AN UNASKED QUESTION: Mark Spitznagel: The Fed and the May 6 "Flash Crash" - WSJ.com
Another thought is to ask what the markets really are for and what they should represent.
Someone on Friday's newscast said there was 9 trillion dollars sitting to be invested.
9 trillion!!!!
Now, at $600,000 per job, could that be 15 million jobs?
Let's see? People have money to invest. People are in need of jobs. So, what's the problem?
Why aren't people asking the question?
Friday, May 28, 2010
Thursday's Rally -- What's Really Changed? - Up and Down Wall Street Daily - R. Forsyth - Barrons.com
HOW CAN PRICES FALL?: Thursday's Rally -- What's Really Changed? - Up and Down Wall Street Daily - R. Forsyth - Barrons.com
Let's see?
The government want to apply a Keynesian approach to maintaining aggregate demand.
OK, demand stays level.
But, government decides labor costs have to rise because more costs have to be added to labor to pay for healthcare for non-workers.
So, the labor component of production increases (as RF says, maybe less labor - i.e. fewer jobs).
But demand stays constant (Keynesian government consumption supports - transfer payments, unemployment insurance extensions, social benefits, support for Medicare, support for local and state government employment, etc.).
Raw materials prices go up.
The constraints on supply are HIGHER LABOR COSTS, HIGHER RAW MATERIAL COSTS plus, the favorite of liberals, higher taxes. So the COST OF CAPITAL goes up.
Now, it's hard to see how the price of goods can go down?
Let's see?
The government want to apply a Keynesian approach to maintaining aggregate demand.
OK, demand stays level.
But, government decides labor costs have to rise because more costs have to be added to labor to pay for healthcare for non-workers.
So, the labor component of production increases (as RF says, maybe less labor - i.e. fewer jobs).
But demand stays constant (Keynesian government consumption supports - transfer payments, unemployment insurance extensions, social benefits, support for Medicare, support for local and state government employment, etc.).
Raw materials prices go up.
The constraints on supply are HIGHER LABOR COSTS, HIGHER RAW MATERIAL COSTS plus, the favorite of liberals, higher taxes. So the COST OF CAPITAL goes up.
Now, it's hard to see how the price of goods can go down?
Wednesday, May 26, 2010
Geithner Urges Europe to Act on Markets - WSJ.com
THE QUESTIONS THAT SHOULD BE ANSWERED, OR, AT LEAST DISCUSSED: Geithner Urges Europe to Act on Markets - WSJ.com
The question G should be asking (both in Europe and at home in the US) is whether we've gone through a period in which liberal thinking, concentrating on benefits rather than incentives for job creation, can work in today's environment.
As an example, Ford recently announced the creation of approximately 220 jobs at a private sector cost per job of just over $600,000. One assumes these are productive, sustainable jobs.
So question 1 would be: What are the capital costs of creating the jobs that these different countries want? (ancillary to this is the level of income they'd like for each job - since higher value (read: paid) jobs probably take more capital).
Question 2 would be: How does society raise this capital? (Just back from China, G certainly must have seen that this capital is raised by entrepreneurs - of whatever relation to the Communist Party).
It would surely seem that the heavy spending of Western democracies on what can be referred to as 'social goods' but not job creation, makes the creation of real, sustainable jobs in this economic environment very unlikely.
Almost all of the European efforts to reduce deficits do nothing to encourage capital or entrepreneurship (just the opposite). The US is clearly trying to pay for more social spending by reducing the capital available for investment and the returns on capital as well.
Just a question; but, it would seem the above deserve some greater attention!
The question G should be asking (both in Europe and at home in the US) is whether we've gone through a period in which liberal thinking, concentrating on benefits rather than incentives for job creation, can work in today's environment.
As an example, Ford recently announced the creation of approximately 220 jobs at a private sector cost per job of just over $600,000. One assumes these are productive, sustainable jobs.
So question 1 would be: What are the capital costs of creating the jobs that these different countries want? (ancillary to this is the level of income they'd like for each job - since higher value (read: paid) jobs probably take more capital).
Question 2 would be: How does society raise this capital? (Just back from China, G certainly must have seen that this capital is raised by entrepreneurs - of whatever relation to the Communist Party).
It would surely seem that the heavy spending of Western democracies on what can be referred to as 'social goods' but not job creation, makes the creation of real, sustainable jobs in this economic environment very unlikely.
