EVER MORE LEARY OF O'S LACK OF ECONOMIC REALISM: Review & Outlook: Social Security Bait and Switch - WSJ.com: "- Sent using Google Toolbar"
Gee, I guess he's getting the economy his policies don't understand as their natural consequence - albeit the evidence is all around him in industry after industry (think UAW) and state after state (CA, NY, Michigan, etc.).
As the quote today from Obama about his fighting to restore the middle class, it's reflective of the way American's maintained their incomes this past decade by living off housing equity. It's also like the family keeping up their consumption by living on their credit cards.
Eventually, in both cases, the credit runs out and everything collapses. Sadly the collapse gets more severe the longer the delusional income is treated as current income.
There is a broad understanding that Obama doesn't have an economic clue and thus his posturing (and that of other Democrats) just makes those who really know how to produce and grow businesses ever more leary.
Tuesday, August 31, 2010
Battle of the Impotent Central Banks - WSJ.com
WHO IS RESPONSIBLE?: Battle of the Impotent Central Banks - WSJ.com: "- Sent using Google Toolbar"
Anyone focusing on the Fed or other central banks, as the article notes, is living in la-la-land.
The issue is the mismatch between incentives to produce (or in the case of most European countries and the US these are 'disincentives') and social policies.
Too much is being redistributed and taxed from producers. Regulations and bureaucracy hold back investment.
Taking one look at this week's Bloomberg graphic of the companies recently acquired by Google shows that there are lots of ideas turned into businesses.
However, there aren't enough of them. And, its all well and interesting to think of minimum wages, minimum social benefits, etc. - but then, why not require kids to finish high school? This past week the report was that 1/3 of US kids 'don't' finish high school.
Yet, we allow teachers unions to use seniority vs. skills and performance to determine who gets to teach children. And then, the teachers have extravagant retirements and benefits (see the articles on NYC teachers for example).
We've distorted the rewards and a as result the economy is stagnant (if not in absolute decline) - one can say logical regression. Why? Because government and unions are taking too much out of society from those who produce.
Look at California. There Obama-type policies have been in the forefront for years and the State's economy no longer leads the country.
Sadly, Obama seems utterly clueless. And, the Tea Party movement sadly mirrors the Republicans in CA - where the Republican base is happy but almost no Republicans get elected by the general public.
The issue at hand would seem to be whether we want to let the economy grow and whether to do this, we are willing to have fewer handouts. Thus, rejecting the idea that people can't and don't have a responsibility to improve their own lives.
Anyone focusing on the Fed or other central banks, as the article notes, is living in la-la-land.
The issue is the mismatch between incentives to produce (or in the case of most European countries and the US these are 'disincentives') and social policies.
Too much is being redistributed and taxed from producers. Regulations and bureaucracy hold back investment.
Taking one look at this week's Bloomberg graphic of the companies recently acquired by Google shows that there are lots of ideas turned into businesses.
However, there aren't enough of them. And, its all well and interesting to think of minimum wages, minimum social benefits, etc. - but then, why not require kids to finish high school? This past week the report was that 1/3 of US kids 'don't' finish high school.
Yet, we allow teachers unions to use seniority vs. skills and performance to determine who gets to teach children. And then, the teachers have extravagant retirements and benefits (see the articles on NYC teachers for example).
We've distorted the rewards and a as result the economy is stagnant (if not in absolute decline) - one can say logical regression. Why? Because government and unions are taking too much out of society from those who produce.
Look at California. There Obama-type policies have been in the forefront for years and the State's economy no longer leads the country.
Sadly, Obama seems utterly clueless. And, the Tea Party movement sadly mirrors the Republicans in CA - where the Republican base is happy but almost no Republicans get elected by the general public.
The issue at hand would seem to be whether we want to let the economy grow and whether to do this, we are willing to have fewer handouts. Thus, rejecting the idea that people can't and don't have a responsibility to improve their own lives.
Monday, August 30, 2010
Treasury Investors Seek Signs of Easing - WSJ.com
MORE NUMBING OF THE ELECTORATE AND POLITICIANS?: Treasury Investors Seek Signs of Easing - WSJ.com: "- Sent using Google Toolbar"
A question of 'numbing' comes to mind - i.e. is both the government and public being numbed into believing that the world is going to continue to allow the US government to borrow at Japanese type interest costs?
Policies coming out of Washington are much more like those of Greece than Germany - for example.
And, Greece is reeling from having to suddenly pay 11% vs. 3-4% for debt it issues (EU subsidies excluded).
Some of us recall when US interest rates were close to 20%.
Isn't it time to think more about tackling the problems holding the economy back rather than think they can be obfuscated and avoided by letting the government borrow even more money?
A question of 'numbing' comes to mind - i.e. is both the government and public being numbed into believing that the world is going to continue to allow the US government to borrow at Japanese type interest costs?
Policies coming out of Washington are much more like those of Greece than Germany - for example.
And, Greece is reeling from having to suddenly pay 11% vs. 3-4% for debt it issues (EU subsidies excluded).
Some of us recall when US interest rates were close to 20%.
Isn't it time to think more about tackling the problems holding the economy back rather than think they can be obfuscated and avoided by letting the government borrow even more money?
Saturday, August 28, 2010
The 1.6% Recovery - WSJ.com
THERE'S NONE SO BLIND...:The 1.6% Recovery - WSJ.com: "- Sent using Google Toolbar"
One does recall the old saying that runs something like, "There's none so blind as those that will not see!"
And, the biggest question of all would seem to be why are US companies sitting with huge amounts of cash and why is all the lending and savings going into government bonds vs. new jobs, new technologies, new ways to make life easier and better?
The iPad phenomenon shows that people will take up new things.
The tiny country of Portugal shows what can happen when you build a ‘smart grid’ (i.e. 40% of its energy demand now comes from renewable, per the NY Times last month).
Any modest read of science and technology pages on Google shows how much terrific creative stuff is out there.
One wants to ask why it isn’t being exploited? And, instead, why are we seeing governments raise taxes and go into hock to pay for social benefits that individuals can’t pay for on their own but feel entitled to?
Somehow, even a modest look at the big picture would start to suggest that too much is going into entitlements and too little is left to move the economy ahead.
After all, who provides the jobs of the future – entrepreneurs or 50 year old retirees getting 80% or more of their salaries paid by high taxes on producers?
One does recall the old saying that runs something like, "There's none so blind as those that will not see!"
And, the biggest question of all would seem to be why are US companies sitting with huge amounts of cash and why is all the lending and savings going into government bonds vs. new jobs, new technologies, new ways to make life easier and better?
The iPad phenomenon shows that people will take up new things.
The tiny country of Portugal shows what can happen when you build a ‘smart grid’ (i.e. 40% of its energy demand now comes from renewable, per the NY Times last month).
Any modest read of science and technology pages on Google shows how much terrific creative stuff is out there.
One wants to ask why it isn’t being exploited? And, instead, why are we seeing governments raise taxes and go into hock to pay for social benefits that individuals can’t pay for on their own but feel entitled to?
Somehow, even a modest look at the big picture would start to suggest that too much is going into entitlements and too little is left to move the economy ahead.
After all, who provides the jobs of the future – entrepreneurs or 50 year old retirees getting 80% or more of their salaries paid by high taxes on producers?
Democrats Face Economic Facts: Updraft Unlikely - WSJ.com
DO DEMOCRATS EVEN HAVE AN ECONOMIC CLUE?: Democrats Face Economic Facts: Updraft Unlikely - WSJ.com: "- Sent using Google Toolbar"
"Sen. Robert Menendez (D., N.J.), who leads the committee working to elect Democrats to the Senate, said there was no way Democrats could completely turn around the economy in two years."
One does wonder what Menendez thinks would turn around the economy?
Let's see:
? Raise the cost of capital.
? Increase regulatory risk.
? Increase the liklihood of further unionization of labor (and the attendant ignoring of costs of production).
? Do nothing to make it easier to bring capable foreign staff to meetings or for work in the US.
? Do little or nothing to make the teachers unions accountable for continuing comparative declines in the education of American workers.
? etc., etc.
Seems to me, everything the Administration has touched has exacerbated existing problems that continue to be ignored - at best.
"Sen. Robert Menendez (D., N.J.), who leads the committee working to elect Democrats to the Senate, said there was no way Democrats could completely turn around the economy in two years."
One does wonder what Menendez thinks would turn around the economy?
Let's see:
? Raise the cost of capital.
? Increase regulatory risk.
? Increase the liklihood of further unionization of labor (and the attendant ignoring of costs of production).
? Do nothing to make it easier to bring capable foreign staff to meetings or for work in the US.
? Do little or nothing to make the teachers unions accountable for continuing comparative declines in the education of American workers.
? etc., etc.
Seems to me, everything the Administration has touched has exacerbated existing problems that continue to be ignored - at best.
