LET'S NOT BE SO QUICK TO FEEL DOLLAR SUPERIOR: European Crises Preclude Reserve Status for Euro - Barrons.com
It would seem as though the global (read: Europe/US) problem is profligate government spending abetted by the banks (lest we say they should be investing their depositors' money instead of supporting profligate governments).
The banks are apparently beyond apoplectic (lest we say starting to recognize the errors of their ways - but, as the old saying goes, "in for a ounce, in for a pound" (or something like that)).
They are looking for the governments they've helped to bail themselves out - but, should the banks really be bailed out?
Isn't this just an impossible balloon?
Don't the US and many European countries really need to invest in competitive, productive jobs and societies?
Maybe there is no crunch-time pending, but as shown in the US by states like California - the US surely shouldn't be doing any gloating!
(Let's see if fiscal rectitude can start to be demonstrated in Washington. It's hard to believe the words have any meaning for Obama or Pelosi - other than with higher taxes driving down investment and job creation.)
Thursday, November 25, 2010
Wednesday, November 24, 2010
Trading Inquiry Widens to Big Firms - WSJ.com
TYPICAL ANTI-BUSINESS DUMMING DOWN:Trading Inquiry Widens to Big Firms - WSJ.com
What in the world can be wrong with using experts to gain knowledge?
The fact that some people seek knowledge and others want it to be blasted into their ears while they do nothing seems a typical mantra of the uneducated and lazy (read: Democrats who want equal outcomes instead of equal opportunities).
After all, what are 'research analysts' for - but to gain knowledge and make use of it.
This isn't insider information since almost all information is available online - if you know where to look for it and you have the educational and learning skills to make use of it.
Since so many Americans have limited reading skills, those that have these skills shouldn't be penalized.
This is just another blatant example of the liberal predilection for mediocrity and regression to the lowest possible mean. After all , the liberals have dummed-down education and the need to achieve and then they wonder about a big pay gap between achievers and non-achievers.
The Federal employees pursuing this insider training should at best be fired or, even better, put in jail for hurting the economic growth of the country.
What in the world can be wrong with using experts to gain knowledge?
The fact that some people seek knowledge and others want it to be blasted into their ears while they do nothing seems a typical mantra of the uneducated and lazy (read: Democrats who want equal outcomes instead of equal opportunities).
After all, what are 'research analysts' for - but to gain knowledge and make use of it.
This isn't insider information since almost all information is available online - if you know where to look for it and you have the educational and learning skills to make use of it.
Since so many Americans have limited reading skills, those that have these skills shouldn't be penalized.
This is just another blatant example of the liberal predilection for mediocrity and regression to the lowest possible mean. After all , the liberals have dummed-down education and the need to achieve and then they wonder about a big pay gap between achievers and non-achievers.
The Federal employees pursuing this insider training should at best be fired or, even better, put in jail for hurting the economic growth of the country.
Sunday, November 21, 2010
History Is Uncertain Guide for Fed Chairman - Barrons.com
THOSE HIDDEN ROCKS: History Is Uncertain Guide for Fed Chairman - Barrons.com
As Donlan writes:
"IN AUGUST, 1992, THE CRUISE SHIP Queen Elizabeth II struck a rock in the waters south of the little island of Cuttyhunk, Mass. There are many rocks on the charts of Buzzards Bay and Vineyard Sound; the QE2 found one that was previously unknown, and it cost the Cunard Line $20 million.
The captain and the pilot testified that they hadn't been worried about the ship, 963 feet long with draft of 32 feet below the water surface, because it was crossing an area charted to be 39 feet deep at low tide.
Unfortunately for them and their ship and their passengers, no other ship so big had ever navigated those waters. What was worse for them, the 39-foot sounding had been taken in 1939 by a method that sampled the depth every quarter-mile. The 39-foot sounding on the chart was accurate, but there was a rock at a depth of 31 feet less than a quarter-mile away."
