Q&A: HENRY FORD: Consumer Worries Overshadow Profits - WSJ.com:
Question:
"We seem to be regressing to a pre-Henry Ford economy, in which business delights in selling to business.
Remember Henry? He discovered that, if you have something useful to make (in his case cars), if you pay your workers a living wage, and if your treat your customers fairly, then your workers and their peers become your customers, markets grow, and everybody wins.
Our business leaders, especially in finance, seem to have forgotten all about Henry. They're unwinding his discoveries and, in the process, the American dream.
When the pie gets smaller, everybody loses. Isn't something wrong?
Answer:
One needs to look at the big picture and what has happened as government has grown bigger since Henry Ford's day.
In Henry's day the government didn't come in and say that for every $1 (remember the old $5 a day wage in 1914) that the government wanted $4. So Henry would have said - "Gee, I'd like to pay you $5 but the government is going to make it cost me $25".
And, then the worker, who is 'maybe' getting $5 is going to find that the cost of the car has had to go up too! So instead of, say $400 (I don't recall the car cost then), the car might cost $2,000.
And, then of course there are taxes and regulatory changes that are now impacting the cost of capital - so, maybe Henry has to add another $1,000 to the cost of the car to cover that. (Think heavy government borrowing, the 'blame Wall Street and the banks for everything' attitude and the new regulatory bill.)
So yes, Henry was able to let the free market work; but, Obama has been taking to new levels the government's distortion of the free market. Supply and demand is grossly distorted.
So, don't blame business - look at the real source of the problem -> government and unions!
Wednesday, July 28, 2010
Consumer Worries Overshadow Profits - WSJ.com
Q&A: BUSH?:Consumer Worries Overshadow Profits - WSJ.com: "*
Question:
Why was there not huge job growth (other than the housing construction bubble) created by the pro-business Bush administration?
I'm in the electronics industry where jobs have been shifting overseas since LONG before Obama came to office.
Answer:
The economy has been changing and Bush's tax cuts helped to create new jobs to replace old ones.
However, Bush didn't want to take on the unions and entitlements (which of course are now blowing out of the water under Obama, Pelosi and Reid).
The fact that Bush didn't do enough (including handling making the US a more business-friendly environment) shouldn't obscure the need for this to be done.
Right now, under Obama, the situation is vastly worse. What Bush may have ignored, Obama is culpably exacerbating.
Question:
Why was there not huge job growth (other than the housing construction bubble) created by the pro-business Bush administration?
I'm in the electronics industry where jobs have been shifting overseas since LONG before Obama came to office.
Answer:
The economy has been changing and Bush's tax cuts helped to create new jobs to replace old ones.
However, Bush didn't want to take on the unions and entitlements (which of course are now blowing out of the water under Obama, Pelosi and Reid).
The fact that Bush didn't do enough (including handling making the US a more business-friendly environment) shouldn't obscure the need for this to be done.
Right now, under Obama, the situation is vastly worse. What Bush may have ignored, Obama is culpably exacerbating.
Tuesday, July 27, 2010
Uncertainty Stifles Business Spending and Hiring. - Barrons.com
DOING JUST ABOUT EVERYTHING TO DESTROY JOB CREATION: Uncertainty Stifles Business Spending and Hiring. - Barrons.com: "- Sent using Google Toolbar"
Let's see?
Obama's policies raise the cost of labor (when it needs to be reduced).
Obama's policies raise the risk level for any investment (which means the projected return has to be higher).
Obama's policies keep taxes high and raise them when, corporately, the US had too high a rate.
As for personal income taxes, again, for the entrepreneur US taxes are too high (except compared to Europe and look at business in Europe).
As for the ease of bringing in workers from overseas, Obama's policies are akin to Bushes - i.e. very discouraging for expansion in the US.
So, net, labor costs, finance costs, risk adjusted returns are all going in the wrong direction. Adding in the fact that the world has competitor nations and economies that are going in the opposite direction to the US, the picture for the US economy looks worse than stagnant - it looks to be heading down.
After all, if labor, capital and regulatory risk are reduced for competitors to US domestic manufacturing, what choice do US companies have? The result is exactly what is seen - both official unemployed and acknowledged discouraged workers, stagnant at best wages, fear, etc.
Hello brave new socialist paradise.
Let's see?
Obama's policies raise the cost of labor (when it needs to be reduced).
Obama's policies raise the risk level for any investment (which means the projected return has to be higher).
Obama's policies keep taxes high and raise them when, corporately, the US had too high a rate.
As for personal income taxes, again, for the entrepreneur US taxes are too high (except compared to Europe and look at business in Europe).
As for the ease of bringing in workers from overseas, Obama's policies are akin to Bushes - i.e. very discouraging for expansion in the US.
So, net, labor costs, finance costs, risk adjusted returns are all going in the wrong direction. Adding in the fact that the world has competitor nations and economies that are going in the opposite direction to the US, the picture for the US economy looks worse than stagnant - it looks to be heading down.
After all, if labor, capital and regulatory risk are reduced for competitors to US domestic manufacturing, what choice do US companies have? The result is exactly what is seen - both official unemployed and acknowledged discouraged workers, stagnant at best wages, fear, etc.
Hello brave new socialist paradise.
Home Prices Rose in May - WSJ.com
Q&A: Can't we blame the rich?: Home Prices Rose in May - WSJ.com: "- Sent using Google Toolbar"
Question: Shouldn't we blame the rich for all our problems? After all, before Obama, Bush gave every tax cut known to Republican kind while business and the wealthy who prospered from it drove the economy into the ground in the name of wanting more.
Answer:
You certainly believe in an ax to grind that lacks any understanding of basic economics.