Almost all of the European efforts to reduce deficits do nothing to encourage capital or entrepreneurship (just the opposite). The US is clearly trying to pay for more social spending by reducing the capital available for investment and the returns on capital as well.
Just a question; but, it would seem the above deserve some greater attention!
Monday, May 24, 2010
John Rutledge: Congress's Carried Interest Tax Folly - WSJ.com
CAPITAL PER JOB (FORD): John Rutledge: Congress's Carried Interest Tax Folly - WSJ.com
An interesting footnote to this is that Ford announced it was going to invest "$135 million" for 220 new jobs in Michigan.
To give this a rough number, it's something like $600,000 in capital for (what one assumes is) a permanent job.
Thus, if the US wants jobs, it had better find ways to let this capital be accumulated! Or, at least one would think so.
An interesting footnote to this is that Ford announced it was going to invest "$135 million" for 220 new jobs in Michigan.
To give this a rough number, it's something like $600,000 in capital for (what one assumes is) a permanent job.
Thus, if the US wants jobs, it had better find ways to let this capital be accumulated! Or, at least one would think so.
Saturday, May 22, 2010
U.S. Jobless Rate Edges Up Despite Declines in 34 States - WSJ.com
WHAT THE NUMBERS AREN'T TELLING US: U.S. Jobless Rate Edges Up Despite Declines in 34 States - WSJ.com
There used to be discussions about the amount of capital behind each job.
I'm not sure where that number is today (and where it would be to create 'new' jobs); esp. with outsourcing, etc.
But, it would have a certain logic to see that with the government basically absorbing all of society's savings and investment dollars, and having to import large amounts of those dollars as well, that there would be less investment dollars around to create jobs.
And, jobs created with less capital behind them would also probably be LOWER PAYING jobs. Which is one fact everyone seems to agree is happening now!
So, one might question where jobs are going to come from?
Also, if more capital needs to be put into R&D, where the US has a competitive edge globally, then capital would need to be allocated there. As such, there'd likely be less for those with jobs that could be substituted for by using, say Chinese, capital to produce things. Again, this would appear to be what's happening.
Etc., etc.
There used to be discussions about the amount of capital behind each job.
I'm not sure where that number is today (and where it would be to create 'new' jobs); esp. with outsourcing, etc.
But, it would have a certain logic to see that with the government basically absorbing all of society's savings and investment dollars, and having to import large amounts of those dollars as well, that there would be less investment dollars around to create jobs.
And, jobs created with less capital behind them would also probably be LOWER PAYING jobs. Which is one fact everyone seems to agree is happening now!
So, one might question where jobs are going to come from?
Also, if more capital needs to be put into R&D, where the US has a competitive edge globally, then capital would need to be allocated there. As such, there'd likely be less for those with jobs that could be substituted for by using, say Chinese, capital to produce things. Again, this would appear to be what's happening.
Etc., etc.
Friday, May 21, 2010
The Fear Returns - WSJ.com
LIKE MAGIC MUSHROOMS?: The Fear Returns - WSJ.com
From the comments on other articles in this paper over recent days, it would appear as though undying Keynsian liberals are still abundant.
One more reason to worry. They were also probably the biggest buyers of houses during the bubble.
Sadly, the cost of correcting and overcoming the excesses of unions and too much government are increasing every day.
It would be nice to think the economy would grow and jobs would be created when the money to do so is being taken by government to be given to the 'socially deserving' - and, clearly that's the belief of liberals. But is it so?
From the comments on other articles in this paper over recent days, it would appear as though undying Keynsian liberals are still abundant.
One more reason to worry. They were also probably the biggest buyers of houses during the bubble.
Sadly, the cost of correcting and overcoming the excesses of unions and too much government are increasing every day.
It would be nice to think the economy would grow and jobs would be created when the money to do so is being taken by government to be given to the 'socially deserving' - and, clearly that's the belief of liberals. But is it so?
Thursday, May 20, 2010
Alan S. Blinder: Return of the Bond Market Vigilantes - WSJ.com
SUSPENDED BELIEF:Alan S. Blinder: Return of the Bond Market Vigilantes - WSJ.com
The lesson Mr. Blinder might have discussed re: Europe is how socialism leads to stagnation (at best).
If he wanted to look at home, he could have looked at what the UAW did to GM with its excessive and socialist demands.
The idea of stimulating the economy re: Blinder is like giving a shopaholic another credit card.
