US.
Perhaps its the old problem of the forest and the trees - both Democrats, Republicans and the average American is so close up to the trees that the forest itself can't be embraced.
As with those who foresaw the last bubble (real estate), there are those who are giving out warnings. But, to heed a warning one might have to act; and, to act would run into opprobrium from all those who like things the way they are.
As seen in the latest California budget deal - smoke and mirrors and hope are all that's there. There is no substance - like building on sand (as the old saying goes).
Saturday, October 9, 2010
The End of Free Trade? - WSJ.com
The End of Free Trade? - WSJ.com: "
What's missing from this discussion?
1. The expanded money supply in the US is moving out of the US. It's not helping the US economy because of the insidious fiscal, tax and redistributionist policies of the government.
There have been many good discussions of how the dollars printed in America go outside of America to earn a better return.
2. As for tariffs impacting trade, clearly the US has raised immigration barriers, which, in an information society are far more pernicious.
There is clearly a huge swath of the American public that wants a job but can't get one. The barriers to bringing and creating those jobs in America increase by the day; but, few want to talk about the problem because too many sacred cows will be gored - starting with too much government and too many transfer payments which necessitate taxes driving business offshore.
It is clearly more favorable to a business to outsource as much of their production and even R&D into countries where the pressures of unions, anti-business regulation, high taxes, etc. aren't there.
As in the 1930's, per Art Laffer, high taxes had perhaps the most pernicious impact on economic growth.
What is sad is there is so much that could be done to produce jobs in the US - but, the government can't even bare to consider the options.
- Sent using Google Toolbar"
What's missing from this discussion?
1. The expanded money supply in the US is moving out of the US. It's not helping the US economy because of the insidious fiscal, tax and redistributionist policies of the government.
There have been many good discussions of how the dollars printed in America go outside of America to earn a better return.
2. As for tariffs impacting trade, clearly the US has raised immigration barriers, which, in an information society are far more pernicious.
There is clearly a huge swath of the American public that wants a job but can't get one. The barriers to bringing and creating those jobs in America increase by the day; but, few want to talk about the problem because too many sacred cows will be gored - starting with too much government and too many transfer payments which necessitate taxes driving business offshore.
It is clearly more favorable to a business to outsource as much of their production and even R&D into countries where the pressures of unions, anti-business regulation, high taxes, etc. aren't there.
As in the 1930's, per Art Laffer, high taxes had perhaps the most pernicious impact on economic growth.
What is sad is there is so much that could be done to produce jobs in the US - but, the government can't even bare to consider the options.
- Sent using Google Toolbar"
California Finally Passes New Budget - WSJ.com
AN UNTREATED ILLNESS: California Finally Passes New Budget - WSJ.com:
"Sure sounds like the smoke and mirrors of Obama and evidences a total failure to address the fact that too much is being taken out of the economy for social consumption to allow the economy to grow. Stunted growth effectively means no-growth and is a downward spiral.
But, you can't convince a Democrat that growth takes capital and that social consumption needs to be cut back.
As said many times, this is a third inning budget in a nine-inning game and the pain to make changes is just put off. Like an untreated illness, it may all sound good - i.e. the state has a budget - but the continuing failure to treat the spending disease will only make the eventual adjustments that much more difficult.
- Sent using Google Toolbar"
"Sure sounds like the smoke and mirrors of Obama and evidences a total failure to address the fact that too much is being taken out of the economy for social consumption to allow the economy to grow. Stunted growth effectively means no-growth and is a downward spiral.
But, you can't convince a Democrat that growth takes capital and that social consumption needs to be cut back.
As said many times, this is a third inning budget in a nine-inning game and the pain to make changes is just put off. Like an untreated illness, it may all sound good - i.e. the state has a budget - but the continuing failure to treat the spending disease will only make the eventual adjustments that much more difficult.
- Sent using Google Toolbar"
Thursday, October 7, 2010
Higher Yuan May Not Mean More U.S. Jobs - WSJ.com
Higher Yuan May Not Mean More U.S. Jobs - WSJ.com: "
High paid jobs for those who likely didn't even get out of high school to compete with foreign made goods in Walmart is a non-starter!
It's sad how the US is allowing itself to focus on old-line union jobs when it could be having so much brighter a future - albeit with lower taxes to spur investment in the wealth of new economy jobs, a greater emphasis on education (e.g. break up the teachers unions), and less US productivity going to people on welfare and too early retirement.
But, will any of these positive things happen? One does doubt it!