To wit, you might consider that the US is in a globally competitive economy with vast numbers of better educated, harder working people who work for vastly lower salaries and benefits.
As such, how do you expect those Americans who earn outsized global salaries and benefits to keep their jobs?
You may feel that those who retain globally competitive jobs are cheating those who don't - but, it's still a reasonably free market where people compete for jobs (even in the US). This is rather evident from the number of applicants per job as reported in the press.
You may also be unfamiliar with the concept of the average amount of capital behind an average job in a society. In the 1970's the figure for the US was about $50,000. (I don't know the current figure.)
Clearly as the cost of non-salary compensation (e.g. retirement pay, healthcare, workmen's compensation and unemployment insurance) escalate, the cost per job increases and the employee has to produce more and more value for the employer. (Look up the "labor conundrum" to see how this distorts economic and labor productivity.)
The biggest problem you should be concerned with isn't rewarding investors and business people but the fact that the laws and regulatory environment are raising the costs of investing and doing business in America while the little guy (the one who wants a job) is being lied to about why businesses don't want to locate in America.
Take a look at someone you pay for a service or a product you buy. Now double or triple the cost and ask yourself if you'd still buy the same good or service (or could afford to). This is the problem the government is presenting to the business person in America. Labor is too expensive (particularly indirect labor costs) and the net, after tax, risk-adjusted return on capital cost has risen to the point where investing in America (compared to other parts of the world) keeps going up.
Just consider that Europe faces an even worse situation in old Europe than in the US due to the high taxes. But other countries, such as the new Europe (e.g. Czech Republic) recognize they want jobs and entrepreneurs to come to the country and flourish - so they have a maximum income tax rate of 15%.
Frankly, I see the US as punishing the rich and investors and, as a result, they are being forced to look elsewhere.
(Consider the case of 2 entrepreneurs, 1 in America with a 50% plus tax rate and 1 in Asia paying 15%. After a few years, who is going to have the greater resources left to invest in their business, pay for research and hire employees and sell their products for less. Unless you have total blinders on, you'd have to say the entrepreneur that keeps more of their money.)
Sorry, you've bought the Administration's line about the problem being someone other than the government. The US is getting what it's policies are asking for - fewer jobs and likely a second dip in the economy.
Question: Shouldn't we blame the rich for all our problems? After all, before Obama, Bush gave every tax cut known to Republican kind while business and the wealthy who prospered from it drove the economy into the ground in the name of wanting more.
Answer:
You certainly believe in an ax to grind that lacks any understanding of basic economics.
To wit, you might consider that the US is in a globally competitive economy with vast numbers of better educated, harder working people who work for vastly lower salaries and benefits.
As such, how do you expect those Americans who earn outsized global salaries and benefits to keep their jobs?
You may feel that those who retain globally competitive jobs are cheating those who don't - but, it's still a reasonably free market where people compete for jobs (even in the US). This is rather evident from the number of applicants per job as reported in the press.
You may also be unfamiliar with the concept of the average amount of capital behind an average job in a society. In the 1970's the figure for the US was about $50,000. (I don't know the current figure.)
Clearly as the cost of non-salary compensation (e.g. retirement pay, healthcare, workmen's compensation and unemployment insurance) escalate, the cost per job increases and the employee has to produce more and more value for the employer. (Look up the "labor conundrum" to see how this distorts economic and labor productivity.)
The biggest problem you should be concerned with isn't rewarding investors and business people but the fact that the laws and regulatory environment are raising the costs of investing and doing business in America while the little guy (the one who wants a job) is being lied to about why businesses don't want to locate in America.
Take a look at someone you pay for a service or a product you buy. Now double or triple the cost and ask yourself if you'd still buy the same good or service (or could afford to). This is the problem the government is presenting to the business person in America. Labor is too expensive (particularly indirect labor costs) and the net, after tax, risk-adjusted return on capital cost has risen to the point where investing in America (compared to other parts of the world) keeps going up.
Just consider that Europe faces an even worse situation in old Europe than in the US due to the high taxes. But other countries, such as the new Europe (e.g. Czech Republic) recognize they want jobs and entrepreneurs to come to the country and flourish - so they have a maximum income tax rate of 15%.
Frankly, I see the US as punishing the rich and investors and, as a result, they are being forced to look elsewhere.
(Consider the case of 2 entrepreneurs, 1 in America with a 50% plus tax rate and 1 in Asia paying 15%. After a few years, who is going to have the greater resources left to invest in their business, pay for research and hire employees and sell their products for less. Unless you have total blinders on, you'd have to say the entrepreneur that keeps more of their money.)
Sorry, you've bought the Administration's line about the problem being someone other than the government. The US is getting what it's policies are asking for - fewer jobs and likely a second dip in the economy.
Monday, July 26, 2010
Health Law Augurs Transfer of Funds From Old to Young - WSJ.com
LESS OF A FUTURE: Health Law Augurs Transfer of Funds From Old to Young - WSJ.com: "- Sent using Google Toolbar"
What everyone (almost) should be irate about (of course they can't see it and aren't being told about it) is that by expanding the role of government in society, the ability of the society to grow is reduced. Thus, the pie may shrink absolutely, shrink on a per capita basis or it may grow way below its potential.
In this way, all young people will have fewer opportunities and, as now, the inability to live as well as their parents.
Will people see that their entire lives become circumscribed? Who knows.
What everyone (almost) should be irate about (of course they can't see it and aren't being told about it) is that by expanding the role of government in society, the ability of the society to grow is reduced. Thus, the pie may shrink absolutely, shrink on a per capita basis or it may grow way below its potential.
In this way, all young people will have fewer opportunities and, as now, the inability to live as well as their parents.