One does ponder the comment, "If it works, the Fed will later withdraw the cash from the economy by selling the Treasury bonds it purchased in QE1 and QE2."
The world (especially many socialist countries in Europe)seem to believe (as of course their public unions do) that you can borrow 3-10% + of GDP each year while growing 1% or less and that this can go on indefinitely.
At some point, one does have to wonder if the magic liquidity to fund this borrowing isn't going to run a bit short!
And, should this happen when Ben decides to sell back to the public all that Treasury paper, one wonders if the interest rates of the 1970's won't look like bargains (yes, we're talking 20% plus).
One then wonders what will happen to our heavily indebted government and our economy - i.e. just one of those potential rocks.
As Donlan writes:
"IN AUGUST, 1992, THE CRUISE SHIP Queen Elizabeth II struck a rock in the waters south of the little island of Cuttyhunk, Mass. There are many rocks on the charts of Buzzards Bay and Vineyard Sound; the QE2 found one that was previously unknown, and it cost the Cunard Line $20 million.
The captain and the pilot testified that they hadn't been worried about the ship, 963 feet long with draft of 32 feet below the water surface, because it was crossing an area charted to be 39 feet deep at low tide.
Unfortunately for them and their ship and their passengers, no other ship so big had ever navigated those waters. What was worse for them, the 39-foot sounding had been taken in 1939 by a method that sampled the depth every quarter-mile. The 39-foot sounding on the chart was accurate, but there was a rock at a depth of 31 feet less than a quarter-mile away."
One does ponder the comment, "If it works, the Fed will later withdraw the cash from the economy by selling the Treasury bonds it purchased in QE1 and QE2."
The world (especially many socialist countries in Europe)seem to believe (as of course their public unions do) that you can borrow 3-10% + of GDP each year while growing 1% or less and that this can go on indefinitely.
At some point, one does have to wonder if the magic liquidity to fund this borrowing isn't going to run a bit short!
And, should this happen when Ben decides to sell back to the public all that Treasury paper, one wonders if the interest rates of the 1970's won't look like bargains (yes, we're talking 20% plus).
One then wonders what will happen to our heavily indebted government and our economy - i.e. just one of those potential rocks.
Saturday, November 20, 2010
U.S. Pursues Sweeping Insider-Trading Probe - WSJ.com
HOW NOT TO CREATE PRIVATE SECTOR JOBS: U.S. Pursues Sweeping Insider-Trading Probe - WSJ.com
Can we say the government is over-reaching and over-reacting?
Some how this all wreaks of the old story of a young guy getting a job at a union-run factory .
The first thing he is taught is to not work too fast, not to show too much initiative and not to try and make changes.
Somehow all of this insider-phobia of the government just seems to have gone way too far - clearly information is gathered and being put together by intelligent people. To say there is something wrong with this is anti-business, anti-thought, anti-job and anti-economic development.
But, then again, it does support government jobs - need more be said!
Can we say the government is over-reaching and over-reacting?
Some how this all wreaks of the old story of a young guy getting a job at a union-run factory .
The first thing he is taught is to not work too fast, not to show too much initiative and not to try and make changes.
Somehow all of this insider-phobia of the government just seems to have gone way too far - clearly information is gathered and being put together by intelligent people. To say there is something wrong with this is anti-business, anti-thought, anti-job and anti-economic development.
But, then again, it does support government jobs - need more be said!
Friday, November 19, 2010
Bernanke Takes Aim at China - WSJ.com
70'S VS. NOW: Bernanke Takes Aim at China - WSJ.com
There were also comments on Bloomberg this morning that Bernanke is criticizing Administration fiscal policies (but no details or quotes).
The comparison with the 70's should be frightening.
In both cases the country was faced with tax and fiscal policies (% of GDP spent by government over 19.8% - a number which Reagan finally corrected) that were negative to growth.
In the 1970's however we had unabashed inflation, housing started low and the country was basically reasonably healthy economically - the 1960's had been a good time.