Friday, August 27, 2010
Heard on the Street: Bernanke's Mountain to Climb - WSJ.com
Heard on the Street: Bernanke's Mountain to Climb - WSJ.com: "- Sent using Google Toolbar"
Perhaps dropping hundred dollar bills from helicopters will make it appear as though the economy will recover; but, will those torrents of dollars encourage job creation?
One finds it hard to believe - read the comment by the head of Intel in today's paper saying it costs an extra billion dollars to locate a factory in the US. Or, read California Governor Swartzenagger's opinion piece on address public employee pension and benefit problems.
None of these 'problems' are on the Washington agenda. So what good would torrents of new cash do?
Also, it's worthwhile reading how Greece suddenly finds itself having an 11 point spread on debt. Within a year the cost to Greece of financing its debt didn't just go up 1 or 2% but, somewhere between 8 and 11%. What would this do to America's government budget?
Perhaps dropping hundred dollar bills from helicopters will make it appear as though the economy will recover; but, will those torrents of dollars encourage job creation?
One finds it hard to believe - read the comment by the head of Intel in today's paper saying it costs an extra billion dollars to locate a factory in the US. Or, read California Governor Swartzenagger's opinion piece on address public employee pension and benefit problems.
None of these 'problems' are on the Washington agenda. So what good would torrents of new cash do?
Also, it's worthwhile reading how Greece suddenly finds itself having an 11 point spread on debt. Within a year the cost to Greece of financing its debt didn't just go up 1 or 2% but, somewhere between 8 and 11%. What would this do to America's government budget?
Wednesday, August 25, 2010
Janice Nittoli: Our Blue-Collar Great Depression - WSJ.com
QA - IMMIGRANTS?: Janice Nittoli: Our Blue-Collar Great Depression - WSJ.com: "- Sent using Google Toolbar"
Question: Can't we put a lot of the blame for job losses on illegal immigrants?
Answer:
Not so simple. The immigrant may be willing to work for the true "clearing price" for labor.
Those who think the immigrant is stealing "their" job, should recognize that the price they want to receive for "their" job - and, this includes all the added costs mandated by government and unions - has made the labor market increasingly inflexible.
Add to this inflexibility and distortion of costs (the labor conundrum), the anti-business policies rampant at Federal and State levels.
Immigrants would help the US maintain and grow its standard of living if the labor market was freer of legislated and union-based distortions.
Ask yourself if there isn't a price at which you'd no longer pay a plumber to come and fix a problem - and, likewise, a price at which you might have some extra work to be done? This is the concept of "economic utility" - again something grossly distorted by (well-meaning, but counter productive in terms of job creation and economic growth) government policies.
Question: Can't we put a lot of the blame for job losses on illegal immigrants?
Answer:
Not so simple. The immigrant may be willing to work for the true "clearing price" for labor.
Those who think the immigrant is stealing "their" job, should recognize that the price they want to receive for "their" job - and, this includes all the added costs mandated by government and unions - has made the labor market increasingly inflexible.
Add to this inflexibility and distortion of costs (the labor conundrum), the anti-business policies rampant at Federal and State levels.
Immigrants would help the US maintain and grow its standard of living if the labor market was freer of legislated and union-based distortions.
Ask yourself if there isn't a price at which you'd no longer pay a plumber to come and fix a problem - and, likewise, a price at which you might have some extra work to be done? This is the concept of "economic utility" - again something grossly distorted by (well-meaning, but counter productive in terms of job creation and economic growth) government policies.
Janice Nittoli: Our Blue-Collar Great Depression - WSJ.com
DISTORTIONS TO THE PRICE OF LABOR: Janice Nittoli: Our Blue-Collar Great Depression - WSJ.com: "- Sent using Google Toolbar"
What I'm not seeing in this article is a discussion of how union salaries and the huge additional costs that (one has to assume) well-meaning politicians have added to the cost of labor have distorted the labor input as a factor of production and wealth creation.
The clearing price of labor should be reduced.
Also, as noted in terms of caregivers, how many moderately well-off people could pay an independent contractor to do domestic or caregiving work if the expense was tax deductible?
And, while it might seem worthwhile to raise the minimum wage, it also means some jobs aren't worth doing. (This gets talked about, validated, etc. - but those with the "living wage" mentality have to ignore the ill-begotten losses.)
And, asking small, sometimes just a wife or husband, to pay all sorts of employment taxes and file all sorts of forms for casual labor is just ridiculous - if you want to spur small job creation.
And, prevailing union wage contracts make a number of very worthwhile infrastructure projects unaffordable.
We also allow teachers to stand behind a union and avoid the competition of a free market for education or standards to be held to. Thus, the unions and the teachers have institutionalized underperformance - while constantly getting more and more money allocated to comfortable salaries, work rules, pensions and other benefits.
And, if government could see its way to requiring individuals to do more for themselves and not pay and give benefits to their employees that are way above those of the private sector, then taxes could be cut and the average citizen would have more money to spend on local services and job creation. (The city of Bell, CA is but an obscene example of the public sector taking no umbrage for ripping off the citizens.)
What I'm not seeing in this article is a discussion of how union salaries and the huge additional costs that (one has to assume) well-meaning politicians have added to the cost of labor have distorted the labor input as a factor of production and wealth creation.
The clearing price of labor should be reduced.
Also, as noted in terms of caregivers, how many moderately well-off people could pay an independent contractor to do domestic or caregiving work if the expense was tax deductible?
And, while it might seem worthwhile to raise the minimum wage, it also means some jobs aren't worth doing. (This gets talked about, validated, etc. - but those with the "living wage" mentality have to ignore the ill-begotten losses.)
And, asking small, sometimes just a wife or husband, to pay all sorts of employment taxes and file all sorts of forms for casual labor is just ridiculous - if you want to spur small job creation.
And, prevailing union wage contracts make a number of very worthwhile infrastructure projects unaffordable.
We also allow teachers to stand behind a union and avoid the competition of a free market for education or standards to be held to. Thus, the unions and the teachers have institutionalized underperformance - while constantly getting more and more money allocated to comfortable salaries, work rules, pensions and other benefits.
And, if government could see its way to requiring individuals to do more for themselves and not pay and give benefits to their employees that are way above those of the private sector, then taxes could be cut and the average citizen would have more money to spend on local services and job creation. (The city of Bell, CA is but an obscene example of the public sector taking no umbrage for ripping off the citizens.)
Monday, August 23, 2010
Steve Malanga: How States Hide Their Budget Deficits - WSJ.com
INTO THE WRONG MAW: Steve Malanga: How States Hide Their Budget Deficits - WSJ.com: "- Sent using Google Toolbar"
One reads this and can't help but think anyone with any resources or hopes to establish or grow a business would want to be away from these states.
As such, the states and the country are only compounding the unemployment problem by letting businesses know that they'd better get as many assets out of the way of this hungry maw of government and union revenue raising.
It's clear from the market success of the iPod, iPad, iPhone, etc. that there is a market for new products and services. It's also clear that the US needs major upgrades to infrastructure and, in reading any technology or scientific pages, there are myriads of great ideas for making life better.
The question isn't asked why these aren't taking place? Especially in light of the fact that there appears to be an abundance of credit being extended (except of course it it to government for entitlements and consumption - not investment into jobs).
Companies are also in excellent financial shape.
Clearly somethings are out-of-whack economically. And, with consumption replacing investment and government replacing the private sector, it would appear that the questions of what to do are being ignored - after all, who wants to see cutbacks in government, retirement or health benefits that someone else (i.e. the rich and businesses) are paying for.
Sure, the Democrats under Obama, Pelosi and Reid have spent a year and a half making the problem worse and the solutions more difficult; but, do the Republicans really have the guts or a plan to change things? After all, the last time they were in office they spent too much as well.
One reads this and can't help but think anyone with any resources or hopes to establish or grow a business would want to be away from these states.
As such, the states and the country are only compounding the unemployment problem by letting businesses know that they'd better get as many assets out of the way of this hungry maw of government and union revenue raising.
It's clear from the market success of the iPod, iPad, iPhone, etc. that there is a market for new products and services. It's also clear that the US needs major upgrades to infrastructure and, in reading any technology or scientific pages, there are myriads of great ideas for making life better.
The question isn't asked why these aren't taking place? Especially in light of the fact that there appears to be an abundance of credit being extended (except of course it it to government for entitlements and consumption - not investment into jobs).
Companies are also in excellent financial shape.
Clearly somethings are out-of-whack economically. And, with consumption replacing investment and government replacing the private sector, it would appear that the questions of what to do are being ignored - after all, who wants to see cutbacks in government, retirement or health benefits that someone else (i.e. the rich and businesses) are paying for.
Sure, the Democrats under Obama, Pelosi and Reid have spent a year and a half making the problem worse and the solutions more difficult; but, do the Republicans really have the guts or a plan to change things? After all, the last time they were in office they spent too much as well.
Sunday, August 22, 2010
Two Economies With A Common Cold - WSJ.com
REAL CHOICES GOVERNMENT DOESN'T WANT TO TALK ABOUT: Two Economies With A Common Cold - WSJ.com: "- Sent using Google Toolbar"
This article touches on much of what is also in the weekend papers - i.e. something seems out of whack.