Will people see that their entire lives become circumscribed? Who knows.
Thursday, July 22, 2010
The Markets & The 'Teen Drama Economy' - MarketBeat - WSJ
The Markets & The 'NON-SEX-ED ECONOMIC POLICIES: Teen Drama Economy' - MarketBeat - WSJ: "- Sent using Google Toolbar"
Isn't the question more like that of the (idiotic) parent who believes they can tell the kid not to masturbate and think the message gets through?
There are tons of things that the masters of the economy and the law need to address - all of which are geared to support the unproductive and the 'entitled' (read: religiously prescripted) vs. those with a hand on reality and producers.
It reminds me of the Chicago school program years ago that didn't want to teach sex education amidst an upswing in teen pregnancies. A 16 (or so) aged girl was interviewed on TV and her comment was something like "well, my boyfriend said I wouldn't get pregnant 'that way'"!
Oh yeah, we'll create jobs with current Democratic policies!
Isn't the question more like that of the (idiotic) parent who believes they can tell the kid not to masturbate and think the message gets through?
There are tons of things that the masters of the economy and the law need to address - all of which are geared to support the unproductive and the 'entitled' (read: religiously prescripted) vs. those with a hand on reality and producers.
It reminds me of the Chicago school program years ago that didn't want to teach sex education amidst an upswing in teen pregnancies. A 16 (or so) aged girl was interviewed on TV and her comment was something like "well, my boyfriend said I wouldn't get pregnant 'that way'"!
Oh yeah, we'll create jobs with current Democratic policies!
Bernanke Signals Continued Low Interest Rates - Barrons.com
MR > TITANIC BAND LEADER: Bernanke Signals Continued Low Interest Rates - Barrons.com: "- Sent using Google Toolbar"
Seemingly, what Bernanke can't say (and perhaps has to block form his mind) is that the policies from the Congress and White House will be accelerating any jobs created to move outside the country.
Yes, companies may do reasonably well. After all, they are nothing but abstract impersonal entities that are charged with providing affordable goods and services to a global (and globally competitive) market.
But, the angst resplendent in comment after comment in the WSJ is that these companies should care about American's who need (good paying) jobs.
However, when people buy goods and services they are looking for value for money, which usually means the lowest priced equivalent product.
The US tax, regulatory, immigration and labor policies make this a joke. Bernanke doesn't say it; much of the world is still thinking about the US as it was, not as it is.
But, the true job picture tells a different story. (As friends from Europe say, the US calculates unemployment statistics in an almost opposite way to Europe - i.e. in the US, if you've given up hope, you're no longer unemployed; in Europe, if you can't get welfare anymore, then you register as unemployed and have to take jobs the labor office finds you.
One does feel that in the US one is listening to the equivalent of the band on the Titanic, an hour or so after it struck the iceberg - but, high on cocaine (or similar) everything seems a-ok.
Seemingly, what Bernanke can't say (and perhaps has to block form his mind) is that the policies from the Congress and White House will be accelerating any jobs created to move outside the country.
Yes, companies may do reasonably well. After all, they are nothing but abstract impersonal entities that are charged with providing affordable goods and services to a global (and globally competitive) market.
But, the angst resplendent in comment after comment in the WSJ is that these companies should care about American's who need (good paying) jobs.
However, when people buy goods and services they are looking for value for money, which usually means the lowest priced equivalent product.
The US tax, regulatory, immigration and labor policies make this a joke. Bernanke doesn't say it; much of the world is still thinking about the US as it was, not as it is.
But, the true job picture tells a different story. (As friends from Europe say, the US calculates unemployment statistics in an almost opposite way to Europe - i.e. in the US, if you've given up hope, you're no longer unemployed; in Europe, if you can't get welfare anymore, then you register as unemployed and have to take jobs the labor office finds you.
One does feel that in the US one is listening to the equivalent of the band on the Titanic, an hour or so after it struck the iceberg - but, high on cocaine (or similar) everything seems a-ok.
Wednesday, July 21, 2010
Bernanke Signals No Policy Shift - WSJ.com
LOGIC VS. LA-LA-LAND: Bernanke Signals No Policy Shift - WSJ.com: "- Sent using Google Toolbar"
Let's ponder?
If 'number of jobs' is equivalent to the 'total labor expense / cost of labor' in the production equation;
and, if 'production' is really equivalent to the price at which goods can be sold (with some elasticity of demand);
and, if 'cost of capital' includes the idea of the necessary after-tax return on capital required by investors;
then,
when one looks at the production equation:
production = cost of labor + cost of capital + cost of raw materials
it would sure seem that the administration has raised the cost of labor and capital and is pushing against the value at which goods can be sold. And, if US production can be substituted for with foreign production (goods from China or India, say), then it's hard to believe that the US production capacity doesn't have to shrink.
And, gee, that's exactly what's staring us in the face.
(And, should the Senator harping about the Chinese yuan revaluation be other than drunk or stoned, it's hard to believe there aren't other countries that won't substitute their low cost production for, should it be, the higher cost production from China. But, these people must have been trained for the law and not business, economics or finance.)
Let's ponder?
If 'number of jobs' is equivalent to the 'total labor expense / cost of labor' in the production equation;
and, if 'production' is really equivalent to the price at which goods can be sold (with some elasticity of demand);
and, if 'cost of capital' includes the idea of the necessary after-tax return on capital required by investors;
then,
when one looks at the production equation:
production = cost of labor + cost of capital + cost of raw materials
it would sure seem that the administration has raised the cost of labor and capital and is pushing against the value at which goods can be sold. And, if US production can be substituted for with foreign production (goods from China or India, say), then it's hard to believe that the US production capacity doesn't have to shrink.
