Gold vs. Goldilocks - WSJ.com
In terms of interest rates, it's worth looking at some of the clear signs of a shortage of cash.
Here in Europe that was seen in the ECB's concerns about repayments on its lending facility.
But, it is also rampant in a recent UCB report on business conditions in Portugal where it points out that a shortage of lending capacity (i.e. not enough funds) is limiting businesses ability to expand and in fact the cancellation of some programs. It sees credit constraint throughout the local economy.
I haven't seen such reports for other parts of the world but clearly this is a common problem. Eventually, the government has crowded out the private sector where jobs are created.
And, what is government doing with this money? It's social consumption, social consumption and social consumption. People feel 'entitled' and government provides.
This will not easily be brought under control. These are fiscal policies akin to drinking and drug problems.
Wednesday, June 30, 2010
Tuesday, June 29, 2010
G-20 leaders show only weakness; bond markets rule - WSJ.com
G-20 leaders show only weakness; bond markets rule - WSJ.com
An interesting comment I just read in a report from UBS on Portugal pointed out that a lack of funds in the banking system is inhibiting most of the Portuguese businesses looked at from expanding (read: adding jobs).
So, instead of adding jobs or stimulating growth, the crowding out of private investment by the rapacious sovereigns would appear to be finding acknowledgment in investment reports.
And, gee whiz, it makes sense - unlike the borrow, borrow, borrow of government to support consumption (which, if not met by local businesses, will have to come from China, etc.).
An interesting comment I just read in a report from UBS on Portugal pointed out that a lack of funds in the banking system is inhibiting most of the Portuguese businesses looked at from expanding (read: adding jobs).
So, instead of adding jobs or stimulating growth, the crowding out of private investment by the rapacious sovereigns would appear to be finding acknowledgment in investment reports.
And, gee whiz, it makes sense - unlike the borrow, borrow, borrow of government to support consumption (which, if not met by local businesses, will have to come from China, etc.).
Personal Income Rises, but Spending Is Muted - WSJ.com
THE BASICS: Personal Income Rises, but Spending Is Muted - WSJ.com
It is astounding how many economists (Irwin Kellner at CBS for instance) don't see the importance of having the US turn around its fiscal policies to encourage job creation instead of benefit extensions.
What the Obama and Pelosi administrations (and in fact Bush as well) keep trying to do is to curry favor with those seeking handouts from the government.
This money doesn't fall from trees (yes, perhaps the printing presses of the Fed) but mostly from lenders and taxes.
Those smart enough to create jobs and generate wealth can see the writing on the wall. If we want jobs and wealth creation, then we need policies that support such activities. We don't have them. We have just the opposite.
Economic utility determines our desire for goods at a certain cost. When we make it more expensive to buy goods artificially (think VAT and sales taxes), then the utility of the goods drops and fewer are wanted. (This especially applies to Europe and the Dem's hope to get some cash out of Americans through a VAT tax.)
The Production equation says to add the costs of 'labor', 'capital' and 'raw materials'. So, what does the administration do? It raises the cost of labor in a globally competitive economy.
So each worker needs to be able to produce even more in order for the employer to pay a currently equivalent wage. This means more investment capital just as government borrowing is crowding out private. Taxes on capital and beating up on the banks and hedge funds doesn't help get lower cost capital to businesses either; etc.
(Clearly those who ignored the portents of the housing bubble are equally ignorant of the basic economics at work in the broader economy.)
It is astounding how many economists (Irwin Kellner at CBS for instance) don't see the importance of having the US turn around its fiscal policies to encourage job creation instead of benefit extensions.
What the Obama and Pelosi administrations (and in fact Bush as well) keep trying to do is to curry favor with those seeking handouts from the government.
This money doesn't fall from trees (yes, perhaps the printing presses of the Fed) but mostly from lenders and taxes.
Those smart enough to create jobs and generate wealth can see the writing on the wall. If we want jobs and wealth creation, then we need policies that support such activities. We don't have them. We have just the opposite.
Economic utility determines our desire for goods at a certain cost. When we make it more expensive to buy goods artificially (think VAT and sales taxes), then the utility of the goods drops and fewer are wanted. (This especially applies to Europe and the Dem's hope to get some cash out of Americans through a VAT tax.)
The Production equation says to add the costs of 'labor', 'capital' and 'raw materials'. So, what does the administration do? It raises the cost of labor in a globally competitive economy.
So each worker needs to be able to produce even more in order for the employer to pay a currently equivalent wage. This means more investment capital just as government borrowing is crowding out private. Taxes on capital and beating up on the banks and hedge funds doesn't help get lower cost capital to businesses either; etc.
(Clearly those who ignored the portents of the housing bubble are equally ignorant of the basic economics at work in the broader economy.)