For example: why is it that investors would rather be funding consumption-focused government borrowings rather than income generating productive investment?
On one hand, the fact that government takes so much of worker's incomes (for redistribution, etc.) means that someone with EUR 2,000 (or $) of take home pay could actually have perhaps EUR 6,000 - 10,000. The difference could include the need to save for one's own retirement and pay for one's own healthcare.
But, on the other hand, what would that added spending power do to personal consumption?
Add to this urge to consume the idea of cutting the VAT or sales tax. Thus, the EUR 200,000 apartment or EUR 50,000 car might cost EUR 170,000 or EUR 35,000 (Portugal = EUR 25,000). Mightn't this spur consumption?
Of course, the tradeoff would be that those who don't work would be suffering. Also, those with overpaid and unnecessary or questionable government jobs would be out looking for something to do in the private economy.
(An interesting anecdote someone published ran to something like the fact that from 1870 - 1900 the price of goods fell by roughly 20%. Now that was an era of low taxes, huge accumulations of wealth and the explosion of an industrial economy in the US.) Wouldn't it be better today to support new industries, ideas and job creating enterprises than social benefits, job and industry destruction?
This article touches on much of what is also in the weekend papers - i.e. something seems out of whack.
For example: why is it that investors would rather be funding consumption-focused government borrowings rather than income generating productive investment?
On one hand, the fact that government takes so much of worker's incomes (for redistribution, etc.) means that someone with EUR 2,000 (or $) of take home pay could actually have perhaps EUR 6,000 - 10,000. The difference could include the need to save for one's own retirement and pay for one's own healthcare.
But, on the other hand, what would that added spending power do to personal consumption?
Add to this urge to consume the idea of cutting the VAT or sales tax. Thus, the EUR 200,000 apartment or EUR 50,000 car might cost EUR 170,000 or EUR 35,000 (Portugal = EUR 25,000). Mightn't this spur consumption?
Of course, the tradeoff would be that those who don't work would be suffering. Also, those with overpaid and unnecessary or questionable government jobs would be out looking for something to do in the private economy.
(An interesting anecdote someone published ran to something like the fact that from 1870 - 1900 the price of goods fell by roughly 20%. Now that was an era of low taxes, huge accumulations of wealth and the explosion of an industrial economy in the US.) Wouldn't it be better today to support new industries, ideas and job creating enterprises than social benefits, job and industry destruction?
Beware the talk of a Treasury Bubble - Barrons.com
A DISLOCATION THAT RAISES PERHAPS MORE SERIOUS QUESTIONS: Beware the talk of a Treasury Bubble - Barrons.com: "- Sent using Google Toolbar"
Somehow the question still lingers that, if interest rates are low, extremely low, unbelievably low, but only government seems to be taking advantage of these low rates - then, what else might these conditions be telling us about the structural framework of our society/economy?
It would seem as though we've either destroyed or constrained entrepreneurial spirits (too little return for effort, little net gain from taking risks, such substantial social benefits that risk is unnecessary, too many unknowns, etc.) or mankind has changed embraced the idea of the counter-reformation where things can't be improved and only providence can orchestrate changes.
However, driving down crowded roadways, taking uncomfortable airplanes, discussing climate changes, not doing anything in space to speak of, etc. - all of these opportunities to break through new frontiers and make life better - why aren't we seeing more investment into these things vs. government borrowings to fund entitlements?
Something is far more dislocated than is being discussed in this article.
Somehow the question still lingers that, if interest rates are low, extremely low, unbelievably low, but only government seems to be taking advantage of these low rates - then, what else might these conditions be telling us about the structural framework of our society/economy?
It would seem as though we've either destroyed or constrained entrepreneurial spirits (too little return for effort, little net gain from taking risks, such substantial social benefits that risk
However, driving down crowded roadways, taking uncomfortable airplanes, discussing climate changes, not doing anything in space to speak of, etc. - all of these opportunities to break through new frontiers and make life better - why aren't we seeing more investment into these things vs. government borrowings to fund entitlements?
Something is far more dislocated than is being discussed in this article.
Friday, August 20, 2010
Dow Logs Second Loss in a Row - WSJ.com
HMMM? The 1820's, 30's?: Dow Logs Second Loss in a Row - WSJ.com: "- Sent using Google Toolbar"
Is it more like the early 1820's - 30's when the handcrafted products were replaced with machine made goods? Suddenly the average person could afford furniture, a clock, etc.
But, today those with a high school education who think they can have lush benefit packages and retire at age 50 but live into their 90's without saving for their own retirement - are these people like the craftsman of the 1820's?
The world doesn't stop at the borders of America. Americans like machine tools that would have cost $400 that now only cost $50. As others supply the labor, America needs to invest in education and entrepreneurship.
Sadly, the myopic who run the teachers unions don't see this need to have an educated citizenry. One can gladly see their lush benefits bankrupted.
The longer it takes for Americans to wake-up to how to move into the future, the more costly and difficult the task will be. But, change is difficult, so one can see the market moving up while jobs continue to languish for those who want to try and maintain a status quo. In particular, those who want more benefits, less work and less individual responsibility.
Is it more like the early 1820's - 30's when the handcrafted products were replaced with machine made goods? Suddenly the average person could afford furniture, a clock, etc.
But, today those with a high school education who think they can have lush benefit packages and retire at age 50 but live into their 90's without saving for their own retirement - are these people like the craftsman of the 1820's?
The world doesn't stop at the borders of America. Americans like machine tools that would have cost $400 that now only cost $50. As others supply the labor, America needs to invest in education and entrepreneurship.
Sadly, the myopic who run the teachers unions don't see this need to have an educated citizenry. One can gladly see their lush benefits bankrupted.
The longer it takes for Americans to wake-up to how to move into the future, the more costly and difficult the task will be. But, change is difficult, so one can see the market moving up while jobs continue to languish for those who want to try and maintain a status quo. In particular, those who want more benefits, less work and less individual responsibility.
Dow Logs Second Loss in a Row - WSJ.com
WRONG TRACK: Dow Logs Second Loss in a Row - WSJ.com: "- Sent using Google Toolbar"
Is the market telling us something unmentioned in the headlines?
In other words, are larger companies that can outsource and internationalize many of their operations in a period of merger/consolidation - while the smaller companies are having to deal with an investor hating, business unfriendly economy?
Obama et al may appear to be sustaining a middle class lifestyle as envisioned by unions like the UAW, but are they at the same time destroying such a lifestyle?
Pick you data. But, the unemployment numbers and lack of growth would seem to suggest there is either "no" track or the US is on the "wrong" track. And, wasn't this the same discussion back in 1980 when Carter and the next Dem. candidate for president were defeated by Reagan, who argued the economy could growth and wealth be created?
Is the market telling us something unmentioned in the headlines?
In other words, are larger companies that can outsource and internationalize many of their operations in a period of merger/consolidation - while the smaller companies are having to deal with an investor hating, business unfriendly economy?
Obama et al may appear to be sustaining a middle class lifestyle as envisioned by unions like the UAW, but are they at the same time destroying such a lifestyle?
Pick you data. But, the unemployment numbers and lack of growth would seem to suggest there is either "no" track or the US is on the "wrong" track. And, wasn't this the same discussion back in 1980 when Carter and the next Dem. candidate for president were defeated by Reagan, who argued the economy could growth and wealth be created?
Thursday, August 19, 2010
Stocks Focus on Economic Worries, Not Deals - WSJ.com
A LEADERSHIP VACUUM: Stocks Focus on Economic Worries, Not Deals - WSJ.com: "- Sent using Google Toolbar"
As Donlan wrote a few weeks back in Barrons, the US needs to consider growing and restructuring its economy to move forward.
If one asks whether certain American companies are doing this (going all the way back to the 'platform company' concept), the answer is yes.
But companies don't operate in a vacuum and the result is that as companies move their businesses to stay globally competitive, the US government and unions aren't doing their part to make the US business friendly and a favored location.
In order to do this, some wrenching changes will be needed and such changes are anathema. Sadly, Obama and Pelosi, rather than working to move the country ahead, they've been doing the opposite - fighting and resisting the changes needed.
If companies can't globalize, the US becomes an increasing uncompetitive business location. Businesses get this but the government is an ostrich with its head in the ground.
It's hard to know if there will be any dialog by the politicians or electorate to discuss what needs to be done, the alternatives and tradeoffs. Leaders with vision are clearly lacking.
As Donlan wrote a few weeks back in Barrons, the US needs to consider growing and restructuring its economy to move forward.
If one asks whether certain American companies are doing this (going all the way back to the 'platform company' concept), the answer is yes.
But companies don't operate in a vacuum and the result is that as companies move their businesses to stay globally competitive, the US government and unions aren't doing their part to make the US business friendly and a favored location.