- Sent using Google Toolbar"
High paid jobs for those who likely didn't even get out of high school to compete with foreign made goods in Walmart is a non-starter!
It's sad how the US is allowing itself to focus on old-line union jobs when it could be having so much brighter a future - albeit with lower taxes to spur investment in the wealth of new economy jobs, a greater emphasis on education (e.g. break up the teachers unions), and less US productivity going to people on welfare and too early retirement.
But, will any of these positive things happen? One does doubt it!
- Sent using Google Toolbar"
Wednesday, October 6, 2010
IMF Cuts 2011 Global Growth Prospects - WSJ.com
CREDIT CARD MENTALITY: IMF Cuts 2011 Global Growth Prospects - WSJ.com: "What is the IMF not saying?
Clearly the IMF doesn't want to address the 'entitlement, credit card mentality' of the developed countries. It also doesn't want to confront or address the economic-utility function.
In terms of the entitlement, credit card mentality, the analogy would appear to be the family that thinks its income is sufficient to provide its living standard but is supplementing its income with credit card borrowing. Eventually, if the income doesn't go up a lot or the lifestyle go way down, the family has to go bankrupt. Is there any indication that overspending and overtaxed countries have any hope of either cutting back entitlements or growing their economies? Evidence of a positive outcome would appear to be lacking - they want to raise taxes and, at best, effect the most modest curbs on unions salaries and benefits.
In terms of economic utility, much of the world raises lots of direct and indirect taxes that hold down wages payable to workers - thus the workers have less spendable income on one hand (some say it costs an employer 4-5 $ or euros for every $ or euro paid in salary). Then the governments have sales and VAT taxes which raise the economic costs of goods.
Thus, the economic wherewithall goes down and the economic costs go up - totally shifting the utility function. An example is Portugal where with taxes a car costs about twice what the same vehicle would cost in the US. However salaries are much less. As a result, fewer cars are sold - and, with people changing their cars much less often, the total revenue to the government is substantially less, the economic activity is substantially less than it would be with less up front taxes. But, the government can wean itself from what will now be a 23% VAT on top of an approximate 20% special car tax.
- Sent using Google Toolbar"
Clearly the IMF doesn't want to address the 'entitlement, credit card mentality' of the developed countries. It also doesn't want to confront or address the economic-utility function.
In terms of the entitlement, credit card mentality, the analogy would appear to be the family that thinks its income is sufficient to provide its living standard but is supplementing its income with credit card borrowing. Eventually, if the income doesn't go up a lot or the lifestyle go way down, the family has to go bankrupt. Is there any indication that overspending and overtaxed countries have any hope of either cutting back entitlements or growing their economies? Evidence of a positive outcome would appear to be lacking - they want to raise taxes and, at best, effect the most modest curbs on unions salaries and benefits.
In terms of economic utility, much of the world raises lots of direct and indirect taxes that hold down wages payable to workers - thus the workers have less spendable income on one hand (some say it costs an employer 4-5 $ or euros for every $ or euro paid in salary). Then the governments have sales and VAT taxes which raise the economic costs of goods.
Thus, the economic wherewithall goes down and the economic costs go up - totally shifting the utility function. An example is Portugal where with taxes a car costs about twice what the same vehicle would cost in the US. However salaries are much less. As a result, fewer cars are sold - and, with people changing their cars much less often, the total revenue to the government is substantially less, the economic activity is substantially less than it would be with less up front taxes. But, the government can wean itself from what will now be a 23% VAT on top of an approximate 20% special car tax.
- Sent using Google Toolbar"
Monday, October 4, 2010
Donald Luskin: The Trade and Tax Doomsday Clocks - WSJ.com
THE OLD THIS TIME IT'S DIFFERENT: Donald Luskin: The Trade and Tax Doomsday Clocks - WSJ.com:
"It seems clear from many of the comments to articles in this newspaper that a great many otherwise apparently literate people have no understanding of economics.
They've certainly never heard about 'regression to the mean', 'economic utility', etc.
It doesn't take a genius to see that those countries with too many taxes and too many social benefits are those not thriving or bouncing back out of this recession.
Anyone reading about all of the scientific advances we have in science blogs must wonder why more of them aren't being followed up on to create new jobs.
But then again, as this article points out, society can choose - support what could provide jobs or bleed the wealth of society to support social transfer payments and overpaid union members and entitlement benefits.
Clearly the Dems are among those who believe the same high tax, anti-investment, anti-business attitudes will produce a different result 'this time'.