If there is a lesson the housing bubble should have taught it is that something is wrong with the balance between taxes and transfer payments and the ability of the economy to produce enough good jobs.
Investing (i.e. taking tax money and giving it to those with social needs) is nothing more than hoping the shopaholics credit card will be discharged in bankruptcy.
Now the sovereign debt bubble is the next stage of trying to create 'magic money'.
More taxes are absolutely NOT the answer! As shown with Europe, there is no incentive to business or to grow the economy in all these fiscal changes. In fact, raising taxes is a further discouragement.
So Blinder and the Dems get what they want, only the government can really provide jobs because that's where cost/benefit, supply/demand live in a suspended state.
The lesson Mr. Blinder might have discussed re: Europe is how socialism leads to stagnation (at best).
If he wanted to look at home, he could have looked at what the UAW did to GM with its excessive and socialist demands.
The idea of stimulating the economy re: Blinder is like giving a shopaholic another credit card.
If there is a lesson the housing bubble should have taught it is that something is wrong with the balance between taxes and transfer payments and the ability of the economy to produce enough good jobs.
Investing (i.e. taking tax money and giving it to those with social needs) is nothing more than hoping the shopaholics credit card will be discharged in bankruptcy.
Now the sovereign debt bubble is the next stage of trying to create 'magic money'.
More taxes are absolutely NOT the answer! As shown with Europe, there is no incentive to business or to grow the economy in all these fiscal changes. In fact, raising taxes is a further discouragement.
So Blinder and the Dems get what they want, only the government can really provide jobs because that's where cost/benefit, supply/demand live in a suspended state.
Monday, May 17, 2010
More on Economic Regression and Socialist Despoiling
To: "...If one thinks of this as a typical regression to the mean problem, the Asian economies thrive by rewarding work and entrepreneurship. They are somewhat below the mean."
* Fahhan Ozcelik replied:
Isn't that why they call "Aging Europe"?
Even more to the point is what we read and hear first hand from friends in Portugal - where about 20% of the university educated leave and even those without an education may go and work abroad.
Lots of the businesses here in mid Portugal are run by Portuguese who've moved back here from Canada (my guess is about the time it joined the EU).
There's much more competitive vitality in Eastern Europe (I just know about the Czechs).
Sadly the Democrats and social liberals have no idea how economies grow. Recall the old Jimmy Carter / Reagan election when the Dems felt the pie couldn't grow and Reagan proved them wrong?
Not sure how it will all play out; but, clearly we're going to miss at least one decade of growth (almost there).
Greedy capitalists may feather their own nests but socialists seem to take from the whole society as its growth is inhibited if not outright reversed.
Cheers.
* Fahhan Ozcelik replied:
Isn't that why they call "Aging Europe"?
Even more to the point is what we read and hear first hand from friends in Portugal - where about 20% of the university educated leave and even those without an education may go and work abroad.
Lots of the businesses here in mid Portugal are run by Portuguese who've moved back here from Canada (my guess is about the time it joined the EU).
There's much more competitive vitality in Eastern Europe (I just know about the Czechs).
Sadly the Democrats and social liberals have no idea how economies grow. Recall the old Jimmy Carter / Reagan election when the Dems felt the pie couldn't grow and Reagan proved them wrong?
Not sure how it will all play out; but, clearly we're going to miss at least one decade of growth (almost there).
Greedy capitalists may feather their own nests but socialists seem to take from the whole society as its growth is inhibited if not outright reversed.
Cheers.
ECB in the Bond-Buying Game as Fears Linger - WSJ.com
AKIN TO PEAK OIL?: ECB in the Bond-Buying Game as Fears Linger - WSJ.com
Is there also come type of kinship here with the concept of 'peak oil'?
In other words, is there eventually a limit as to how much cash is available for governments to borrow?
And, of course, the impact of government borrowing crowding out private borrowing and investment capital isn't something to be sneezed at either.
Is there also come type of kinship here with the concept of 'peak oil'?
In other words, is there eventually a limit as to how much cash is available for governments to borrow?
And, of course, the impact of government borrowing crowding out private borrowing and investment capital isn't something to be sneezed at either.
Auction Highlights Drop in U.S. Capacity - WSJ.com
Auction Highlights Drop in U.S. Capacity - WSJ.com
Let's see?
Government borrows capital that the private sector could use. There's less capital for business. So, businesses have to disgorge capital to feed the maw of government.