In order to do this, some wrenching changes will be needed and such changes are anathema. Sadly, Obama and Pelosi, rather than working to move the country ahead, they've been doing the opposite - fighting and resisting the changes needed.
If companies can't globalize, the US becomes an increasing uncompetitive business location. Businesses get this but the government is an ostrich with its head in the ground.
It's hard to know if there will be any dialog by the politicians or electorate to discuss what needs to be done, the alternatives and tradeoffs. Leaders with vision are clearly lacking.
Wednesday, August 18, 2010
Letters to the Editor: Let the Health Systems Compete - WSJ.com
FREE AT LAST, FREE AT LAST: Letters to the Editor: Let the Health Systems Compete - WSJ.com: "- Sent using Google Toolbar"
Why not let every state offer individuals a totally unmandate controlled health insurance option. Let the insurance companies come up with any range of plans. Let it be called the "freedom plans" and get rid of fine print. If the benefits don't include maternity or mental health, so be it.
If there are health qualifications, so be it.
Let there be an alternative to the life-sapping socialist plans. Those in such plans might have to sign that they will forgo (or cover out-of-pocket) uncovered health needs; but, there should be a choice.
Right now, the only goal is to have everyone who isn't conscious of taking care of their health pay into a system to cover those who want to abuse their health and milk the system.
Why not let every state offer individuals a totally unmandate controlled health insurance option. Let the insurance companies come up with any range of plans. Let it be called the "freedom plans" and get rid of fine print. If the benefits don't include maternity or mental health, so be it.
If there are health qualifications, so be it.
Let there be an alternative to the life-sapping socialist plans. Those in such plans might have to sign that they will forgo (or cover out-of-pocket) uncovered health needs; but, there should be a choice.
Right now, the only goal is to have everyone who isn't conscious of taking care of their health pay into a system to cover those who want to abuse their health and milk the system.
Tuesday, August 17, 2010
The Fed Can't Solve Our Economic Woes - WSJ.com
WHAT'S WRONG WITH A VAT TAX: The Fed Can't Solve Our Economic Woes - WSJ.com: "- Sent using Google Toolbar"
Several fatal flaws with consumption taxes:
1) They raise the cost of items and shift economic utility functions. The result is people may opt for less efficient, less productive solutions because the cost-benefit trade-off has been shifted. (This is broadly evident in Europe). As a result, the overall productive capacity declines and erodes.
2) The first might not be so malign if the funds raised from the consumption tax did things that increased even more the productivity of the society.
One might think of things like a smart grid to support the development of renewable energy. But an example here would be a country like Portugal where the VAT rate is 21%. When the country decided to build a smart grid to support the current (per the New York Times this month) 40% of electricity demand coming from wind and hydro, the country set up a private company.
Thus, taking more money out of the economy in any way that distorts the normal supply and demand balance of incentives and restraints would seem wrong. Clearly the extra 25% increase in the last 2 years under Obama (from 19% to 25% of GDP) has pushed the development of the economy and jobs in exactly the wrong direction (unless you are a socialist of course).
Several fatal flaws with consumption taxes:
1) They raise the cost of items and shift economic utility functions. The result is people may opt for less efficient, less productive solutions because the cost-benefit trade-off has been shifted. (This is broadly evident in Europe). As a result, the overall productive capacity declines and erodes.
2) The first might not be so malign if the funds raised from the consumption tax did things that increased even more the productivity of the society.
One might think of things like a smart grid to support the development of renewable energy. But an example here would be a country like Portugal where the VAT rate is 21%. When the country decided to build a smart grid to support the current (per the New York Times this month) 40% of electricity demand coming from wind and hydro, the country set up a private company.
Thus, taking more money out of the economy in any way that distorts the normal supply and demand balance of incentives and restraints would seem wrong. Clearly the extra 25% increase in the last 2 years under Obama (from 19% to 25% of GDP) has pushed the development of the economy and jobs in exactly the wrong direction (unless you are a socialist of course).
The Fed Can't Solve Our Economic Woes - WSJ.com
WE NEED A 180: The Fed Can't Solve Our Economic Woes - WSJ.com: "- Sent using Google Toolbar"
To add another note, consider what Donlan wrote last week in Barrons on the changing nature of the economy. This changing nature of the global economy and America's position in it calls for support for innovation, education and our business community.
Instead of such policies, the administration is supporting increased taxes on the productive members of society to pay for ever more entitlements. At the same time, it supports anti-business policies and rhetoric, some of which (as in the anti-immigration policies) are holdovers from and anti-business policies of the Republican right and misguided independents.
If there is one thing missing today it is overriding support for business globally to see the US as a great place to locate (this means changes to tax and immigration policies and pandering to unions and a turn around of political rhetoric).
Meanwhile, the red-herrings of immigrant-blaming, banker-blaming, teacher union excuses, etc. all detract from the ability to turn the economy around.
The misplaced anger of the electorate should be directed at the misbegotten fiscal policies that need to do a 180 turnabout.
To add another note, consider what Donlan wrote last week in Barrons on the changing nature of the economy. This changing nature of the global economy and America's position in it calls for support for innovation, education and our business community.
Instead of such policies, the administration is supporting increased taxes on the productive members of society to pay for ever more entitlements. At the same time, it supports anti-business policies and rhetoric, some of which (as in the anti-immigration policies) are holdovers from and anti-business policies of the Republican right and misguided independents.
If there is one thing missing today it is overriding support for business globally to see the US as a great place to locate (this means changes to tax and immigration policies and pandering to unions and a turn around of political rhetoric).
Meanwhile, the red-herrings of immigrant-blaming, banker-blaming, teacher union excuses, etc. all detract from the ability to turn the economy around.
The misplaced anger of the electorate should be directed at the misbegotten fiscal policies that need to do a 180 turnabout.
Weak Economy Feeds Impulse to Turn Inward - WSJ.com
REFUSING TO BAIL OUT A BOAT TAKING ON WATER: Weak Economy Feeds Impulse to Turn Inward - WSJ.com: "- Sent using Google Toolbar"
It would seem as though we need leaders who recognize that the existing industrial economy has to change and that the US would be better off being globally business-friendly rather than old-fashioned industrial protectionist.
People who are tied to the old industrial economy are jealous of those Americans that have found prosperity in the developing technological, information based economy. And leaders, rather than helping those left out find ways to join this new economy, are pandering to the fears of those left behind in ways that are inhibiting, if not killing the ability of the larger economy to move ahead.
Donlan wrote a good piece on this a couple of weeks ago in Barrons. He compared the 19th century movement of farm workers into factories to the need to move ahead today with more education, rationalization of jobs and work, etc.
One can only imagine the technology first written about carefully in the 1960's where instead of having centralized factories, technology advances to machines that can make any product and factories become decentralized - requiring even fewer workers without highly advanced skills.
Obama and Pelosi and their supporters and union members may be hoping to hold back the tide of the future, but so far the results have been ominous. Tax receipts are down, unemployment is way up and the US is eating up the capital and equity it has to make the needed changes.
Will the Republicans be able to come up with a coherent set of policies, let alone have the ability to advance them come November? It's like watching a group of people sitting in a boat taking on water and wondering why they refuse to start trying to bail the water out of the boat. Somehow it's like those on the Titanic who thought the boat unsinkable. They are deluded by their beliefs.
It would seem as though we need leaders who recognize that the existing industrial economy has to change and that the US would be better off being globally business-friendly rather than old-fashioned industrial protectionist.
People who are tied to the old industrial economy are jealous of those Americans that have found prosperity in the developing technological, information based economy. And leaders, rather than helping those left out find ways to join this new economy, are pandering to the fears of those left behind in ways that are inhibiting, if not killing the ability of the larger economy to move ahead.
Donlan wrote a good piece on this a couple of weeks ago in Barrons. He compared the 19th century movement of farm workers into factories to the need to move ahead today with more education, rationalization of jobs and work, etc.
One can only imagine the technology first written about carefully in the 1960's where instead of having centralized factories, technology advances to machines that can make any product and factories become decentralized - requiring even fewer workers without highly advanced skills.
Obama and Pelosi and their supporters and union members may be hoping to hold back the tide of the future, but so far the results have been ominous. Tax receipts are down, unemployment is way up and the US is eating up the capital and equity it has to make the needed changes.
Will the Republicans be able to come up with a coherent set of policies, let alone have the ability to advance them come November? It's like watching a group of people sitting in a boat taking on water and wondering why they refuse to start trying to bail the water out of the boat. Somehow it's like those on the Titanic who thought the boat unsinkable. They are deluded by their beliefs.
Monday, August 16, 2010
New Visa Law Irks Outsourcing Firms - WSJ.com
LESS AND LESS BUSINESS FRIENDLY AMERICA: New Visa Law Irks Outsourcing Firms - WSJ.com: "- Sent using Google Toolbar"
As with so much of the legislation coming from Congress in recent years, it is subject to the law of unintended consequences for its single-minded ignorance of the need for the US to recognize a larger, global more competitive marketplace.