Tuesday, June 22, 2010
Cameron Betting on Prosperity From Austerity; Obama Delays - Bloomberg
TAX INCREASES OR SPENDING CUTS TO STIMULATE THE ECONOMY - (RESULTS OF STUDY): Cameron Betting on Prosperity From Austerity; Obama Delays - Bloomberg
"... The key is an emphasis on cutting spending rather than raising taxes, said Goldman Sachs economists Broadbent and Daly in London. Lower spending means consumers and companies don’t fear higher taxes, so demand accelerates. A smaller public sector also helps reduce borrowing costs and makes economies more competitive as fewer government workers lighten labor expenses.
In a study of 44 large fiscal adjustments in 24 advanced economies since 1975, Broadbent and Daly discovered that reducing expenditures by 1 percentage point a year boosted average annual growth by 0.6 percentage point. Raising the ratio of taxes to GDP by the same margin cut growth by an average 0.9 percentage point.
The equity markets of the countries that sliced spending beat those of other advanced nations by 64 percent during a three-year period, and their bond yields fell by more than if budget adjustments had been driven by tax hikes, according to the report...."
"... The key is an emphasis on cutting spending rather than raising taxes, said Goldman Sachs economists Broadbent and Daly in London. Lower spending means consumers and companies don’t fear higher taxes, so demand accelerates. A smaller public sector also helps reduce borrowing costs and makes economies more competitive as fewer government workers lighten labor expenses.
In a study of 44 large fiscal adjustments in 24 advanced economies since 1975, Broadbent and Daly discovered that reducing expenditures by 1 percentage point a year boosted average annual growth by 0.6 percentage point. Raising the ratio of taxes to GDP by the same margin cut growth by an average 0.9 percentage point.
The equity markets of the countries that sliced spending beat those of other advanced nations by 64 percent during a three-year period, and their bond yields fell by more than if budget adjustments had been driven by tax hikes, according to the report...."
Sunday, June 20, 2010
BP Chief on the Hot Spot - Barrons.com
BARBARIANS AT THE GATE - AN ANALOGY TO ANCIENT ROME: BP Chief on the Hot Spot - Barrons.com
Somehow, in reading the first part of this article's cautionary reminders on the vagaries of the government, one is reminded of the fall of Rome. How can this be?
Well, first of all the politicians in Washington have to be seen as the barbarians. After all, they are the ones who want to despoil and take the accumulated wealth of the people (in the analogy, the people of Rome).
So the people of Rome are watching the barbarians around the periphery of the empire.
The barbarians raise taxes here, which is equivalent to capturing territory. However, in the analogy, the loss of jobs and economic capacity are the equivalent of actual land territory (as the barbarians descended into the Empire).
So what historical year are we? Is it the 3rd century AD or are we into the 4th century?
Clearly the equivalent of the Roman army (insightful laws and policies) are being crushed and crippled and reduced in their ability to support the economy (the equivalent of the army); yet, most people seem ignorant of the despoiling occasioned by the barbarians.
So, with barbarians at the gate, what will happen? Randy has given us the low inflation argument.
Stephen W. wrote:
We are in 64 AD. The Battle of the Teutoburg Forest has already taken place and we lost a legion (division) there. We have an arrogant and self-absorbed dictator who fiddles while Rome burns. Soon the scapegoats will be found and fed to the lions. But we still have 400 years ahead of us, so I'm long stocks, including those who drill for oil and natural gas.
Somehow, in reading the first part of this article's cautionary reminders on the vagaries of the government, one is reminded of the fall of Rome. How can this be?
Well, first of all the politicians in Washington have to be seen as the barbarians. After all, they are the ones who want to despoil and take the accumulated wealth of the people (in the analogy, the people of Rome).
So the people of Rome are watching the barbarians around the periphery of the empire.
The barbarians raise taxes here, which is equivalent to capturing territory. However, in the analogy, the loss of jobs and economic capacity are the equivalent of actual land territory (as the barbarians descended into the Empire).
So what historical year are we? Is it the 3rd century AD or are we into the 4th century?
Clearly the equivalent of the Roman army (insightful laws and policies) are being crushed and crippled and reduced in their ability to support the economy (the equivalent of the army); yet, most people seem ignorant of the despoiling occasioned by the barbarians.
So, with barbarians at the gate, what will happen? Randy has given us the low inflation argument.
Stephen W. wrote:
We are in 64 AD. The Battle of the Teutoburg Forest has already taken place and we lost a legion (division) there. We have an arrogant and self-absorbed dictator who fiddles while Rome burns. Soon the scapegoats will be found and fed to the lions. But we still have 400 years ahead of us, so I'm long stocks, including those who drill for oil and natural gas.
Tuesday, June 15, 2010
Hungary Goes For Growth - WSJ.com
Hungary Goes For Growth - WSJ.com
Socialists and liberals believe taxes don't impact behavior. One of the many reasons why the pending explosion of tax increases on producers (read: businesses and individuals with good incomes and likely owners or investors in businesses) isn't seen as one of the reasons jobs aren't being created in the US.