Now, 2010, we had a good 1990's, but economically the country didn't do what it needed past 2000 and was deluded with the advent of financial engineering and the housing boom to think wealth was being created - but, it was paper wealth.
The Democrats still don't think they are doing anything wrong by favoring high taxes and consumption - with huge amounts of wealth transfers via entitlements from producers (both here and abroad) to non-producers at home.
They are ignorant of making the US a business-friendly environment. This is something the Bush Administration also failed to do with its pandering to the anti-immigrant policies of the Republican right and the willingness to spend whatever revenues government could take in to support special interests in hopes of packing the Supreme Court to have it overrule Roe vs. Wade.
One look at the elections just past in California and one has to see that the Democrats that got the state into its economic mess were re-elected and thus there is little apparent awareness by average people of what to do to change things for the better.
Meanwhile, the Fed runs the money presses. Are there English bookmakers taking bets on outcomes?
There were also comments on Bloomberg this morning that Bernanke is criticizing Administration fiscal policies (but no details or quotes).
The comparison with the 70's should be frightening.
In both cases the country was faced with tax and fiscal policies (% of GDP spent by government over 19.8% - a number which Reagan finally corrected) that were negative to growth.
In the 1970's however we had unabashed inflation, housing started low and the country was basically reasonably healthy economically - the 1960's had been a good time.
Now, 2010, we had a good 1990's, but economically the country didn't do what it needed past 2000 and was deluded with the advent of financial engineering and the housing boom to think wealth was being created - but, it was paper wealth.
The Democrats still don't think they are doing anything wrong by favoring high taxes and consumption - with huge amounts of wealth transfers via entitlements from producers (both here and abroad) to non-producers at home.
They are ignorant of making the US a business-friendly environment. This is something the Bush Administration also failed to do with its pandering to the anti-immigrant policies of the Republican right and the willingness to spend whatever revenues government could take in to support special interests in hopes of packing the Supreme Court to have it overrule Roe vs. Wade.
One look at the elections just past in California and one has to see that the Democrats that got the state into its economic mess were re-elected and thus there is little apparent awareness by average people of what to do to change things for the better.
Meanwhile, the Fed runs the money presses. Are there English bookmakers taking bets on outcomes?
Wednesday, November 17, 2010
U.S. Sets 50 Bank Probes - WSJ.com
Q & A: WHAT ABOUT BANKERS SALARIES? :U.S. Sets 50 Bank Probes - WSJ.com
Question:
It's easy to blame Fannie and Freddie.
But, who wrote those bad loans? The bankers who walked away with multi-million dollar bonuses and severence packages?
Answer:
Gee, did you check what the top execs at Fannie and Freddie made in salary and bonuses?
And, if you recall, there were warnings to people about the housing bubble - after all, incomes weren't going up - just housing prices and lots of new houses.
It was a ponzi scheme that many people chose not to look at.
Plus, with Basel II, etc. the idea of bankers actually having to think about investments they might make was obviated by just buying AAA rated instruments to ease reserve requirements.
With Basel III, it's gotten worse. All the European banks are flooded with sovereign debt that it is illogical could ever be repaid (e.g. with socialist entitlement costs of 3 to 5 to 15% of GDP (after already heavy taxation) and little or no economic growth (again, with anti-business and anti-growth tax and regulatory policies), it is hard to see how piling up debt year after year can't end anything but badly!
Oh yes, these are Obama policies as well.
And, frankly, they are the result of government policies, not banking policies per se.
Those bankers who can find a way to make huge sums on this stupidity on the part of government and the electorate should receive accolades. They aren't hiding what is going on - rather, they are calling attention to it.
And, as the European governments are trying to legislate out of existence such attention by constraining hedge funds and others who trade against the debt bubble these governments are creating.
Question:
It's easy to blame Fannie and Freddie.
But, who wrote those bad loans? The bankers who walked away with multi-million dollar bonuses and severence packages?