It's far easier to say "I want laws that keep my job, benefits, etc." - even if the outcome is the company you work for would have to sell at product for $1,000 that competitors make for $200. As seen with the UAW and GM, such policies are wealth destroyers not wealth creators. And, the jobs disappear without good replacements.
Donlan wrote a great piece in Barrons within the last 2 weeks on the need for the US to recognize changes are needed and that the economy will be changing and have to change in a manner a wrenching as that in the 19th century when workers moved from farms to factories.
Sadly, all this legislation, which is putative at best, will just drive business out of the US. Politicians may think that jobs and businesses are stuck in America with its uncompetitive tax and labor policies due to ?????, but it would seem as though the competitive development of the US economy compared to others in the recent economic downturn, would be evidence enough that the US lacks any type of leadership that understands where the US needs to go; rather than where it would like to justify the continuation of where it has been.
Ah well, the drama continues to play and the current scenes seem to drag on more and more. Will November bring a change? It would seem as though the stock market can't decide.
As with so much of the legislation coming from Congress in recent years, it is subject to the law of unintended consequences for its single-minded ignorance of the need for the US to recognize a larger, global more competitive marketplace.
It's far easier to say "I want laws that keep my job, benefits, etc." - even if the outcome is the company you work for would have to sell at product for $1,000 that competitors make for $200. As seen with the UAW and GM, such policies are wealth destroyers not wealth creators. And, the jobs disappear without good replacements.
Donlan wrote a great piece in Barrons within the last 2 weeks on the need for the US to recognize changes are needed and that the economy will be changing and have to change in a manner a wrenching as that in the 19th century when workers moved from farms to factories.
Sadly, all this legislation, which is putative at best, will just drive business out of the US. Politicians may think that jobs and businesses are stuck in America with its uncompetitive tax and labor policies due to ?????, but it would seem as though the competitive development of the US economy compared to others in the recent economic downturn, would be evidence enough that the US lacks any type of leadership that understands where the US needs to go; rather than where it would like to justify the continuation of where it has been.
Ah well, the drama continues to play and the current scenes seem to drag on more and more. Will November bring a change? It would seem as though the stock market can't decide.
Europe's Two-Speed Dilemma - WSJ.com
AND, LESS CONSUMPTION! WHY?: Europe's Two-Speed Dilemma - WSJ.com: "- Sent using Google Toolbar"
What always seems to be missing from articles trying to cajole Europeans (and especially Germans) into doing more consuming is the issue of economic-utility to income that comes about with a VAT tax.
Thus, an extreme (Portuguese) example is the 20% VAT (recently raised to 21%) applied on top of a 20% car purchase excise tax. Thus the cost of a car (new or used) in Portugal is approximately twice the cost in euros as the same car in the US.
Not surprisingly, car dealers advertise 10-year car loans.
Combine these higher costs with lower average incomes and people just don't have either the wherewithal or the economic-utility desire to consume.
What always seems to be missing from articles trying to cajole Europeans (and especially Germans) into doing more consuming is the issue of economic-utility to income that comes about with a VAT tax.
Thus, an extreme (Portuguese) example is the 20% VAT (recently raised to 21%) applied on top of a 20% car purchase excise tax. Thus the cost of a car (new or used) in Portugal is approximately twice the cost in euros as the same car in the US.
Not surprisingly, car dealers advertise 10-year car loans.
Combine these higher costs with lower average incomes and people just don't have either the wherewithal or the economic-utility desire to consume.
Thursday, August 12, 2010
Fed's Balance-Sheet Target Fails to Steady Markets - Barrons.com
ECONOMICALLY CLUELESS SOCIALISTS: Fed's Balance-Sheet Target Fails to Steady Markets - Barrons.com: "- Sent using Google Toolbar"
Sadly, from reading the comments, the socialists (and those without a real economic clue) seem to believe Obama can do no wrong.
On the other hand, those who have managed to save and work hard to invest, they know the government is in the hand of social redistributionists who only know how to take from producers. Thus, it's not the time to look for any economic recovery or job creation in the US. The Democrats are determined to continue to despoil the economic competitiveness of the US.
It's not a good harbinger.
Sadly, from reading the comments, the socialists (and those without a real economic clue) seem to believe Obama can do no wrong.
On the other hand, those who have managed to save and work hard to invest, they know the government is in the hand of social redistributionists who only know how to take from producers. Thus, it's not the time to look for any economic recovery or job creation in the US. The Democrats are determined to continue to despoil the economic competitiveness of the US.
It's not a good harbinger.
Chapter 11 Benefits Battles Get Fierce - WSJ.com
AND BLAME WHO? Chapter 11 Benefits Battles Get Fierce - WSJ.com: "- Sent using Google Toolbar"
One wonders why the retirees don't sue their union and union leaders for having put in place unrealistic compensation and union work rules that forced the companies into bankruptcy.
If economic times and the competitive environment changes, then so must labor relationships. But, to take one look at unionized labor conditions is to make it clear that unions just don't get it.
Whether the outsized levels of public employee pay and benefits to the treatment of investors vs. the union in the GM restructuring.
Sad, but true, things have to change. The fact that some finance businesses have been able to stay competitive while lots of blue collar positions have become grossly overpaid unfortunately should not be a cause of jealousy but an incentive to get more education and make all jobs reflect their value in the market.
Of course, this is anathema to unions and the Democrats who want to go back to the Carter years when the economy was seen as stagnant and redistribution the only option. One look around the world and at US history shows economies can grow - but, not when redistribution trumps reward for effort and risk taking.
One wonders why the retirees don't sue their union and union leaders for having put in place unrealistic compensation and union work rules that forced the companies into bankruptcy.
If economic times and the competitive environment changes, then so must labor relationships. But, to take one look at unionized labor conditions is to make it clear that unions just don't get it.
Whether the outsized levels of public employee pay and benefits to the treatment of investors vs. the union in the GM restructuring.
Sad, but true, things have to change. The fact that some finance businesses have been able to stay competitive while lots of blue collar positions have become grossly overpaid unfortunately should not be a cause of jealousy but an incentive to get more education and make all jobs reflect their value in the market.
Of course, this is anathema to unions and the Democrats who want to go back to the Carter years when the economy was seen as stagnant and redistribution the only option. One look around the world and at US history shows economies can grow - but, not when redistribution trumps reward for effort and risk taking.
Wednesday, August 11, 2010
Stocks Skid on Fresh Economic Worries - WSJ.com
ECONOMETRIC MODELS REQUIRE THE RIGHT INPUT DATA - BUT IS THERE MUCH FROM THE 19TH c?: Stocks Skid on Fresh Economic Worries - WSJ.com: "- Sent using Google Toolbar"
It seems interesting how wrong most prognosticators and their models have become of late; but, perhaps not surprising. After all, most of the data they use comes from the 20th century or the last decade.
But, it is interesting how Donlan writes in this weeks Barrons an opinion piece suggesting that the current period is more akin to the 19th century when people moved off of farms to work in industry; and, that the current period (in the US) has a similar push to get better educated and take on non-industrial labor jobs.
Additionally of course, there is the fact that while the push to make Donlan's suggested changes has been going on for perhaps 30 years or more, the efforts on the part of governments and unions has been to push back against such changes, thus distorting the data streams that feed the econometric forecasting models being used.
We also seem to have fiscal policies that are so counter- and anti-change, with the dreamy belief that monetary policy can on its own cure all ills.
It's hard to know what the next steps will be, but to date, we seem to be seeing the results of more wrong moves on the policy front and only a November election offering even a glimmer of a change (see also the Fouad Ajami opinion piece about Obama in today's WSJ).
It seems interesting how wrong most prognosticators and their models have become of late; but, perhaps not surprising. After all, most of the data they use comes from the 20th century or the last decade.
But, it is interesting how Donlan writes in this weeks Barrons an opinion piece suggesting that the current period is more akin to the 19th century when people moved off of farms to work in industry; and, that the current period (in the US) has a similar push to get better educated and take on non-industrial labor jobs.
Additionally of course, there is the fact that while the push to make Donlan's suggested changes has been going on for perhaps 30 years or more, the efforts on the part of governments and unions has been to push back against such changes, thus distorting the data streams that feed the econometric forecasting models being used.
We also seem to have fiscal policies that are so counter- and anti-change, with the dreamy belief that monetary policy can on its own cure all ills.
It's hard to know what the next steps will be, but to date, we seem to be seeing the results of more wrong moves on the policy front and only a November election offering even a glimmer of a change (see also the Fouad Ajami opinion piece about Obama in today's WSJ).
Frank: The Economic Crisis: Lessons Unlearned - WSJ.com
CAN'T GO BACK, BUT HAVE A HARD TIME DECIDING TO MOVE FORWARD: Frank: The Economic Crisis: Lessons Unlearned - WSJ.com: "- Sent using Google Toolbar"
Worth reading is Donlan's article in this week's Barrons:
#
Editorial Commentary
Dr. Feelgood, Call Your Office
by THOMAS G. DONLAN
There's a problem with the prescription for macroeconomic stimulus.
http://online.barrons.com/article/SB50001424052970204203204575411490821689592.html?mod=BOL_twm_fs
With the pejorative slant at those who know how to prosper during these changing times (the snide remarks about bankers), one wonders why the parallel encouragement of the other parts of the population to see that the way they earn their living has to change isn't also part and parcel of the litany?