As the old saying goes, "There's none so blind as those that will not see".
Or, as a Polish friend used to say (but not sure of the spelling) "Svai blinda" (which meant "the blind leading the blind")
Socialists and liberals believe taxes don't impact behavior. One of the many reasons why the pending explosion of tax increases on producers (read: businesses and individuals with good incomes and likely owners or investors in businesses) isn't seen as one of the reasons jobs aren't being created in the US.
As the old saying goes, "There's none so blind as those that will not see".
Or, as a Polish friend used to say (but not sure of the spelling) "Svai blinda" (which meant "the blind leading the blind")
Saturday, June 12, 2010
Are we are on a road to economic recovery in mid-June 2010?
In terms of the economy, just another passing thought: other papers this weekend are highlighting the number of homes in foreclosure and those yet to be foreclosed upon but where homeowners are at least 60 days behind in payments.
As for me, it's hard to see how people in foreclosure or close to it are going to be out borrowing new funds or adding to retail sales growth - rather, just the opposite.
And, to add icing on the cake (and also perhaps to explain why retail sales have been holding up as well as they have - without massive increase in reported consumer debt), the report is out that ALL of the shrinkage in consumer debt is coming from consumers DEFAULTING on it. Concomitantly, the report goes on to say, those that haven't defaulted are actually adding to their debt.
Somehow - one wonders if this is really any kind of foundation for a recovery?
As for me, it's hard to see how people in foreclosure or close to it are going to be out borrowing new funds or adding to retail sales growth - rather, just the opposite.
And, to add icing on the cake (and also perhaps to explain why retail sales have been holding up as well as they have - without massive increase in reported consumer debt), the report is out that ALL of the shrinkage in consumer debt is coming from consumers DEFAULTING on it. Concomitantly, the report goes on to say, those that haven't defaulted are actually adding to their debt.
Somehow - one wonders if this is really any kind of foundation for a recovery?
Friday, June 11, 2010
The Consumption Balloon
In terms of employment, take a look at the 'labor conundrum' (to little of the wage cost goes to the employee) and the fact that we have geared the economy more everyday to the support of 'consumption' vs. 'investment'.
If one agrees that we need a better educated workforce, then allowing teachers unions to degrade the quality of education, while increasing substantially the cost, is but another dislocation!
Anyone with a bit of common sense knows government (esp. state and local) has been unionized and is out of control.
Bottom line is the US needs to focus on investment; but how does this happen when everyone's entitled to a free social lunch?
The consumption side of the economy is like a balloon, it's either going to burst (like housing, where prices were also illogical and unsustainable) or the excess is going to be let out more slowly.
Based on Obamacare, etc. - the let out slowly idea is off the table.
If one agrees that we need a better educated workforce, then allowing teachers unions to degrade the quality of education, while increasing substantially the cost, is but another dislocation!
Anyone with a bit of common sense knows government (esp. state and local) has been unionized and is out of control.
Bottom line is the US needs to focus on investment; but how does this happen when everyone's entitled to a free social lunch?
The consumption side of the economy is like a balloon, it's either going to burst (like housing, where prices were also illogical and unsustainable) or the excess is going to be let out more slowly.
Based on Obamacare, etc. - the let out slowly idea is off the table.
Thursday, June 10, 2010
House Readies Bill to Zero Out Capital-Gains Taxes on Small Firms - WSJ.com
TRICKS UP GOVERNMENT SLEEEVES: House Readies Bill to Zero Out Capital-Gains Taxes on Small Firms - WSJ.com
Somehow, the picture of trying to manipulate the economy as indicated by the above bill, is countered by all the other tax shenanigans (not least of which is the carried interest bill - which, somehow suggests you have 18 months or so to invest in a small business, but you better not have too much money or make to big an investment or be too successful - the liberals are out to tax you to pay for their programs).
The government can't bring itself to confront the real dilemma it has both inherited and blown out the ceiling on its own - which is the idea that people are entitled to benefits first. Then both by taxing anyone who is successful and running up government credit card like debts with no limit, somehow people should feel confident creating jobs and risking capital and be willing to invest long hours - maybe hoping for a big gain; but, with the real worry starring them in the face that any big gains will have to be sacrificed to government efforts to support outrageous union pensions, healthcare for non-producers, unaffordable early retirements, etc., etc., etc.
The deck is loaded against small business. Higher interest rates are only a matter of when, not if. And, it doesn't take a genius to figure out that Greek style policies are running a muck through the Democrats in Congress.
The Republicans have also not shown themselves in the past to have the stomach to rein in government spending - sadly, just the opposite.
So, the betting odds would seem to favor the need for much worse times to come before their could be even the hint of a political consensus to provide enough to the private sector to let it earn a rate of return that would justify job creation.
And, the cost of labor has to come down. Not in terms of direct wages, but in terms of government taxes and indirect costs mandated by government.
Will it happen? Sure looks like the small businessman is smart enough to know not to bet with charlatans!