Answer:
Gee, did you check what the top execs at Fannie and Freddie made in salary and bonuses?
And, if you recall, there were warnings to people about the housing bubble - after all, incomes weren't going up - just housing prices and lots of new houses.
It was a ponzi scheme that many people chose not to look at.
Plus, with Basel II, etc. the idea of bankers actually having to think about investments they might make was obviated by just buying AAA rated instruments to ease reserve requirements.
With Basel III, it's gotten worse. All the European banks are flooded with sovereign debt that it is illogical could ever be repaid (e.g. with socialist entitlement costs of 3 to 5 to 15% of GDP (after already heavy taxation) and little or no economic growth (again, with anti-business and anti-growth tax and regulatory policies), it is hard to see how piling up debt year after year can't end anything but badly!
Oh yes, these are Obama policies as well.
And, frankly, they are the result of government policies, not banking policies per se.
Those bankers who can find a way to make huge sums on this stupidity on the part of government and the electorate should receive accolades. They aren't hiding what is going on - rather, they are calling attention to it.
And, as the European governments are trying to legislate out of existence such attention by constraining hedge funds and others who trade against the debt bubble these governments are creating.
Why an Outbreak of Inflation Isn't Likely - WSJ.com
Why an Outbreak of Inflation Isn't Likely - WSJ.com
This is about the most hollow article I've seen on inflation.
The only focus is on the demand side. Unless something is done to change the anti-business, anti-investor fiscal policies of the country (at both the local, state and national levels), the supply side in the US will continue to be in decline.
Yes, that will mean fewer and fewer jobs created and additional jobs lost; but, at the same time, with a declining dollar (as money is printed to try and overcome fiscal drag), the cost of imported goods will go up.
If there wasn't the huge fiscal drag on the economy, there would be some domestic replacement but that will really require the fiscal policy changes that are problematic at best as they seem utterly opposed by (and not even comprehended) by the President and the left wing of his party.
The prognostication of a few years back to see an inflationary depression is clearly still on the table based on over-spending, over-taxing and over-regulation by government.
This is about the most hollow article I've seen on inflation.
The only focus is on the demand side. Unless something is done to change the anti-business, anti-investor fiscal policies of the country (at both the local, state and national levels), the supply side in the US will continue to be in decline.
Yes, that will mean fewer and fewer jobs created and additional jobs lost; but, at the same time, with a declining dollar (as money is printed to try and overcome fiscal drag), the cost of imported goods will go up.
If there wasn't the huge fiscal drag on the economy, there would be some domestic replacement but that will really require the fiscal policy changes that are problematic at best as they seem utterly opposed by (and not even comprehended) by the President and the left wing of his party.
The prognostication of a few years back to see an inflationary depression is clearly still on the table based on over-spending, over-taxing and over-regulation by government.
Tuesday, November 16, 2010
Teacher Training Is Panned - WSJ.com
TEACHING PROCESS VS. PRODUCT: Teacher Training Is Panned - WSJ.com
Isn't this just making excuses for the 'process' vs. 'product' focus of liberal thinking?
If the teachers unions still run education on a 'seniority' basis, then what is the encouragement of a capable young person to enter the profession?
The profession gets what it looks for - hacks that know they will be protected and, as with other unionized jobs, the 'lowest' common denominator is what gives the union its strength.
Anyone who 'outperforms' is anathema to the vast majority of union members.
If 'excellence' and 'performance' were fairly rewarded (and 'not' rewarded) - which of course is again anathema to the teachers unions - then all of the regulatory crap wouldn't be needed.
The basics of rewarding quality and performance would mean all of these 'credentials' for teaching again would be unnecessary as it would be performance that was rewarded.
If someone is a good teacher and 25 years old, why shouldn't that teacher receive the same pay as a 40 or 50 year old teacher who is no more skilled?
Isn't this just making excuses for the 'process' vs. 'product' focus of liberal thinking?