As with Donlan, one recalls all the 19th rant about the loss of family farms and the supposed idyllic life supplanted by industrialization. But, there was no going back in the 19th century and there is no going back now. The world is changing and one can either grow and change with it or eventually fail.
Sure, it would be nice in some dream state to have the closed-economic-cycle the UAW sought in the domestic car industry, but just as that failed, so will the economic entitlement policies of the Democrats.
How all of this will work out is less clear than the proven path of failure seen in overtaxed and over-benefited states like California. (To think that as the 8th largest economy in the world, the budget problems of California deserve less interest and attention than those of Greece (who knows how very much farther down the ranking the Greek economy is) suggests that all wits are not about the media!)
Worth reading is Donlan's article in this week's Barrons:
#
Editorial Commentary
Dr. Feelgood, Call Your Office
by THOMAS G. DONLAN
There's a problem with the prescription for macroeconomic stimulus.
http://online.barrons.com/article/SB50001424052970204203204575411490821689592.html?mod=BOL_twm_fs
With the pejorative slant at those who know how to prosper during these changing times (the snide remarks about bankers), one wonders why the parallel encouragement of the other parts of the population to see that the way they earn their living has to change isn't also part and parcel of the litany?
As with Donlan, one recalls all the 19th rant about the loss of family farms and the supposed idyllic life supplanted by industrialization. But, there was no going back in the 19th century and there is no going back now. The world is changing and one can either grow and change with it or eventually fail.
Sure, it would be nice in some dream state to have the closed-economic-cycle the UAW sought in the domestic car industry, but just as that failed, so will the economic entitlement policies of the Democrats.
How all of this will work out is less clear than the proven path of failure seen in overtaxed and over-benefited states like California. (To think that as the 8th largest economy in the world, the budget problems of California deserve less interest and attention than those of Greece (who knows how very much farther down the ranking the Greek economy is) suggests that all wits are not about the media!)
Sunday, August 8, 2010
The Fed Will Print More Money - Barrons.com
ATTAINING SOME TYPE OF EQUILIBRIUM: The Fed Will Print More Money - Barrons.com: "- Sent using Google Toolbar"
As above with Taverna as well, part of the problem is also the mismatch between economic cost and benefit utility (i.e. the government has distorted the work people do and the benefits (utility) received through attempts at some type of fairness. This also totally distorts the ability of the society to recover in a logically productive manner.
Obama has clearly made this worse with Obamacare. Public employee unions are finding they have to lower their benefit demands. It would seem as though this process if far from equilibrium by a factor at least equal to 10% of GDP before any multiplier effects.
As above with Taverna as well, part of the problem is also the mismatch between economic cost and benefit utility (i.e. the government has distorted the work people do and the benefits (utility) received through attempts at some type of fairness. This also totally distorts the ability of the society to recover in a logically productive manner.
Obama has clearly made this worse with Obamacare. Public employee unions are finding they have to lower their benefit demands. It would seem as though this process if far from equilibrium by a factor at least equal to 10% of GDP before any multiplier effects.
The Fed Will Print More Money - Barrons.com
IS QUANTITATIVE EASING THE ANSWER (AND WILL IT WORK IF NO OTHER CHANGES ARE MADE?: The Fed Will Print More Money - Barrons.com: "- Sent using Google Toolbar"
Hasn’t Donlan basically summed up this week what needs to be done (and is being managed by the current administration in exactly the wrong way?
In other words, if the US is support the type of living standards people want, doesn’t it need to change? And, don’t these changes involve moving up from an education and labor structure geared to a manufacturing society to one geared to handle information processing, automation and engineering and scientific excellence – along with great entrepreneurial drive?
On one hand there is clearly the need to help the less fortunate – which includes those who by the traditional baggage they carry and hold on to find it hard to adapt. This is the Democratic, liberal mantra. They hope that the larger society and its progress aren’t so retarded by all these wealth transfers that it can still grow. Right now, the evidence in America is that it isn’t growing; yet it needs to in order to create jobs for the fifth of the population without them.
The Republicans are a political class with their own baggage. They were in control under Bush and overspent and failed to challenge the entrenched interests of unions and entitlement receivers.
Will printing money help if the direction of society doesn’t change? One strongly doubts it.
What needs to be done? Clearly something to support – and, not constrain – the forces of entrepreneurial growth, educational excellence and individual responsibility.
Right now, US policy would appear to be continuing to push these forces away from America to reward individuals and companies. Changing this is a more important and bigger challenge than running the printing presses.
Hasn’t Donlan basically summed up this week what needs to be done (and is being managed by the current administration in exactly the wrong way?
In other words, if the US is support the type of living standards people want, doesn’t it need to change? And, don’t these changes involve moving up from an education and labor structure geared to a manufacturing society to one geared to handle information processing, automation and engineering and scientific excellence – along with great entrepreneurial drive?
On one hand there is clearly the need to help the less fortunate – which includes those who by the traditional baggage they carry and hold on to find it hard to adapt. This is the Democratic, liberal mantra. They hope that the larger society and its progress aren’t so retarded by all these wealth transfers that it can still grow. Right now, the evidence in America is that it isn’t growing; yet it needs to in order to create jobs for the fifth of the population without them.
The Republicans are a political class with their own baggage. They were in control under Bush and overspent and failed to challenge the entrenched interests of unions and entitlement receivers.
Will printing money help if the direction of society doesn’t change? One strongly doubts it.
What needs to be done? Clearly something to support – and, not constrain – the forces of entrepreneurial growth, educational excellence and individual responsibility.
Right now, US policy would appear to be continuing to push these forces away from America to reward individuals and companies. Changing this is a more important and bigger challenge than running the printing presses.
Saturday, August 7, 2010
Dangerous Stimulation - Barrons.com
MOMENTUS CHANGES CALLED FOR: Dangerous Stimulation - Barrons.com: "- Sent using Google Toolbar"
A most interesting opinion piece. Thank you Mr. Donlan.
I strong agree with the fact that the changes go back a way; which explains why one can criticize both Bush and Obama.
Sadly, a time that the world needs insightful leaders, we've had one too beholden to old religion(s) (Mr. Bush) and too beholden to old socialism (Mr. Obama).
No wonder there is disquiet in the land. Vast numbers of people seem to know they don't want to turn to the right or the left; and, sadly, this November doesn't seem to offering them the type of choice they are seeking.
Will we have to wait the 30 years you note? One can only hope not; and, that in the interim the grief doesn't get too much greater.
A most interesting opinion piece. Thank you Mr. Donlan.
I strong agree with the fact that the changes go back a way; which explains why one can criticize both Bush and Obama.
Sadly, a time that the world needs insightful leaders, we've had one too beholden to old religion(s) (Mr. Bush) and too beholden to old socialism (Mr. Obama).
No wonder there is disquiet in the land. Vast numbers of people seem to know they don't want to turn to the right or the left; and, sadly, this November doesn't seem to offering them the type of choice they are seeking.
Will we have to wait the 30 years you note? One can only hope not; and, that in the interim the grief doesn't get too much greater.
New U.S. Visa Fees Would Hit Indian Firms - WSJ.com
Q&A: Who's to blame: New U.S. Visa Fees Would Hit Indian Firms - WSJ.com: "- Sent using Google Toolbar"
Question: Shouldn't we blame entrepreneurs for not hiring Americans? The real business of these 'entrepreneurs' has been to profit by throwing Americans out of work. That is not a business that America needs to nuture.
Answer:
You can't blame investors and business people for trying to be globally competitive.
If Americans want jobs, they have to realize that the total cost of labor has to be competitive. The use of technology to make it possible to realize more value for each hour of labor means there has to be adequate capital at a cost that supports the added investment.
Right now, the US has amongst the worlds highest corporate income taxes: As a result of course, it pays for an American company to either locate a subsidiary outside the US; or, if the government passes the currently proposed law to disallow US companies to deduct these foreign taxes (with the goal of making them keep jobs in the US), these companies will just have to 'out-source' this work and have even fewer American jobs.
Along with the tax idiocy of the government, there is the immigration idiocy. It may seem all smart and good to limit the ability of foreigners to work in the US on the surface; but, think of yourself as a global business, drawing on technical and production people from plants scattered around the world. It is important that foreigners can be brought to the US and Americans can be moved overseas to enrich and develop the skills base. But, what does immigration say? They say, keep all these foreigners out; or, at best, make it difficult to bring them here without inordinate delays. So, what does a company logically do? Again, since Americans can generally easily go to other countries (but foreigners not come here), the US business moves their main facilities out of the US.