Somehow, the picture of trying to manipulate the economy as indicated by the above bill, is countered by all the other tax shenanigans (not least of which is the carried interest bill - which, somehow suggests you have 18 months or so to invest in a small business, but you better not have too much money or make to big an investment or be too successful - the liberals are out to tax you to pay for their programs).
The government can't bring itself to confront the real dilemma it has both inherited and blown out the ceiling on its own - which is the idea that people are entitled to benefits first. Then both by taxing anyone who is successful and running up government credit card like debts with no limit, somehow people should feel confident creating jobs and risking capital and be willing to invest long hours - maybe hoping for a big gain; but, with the real worry starring them in the face that any big gains will have to be sacrificed to government efforts to support outrageous union pensions, healthcare for non-producers, unaffordable early retirements, etc., etc., etc.
The deck is loaded against small business. Higher interest rates are only a matter of when, not if. And, it doesn't take a genius to figure out that Greek style policies are running a muck through the Democrats in Congress.
The Republicans have also not shown themselves in the past to have the stomach to rein in government spending - sadly, just the opposite.
So, the betting odds would seem to favor the need for much worse times to come before their could be even the hint of a political consensus to provide enough to the private sector to let it earn a rate of return that would justify job creation.
And, the cost of labor has to come down. Not in terms of direct wages, but in terms of government taxes and indirect costs mandated by government.
Will it happen? Sure looks like the small businessman is smart enough to know not to bet with charlatans!
Health Care Option Shows Promise at a Cost - WSJ.com
Q&A: Health Care Option Shows Promise at a Cost - WSJ.com
Question:
Doesn't the healthcare customer need to feel the pain? Otherwise we'll ALL want BMW care, and we'll want someone else to pay for it. That's just not sustainable in a global free market. At some point, won't large employers just ship their labor-intensive work to India and Nepal, and leave our spoiled Americans unemployed?
Answer:
As for shipping jobs offshore, its already blatantly happening. Ford shipping jobs to Mexico was in yesterday's paper.
I saw in one of the projections on Obamacare that a family of four would be paying about $24,000 per year for healthcare.
It's like minimum wages - if the job is worth $3 per hour, then at $8 the job disappears.
(I recall in the late '80's a financial presentation by a major franchise owner. At the time, one of the interminable minimum wage debates was being raised. He told his audience, "look, if wages go up $1 per hour, then I'll just invest $10,000 in each of my fast food restaurants to let customers refill their own cups of soda." Well, both happened.
He also told his audience that the machines would let him eliminate at least one employee - i.e. fewer entry level jobs!
Etc., etc. this is one reason why it would seem as though we have a lot of worse times ahead.
Knuckling down and getting out of the way would seem a good strategy - and, as seen in Europe - all those promised social benefits aren't going to all be there! So, watch out retirees!
European youth haven't caught on, nor have those in America to what is really happening.
I recall how people used to take pride in the fact that parents were able to leave their children with better jobs and a better country to live in.
Clearly (even discussed in a recent article), the current view is that the future won't be any better - at best - and that the young should plan on paying for what their parents want to live on now! JUST ASTOUNDING!
Question:
Doesn't the healthcare customer need to feel the pain? Otherwise we'll ALL want BMW care, and we'll want someone else to pay for it. That's just not sustainable in a global free market. At some point, won't large employers just ship their labor-intensive work to India and Nepal, and leave our spoiled Americans unemployed?
Answer:
As for shipping jobs offshore, its already blatantly happening. Ford shipping jobs to Mexico was in yesterday's paper.
I saw in one of the projections on Obamacare that a family of four would be paying about $24,000 per year for healthcare.
It's like minimum wages - if the job is worth $3 per hour, then at $8 the job disappears.
(I recall in the late '80's a financial presentation by a major franchise owner. At the time, one of the interminable minimum wage debates was being raised. He told his audience, "look, if wages go up $1 per hour, then I'll just invest $10,000 in each of my fast food restaurants to let customers refill their own cups of soda." Well, both happened.
He also told his audience that the machines would let him eliminate at least one employee - i.e. fewer entry level jobs!
Etc., etc. this is one reason why it would seem as though we have a lot of worse times ahead.
Knuckling down and getting out of the way would seem a good strategy - and, as seen in Europe - all those promised social benefits aren't going to all be there! So, watch out retirees!
European youth haven't caught on, nor have those in America to what is really happening.
I recall how people used to take pride in the fact that parents were able to leave their children with better jobs and a better country to live in.
Clearly (even discussed in a recent article), the current view is that the future won't be any better - at best - and that the young should plan on paying for what their parents want to live on now! JUST ASTOUNDING!
U.S. Trade Deficit Expands - WSJ.com
FACT FROM FICTION: U.S. Trade Deficit Expands - WSJ.com
One really wonders whether even if consumers in the US should suddenly find large extra checks in the mail from Uncle Sam whether the goods demanded would be imported or produced domestically.