And, gee, that's exactly what's staring us in the face.
(And, should the Senator harping about the Chinese yuan revaluation be other than drunk or stoned, it's hard to believe there aren't other countries that won't substitute their low cost production for, should it be, the higher cost production from China. But, these people must have been trained for the law and not business, economics or finance.)
The View From Bernanke's Perch at the Fed - WSJ.com
Q&A: CART AND HORSE: The View From Bernanke's Perch at the Fed - WSJ.com: "- Sent using Google Toolbar"
Question:
People keep saying that an "anti-business" climate in Washington is preventing the private sector from putting unemployed Americans back to work. That's nonsense. Isn't it that businesses aren't hiring because the economy isn't looking very good?
Answer:
What also needs to be considered is that the 1970's was also a relative poor climate for business fiscally.
If you recall one of the issues in the 1980 election - the Democrats thought the economy couldn't grow, so they were only concerned about redistribution; the Republicans under Reagan however saw lower taxes and less regulation as a way in which business could grow.
We all know Reagan won and we all know that that economy did grow again.
You are right in terms of what business is doing now (above); however, the causes are in part that the US economy has to undergo changes which much of it is ill-equipped and opposed to doing (not too dissimilar to the 1970's and 80's (remember junk bonds?).
And today, the incentives for the economy and businesses to grow are all working against supporting the business community.
The 'cart' of a poor business climate is being led by the 'horse' of abominable fiscal and other anti-business policies.
Question:
People keep saying that an "anti-business" climate in Washington is preventing the private sector from putting unemployed Americans back to work. That's nonsense. Isn't it that businesses aren't hiring because the economy isn't looking very good?
Answer:
What also needs to be considered is that the 1970's was also a relative poor climate for business fiscally.
If you recall one of the issues in the 1980 election - the Democrats thought the economy couldn't grow, so they were only concerned about redistribution; the Republicans under Reagan however saw lower taxes and less regulation as a way in which business could grow.
We all know Reagan won and we all know that that economy did grow again.
You are right in terms of what business is doing now (above); however, the causes are in part that the US economy has to undergo changes which much of it is ill-equipped and opposed to doing (not too dissimilar to the 1970's and 80's (remember junk bonds?).
And today, the incentives for the economy and businesses to grow are all working against supporting the business community.
The 'cart' of a poor business climate is being led by the 'horse' of abominable fiscal and other anti-business policies.
Tuesday, July 20, 2010
Martin Feldstein: The 'Tax Expenditure' Solution for Our National Debt - WSJ.com
BEYOND STUPID: Martin Feldstein: The 'Tax Expenditure' Solution for Our National Debt - WSJ.com: "- Sent using Google Toolbar"
What puzzles me is why any expense of a household to support the work of the income earner isn't deductible - in particular, this would include any kind of servants and staff.
After all, how many smart, educated, talented and trained individuals decide to stay home because the net return from working doesn't compute tax wise.
Meanwhile, a number of people that could fulfill such domestic support functions have no work. And, many of the people who could provide jobs to these people and have the skills to compete on a global job market decide the after-tax benefits are greater for not working.
Can anything be more insidiously stupid?
What puzzles me is why any expense of a household to support the work of the income earner isn't deductible - in particular, this would include any kind of servants and staff.
After all, how many smart, educated, talented and trained individuals decide to stay home because the net return from working doesn't compute tax wise.
Meanwhile, a number of people that could fulfill such domestic support functions have no work. And, many of the people who could provide jobs to these people and have the skills to compete on a global job market decide the after-tax benefits are greater for not working.
Can anything be more insidiously stupid?
Letters to the Editor: Real Wages Don't Tell the Whole Compensation Story - WSJ.com
DOWN TO BASICS: Letters to the Editor: Real Wages Don't Tell the Whole Compensation Story - WSJ.com: "- Sent using Google Toolbar"
The best equation I know of is that "production = labor + capital + raw materials".
If production is equal to the price at which the market will buy a product, then the other factors all need to be considered to make the production cost competitive.
This of course is what is totally ignored by the Democratic bills that are increasing the cost of labor (so many bills), the cost of capital (the new financial reform bill comes to mind plus the open ended increases to taxes) and the cost of raw materials (here the misguided pandering to environmentalists is clearly increasing this cost for energy).
So, if the production cost in the US can't be competitive, it is hard to see how job growth in the US can take root.
Clearly, the Administration and Congress are blind to the realities of this type of production equation (as was and I am rather confident is the UAW, etc.).
The best equation I know of is that "production = labor + capital + raw materials".
If production is equal to the price at which the market will buy a product, then the other factors all need to be considered to make the production cost competitive.
This of course is what is totally ignored by the Democratic bills that are increasing the cost of labor (so many bills), the cost of capital (the new financial reform bill comes to mind plus the open ended increases to taxes) and the cost of raw materials (here the misguided pandering to environmentalists is clearly increasing this cost for energy).
So, if the production cost in the US can't be competitive, it is hard to see how job growth in the US can take root.
Clearly, the Administration and Congress are blind to the realities of this type of production equation (as was and I am rather confident is the UAW, etc.).
Monday, July 19, 2010
Deutsche Bank Chief to Asia: Avoid West's Levies - WSJ.com
US BLIND TO CONSEQUENCES: Deutsche Bank Chief to Asia: Avoid West's Levies - WSJ.com: "- Sent using Google Toolbar"
There is certainly one thing that socialists and populists abhor and try to ignore - and that is competition.
Clearly the US is going down a two-lane road going in the wrong direction: in one lane, it is creating an increasingly less job friendly and a more anti-business climate; in the other lane, it is going after any money it can find to support its gargantuan appetite for government largess.