Thus, once again, the simplicity and shortsightedness of American and union policy actually costs Americans far more jobs than it saves.
One could write a book on things the US is doing wrong. Another good place to look is the letter the US Chamber of Commerce sent to Obama in July on things Obama is doing wrong.
Question: Shouldn't we blame entrepreneurs for not hiring Americans? The real business of these 'entrepreneurs' has been to profit by throwing Americans out of work. That is not a business that America needs to nuture.
Answer:
You can't blame investors and business people for trying to be globally competitive.
If Americans want jobs, they have to realize that the total cost of labor has to be competitive. The use of technology to make it possible to realize more value for each hour of labor means there has to be adequate capital at a cost that supports the added investment.
Right now, the US has amongst the worlds highest corporate income taxes: As a result of course, it pays for an American company to either locate a subsidiary outside the US; or, if the government passes the currently proposed law to disallow US companies to deduct these foreign taxes (with the goal of making them keep jobs in the US), these companies will just have to 'out-source' this work and have even fewer American jobs.
Along with the tax idiocy of the government, there is the immigration idiocy. It may seem all smart and good to limit the ability of foreigners to work in the US on the surface; but, think of yourself as a global business, drawing on technical and production people from plants scattered around the world. It is important that foreigners can be brought to the US and Americans can be moved overseas to enrich and develop the skills base. But, what does immigration say? They say, keep all these foreigners out; or, at best, make it difficult to bring them here without inordinate delays. So, what does a company logically do? Again, since Americans can generally easily go to other countries (but foreigners not come here), the US business moves their main facilities out of the US.
Thus, once again, the simplicity and shortsightedness of American and union policy actually costs Americans far more jobs than it saves.
One could write a book on things the US is doing wrong. Another good place to look is the letter the US Chamber of Commerce sent to Obama in July on things Obama is doing wrong.
Friday, August 6, 2010
Peggy Noonan: America Is at Risk of Boiling Over - WSJ.com
HAVING A CLUE: Peggy Noonan: America Is at Risk of Boiling Over - WSJ.com: "- Sent using Google Toolbar"
You've certainly hit part of the nail on its head - i.e. if we could be optimistic (as producers, investors, job creators, etc.) then the economy could rebound; but, with the focus of the government on everything but rewarding producers and letting people earn what they get and keep what they earn, is it any wonder that people don't have jobs - but wonder why; and, business has to look to not go bankrupt - so it tries to stay competitive, which often means invest, create jobs, sell, etc. outside the US.
To note that the political class doesn't get it, one needs only look at California, New York, etc. To see that organized labor doesn't and hasn't gotten it, one only needs look at the UAW, public employee unions and teachers unions.
So, if the political class and organized labor don't get it, then a great many leaders are dragging the country down, not up. (If this wasn't true, then where are the jobs and where's the educated work force we need?)
It will be interesting to see if the Republicans can (at best) sideline their flat-earth religious cohort to focus on jobs and economic well-being. Christine Romer leaving her White House position may be an admission of failure - but, more likely, she just doesn't have a clue - nor is she leaving someone at the White House who has a clue.
You've certainly hit part of the nail on its head - i.e. if we could be optimistic (as producers, investors, job creators, etc.) then the economy could rebound; but, with the focus of the government on everything but rewarding producers and letting people earn what they get and keep what they earn, is it any wonder that people don't have jobs - but wonder why; and, business has to look to not go bankrupt - so it tries to stay competitive, which often means invest, create jobs, sell, etc. outside the US.
To note that the political class doesn't get it, one needs only look at California, New York, etc. To see that organized labor doesn't and hasn't gotten it, one only needs look at the UAW, public employee unions and teachers unions.
So, if the political class and organized labor don't get it, then a great many leaders are dragging the country down, not up. (If this wasn't true, then where are the jobs and where's the educated work force we need?)
It will be interesting to see if the Republicans can (at best) sideline their flat-earth religious cohort to focus on jobs and economic well-being. Christine Romer leaving her White House position may be an admission of failure - but, more likely, she just doesn't have a clue - nor is she leaving someone at the White House who has a clue.
Jobs Report Intensifies Fed Debate - WSJ.com
TIME TO CHANGE TACK?: Jobs Report Intensifies Fed Debate - WSJ.com: "- Sent using Google Toolbar"
What works and what doesn't work?
It would seem as though the current strategy of (among other things):
> high and expanded entitlements
> extravagant public pensions and bloated social benefits
> high taxes and multiple layers of high taxes going forward
> unabashed favoritism towards unions over capital and business
> business bashing
etc.
combined with low interest rates isn't working.
Rather than dealing with just the monetary side of the equation (thank you Milton Friedman in years gone by), would it not make greater sense to seriously try and make the investment and business climate in America more job friendly (a la Art Laffer)?
What works and what doesn't work?
It would seem as though the current strategy of (among other things):
> high and expanded entitlements
> extravagant public pensions and bloated social benefits
> high taxes and multiple layers of high taxes going forward
> unabashed favoritism towards unions over capital and business
> business bashing
etc.
combined with low interest rates isn't working.
Rather than dealing with just the monetary side of the equation (thank you Milton Friedman in years gone by), would it not make greater sense to seriously try and make the investment and business climate in America more job friendly (a la Art Laffer)?
Romer to Resign as Obama Adviser - WSJ.com
ON C. ROMER: Romer to Resign as Obama Adviser - WSJ.com:
"Since she clearly misread history (i.e. the Depression, etc.), it would seem good to have her go. However, the rest of the team in office clearly has the wrong approach to restarting the US economy, so it won't make any difference.
And, lets stop this 9.5% unemployment charade. It's closer to 20% and the rest of the world and the average American should stop buying the misdirection and counter-fact of 9.5%. About 20% of the potential workers in the US would like a job and can't find one. Meanwhile, all the economic policies are encouraging job creation outside of the US first.
One does feel sorry for Berkeley students who will have a professor who doesn't have her facts and ability to think on the right track. Sort of reminds one of those who taught the world was flat! Ah well....
- Sent using Google Toolbar"
"Since she clearly misread history (i.e. the Depression, etc.), it would seem good to have her go. However, the rest of the team in office clearly has the wrong approach to restarting the US economy, so it won't make any difference.
And, lets stop this 9.5% unemployment charade. It's closer to 20% and the rest of the world and the average American should stop buying the misdirection and counter-fact of 9.5%. About 20% of the potential workers in the US would like a job and can't find one. Meanwhile, all the economic policies are encouraging job creation outside of the US first.
One does feel sorry for Berkeley students who will have a professor who doesn't have her facts and ability to think on the right track. Sort of reminds one of those who taught the world was flat! Ah well....
- Sent using Google Toolbar"
New U.S. Visa Fees to Hit Indian Firms - WSJ.com
CARROTS AND STICKS: New U.S. Visa Fees to Hit Indian Firms - WSJ.com: "- Sent using Google Toolbar"
Seems like a typical Democratic preference for "sticks" vs. "carrots".
It's sort of like looking at two different sets of parents: One (the US, union-centric, liberal parent) is equivalent to the one that yells and beats on their kids to behave; the other parent (not the Republican one either) is a parent who knows how to negotiate and positively encourage good behavior.
In the first case, the kid is beaten down; and, as in the employment and economic picture in the US today, the economy is relatively stagnant and not growing. Their is no positive exuberance or feeling of joy.
In the second case, there is always something positive going on and a resounding cycle of success and good feeling.
Too bad, we don't have positively inclined leaders in this country!
Seems like a typical Democratic preference for "sticks" vs. "carrots".
It's sort of like looking at two different sets of parents: One (the US, union-centric, liberal parent) is equivalent to the one that yells and beats on their kids to behave; the other parent (not the Republican one either) is a parent who knows how to negotiate and positively encourage good behavior.
In the first case, the kid is beaten down; and, as in the employment and economic picture in the US today, the economy is relatively stagnant and not growing. Their is no positive exuberance or feeling of joy.
In the second case, there is always something positive going on and a resounding cycle of success and good feeling.
Too bad, we don't have positively inclined leaders in this country!
Thursday, August 5, 2010
Emerging Lessons on Fighting the Financial Crisis - WSJ.com
MORE ON OSTRICHES AND THEIR BEHAVIOR: Emerging Lessons on Fighting the Financial Crisis - WSJ.com: "- Sent using Google Toolbar"
Whether inflation or deflation is on the horizon, it would seem as though the basic problems of the society and economy, which is to build and maintain a global competitiveness that can sustain our desired standard of living, are being ignored as an ostrich sticking its head in the sand.
Sadly, liberal and socialist philosophies discount, ignore and contravene one of the essential characteristics of individuals, which is to improve their own lives and work harder for themselves than for others.
The latest additional funding for States is another example of putting a new coat of paint on a termite-ridden house with no attempt made to get rid of the termites or the bad wood.
As such, we face the equivalent of the housing bubble - i.e. an unsustainable situation largely ignored by the majority of the population and the politicians. One result of this ignorance is a growing extension of the time required to rebuild employment.