Now, government takes the capital and gives it to what it considers the poor and disadvantaged.
The poor and disadvantaged consider the capital as income and they spend it.
Net for society = less capital, less businesses and less jobs.
(As with European socialism - is this a surprise? It shouldn't be.)
Let's see?
Government borrows capital that the private sector could use. There's less capital for business. So, businesses have to disgorge capital to feed the maw of government.
Now, government takes the capital and gives it to what it considers the poor and disadvantaged.
The poor and disadvantaged consider the capital as income and they spend it.
Net for society = less capital, less businesses and less jobs.
(As with European socialism - is this a surprise? It shouldn't be.)
Saturday, May 15, 2010
A Sickening Situation - Editorial Commentary - Thomas G. Donlan - Barrons.com
THIS TIME IT HAS GOTTA BE DIFFERENT?: A Sickening Situation - Editorial Commentary - Thomas G. Donlan - Barrons.com
It's amazing how the "this time it has got to be different" mentality seems to permeate governments.
They could look around and see what Washington's current fiscal and social policies have wrought in Europe - but, rather than see the overextended, effectively non-growing economies with much lower salaries and much more expensive goods, they'd rather ignore those unpleasantries, assign them just to Europe, and instead bask in the thought that the US can create a socialist state that will actually be able to pay for itself.
(Well, it's not paying for itself now; and, it's not doing it in any other country; and, even states like California don't seem to be able to pay for it; but, heck - maybe its different for the entire US?)
Anyone out there selling bridges?
It's amazing how the "this time it has got to be different" mentality seems to permeate governments.
They could look around and see what Washington's current fiscal and social policies have wrought in Europe - but, rather than see the overextended, effectively non-growing economies with much lower salaries and much more expensive goods, they'd rather ignore those unpleasantries, assign them just to Europe, and instead bask in the thought that the US can create a socialist state that will actually be able to pay for itself.
(Well, it's not paying for itself now; and, it's not doing it in any other country; and, even states like California don't seem to be able to pay for it; but, heck - maybe its different for the entire US?)
Anyone out there selling bridges?
Thursday, May 13, 2010
EU to Take More Fiscal Control - WSJ.com
CAN'T TEACH OLD DOGS NEW TRICKS: EU to Take More Fiscal Control - WSJ.com
A typical example of the problem can be seen in the US where a member of a public employee union feels "entitled" to raises (while his private sector neighbors and fellow citizens are unemployed) and early retirement benefits (say age 50 with fully indexed retirement salary increases and sometimes final bumps in benefits) while again, his private sector neighbors make less in salary, have to work to 65 or later, may have no pension (or just social security) and have to pay the property taxes to pay the union worker.
Things get out-of-hand, but the offenders seen nothing wrong with what they are doing to society and the officials who are in office often get their with the strong financial support of these very parties hurting the broader (if not their own) economy.
How does this get changed?
A typical example of the problem can be seen in the US where a member of a public employee union feels "entitled" to raises (while his private sector neighbors and fellow citizens are unemployed) and early retirement benefits (say age 50 with fully indexed retirement salary increases and sometimes final bumps in benefits) while again, his private sector neighbors make less in salary, have to work to 65 or later, may have no pension (or just social security) and have to pay the property taxes to pay the union worker.
Things get out-of-hand, but the offenders seen nothing wrong with what they are doing to society and the officials who are in office often get their with the strong financial support of these very parties hurting the broader (if not their own) economy.
How does this get changed?
Greek Shippers Weather Storm - WSJ.com
INVEST OR CONSUMER?:Greek Shippers Weather Storm - WSJ.com
What I particularly like is the clear fact that by being "exempt from income taxes" the companies grow and prosper.
Could this be a lesson that too high taxes tends to keep the rest of the economy in Greece and elsewhere from growing?
Or, is it 'better' to strip the income from the productive sectors and 'give it to the needy'?
Greece is clearly paying the price for too much of the latter and not enough of the former. But, then again, so is much of Europe, the UK and the US.
What I particularly like is the clear fact that by being "exempt from income taxes" the companies grow and prosper.
Could this be a lesson that too high taxes tends to keep the rest of the economy in Greece and elsewhere from growing?
Or, is it 'better' to strip the income from the productive sectors and 'give it to the needy'?
Greece is clearly paying the price for too much of the latter and not enough of the former. But, then again, so is much of Europe, the UK and the US.