One wonders if the US is even replacing its capital stock used up each year. One kind of doubts it. But these are issues the current administration couldn't understand. Oh my, it's like speaking Chinese to them (and they only understand American English).
There is certainly one thing that socialists and populists abhor and try to ignore - and that is competition.
Clearly the US is going down a two-lane road going in the wrong direction: in one lane, it is creating an increasingly less job friendly and a more anti-business climate; in the other lane, it is going after any money it can find to support its gargantuan appetite for government largess.
One wonders if the US is even replacing its capital stock used up each year. One kind of doubts it. But these are issues the current administration couldn't understand. Oh my, it's like speaking Chinese to them (and they only understand American English).
Alan Blinder: Obama's Fiscal Priorities Are Right - WSJ.com
BLINDER BLINDER: Alan Blinder: Obama's Fiscal Priorities Are Right - WSJ.com: "- Sent using Google Toolbar"
Sadly, the administration is missing the key issue, which is what it would take to make America a place where companies and individuals can best create and continue and expand businesses.
The fact that every step and bill of the administration is clearly targeted away from business and to provide for the 'unfortunate' - leaves the 'fortunate' to have to keep their wallets closed and look for opportunities elsewhere.
For those living on borrowed and taxed money, the vaunted consumption is met by imported goods (as those are cheapest). Meanwhile, the costs of domestic production are continually raised.
Clearly the administration has it wrong to think that those with the wherewithal to produce will do so no matter what the government throws at them. What happened to General Motors is what is and will be happening to the US economy under Democratic stewardship and the Democrats just don't get it.
The Democrats need to support job creation and wealth creation; not the handout of borrowed money to the jobless. The jobless should shame the Democrats into changing their fiscal policies.
Sadly, the administration is missing the key issue, which is what it would take to make America a place where companies and individuals can best create and continue and expand businesses.
The fact that every step and bill of the administration is clearly targeted away from business and to provide for the 'unfortunate' - leaves the 'fortunate' to have to keep their wallets closed and look for opportunities elsewhere.
For those living on borrowed and taxed money, the vaunted consumption is met by imported goods (as those are cheapest). Meanwhile, the costs of domestic production are continually raised.
Clearly the administration has it wrong to think that those with the wherewithal to produce will do so no matter what the government throws at them. What happened to General Motors is what is and will be happening to the US economy under Democratic stewardship and the Democrats just don't get it.
The Democrats need to support job creation and wealth creation; not the handout of borrowed money to the jobless. The jobless should shame the Democrats into changing their fiscal policies.
Saturday, July 17, 2010
Democrats Hope Voters Learn to Like Big Initiatives - WSJ.com
AN INDUCED ECONOMIC DROUGHT: Democrats Hope Voters Learn to Like Big Initiatives - WSJ.com: "- Sent using Google Toolbar"
What the Democrats don't seem to understand is that the country doesn't have the money to devote to all these cherished needs of the 'entitled' constituents.
It's sort of like the UAW and GM.
No one has ever said that the benefits the UAW won for its members weren't 'nice' or that they were 'unliked' (as with some of the Health Care Plan of Obama).
But, what is, was and continues to be said - evidenced by the bankruptcy and downsizing of GM and its huge taxpayer bailout - is that these benefits were 'unaffordable'.
Thus, if the goal of the country is create jobs for the modern world-changing economy, then that is where everything else starts and springs from. Sort of like a typical couple starting out in life. You can do so on welfare or you can do so with a job. And, hopefully a job full of promise and advancement.
What the Democrats have done is continue (as the UAW) to think that they can take, take and take and that it never has to end. Paying for all of the benefits is someone else's job.
The 'real' unemployment rate (of over 16%, may 20%) would seem to suggest that they have totally failed. And, like the farmer who stands their without irrigation, just hoping the rains will come, the Democrats don't realize (and can't even conceive of) how their legislation is drying up the economic landscape.
(What's the Democratic economic drought like? Can we say the housing bubble!)
What the Democrats don't seem to understand is that the country doesn't have the money to devote to all these cherished needs of the 'entitled' constituents.
It's sort of like the UAW and GM.
No one has ever said that the benefits the UAW won for its members weren't 'nice' or that they were 'unliked' (as with some of the Health Care Plan of Obama).
But, what is, was and continues to be said - evidenced by the bankruptcy and downsizing of GM and its huge taxpayer bailout - is that these benefits were 'unaffordable'.
Thus, if the goal of the country is create jobs for the modern world-changing economy, then that is where everything else starts and springs from. Sort of like a typical couple starting out in life. You can do so on welfare or you can do so with a job. And, hopefully a job full of promise and advancement.
What the Democrats have done is continue (as the UAW) to think that they can take, take and take and that it never has to end. Paying for all of the benefits is someone else's job.
The 'real' unemployment rate (of over 16%, may 20%) would seem to suggest that they have totally failed. And, like the farmer who stands their without irrigation, just hoping the rains will come, the Democrats don't realize (and can't even conceive of) how their legislation is drying up the economic landscape.
(What's the Democratic economic drought like? Can we say the housing bubble!)
Thursday, July 15, 2010
It's Dippy to Fret About a Double-Dip Recession - Barrons.com
Past as Prologue?: It's Dippy to Fret About a Double-Dip Recession - Barrons.com: "- Sent using Google Toolbar"
In terms of econometric models, has there been a period when such a welter of anti-business tax and regulatory inhibitors existed?
I'd rather say no! And, as such, the ability of any such models to forecast with any degree of reasonable relationship to past events would appear more than highly suspect.