Certainly the policies of the government both now and as forecast for the future include lower net returns to businesses, entrepreneurs and investors and higher and higher costs for domestic labor, government and union retirement programs, etc., etc., etc. - none of this would seem to inspire especially small or mid-sized businesses to take on any additional risks. Nor would it or should it encourage banks to take on the 'staring you in the face risks' attendant to the governments fiscal, social and tax policies.
It may be well and good to focus on unused capacity in the US; but, if the capacity is now going to cost more to operate (as noted above with respect to costs and returns), then the hurtle number to utilize the capacity has a greater and greater gap.
Greece has shown that interest rate surprises come about quickly - much more quickly than the time it takes to amortize loans to re-initiate or start production.
But somehow, all these facts are just too unpleasant to enter into a lot of comments on the economy!
I liked the remark about interest on the debt now being $1 billion a day. Ask how much of that is American treasure being shipped out to Arab countries (to build new cities in the desert and fancy new airlines, etc.) and to China to support industrial development?
But heck, there are UAW pensions and now public union pensions and free healthcare to be provided by the government here in the US. So, let's borrow now and forget about tomorrow.
Sadly, those who look to the future are usually those who create jobs. Those with their hands on the taxpayer credit cards usually don't create jobs, they just no how to run up humongous bills.
One really wonders whether even if consumers in the US should suddenly find large extra checks in the mail from Uncle Sam whether the goods demanded would be imported or produced domestically.
Certainly the policies of the government both now and as forecast for the future include lower net returns to businesses, entrepreneurs and investors and higher and higher costs for domestic labor, government and union retirement programs, etc., etc., etc. - none of this would seem to inspire especially small or mid-sized businesses to take on any additional risks. Nor would it or should it encourage banks to take on the 'staring you in the face risks' attendant to the governments fiscal, social and tax policies.
It may be well and good to focus on unused capacity in the US; but, if the capacity is now going to cost more to operate (as noted above with respect to costs and returns), then the hurtle number to utilize the capacity has a greater and greater gap.
Greece has shown that interest rate surprises come about quickly - much more quickly than the time it takes to amortize loans to re-initiate or start production.
But somehow, all these facts are just too unpleasant to enter into a lot of comments on the economy!
I liked the remark about interest on the debt now being $1 billion a day. Ask how much of that is American treasure being shipped out to Arab countries (to build new cities in the desert and fancy new airlines, etc.) and to China to support industrial development?
But heck, there are UAW pensions and now public union pensions and free healthcare to be provided by the government here in the US. So, let's borrow now and forget about tomorrow.
Sadly, those who look to the future are usually those who create jobs. Those with their hands on the taxpayer credit cards usually don't create jobs, they just no how to run up humongous bills.
Wednesday, June 9, 2010
Health Care Option Shows Promise at a Cost - WSJ.com
Q&A: Health Care Option Shows Promise at a Cost - WSJ.com
William writes, "....the 'medical home' is a site where more than the traditional gatekeeper primary care activity can happen. The goal is to create a place where most care can be delivered in the right way, at the right time, and at a reasonable cost....Many of the monitoring and reimbursement schemes weren't possible when HMOs were first conceived. "
Response:
Hi William, thanks for all the particularly thoughtful comments on the medical home.
I recognize your parallel with new technological options - but, I'd still argue that in both cases, the Medical Home and HMO are quite parallel.
The biggest difference (which was brought out in the article) is that the Medical home is currently more expensive than standalone care plans.
However, all of the objectives of the medical home are there for HMOs with the added bonus that the HMO is targeting cost control. Competing HMOs let patients evaluate cost and quality of care tradeoffs to some extent.
My experience is more with healthcare and health insurance from the 1980's and early 1990's (in California).
I saw that incentives to have people pay more of a bill (50/50 vs 80/20 for example or the use of a health savings account) had a measurable impact on the cost of their insurance. The individual health care buyer made their own tradeoffs. Some wanted to save up front (insurance) and some wanted a higher insurance payout. Others took a look at different and modified versions of HMOs.
My concern is that we are giving away the store and to think that without a pricing component to balance out supply and demand and economic utility, the country will never be able to rein in healthcare. More and more is a cost borne by the government through taxes.
Thus, someone else is paying for a person's healthcare.
Our economy isn't growing (read the Laffer article on the liklihood of a double dip recession) and it needs to cut back consumption if it is going to have the wherewithal to invest capital into businesses that can create real jobs.
I have friends in the US closing their businesses to get a government job. This means their employees are out of work and they in fact often make more money with far fewer hassles.
There's the old economic maxim called "economic utility". The dreamers think society can afford whatever it takes to meet the utility desires of the poor, retired and out of work. Sadly, the net left for society to function and create jobs and wealth was too little under Bush (obfuscated in part by the housing bubble). Now it's evident in a jobless rebound with unspeakable budget deficits.
I know I'm not going to change anything. It's just interesting to see what happens when one goes on record and looks back years hence.