Wednesday, May 12, 2010
The Minnesota Prelude - WSJ.com
THE FATE OF ROME AND WHAT DISAPPEARED: The Minnesota Prelude - WSJ.com
We all know that Rome was overrun by barbarians (could we call them Democrats?); but, what is worth thinking about is that what Rome built was lost and not recovered to any measurable extent for 1,000 years (recall the term "Renaissance").
Here in Europe one easily sees how high taxes and union labor law restrictions have stagnated the economy.
The vitality has been sapped - not unlike what brought about the downfall of Rome.
Maybe the Democrats are right. We should tax away the store to provide for the wants and needs of early retirees, those who fail to get an education or improve their skills or those who seem hidebound by restrictive belief systems of one kind or another. But, history isn't a positive supporter of the sustainability of such systems.
What's the current rate of inflation in Venezuela or Argentina? And, what's the job growth in Greece? Etc.
We all know that Rome was overrun by barbarians (could we call them Democrats?); but, what is worth thinking about is that what Rome built was lost and not recovered to any measurable extent for 1,000 years (recall the term "Renaissance").
Here in Europe one easily sees how high taxes and union labor law restrictions have stagnated the economy.
The vitality has been sapped - not unlike what brought about the downfall of Rome.
Maybe the Democrats are right. We should tax away the store to provide for the wants and needs of early retirees, those who fail to get an education or improve their skills or those who seem hidebound by restrictive belief systems of one kind or another. But, history isn't a positive supporter of the sustainability of such systems.
What's the current rate of inflation in Venezuela or Argentina? And, what's the job growth in Greece? Etc.
Tuesday, May 11, 2010
HEARD ON THE STREET: Banks' Not-So-Safe Government Bonds - WSJ.com
HEARD ON THE STREET: Banks' Not-So-Safe Government Bonds - WSJ.com
Clearly the price of gold is showing that governments aren't to be trusted. And, it's not just the governments - it's the citizens themselves. They know they don't want any benefits cut and they want to raise taxes on the minorities in their population - i.e. those with good jobs, good pay and businesses (esp. business owners).
Thus, the cards are stacked against economic growth. The EU on Monday held a panel (broadcast on Bloomberg) with Barroso, et. al. talking about wanting "sustainable growth" and realizing that "the European social model" doesn't work unless there is growth to pay the costs.
Did we hear anything about reducing taxes or regulatory burdens on those who might like to start a business in Europe? No.
Did we see in the WSJ that 700 small business owners were this week complaining about new EU regulations that will hurt startups and small growing businesses? Yes.
Etc.
(As the Greek school teacher (female, aged about 50) said when interviewed last week about the crisis faced by her country (paraphrasing) "Well, I worked for 25 years, I deserve my retirement [now]....Well, my neighbor has a swimming pool and I don't. Is that fair?", etc.)
With this kind of 'fairness' uppermost in liberal consciousnesses, is it likely that fiscal and regulatory changes can or will be made to allow economies to grow?
This article on the risk of sovereign debt is right on the money!
Clearly the price of gold is showing that governments aren't to be trusted. And, it's not just the governments - it's the citizens themselves. They know they don't want any benefits cut and they want to raise taxes on the minorities in their population - i.e. those with good jobs, good pay and businesses (esp. business owners).
Thus, the cards are stacked against economic growth. The EU on Monday held a panel (broadcast on Bloomberg) with Barroso, et. al. talking about wanting "sustainable growth" and realizing that "the European social model" doesn't work unless there is growth to pay the costs.
Did we hear anything about reducing taxes or regulatory burdens on those who might like to start a business in Europe? No.
Did we see in the WSJ that 700 small business owners were this week complaining about new EU regulations that will hurt startups and small growing businesses? Yes.
Etc.
(As the Greek school teacher (female, aged about 50) said when interviewed last week about the crisis faced by her country (paraphrasing) "Well, I worked for 25 years, I deserve my retirement [now]....Well, my neighbor has a swimming pool and I don't. Is that fair?", etc.)
With this kind of 'fairness' uppermost in liberal consciousnesses, is it likely that fiscal and regulatory changes can or will be made to allow economies to grow?
This article on the risk of sovereign debt is right on the money!
Sunday, May 9, 2010
Germany, France Agree on Greek Measures - WSJ.com
SEX AND PREGNANCY: Germany, France Agree on Greek Measures - WSJ.com
These ministers seem to believe sex doesn't produce pregnancy.