- Sent using Google Toolbar"
"It seems clear from many of the comments to articles in this newspaper that a great many otherwise apparently literate people have no understanding of economics.
They've certainly never heard about 'regression to the mean', 'economic utility', etc.
It doesn't take a genius to see that those countries with too many taxes and too many social benefits are those not thriving or bouncing back out of this recession.
Anyone reading about all of the scientific advances we have in science blogs must wonder why more of them aren't being followed up on to create new jobs.
But then again, as this article points out, society can choose - support what could provide jobs or bleed the wealth of society to support social transfer payments and overpaid union members and entitlement benefits.
Clearly the Dems are among those who believe the same high tax, anti-investment, anti-business attitudes will produce a different result 'this time'.
- Sent using Google Toolbar"
Saturday, October 2, 2010
Balancing Act - Barrons.com
HONEST NUMBERS AND DISCOUNTING BACK: Balancing Act - Barrons.com: "- Sent using Google Toolbar"
Sitting here in one of the highly overtaxed countries of Europe where the thought or real economic growth or vitality is totally tax constrained, one does wonder whether the old real estate valuation formula might not also be a required part of budgeting?
In other words, to simplify, take a 10-year present value calculation of income (tax receipt) growth, based on the in effect fiscal policies of the country, and discount them back.
For example, the idea of getting Obama's 700 billion from the rich by letting the Bush tax cuts expire is beyond wishful thinking.
Europe is trying to get government deficits down to 3% of GDP - assuming their economies will grow at this rate. Which again is like expecting a prostitute to be a virgin, year-after-year.
To balance the budget you can either have income discounted back from a growing economy or tax the bejesus out of the economy today and forget having anything to add in from the future.
Clearly, the US is going for the Europe route - head-in-the-sand big deficits and no growth.
Sitting here in one of the highly overtaxed countries of Europe where the thought or real economic growth or vitality is totally tax constrained, one does wonder whether the old real estate valuation formula might not also be a required part of budgeting?
In other words, to simplify, take a 10-year present value calculation of income (tax receipt) growth, based on the in effect fiscal policies of the country, and discount them back.
For example, the idea of getting Obama's 700 billion from the rich by letting the Bush tax cuts expire is beyond wishful thinking.
Europe is trying to get government deficits down to 3% of GDP - assuming their economies will grow at this rate. Which again is like expecting a prostitute to be a virgin, year-after-year.
To balance the budget you can either have income discounted back from a growing economy or tax the bejesus out of the economy today and forget having anything to add in from the future.
Clearly, the US is going for the Europe route - head-in-the-sand big deficits and no growth.
Friday, October 1, 2010
The Risks of a Currency War Become Widely Recognized - Barrons.com
GROWTH OPTIONS: The Risks of a Currency War Become Widely Recognized - Barrons.com: "- Sent using Google Toolbar"
Plus of course the lesson from the 30's (see Art Laffer) that higher taxes at the upper income levels also cripple growth has not been learned.
It becomes clearer everyday that one reads a science blog or similar, that the ideas to power this economy forward (i.e. to really grow this economy) are there.
So, the question has to be what is holding it back. This is where everyone has a different point of view.
But, as with Reagan changing the playing field in the 1980's, the "no-growth-possible" philosophy was replaced with a rapidly growing economy. Tax cuts, not increases, were part of this.
Plus of course the lesson from the 30's (see Art Laffer) that higher taxes at the upper income levels also cripple growth has not been learned.
It becomes clearer everyday that one reads a science blog or similar, that the ideas to power this economy forward (i.e. to really grow this economy) are there.
So, the question has to be what is holding it back. This is where everyone has a different point of view.
But, as with Reagan changing the playing field in the 1980's, the "no-growth-possible" philosophy was replaced with a rapidly growing economy. Tax cuts, not increases, were part of this.
Friday, September 24, 2010
'Macro' Forces in Market Confound Stock Pickers - WSJ.com
'Macro' Q&A: Too much labor?: Forces in Market Confound Stock Pickers - WSJ.com: "
Question:
Forget about unions,they're an endangered species at this point.The competition American workers have will work for $1/hr.Essentially,the potential American worker has to think about giving up flushing toilets and luxuries such as meat.The only way out is war on a large scale against the east.We both need massive casualties to bring supply and demand for labor back to balance.The real problem,there are too many of us.
Answer:
You'd seem to have missed some alternate lessons of history.
While it is true that those who don't produce are a social burden, what China has clearly shown is that with leadership (i.e. entrepreneurs), the overall wealth of society can be vastly expanded.