Cheers.
William writes, "....the 'medical home' is a site where more than the traditional gatekeeper primary care activity can happen. The goal is to create a place where most care can be delivered in the right way, at the right time, and at a reasonable cost....Many of the monitoring and reimbursement schemes weren't possible when HMOs were first conceived. "
Response:
Hi William, thanks for all the particularly thoughtful comments on the medical home.
I recognize your parallel with new technological options - but, I'd still argue that in both cases, the Medical Home and HMO are quite parallel.
The biggest difference (which was brought out in the article) is that the Medical home is currently more expensive than standalone care plans.
However, all of the objectives of the medical home are there for HMOs with the added bonus that the HMO is targeting cost control. Competing HMOs let patients evaluate cost and quality of care tradeoffs to some extent.
My experience is more with healthcare and health insurance from the 1980's and early 1990's (in California).
I saw that incentives to have people pay more of a bill (50/50 vs 80/20 for example or the use of a health savings account) had a measurable impact on the cost of their insurance. The individual health care buyer made their own tradeoffs. Some wanted to save up front (insurance) and some wanted a higher insurance payout. Others took a look at different and modified versions of HMOs.
My concern is that we are giving away the store and to think that without a pricing component to balance out supply and demand and economic utility, the country will never be able to rein in healthcare. More and more is a cost borne by the government through taxes.
Thus, someone else is paying for a person's healthcare.
Our economy isn't growing (read the Laffer article on the liklihood of a double dip recession) and it needs to cut back consumption if it is going to have the wherewithal to invest capital into businesses that can create real jobs.
I have friends in the US closing their businesses to get a government job. This means their employees are out of work and they in fact often make more money with far fewer hassles.
There's the old economic maxim called "economic utility". The dreamers think society can afford whatever it takes to meet the utility desires of the poor, retired and out of work. Sadly, the net left for society to function and create jobs and wealth was too little under Bush (obfuscated in part by the housing bubble). Now it's evident in a jobless rebound with unspeakable budget deficits.
I know I'm not going to change anything. It's just interesting to see what happens when one goes on record and looks back years hence.
Cheers.
Tuesday, June 8, 2010
G20 Channels Herbert Hoover - Up and Down Wall Street Daily - R. Forsyth - Barrons.com
WHAT REALLY HOLDS THE ECONOMY BACK: G20 Channels Herbert Hoover - Up and Down Wall Street Daily - R. Forsyth - Barrons.com
The above article tries to suggest that developed country governments should continue deficit spending to spur growth; but, it ignores a key variable, which is to set in place the conditions that will make investors want to invest and for entrepreneurs to build businesses?
It also ignores the fact that governments have been piling on to the labor component of production costs (labor+raw materials+capital) additional charges that distort the labor component. Part of the distortion is to channel the fruits of labor to 'non-producers' (retirement benefits, etc.).
Thus, the government may be trying to get the economy going by borrowing; but, it is pushing on a string because of the road blocks and inhibitors of the fiscal policies and social policies that governments have created.
(Communism in Eastern Europe is an extreme example of what happens with out of control social policies in terms of dampening down economic activity.)
The drag of fiscally based tax and social policies needs to be addressed. The current government spending won't work (e.g. Pimco's 'new normal')
The above article tries to suggest that developed country governments should continue deficit spending to spur growth; but, it ignores a key variable, which is to set in place the conditions that will make investors want to invest and for entrepreneurs to build businesses?
It also ignores the fact that governments have been piling on to the labor component of production costs (labor+raw materials+capital) additional charges that distort the labor component. Part of the distortion is to channel the fruits of labor to 'non-producers' (retirement benefits, etc.).
Thus, the government may be trying to get the economy going by borrowing; but, it is pushing on a string because of the road blocks and inhibitors of the fiscal policies and social policies that governments have created.
(Communism in Eastern Europe is an extreme example of what happens with out of control social policies in terms of dampening down economic activity.)
The drag of fiscally based tax and social policies needs to be addressed. The current government spending won't work (e.g. Pimco's 'new normal')
Saturday, June 5, 2010
May's Big Selloff Could Be Just the Beginning - WSJ.com
PAYING FOR LUNCH: May's Big Selloff Could Be Just the Beginning - WSJ.com
This article also fails to address the big shifts in the reward for labor from the laborer to government. And, government then deciding how to redistribute these rewards.
As such, the laborer complains that they aren't seeing any additional income, whereas, in fact, the income is being taxed and charged away to feed government social programs.
This overtaxing was somewhat obscured under Bush with tax cuts and then the housing bubble. However, now, the government under Obama and Pelosi is trying to further blow out the bubble of government entitlements and government benefits.
As a result, not only is the allocation of the income from production going further down against the worker, the government's borrowing is taking capital out of the private economy.
Thus, corporations have cut back staff to maintain profits in 2009. But, looking ahead, all they see is more taxes and additional costs on investment.