In other words, they are hoping that the private world doesn't keep questioning the ability of socialist states to keep borrowing money to fund social expenditures without fiscal policies to promote growth.
Everyone now sees what happens by looking at Greece. A careful examination of some US numbers (as has been done this week by Barrons, etc.) point to the need to look closer at America's economy as well.
To believe the private investor isn't going to want a little more fiscal rectitude can't be plastered over.
These ministers seem to believe sex doesn't produce pregnancy.
In other words, they are hoping that the private world doesn't keep questioning the ability of socialist states to keep borrowing money to fund social expenditures without fiscal policies to promote growth.
Everyone now sees what happens by looking at Greece. A careful examination of some US numbers (as has been done this week by Barrons, etc.) point to the need to look closer at America's economy as well.
To believe the private investor isn't going to want a little more fiscal rectitude can't be plastered over.
Saturday, May 8, 2010
Banks See New Funding Crunch - WSJ.com
FATAL FISCAL POLICIES?: Banks See New Funding Crunch - WSJ.com
What keeps getting skipped over or obfuscated is the dreadful business climate in Europe.
Taxes are too high. Unions have unrealistic demands. Labor policies and laws make hiring the last thing any business wants to do.
So, government keeps making up for this by borrowing money.
If one thinks of government as a farmer who keeps borrowing more and more on his land, eventually the banker (read: taxpayers, banks and the rest of us) realize that no matter how high taxes get, the farmer will never have enough funds to pay the loans back. Is this where Europe is now?
(Certainly everyone except the Greeks thinks that Greece is there.)
What keeps getting skipped over or obfuscated is the dreadful business climate in Europe.
Taxes are too high. Unions have unrealistic demands. Labor policies and laws make hiring the last thing any business wants to do.
So, government keeps making up for this by borrowing money.
If one thinks of government as a farmer who keeps borrowing more and more on his land, eventually the banker (read: taxpayers, banks and the rest of us) realize that no matter how high taxes get, the farmer will never have enough funds to pay the loans back. Is this where Europe is now?
(Certainly everyone except the Greeks thinks that Greece is there.)
The Infants' Intifada - Up and Down Wall Street - A. Abelson - Barrons.com
AND THE MONEY IS WHERE?: The Infants' Intifada - Up and Down Wall Street - A. Abelson - Barrons.com
One also tends to ponder the old number from the 1960's and 70's which related to the average cost of creating each job.
As shown in the WSJ this week, productivity is being helped by outsourcing (out of the US sourcing) and this can concentrate funds to provide more capital for those jobs that are left.
But, as the cost of labor goes up due to Obamacare, etc., more capital ought to be required to fund each job.
And, the US doesn't save enough to even cover the US annual deficit - let alone new cars, home mortgages, investment into the new business, etc.
Similarly, Europe has come countries that save (e.g. Germany) and some that have to borrow from others (e.g. Greece and Portugal).
It is thus reasonable to assume that all this stored capital and saving going to government has to lessen the capital going to private business and the consumer.
And, with less capital allocated (efficiently), it's hard to believe there's the basis of a sustained recovery (sort of like with housing prices expected to always grow faster than incomes)?
One also tends to ponder the old number from the 1960's and 70's which related to the average cost of creating each job.
As shown in the WSJ this week, productivity is being helped by outsourcing (out of the US sourcing) and this can concentrate funds to provide more capital for those jobs that are left.
But, as the cost of labor goes up due to Obamacare, etc., more capital ought to be required to fund each job.
And, the US doesn't save enough to even cover the US annual deficit - let alone new cars, home mortgages, investment into the new business, etc.
Similarly, Europe has come countries that save (e.g. Germany) and some that have to borrow from others (e.g. Greece and Portugal).
It is thus reasonable to assume that all this stored capital and saving going to government has to lessen the capital going to private business and the consumer.
And, with less capital allocated (efficiently), it's hard to believe there's the basis of a sustained recovery (sort of like with housing prices expected to always grow faster than incomes)?
Friday, May 7, 2010
Your Big, Fat-Fingered Debacle - Up and Down Wall Street Daily - R. Forsyth - Barrons.com
LET ME BORROW YOUR MONEY - BUT, I'M NOT WORKING: Your Big, Fat-Fingered Debacle - Up and Down Wall Street Daily - R. Forsyth - Barrons.com
"for now the subprime lending and robust housing market was alive and well".