Should one venture out into history, one does seem to find that people do believe that past is prologue and, as such, they are more likely to believe the current anti-business administration will have less impact on jobs and the economy than an iconoclast or maverick might flag as a possibility.
But, who knows? (How many guessed right on the housing bubble?)
In terms of econometric models, has there been a period when such a welter of anti-business tax and regulatory inhibitors existed?
I'd rather say no! And, as such, the ability of any such models to forecast with any degree of reasonable relationship to past events would appear more than highly suspect.
Should one venture out into history, one does seem to find that people do believe that past is prologue and, as such, they are more likely to believe the current anti-business administration will have less impact on jobs and the economy than an iconoclast or maverick might flag as a possibility.
But, who knows? (How many guessed right on the housing bubble?)
Despite good news, July's stock rally runs into resistance. - Barrons.com
ULTIMATE REALITY: Despite good news, July's stock rally runs into resistance. - Barrons.com: "- Sent using Google Toolbar"
Somehow, the market and the economy keeps reminding me of ever higher prices for houses a few years back.
As the gap between incomes and prices kept expanding, so seems the belief that with more and more of the economic wherewithal going to the government (ad infinitum, but likely less), the markets (and the government) seem to believe we can keep the same old jobs and business model going.
Well, there's less for business and a bigger and bigger drag from government (and the entitled). You can fool the market some of the time; but, as with housing, can you confound reality forever?
Somehow, the market and the economy keeps reminding me of ever higher prices for houses a few years back.
As the gap between incomes and prices kept expanding, so seems the belief that with more and more of the economic wherewithal going to the government (ad infinitum, but likely less), the markets (and the government) seem to believe we can keep the same old jobs and business model going.
Well, there's less for business and a bigger and bigger drag from government (and the entitled). You can fool the market some of the time; but, as with housing, can you confound reality forever?
In Washington, Dueling Jobs Summits - WSJ.com
ANCIENNE REGIME: In Washington, Dueling Jobs Summits - WSJ.com: "- Sent using Google Toolbar"
Somehow, what comes to mind here is an inversion of the old Medieval lords and serfs.
In this case, the government (Obama, Pelosi, et al) act the part of the lords and they treat the productive elements of society as the serfs.
The lords wonder why the serfs don't produce more; but, as was common in many parts of the world of the Ancienne Regime, the lords took so much from the peasants that they didn't have anything left to reinvest in improving or expanding production.
In some cases, the Ancienne Regime fell peacefully; and, in other cases (one thinks of the French Revolution), some heads had to roll.
And, like Marie Antoinette, Ram Emmanuel, etc. seem to being saying to business the equivalent of "let them eat cake".
Somehow, what comes to mind here is an inversion of the old Medieval lords and serfs.
In this case, the government (Obama, Pelosi, et al) act the part of the lords and they treat the productive elements of society as the serfs.
The lords wonder why the serfs don't produce more; but, as was common in many parts of the world of the Ancienne Regime, the lords took so much from the peasants that they didn't have anything left to reinvest in improving or expanding production.
In some cases, the Ancienne Regime fell peacefully; and, in other cases (one thinks of the French Revolution), some heads had to roll.
And, like Marie Antoinette, Ram Emmanuel, etc. seem to being saying to business the equivalent of "let them eat cake".
Credit Is Easy for Wall Street but Stays Tight on Main Street - Barrons.com
PROCESS VS. PRODUCT: Credit Is Easy for Wall Street but Stays Tight on Main Street - Barrons.com: "- Sent using Google Toolbar"
Some of this reminds me of the logical outcome of the "process vs. product" arguments that were logically debated in college lectures years ago.
As 'process' wins out (very big in Europe with ISO), one sees that critical judgment is replaced by appropriate judgment. Thus, with more and more regulations of banks replacing critical decision-making, it was easy for banks to load up on AAA-rated subprime debt.
After all, the process said how to use AAA.
Now, we're pushing for even more of the same. Regulations don't ensure good judgment. With fear paramount due to government expanding more and more, is it any wonder that the increasingly government protective turf of banking is buying off on the 'process' prescribed by government?
As Randy notes, the obvious outcome is for banks to do what is 'process-safe'. In other words, just buy sovereign debt (and maybe less of that from Greece, Portugal, etc.)
Some of this reminds me of the logical outcome of the "process vs. product" arguments that were logically debated in college lectures years ago.
As 'process' wins out (very big in Europe with ISO), one sees that critical judgment is replaced by appropriate judgment. Thus, with more and more regulations of banks replacing critical decision-making, it was easy for banks to load up on AAA-rated subprime debt.
After all, the process said how to use AAA.
Now, we're pushing for even more of the same. Regulations don't ensure good judgment. With fear paramount due to government expanding more and more, is it any wonder that the increasingly government protective turf of banking is buying off on the 'process' prescribed by government?
As Randy notes, the obvious outcome is for banks to do what is 'process-safe'. In other words, just buy sovereign debt (and maybe less of that from Greece, Portugal, etc.)
Tuesday, July 13, 2010
U.S. Seeks to Recoup Fannie, Freddie Losses - WSJ.com
PERFIDY: U.S. Seeks to Recoup Fannie, Freddie Losses - WSJ.com: "- Sent using Google Toolbar"
Could this be another example of where the government screws up badly (and under political pressure in this case) and then tries to put all the blame on the private sector?
And, could this perfidy on the part of government be one more restraint on the revival of the economy?
Hmmm. One does seem to read such things!
Could this be another example of where the government screws up badly (and under political pressure in this case) and then tries to put all the blame on the private sector?
And, could this perfidy on the part of government be one more restraint on the revival of the economy?
Hmmm. One does seem to read such things!