This is not the picture that produces jobs or a revived economy.
Clearly the Democrats feel they can tax and tax and tax without any impact on the behavior of business or consumers.
But, this is clearly not turning out to be the case. And, as the government builds up a bigger and bigger debt, there is clearly a time when the lenders will "pull-a-Greek" and demand higher interest.
It's hard not to see the administration's policies as other than the band playing on the Titanic. Sadly, the administration can't imagine there is anything wrong with socialism; and, they can't see the evidence surrounding them.
Hard to believe the stock market won't wake up and reflect this - at some point!
This article also fails to address the big shifts in the reward for labor from the laborer to government. And, government then deciding how to redistribute these rewards.
As such, the laborer complains that they aren't seeing any additional income, whereas, in fact, the income is being taxed and charged away to feed government social programs.
This overtaxing was somewhat obscured under Bush with tax cuts and then the housing bubble. However, now, the government under Obama and Pelosi is trying to further blow out the bubble of government entitlements and government benefits.
As a result, not only is the allocation of the income from production going further down against the worker, the government's borrowing is taking capital out of the private economy.
Thus, corporations have cut back staff to maintain profits in 2009. But, looking ahead, all they see is more taxes and additional costs on investment.
This is not the picture that produces jobs or a revived economy.
Clearly the Democrats feel they can tax and tax and tax without any impact on the behavior of business or consumers.
But, this is clearly not turning out to be the case. And, as the government builds up a bigger and bigger debt, there is clearly a time when the lenders will "pull-a-Greek" and demand higher interest.
It's hard not to see the administration's policies as other than the band playing on the Titanic. Sadly, the administration can't imagine there is anything wrong with socialism; and, they can't see the evidence surrounding them.
Hard to believe the stock market won't wake up and reflect this - at some point!
Friday, June 4, 2010
Red Decal Has N.J. Teens Seeing Red - WSJ.com
Q&A: Red Decal Has N.J. Teens Seeing Red - WSJ.com
Question: "Isn't it true that those that subscribe to the authoritarian mind-set such as the current Leftist Culture (I know, I repeat myself), there can never be too much control."
Answer:
Sadly, the religious right is probably the worst offender in terms of trying to legislate their questionable (at best) moral agenda.
As for liberals, they seem to think they can legislate processes to ensure an easy and mindless life.
So, the Republicans take your rights (e.g. abortion, drug laws, etc.) that cost money; and, the Dems do the same by their social entitlement spending.
We need a third way. But, I'm sure not seeing it.
Meanwhile, the money that could be invested in jobs is going to social consumption; and, the Dems seem perplexed. They fail to see how their economic model bankrupted GM and has failed in Greece.
The Republicans don't seem to be able to articulate any meaningful alternative. And, people wonder why no one is investing in jobs?
Ah well. Somehow 2+2 always equals 4. It's just a matter of knowing how to frame the equation correctly.
Question: "Isn't it true that those that subscribe to the authoritarian mind-set such as the current Leftist Culture (I know, I repeat myself), there can never be too much control."
Answer:
Sadly, the religious right is probably the worst offender in terms of trying to legislate their questionable (at best) moral agenda.
As for liberals, they seem to think they can legislate processes to ensure an easy and mindless life.
So, the Republicans take your rights (e.g. abortion, drug laws, etc.) that cost money; and, the Dems do the same by their social entitlement spending.
We need a third way. But, I'm sure not seeing it.
Meanwhile, the money that could be invested in jobs is going to social consumption; and, the Dems seem perplexed. They fail to see how their economic model bankrupted GM and has failed in Greece.
The Republicans don't seem to be able to articulate any meaningful alternative. And, people wonder why no one is investing in jobs?
Ah well. Somehow 2+2 always equals 4. It's just a matter of knowing how to frame the equation correctly.
Jobs Report: Bad - MarketBeat - WSJ
SHOULDN'T BE SURPRISED: Jobs Report: Bad - MarketBeat - WSJ
As Bill Gross said on Bloomberg today - we shouldn't be surprised with this jobs report.
The government has followed a program of borrowing to support consumption and is not supporting investment into job creation.
It's the old Democratic Keynesian belief that higher taxes and don't impact investment decision-making and that businesses will create jobs no matter how much money is taken from them to support social programs.
Clearly, the Democrats are blind to what such policies have wrought in Europe - because, it doesn't fit in with their redistributionist beliefs of the belief of unions that labor costs don't matter to job creation or job sustainability. Well, maybe it will be harder for Dems to argue that their policies are working as time goes on; but, meanwhile, those who'd rather work than rely on government handouts are having to suffer.
As Bill Gross said on Bloomberg today - we shouldn't be surprised with this jobs report.
The government has followed a program of borrowing to support consumption and is not supporting investment into job creation.
It's the old Democratic Keynesian belief that higher taxes and don't impact investment decision-making and that businesses will create jobs no matter how much money is taken from them to support social programs.