It's sort of like the promiscuous 13-year old girl who doesn't get pregnant but has sex with several boys a day. The only question is "when" not "if".
Socialists tax and borrow, borrow and tax. The result is an encouragement to consume (Greece is an extreme case) and a discouragement to business (read: produce goods) creation and expansion and continuation.
As a result, one has to think on one hand of the TOTAL ECONOMIC PIE (read: total goods produced) and then the DEMAND ON THOSE GOODS (read: total earned and unearned demand for those goods).
Those who save (to try and save and set aside money and investment earnings for the future) find that there money has been borrowed by governments to fund purchases of goods by 'non' producers.
Eventually, those who save realize no return on their savings (i.e. nothing to earn on setting money aside), while those who don't produce but are living on loans from savers, find the saved funds are tapped out.
Is this the problem Europe and the US will face? And, if so, when?
"for now the subprime lending and robust housing market was alive and well".
It's sort of like the promiscuous 13-year old girl who doesn't get pregnant but has sex with several boys a day. The only question is "when" not "if".
Socialists tax and borrow, borrow and tax. The result is an encouragement to consume (Greece is an extreme case) and a discouragement to business (read: produce goods) creation and expansion and continuation.
As a result, one has to think on one hand of the TOTAL ECONOMIC PIE (read: total goods produced) and then the DEMAND ON THOSE GOODS (read: total earned and unearned demand for those goods).
Those who save (to try and save and set aside money and investment earnings for the future) find that there money has been borrowed by governments to fund purchases of goods by 'non' producers.
Eventually, those who save realize no return on their savings (i.e. nothing to earn on setting money aside), while those who don't produce but are living on loans from savers, find the saved funds are tapped out.
Is this the problem Europe and the US will face? And, if so, when?
Euro Summit Seeks to Calm Markets - WSJ.com
BORROW TIL BUST: Euro Summit Seeks to Calm Markets - WSJ.com
The facts are becoming increasingly evident that cradle to grave European socialism isn't self-sustaining in the larger global world (nor is it in America - see Illinois).
As money and energy is siphoned from the private sector and individuals and transferred to the state, there is a doubly negative feedback loop.
Will all of these financial problems create a political turn to support producers instead of those feeling entitled? If so, this could be a good crisis.
But, government and unions have so far seemed to believe that success or failure in life is the luck of the draw - rather than the results of hard work and study.
A society gets what it asks for. Will Europe ask for growth and individual responsibility?
The facts are becoming increasingly evident that cradle to grave European socialism isn't self-sustaining in the larger global world (nor is it in America - see Illinois).
As money and energy is siphoned from the private sector and individuals and transferred to the state, there is a doubly negative feedback loop.
Will all of these financial problems create a political turn to support producers instead of those feeling entitled? If so, this could be a good crisis.
But, government and unions have so far seemed to believe that success or failure in life is the luck of the draw - rather than the results of hard work and study.
A society gets what it asks for. Will Europe ask for growth and individual responsibility?
Thursday, May 6, 2010
Less Educated Men Face Brutal Job Market - WSJ.com
LABOR MISS-PRICING: Less Educated Men Face Brutal Job Market - WSJ.com
If illegal aliens are taking those jobs that exist - it's likely because the cost of their labor is closer to a labor-clearing price.
The other people taking these jobs are offshore - where, even more, the labor cost is at a labor-clearing price.
Policies to make job creation in the US easier and better are the answer. The job pie can be expanded. But, policies to do this are anathema to social liberals and entitlement redistributionists who burden jobs with high benefit costs and taxes.
Concomitantly, why is that someone with a salary can't hire and deduct the cost of hiring someone to do work for them? Think of all the families that have two wage earners where one quits because taxes are too high. If this high wage earner (likely highly educated) was working, and the income they earn could deduct the wages of help at home, they could probably provide anywhere from an average of 1 to 5 jobs for the less educated. That's the kind of math I'd like to see. It has nothing to do with illegal immigrants as so many conservatives rant.
If illegal aliens are taking those jobs that exist - it's likely because the cost of their labor is closer to a labor-clearing price.
The other people taking these jobs are offshore - where, even more, the labor cost is at a labor-clearing price.
Policies to make job creation in the US easier and better are the answer. The job pie can be expanded. But, policies to do this are anathema to social liberals and entitlement redistributionists who burden jobs with high benefit costs and taxes.