We've seen cycles of this in the US - from the vast wealth created by the advent of corporations and the use of industrial technologies in the 19th century to the 1980's when lower taxes and a better tax code enabled the economy to grow again. (recall the debate in the 1980 election: Democrats believed the economy couldn't grow so everyone should concentrate on how to fairly distribute that wealth; the Republicans thought the economy could grow - and, proved it!
If one takes a look around, the are limitless opportunities for our economy to grow. But, we've decided to consume and not invest. It's very simple.
Read any science journal and see all the things that we could invest in. We could invest in the space program, better transportation, etc. - but, this will mean no fat government retirements at age 50, no free healthcare for all, no school dropouts because teachers unions want to preserve a seniority system that resists measuring any quality criteria of teacher performance, etc., etc., etc.
If you read the Pulitzer Prize book on Cornelius Vanderbilt, you see what can happen when society accepts a rough and ready, opportunity for all approach.
- Sent using Google Toolbar"
Question:
Forget about unions,they're an endangered species at this point.The competition American workers have will work for $1/hr.Essentially,the potential American worker has to think about giving up flushing toilets and luxuries such as meat.The only way out is war on a large scale against the east.We both need massive casualties to bring supply and demand for labor back to balance.The real problem,there are too many of us.
Answer:
You'd seem to have missed some alternate lessons of history.
While it is true that those who don't produce are a social burden, what China has clearly shown is that with leadership (i.e. entrepreneurs), the overall wealth of society can be vastly expanded.
We've seen cycles of this in the US - from the vast wealth created by the advent of corporations and the use of industrial technologies in the 19th century to the 1980's when lower taxes and a better tax code enabled the economy to grow again. (recall the debate in the 1980 election: Democrats believed the economy couldn't grow so everyone should concentrate on how to fairly distribute that wealth; the Republicans thought the economy could grow - and, proved it!
If one takes a look around, the are limitless opportunities for our economy to grow. But, we've decided to consume and not invest. It's very simple.
Read any science journal and see all the things that we could invest in. We could invest in the space program, better transportation, etc. - but, this will mean no fat government retirements at age 50, no free healthcare for all, no school dropouts because teachers unions want to preserve a seniority system that resists measuring any quality criteria of teacher performance, etc., etc., etc.
If you read the Pulitzer Prize book on Cornelius Vanderbilt, you see what can happen when society accepts a rough and ready, opportunity for all approach.
- Sent using Google Toolbar"
Change in Tone Depends on Obama - WSJ.com
WRONG FROM SQUARE ONE: Change in Tone Depends on Obama - WSJ.com: "
Whatever else might be said about the Administration - the bottom line is their economic policies are making things worse for adding jobs and building up the American economy. And they just don't believe this is the case. So, one can only suggest the apropos word would be 'deluded'.
That the Administration believes that by borrowing and taxing money from anyone other than the poor or middle class to expand entitlements and benefits will revive and build the economy is also clear from actions, statements and priorities.
Where the Administration focus on the middle class and ignorance of the overtaxing of the economy is evident in states like Michigan where a once extremely vibrant business sector and economy is now more of a ghost - as evident in Detroit.
So, the choice is to do what the Asian success stories do - rely on entrepreneurs, cut back on government and invest for the future; or, do like the US is doing now - tax and beat up on investors and business and hope they aren't so terribly beaten up that they will still be able to pay the country's bills.
2 years in on this policy would strongly suggest that it not only isn't working, but that things are getting worse.
- Sent using Google Toolbar"
Whatever else might be said about the Administration - the bottom line is their economic policies are making things worse for adding jobs and building up the American economy. And they just don't believe this is the case. So, one can only suggest the apropos word would be 'deluded'.
That the Administration believes that by borrowing and taxing money from anyone other than the poor or middle class to expand entitlements and benefits will revive and build the economy is also clear from actions, statements and priorities.
Where the Administration focus on the middle class and ignorance of the overtaxing of the economy is evident in states like Michigan where a once extremely vibrant business sector and economy is now more of a ghost - as evident in Detroit.
So, the choice is to do what the Asian success stories do - rely on entrepreneurs, cut back on government and invest for the future; or, do like the US is doing now - tax and beat up on investors and business and hope they aren't so terribly beaten up that they will still be able to pay the country's bills.
2 years in on this policy would strongly suggest that it not only isn't working, but that things are getting worse.
- Sent using Google Toolbar"
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