Clearly, the Democrats are blind to what such policies have wrought in Europe - because, it doesn't fit in with their redistributionist beliefs of the belief of unions that labor costs don't matter to job creation or job sustainability. Well, maybe it will be harder for Dems to argue that their policies are working as time goes on; but, meanwhile, those who'd rather work than rely on government handouts are having to suffer.
Thursday, June 3, 2010
Robert L. Pollock: Erdogan and the Decline of the Turks - WSJ.com
Robert L. Pollock: Erdogan and the Decline of the Turks - WSJ.com
Thanks for the good article.
It further emphasizes the risks posed by a world in which science creates great opportunities for productive, advanced ways of life that are resisted vigorously (and more vigorously) by religious societies that see myth and mystery their only way to hold onto control of populations that provide them succor.
As such, the disparity between not just rich-and-poor, but enlighted-and-unenlightened will grow.
What the result will be is worthy of discussion now.
Liberals may think they can buy off the unenlightened (e.g. Gaza and Hamas) by letting them have a small country (e.g. Israel), but let's hope the Israelis don't give up so easily!
Thanks for the good article.
It further emphasizes the risks posed by a world in which science creates great opportunities for productive, advanced ways of life that are resisted vigorously (and more vigorously) by religious societies that see myth and mystery their only way to hold onto control of populations that provide them succor.
As such, the disparity between not just rich-and-poor, but enlighted-and-unenlightened will grow.
What the result will be is worthy of discussion now.
Liberals may think they can buy off the unenlightened (e.g. Gaza and Hamas) by letting them have a small country (e.g. Israel), but let's hope the Israelis don't give up so easily!
The Blue Dogs Roll Over - WSJ.com
The Blue Dogs Roll Over - WSJ.com
Meanwhile, the media and financial commentators seem to be giving the economy a free pass - much like they did during the housing bubble.
The question is never asked: where will new jobs come from when all the money is being borrowed by government? Greece showed us what happened with Pelosi-type policies, but the press seems to prefer the 'ostrich' approach to doing the math.
And, the congressmen the other day berate Warren Buffet for not doing more to find out what is going on with the rating agencies - because, unsaid, is the fact that the government (i.e. the SEC) again failed to do its job as the regulator of these agencies. Such a double-standard!
Meanwhile, the media and financial commentators seem to be giving the economy a free pass - much like they did during the housing bubble.
The question is never asked: where will new jobs come from when all the money is being borrowed by government? Greece showed us what happened with Pelosi-type policies, but the press seems to prefer the 'ostrich' approach to doing the math.
And, the congressmen the other day berate Warren Buffet for not doing more to find out what is going on with the rating agencies - because, unsaid, is the fact that the government (i.e. the SEC) again failed to do its job as the regulator of these agencies. Such a double-standard!
Tuesday, June 1, 2010
William McGurn: Gallup's Pro-Life America - WSJ.com
EXCORIATION NOT ACKNOWLEDGMENT: William McGurn: Gallup's Pro-Life America - WSJ.com
The "anti-abortion" (let's give up the "pro-life" moniker) are really more like the people who thought "the world was flat".
They believe what they have 'cherry-picked' from their bible (or, more to the point, those who manipulate them have picked from the Bible) and they take it as 'such a complete truth', that their opinion has to 'forced' on society.
In this idea of 'forcing a religious point of view on society', they are totally in sync with today's Islamic radicals. So, we've got our own Christian crazies!
As for the belief that the world could be anything but flat, history teaches us religious authorities had no trouble at all burning people at the stake for such outrageous utterances in the 15th century.
So, as to whether the media should accept and pander to those whose belief systems should in fact be outlawed (i.e. the anti-abortionists) is as evil as allowing any wrong beliefs to be taught. It maybe that the world is flat and abortion is wrong; but, a more scientific view would be allow opposite knowledge and beliefs to have equal weight! And, this the Christian right can't countenance.
They deserve excoriation in the media, not acknowledgment.
The "anti-abortion" (let's give up the "pro-life" moniker) are really more like the people who thought "the world was flat".
They believe what they have 'cherry-picked' from their bible (or, more to the point, those who manipulate them have picked from the Bible) and they take it as 'such a complete truth', that their opinion has to 'forced' on society.
In this idea of 'forcing a religious point of view on society', they are totally in sync with today's Islamic radicals. So, we've got our own Christian crazies!
As for the belief that the world could be anything but flat, history teaches us religious authorities had no trouble at all burning people at the stake for such outrageous utterances in the 15th century.
So, as to whether the media should accept and pander to those whose belief systems should in fact be outlawed (i.e. the anti-abortionists) is as evil as allowing any wrong beliefs to be taught. It maybe that the world is flat and abortion is wrong; but, a more scientific view would be allow opposite knowledge and beliefs to have equal weight! And, this the Christian right can't countenance.
They deserve excoriation in the media, not acknowledgment.
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