Concomitantly, why is that someone with a salary can't hire and deduct the cost of hiring someone to do work for them? Think of all the families that have two wage earners where one quits because taxes are too high. If this high wage earner (likely highly educated) was working, and the income they earn could deduct the wages of help at home, they could probably provide anywhere from an average of 1 to 5 jobs for the less educated. That's the kind of math I'd like to see. It has nothing to do with illegal immigrants as so many conservatives rant.
No More Carrying On in the Markets - Up and Down Wall Street Daily - R. Forsyth - Barrons.com
DEFLATION?: No More Carrying On in the Markets - Up and Down Wall Street Daily - R. Forsyth - Barrons.com
Deflation or not deflation?
Trichet has already blinked at the idea of the European Central Bank taking Greek debt at par as collateral. For all intents and purposes this is equivalent to monetizing debt.
With all of these developed countries running big deficits (includes the US), it would seem far more likely that we'll have inflation with a stagnant or less economy.
After all, the one thing all developed economies have had in common is a shifting of the 'labor' component as a production input to an unnaturally high expense.
As a result, capital and raw materials are substituted. In developed countries, as shown in another article in Thursday's WSJ, another labor substitute is 'outsourcing'.
What populists and politicians loathe to confront is that they've mispriced labor and, as such, unemployment results.
Deflation or not deflation?
Trichet has already blinked at the idea of the European Central Bank taking Greek debt at par as collateral. For all intents and purposes this is equivalent to monetizing debt.
With all of these developed countries running big deficits (includes the US), it would seem far more likely that we'll have inflation with a stagnant or less economy.
After all, the one thing all developed economies have had in common is a shifting of the 'labor' component as a production input to an unnaturally high expense.
As a result, capital and raw materials are substituted. In developed countries, as shown in another article in Thursday's WSJ, another labor substitute is 'outsourcing'.
What populists and politicians loathe to confront is that they've mispriced labor and, as such, unemployment results.
Some Productivity Gains May Be an Illusion - WSJ.com
STATISTICS AND LIARS: Some Productivity Gains May Be an Illusion - WSJ.com
There is an old saw that goes roughly "statistics lie and liars use statistics".
Have you wondered about US numbers - especially about GDP?
Here's a bit of a recent WSJ article that points out where some of this misrepresentation and misdirection may be coming from.
"A chunk of the U.S.'s recent productivity gains could be an illusion, created by companies moving more production overseas rather than domestic workers becoming more efficient.
An increasing number of U.S. producers are tapping low-cost suppliers in countries like China for parts and materials that they used to buy at home.
But in many cases, the government statistics undercount those imports. That exaggerates the amount of domestic production and overstates productivity."
There is an old saw that goes roughly "statistics lie and liars use statistics".
Have you wondered about US numbers - especially about GDP?
Here's a bit of a recent WSJ article that points out where some of this misrepresentation and misdirection may be coming from.
"A chunk of the U.S.'s recent productivity gains could be an illusion, created by companies moving more production overseas rather than domestic workers becoming more efficient.
An increasing number of U.S. producers are tapping low-cost suppliers in countries like China for parts and materials that they used to buy at home.
But in many cases, the government statistics undercount those imports. That exaggerates the amount of domestic production and overstates productivity."
Tuesday, May 4, 2010
Euroland Is Changed Forever - WSJ.com
HERE AN OSTRICH, THERE AN OSTRICH: Euroland Is Changed Forever - WSJ.com
Since over-borrowing will be followed by over-compensating (to the limits of the taxation of the most fiscally prudent to the most fiscally non-prudent), one has to ask where it will all end up?
Lots of prognosticators say the printing press.
Chavez in Venezuela has shown that printing and confiscation of private property and the handing out of jobs to the incompetent but politically favored end up with producing shortages and 30% inflation.
But heck, let's be ostriches and ignore the likely and current and hope for something from heaven. Maybe some Iranian missiles perhaps; or, some other Islamic terrorist attack with North Korean bombs?
Since over-borrowing will be followed by over-compensating (to the limits of the taxation of the most fiscally prudent to the most fiscally non-prudent), one has to ask where it will all end up?
Lots of prognosticators say the printing press.
Chavez in Venezuela has shown that printing and confiscation of private property and the handing out of jobs to the incompetent but politically favored end up with producing shortages and 30% inflation.
But heck, let's be ostriches and ignore the likely and current and hope for something from heaven. Maybe some Iranian missiles perhaps; or, some other Islamic terrorist attack with North Korean bombs?
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