Medicaid Stalemate Tests Cash-Strapped States - WSJ.com
ROMAN RUIN: Medicaid Stalemate Tests Cash-Strapped States - WSJ.com: "- Sent using Google Toolbar"
I like Medicaid providing 'free aspirin'! Just unbelievable.
It boggles the mind to consider how so many people are being 'ruined' by this sense of entitlement.
(In one way it's a stretch, but one of history's comments on the cause of the 'Dark Ages' was that previously 'democratic' areas of Europe, such as Gaul, had spent so much time under Roman imperial rule, that all sense of democracy had vanished as Rome fell and they had to govern themselves. It reminds me of how people being responsible and self-reliant and working and saving is being destroyed by the liberal/Democratic view that everyone can just ask government for anything they need - and, they don't need to work or pay for it! Someone else will provide.)
I like Medicaid providing 'free aspirin'! Just unbelievable.
It boggles the mind to consider how so many people are being 'ruined' by this sense of entitlement.
(In one way it's a stretch, but one of history's comments on the cause of the 'Dark Ages' was that previously 'democratic' areas of Europe, such as Gaul, had spent so much time under Roman imperial rule, that all sense of democracy had vanished as Rome fell and they had to govern themselves. It reminds me of how people being responsible and self-reliant and working and saving is being destroyed by the liberal/Democratic view that everyone can just ask government for anything they need - and, they don't need to work or pay for it! Someone else will provide.)
Friday, July 9, 2010
John Lechleiter: America's Growing Innovation Gap - WSJ.com
EONOCMIC NUTRIENTS: John Lechleiter: America's Growing Innovation Gap - WSJ.com: "- Sent using Google Toolbar"
Loads of people are providing Americans with an alternative to UAW inspired entitlement spending as a way to grow the US economy.
Sadly, the administration is trying to use just words to try and convince the private sector and investors that what it is doing in terms of policy isn't what it would like to see.
It reminds me of the two farmers. One irrigates his fields and can be assured of a good crop. The other (i.e. Obama's policies) are like the farmer who thinks the occasional rain will be all that's necessary; and, when he sees a bit of green after a shower, he thinks he's done all he needs to do.
Meanwhile, the developing world and China are learning about and also using irrigation to grow their economies. As for Obama, his only thoughts seem to be on how to tax those who dare to apply water and nutrients to the economic soil.
Loads of people are providing Americans with an alternative to UAW inspired entitlement spending as a way to grow the US economy.
Sadly, the administration is trying to use just words to try and convince the private sector and investors that what it is doing in terms of policy isn't what it would like to see.
It reminds me of the two farmers. One irrigates his fields and can be assured of a good crop. The other (i.e. Obama's policies) are like the farmer who thinks the occasional rain will be all that's necessary; and, when he sees a bit of green after a shower, he thinks he's done all he needs to do.
Meanwhile, the developing world and China are learning about and also using irrigation to grow their economies. As for Obama, his only thoughts seem to be on how to tax those who dare to apply water and nutrients to the economic soil.
Mohamed El-Erian: The Real Tragedy of Persistent Unemployment - WSJ.com
LIVING WAGES, ETC.: Mohamed El-Erian: The Real Tragedy of Persistent Unemployment - WSJ.com: "- Sent using Google Toolbar"
Another problem is the attraction of Democrats in particular to the idea of the "living wage" (e.g. the increase in the minimum wage).
As seen in Europe and evidenced by unions in the US, there are many constraints and policies that artificially distort the cost of labor. Thus, a job that might exist if one could pay $10 an hour, won't exist when the cost to the employer is $20 and the net to the worker is $5.
It would be interesting if, in the name of transparency, all employers had to give their employees a statement showing what the cost of all government mandated programs and taxes (and union demands, where applicable) would be.
Since many people in business say these costs are some 400 - 500% of the listed pay of the employee, my guess is the average American worker would suddenly start to question the bane of government mandates on their pay and job opportunities.
Another problem is the attraction of Democrats in particular to the idea of the "living wage" (e.g. the increase in the minimum wage).
As seen in Europe and evidenced by unions in the US, there are many constraints and policies that artificially distort the cost of labor. Thus, a job that might exist if one could pay $10 an hour, won't exist when the cost to the employer is $20 and the net to the worker is $5.
It would be interesting if, in the name of transparency, all employers had to give their employees a statement showing what the cost of all government mandated programs and taxes (and union demands, where applicable) would be.
Since many people in business say these costs are some 400 - 500% of the listed pay of the employee, my guess is the average American worker would suddenly start to question the bane of government mandates on their pay and job opportunities.
Tuesday, July 6, 2010
Perched between growth and recession Irwin Kellner - MarketWatch
A BETTER STIMULUS: Perched between growth and recession Irwin Kellner - MarketWatch: "- Sent using Google Toolbar"
Sadly, the stimulus that's needed is off the table for Obama and Pelosi - i.e. (1) reign in government unions and their pay and benefit structures (Federal, State and local) => long term savings; (2) reign in entitlements; (3) stop the idiotic drug war; (4) most importantly, set out clear programs to assure business that laws will be respected (i.e. UAW and GM, Chrysler); (5) fix immigration so the US knows it can always have the best and brightest come and work in the US without constraints; (6) stop meddling with banks and finance to make sure the US is where money wants to come and go to work (this also involves stopping IRS witch hunts); (7) cut business and investment taxes; (8) pass laws that allow employers to get rid of unions so employees aren't stuck with regressive, job-destroying labor leaders.
This would be a no new tax way to provide a lasting stimulus.