Whether inflation or deflation is on the horizon, it would seem as though the basic problems of the society and economy, which is to build and maintain a global competitiveness that can sustain our desired standard of living, are being ignored as an ostrich sticking its head in the sand.
Sadly, liberal and socialist philosophies discount, ignore and contravene one of the essential characteristics of individuals, which is to improve their own lives and work harder for themselves than for others.
The latest additional funding for States is another example of putting a new coat of paint on a termite-ridden house with no attempt made to get rid of the termites or the bad wood.
As such, we face the equivalent of the housing bubble - i.e. an unsustainable situation largely ignored by the majority of the population and the politicians. One result of this ignorance is a growing extension of the time required to rebuild employment.
Congress Set to Boost Aid to States - WSJ.com
PAINTING OVER A TERMITE-RIDDEN HOUSE: Congress Set to Boost Aid to States - WSJ.com: "- Sent using Google Toolbar"
A question that should have been asked is whether this bill encourages the private sector to see a better economic climate in the future? My answer would be clearly "NO"!
The problem the States and Federal Government are in is brought about by too much spending.
To keep teachers, have they asked the teachers to contribute more to pensions (i.e. in NY they pay nothing towards their pensions after 10 years). Have they made changes to reduce Medicaid costs? Have they considered legalizing drugs instead of spending huge sums on incarceration?
No, it's typical unionized, special interest business as usual - which, almost all articles recognize as a major cause of the prolonging of this economic downturn.
It would seem more an admission of a total inability to address the underlying causes of the economic problems we face - it's like painting a termite-ridden house without getting rid of the termites or the rotten wood first. (We may have all known someone who did that to their house; and, how smart did we think they were?)
A question that should have been asked is whether this bill encourages the private sector to see a better economic climate in the future? My answer would be clearly "NO"!
The problem the States and Federal Government are in is brought about by too much spending.
To keep teachers, have they asked the teachers to contribute more to pensions (i.e. in NY they pay nothing towards their pensions after 10 years). Have they made changes to reduce Medicaid costs? Have they considered legalizing drugs instead of spending huge sums on incarceration?
No, it's typical unionized, special interest business as usual - which, almost all articles recognize as a major cause of the prolonging of this economic downturn.
It would seem more an admission of a total inability to address the underlying causes of the economic problems we face - it's like painting a termite-ridden house without getting rid of the termites or the rotten wood first. (We may have all known someone who did that to their house; and, how smart did we think they were?)
Monday, August 2, 2010
Bernanke Notes Risks to Recovery - WSJ.com
Bernanke Notes Risks to Recovery - WSJ.com: "- Sent using Google Toolbar"
Its all such basic math that one would think the legislators would get it - but of course, they excel only in micro-economics (i.e. how to save on their own taxes, as Art Laffer notes in his opinion piece this Monday mentioning Senator Kerry saving on the cost of his yacht by buying and keeping it in Rhode Island vs. Mass.). As for macro-economics - well, it just goes against their redistributionist bent.
It's as if the added 5-6% of GDP that the government wants to tax from the rich should have no impact on reducing the capital available for creating jobs in the US. Similarly, the added costs of labor shouldn't make foreign employees or outsourcing more appealing. And, then of course, there is the higher taxes on capital and good salaries and bonuses that, in the minds of Liberals, should have no impact on the risk return evaluation of an investment.
One does wonder if such a lack of basic economic skills on the part of Liberals should be a disqualification for office - sort of like being an illegal immigrant by choice not nature? Ah well, they're in their turning the economy in socialist Europe at best, socialist Venezuela if they're not careful.
Its all such basic math that one would think the legislators would get it - but of course, they excel only in micro-economics (i.e. how to save on their own taxes, as Art Laffer notes in his opinion piece this Monday mentioning Senator Kerry saving on the cost of his yacht by buying and keeping it in Rhode Island vs. Mass.). As for macro-economics - well, it just goes against their redistributionist bent.
It's as if the added 5-6% of GDP that the government wants to tax from the rich should have no impact on reducing the capital available for creating jobs in the US. Similarly, the added costs of labor shouldn't make foreign employees or outsourcing more appealing. And, then of course, there is the higher taxes on capital and good salaries and bonuses that, in the minds of Liberals, should have no impact on the risk return evaluation of an investment.
One does wonder if such a lack of basic economic skills on the part of Liberals should be a disqualification for office - sort of like being an illegal immigrant by choice not nature? Ah well, they're in their turning the economy in socialist Europe at best, socialist Venezuela if they're not careful.
Arthur Laffer: The Soak-the-Rich Catch-22 - WSJ.com
TRYING TO HELP, BUT TALKING TO A BRICK WALL: Arthur Laffer: The Soak-the-Rich Catch-22 - WSJ.com: "- Sent using Google Toolbar"
Such an ongoing stream of reasonable and, one might say insightful, but it is so bloody obvious that to say 'insightful' is to pander to the acceptance of the stupidity of those who think people don't work for themselves.
What comes to mind when one thinks of the Obama, et. al. economic policy is the analogy of a family that spends everything they make and then, because they want more, they go out and steal it (or tax it) so they don't have to fore go anything.
It's clear the majority of the country feels the downward pressure of the heavy hand of the Democratic government. The real concern is whether the Republicans would have the guts to start cutting back on all of the entitlements.
As all Americans know, it's hard to live without a credit card or some room left on a credit card. The US has overdrawn its credit card and clearly the Democrats are hoping they can keep finding new credit.
As the economist Robert Reich was quoted all this past weekend on Bloomberg, he argues the government should be giving money to state and local governments so they can avoid major layoffs. He never questions whether government salaries should see major cutbacks to bring them in line with what they were before the explosion of public employee union power; nor does he challenge the benefits public employee retirees are getting by taking tax money out of the hands of citizens that is holding back the economy.
Some people are part of the solution (Laffer) and some are part of the problem (Reich).
So, the question is does anyone think post-November the government will be able to cut back entitlements, unions - basically, the whole liberal agenda? (Clearly Gross at PIMCO is concerned about a much longer economic downturn and deflation.)
Such an ongoing stream of reasonable and, one might say insightful, but it is so bloody obvious that to say 'insightful' is to pander to the acceptance of the stupidity of those who think people don't work for themselves.
What comes to mind when one thinks of the Obama, et. al. economic policy is the analogy of a family that spends everything they make and then, because they want more, they go out and steal it (or tax it) so they don't have to fore go anything.
It's clear the majority of the country feels the downward pressure of the heavy hand of the Democratic government. The real concern is whether the Republicans would have the guts to start cutting back on all of the entitlements.
As all Americans know, it's hard to live without a credit card or some room left on a credit card. The US has overdrawn its credit card and clearly the Democrats are hoping they can keep finding new credit.
As the economist Robert Reich was quoted all this past weekend on Bloomberg, he argues the government should be giving money to state and local governments so they can avoid major layoffs. He never questions whether government salaries should see major cutbacks to bring them in line with what they were before the explosion of public employee union power; nor does he challenge the benefits public employee retirees are getting by taking tax money out of the hands of citizens that is holding back the economy.
Some people are part of the solution (Laffer) and some are part of the problem (Reich).
So, the question is does anyone think post-November the government will be able to cut back entitlements, unions - basically, the whole liberal agenda? (Clearly Gross at PIMCO is concerned about a much longer economic downturn and deflation.)
Sunday, August 1, 2010
Uncertainty to Stave off 'Austerians' and Keynesians on Fiscal Policy - Barrons.com
THE GREAT UNSAID: Uncertainty to Stave off 'Austerians' and Keynesians on Fiscal Policy - Barrons.com: "- Sent using Google Toolbar"
One does keep wondering why the quality of the business environment is always omitted from the look back at the Depression and the evaluation of the current economic situation?
Clearly the idea of taking from producers and giving to non-producers is appealing to the socially conscious and liberals, but it is counterproductive to the ability of society to sort out and reward those who endeavor to make individual decisions on working, investing and consumption based on their own dedicated efforts to make their lives better or allow the government to do it for them.
Right now, the economic environment is so distorted that it is little wonder things are at best treading water. But this argument goes beyond the Austerians and Keynesians and is clearly an argument that only those like the American Chamber of Commerce have the courage to raise publicly. And, such discussions are clearly anathema to the current administration.
One does keep wondering why the quality of the business environment is always omitted from the look back at the Depression and the evaluation of the current economic situation?
Clearly the idea of taking from producers and giving to non-producers is appealing to the socially conscious and liberals, but it is counterproductive to the ability of society to sort out and reward those who endeavor to make individual decisions on working, investing and consumption based on their own dedicated efforts to make their lives better or allow the government to do it for them.
Right now, the economic environment is so distorted that it is little wonder things are at best treading water. But this argument goes beyond the Austerians and Keynesians and is clearly an argument that only those like the American Chamber of Commerce have the courage to raise publicly. And, such discussions are clearly anathema to the current administration.
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