Sadly, the stimulus that's needed is off the table for Obama and Pelosi - i.e. (1) reign in government unions and their pay and benefit structures (Federal, State and local) => long term savings; (2) reign in entitlements; (3) stop the idiotic drug war; (4) most importantly, set out clear programs to assure business that laws will be respected (i.e. UAW and GM, Chrysler); (5) fix immigration so the US knows it can always have the best and brightest come and work in the US without constraints; (6) stop meddling with banks and finance to make sure the US is where money wants to come and go to work (this also involves stopping IRS witch hunts); (7) cut business and investment taxes; (8) pass laws that allow employers to get rid of unions so employees aren't stuck with regressive, job-destroying labor leaders.
This would be a no new tax way to provide a lasting stimulus.
Sunday, July 4, 2010
Alan Abelson: Up and Down Wall Street - Barrons.com
ROMER AND OBAMA AS MEMBERS OF THE CATHOLIC INQUISITION: Alan Abelson: Up and Down Wall Street - Barrons.com
Somehow listening (as briefly as possible) to Christine Romer and other defenders of Obama economic policies (including the man himself), I somehow can't help but think I'm listening to the economic equivalent of Catholic priests who are members of an inquisition in the 16th century.
Their confident rectitude seems at least 400 years beyond belief.
But, as with those trusty inquisitioners, the world was flat and they'd burn you at the state for any dispute.
Somehow listening (as briefly as possible) to Christine Romer and other defenders of Obama economic policies (including the man himself), I somehow can't help but think I'm listening to the economic equivalent of Catholic priests who are members of an inquisition in the 16th century.
Their confident rectitude seems at least 400 years beyond belief.
But, as with those trusty inquisitioners, the world was flat and they'd burn you at the state for any dispute.
Saturday, July 3, 2010
Unemployment Rate Falls to 9.5% as Report Shows 125,000 Jobs Lost in June - WSJ.com
GORING THE SACRED OX: Unemployment Rate Falls to 9.5% as Report Shows 125,000 Jobs Lost in June - WSJ.com
Is the real question what will happen in November (or really January) or is it will the Republicans either not have a sufficient majority or the political will to tackle entitlements.
The idea of all these 'entitlements' is like a cancer. It has infected Europe and many in the United States (led of course by unions, the Democrats, etc.).
At some point, as with Greece, the balloon does burst.
At that point, the country either has to print to survive or go down hill.
Scary evidence of how really bad the anti-business attitudes and out-of-whack policies are in the US was a report this week on Bloomberg that venture capital companies in Silicon Valley are now funding entrepreneurs who are outsourcing (i.e. out of the US) a lot of fundamental research and product development.
The cost structure in the US needs major work. One of the ways in which this could be done is by making it cost-wise more feasible to do business in the US. The only way this would seem to be able to be done (is not by raising the yuan, but) is by cutting out the taxes and other costs for entitlements that drive up the cost of labor in the US.
To do this, a lot of oxes will have to be gored.
Is the real question what will happen in November (or really January) or is it will the Republicans either not have a sufficient majority or the political will to tackle entitlements.
The idea of all these 'entitlements' is like a cancer. It has infected Europe and many in the United States (led of course by unions, the Democrats, etc.).
At some point, as with Greece, the balloon does burst.
At that point, the country either has to print to survive or go down hill.
Scary evidence of how really bad the anti-business attitudes and out-of-whack policies are in the US was a report this week on Bloomberg that venture capital companies in Silicon Valley are now funding entrepreneurs who are outsourcing (i.e. out of the US) a lot of fundamental research and product development.
The cost structure in the US needs major work. One of the ways in which this could be done is by making it cost-wise more feasible to do business in the US. The only way this would seem to be able to be done (is not by raising the yuan, but) is by cutting out the taxes and other costs for entitlements that drive up the cost of labor in the US.
To do this, a lot of oxes will have to be gored.
Friday, July 2, 2010
Unemployment Rate Falls to 9.5% as Report Shows 125,000 Jobs Lost in June - WSJ.com
FUNNY MATH: Unemployment Rate Falls to 9.5% as Report Shows 125,000 Jobs Lost in June - WSJ.com
What hits one right away in this article (not the reporter's problem) is the lack of a logical relationship between the net 'loss' of jobs (-125,000) yet a 'drop' in the unemployment rate (from 9.7% to 9.5%).
Not that one wants to say that the government statisticians are purposely lying. No, maybe they aren't.
But, since the math doesn't make sense in the two reports, one does wonder what else isn't reflecting what people see and feel about the economy and job market?
There were two schools of thought when the economy saw housing price increases rapidly outstrip income gains. Most thought everything was OK and their was nothing amiss.
Today, people seem to feel there is no problem with government borrowing all the money there is out there and, rather than restricting entitlements, letting them just blow out of the water. Yet, none of this produces jobs and huge numbers of people (including the current administration) see no correlation between government taking money out of the private sector and the private sector not creating jobs.
One's eyebrows do raise at this ability to ignore the obvious!
What hits one right away in this article (not the reporter's problem) is the lack of a logical relationship between the net 'loss' of jobs (-125,000) yet a 'drop' in the unemployment rate (from 9.7% to 9.5%).
Not that one wants to say that the government statisticians are purposely lying. No, maybe they aren't.
But, since the math doesn't make sense in the two reports, one does wonder what else isn't reflecting what people see and feel about the economy and job market?
There were two schools of thought when the economy saw housing price increases rapidly outstrip income gains. Most thought everything was OK and their was nothing amiss.
Today, people seem to feel there is no problem with government borrowing all the money there is out there and, rather than restricting entitlements, letting them just blow out of the water. Yet, none of this produces jobs and huge numbers of people (including the current administration) see no correlation between government taking money out of the private sector and the private sector not creating jobs.
One's eyebrows do raise at this ability to ignore the obvious!
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