If the teachers unions still run education on a 'seniority' basis, then what is the encouragement of a capable young person to enter the profession?
The profession gets what it looks for - hacks that know they will be protected and, as with other unionized jobs, the 'lowest' common denominator is what gives the union its strength.
Anyone who 'outperforms' is anathema to the vast majority of union members.
If 'excellence' and 'performance' were fairly rewarded (and 'not' rewarded) - which of course is again anathema to the teachers unions - then all of the regulatory crap wouldn't be needed.
The basics of rewarding quality and performance would mean all of these 'credentials' for teaching again would be unnecessary as it would be performance that was rewarded.
If someone is a good teacher and 25 years old, why shouldn't that teacher receive the same pay as a 40 or 50 year old teacher who is no more skilled?
Monday, November 15, 2010
Paychecks for CEOs Climb - WSJ.com
Q&A: Paychecks for CEOs Climb - WSJ.com
Question:
But don't you think these pay packages are just a little overblown?
Answer:
You should read Art Laffer's article on total labor cost as an input to production (was available last week through Sunday in the WSJ).
Government likes to have people believe they are getting all the benefits that flow through government (including but not limited to social security, medicare, unemployment insurance, etc.) for free or at low cost, but many employers will tell you the gross wage paid to an employee is only 20-25% of the total cost to the employer of having that employee.
Thus, an employer has to look to sell a product at a competitive price - if not, they go bankrupt.
Then the employer has to look at the combination of his labor input costs, his capital input costs and his raw material input costs.
As you read the news, you're aware that the Obama administration has been increasing all three of these costs (Obamacare is a direct increase to labor costs; the deficit, tax increases and bank and investor regulatory policies directly increase the cost of capital; and, the depreciation in the value of the dollar directly increase raw material costs).
The pro-union policies of the administration also hurt domestic job creation (witness how blithely the UAW bled GM and then expected a taxpayer bailout and how the public employee unions have extorted obscene benefits).
Both parties have supported immigration policies that prohibit top university graduates from foreign countries from staying in the US.
So, from what I see, the public is supporting policies which run directly counter to the long-term economic health of the country and, since the government can't admit the failure of its socialist policies, it is trying to blame business and the banks.
But, business needs to survive and the decks are stacked (by government, etc.) against it.
It is ridiculous to criticize greed when it is generally what drives everyone. What should be criticized is anything that prevents an individual from coming up with a new idea or a better idea to go into business for him or herself.
After all in a supply and demand relationship (which is really all that there is), when either side of the balance is distorted, disequilibriums occur.
Question:
But don't you think these pay packages are just a little overblown?
Answer:
You should read Art Laffer's article on total labor cost as an input to production (was available last week through Sunday in the WSJ).
Government likes to have people believe they are getting all the benefits that flow through government (including but not limited to social security, medicare, unemployment insurance, etc.) for free or at low cost, but many employers will tell you the gross wage paid to an employee is only 20-25% of the total cost to the employer of having that employee.
Thus, an employer has to look to sell a product at a competitive price - if not, they go bankrupt.
Then the employer has to look at the combination of his labor input costs, his capital input costs and his raw material input costs.
As you read the news, you're aware that the Obama administration has been increasing all three of these costs (Obamacare is a direct increase to labor costs; the deficit, tax increases and bank and investor regulatory policies directly increase the cost of capital; and, the depreciation in the value of the dollar directly increase raw material costs).
The pro-union policies of the administration also hurt domestic job creation (witness how blithely the UAW bled GM and then expected a taxpayer bailout and how the public employee unions have extorted obscene benefits).
Both parties have supported immigration policies that prohibit top university graduates from foreign countries from staying in the US.
So, from what I see, the public is supporting policies which run directly counter to the long-term economic health of the country and, since the government can't admit the failure of its socialist policies, it is trying to blame business and the banks.
But, business needs to survive and the decks are stacked (by government, etc.) against it.
It is ridiculous to criticize greed when it is generally what drives everyone. What should be criticized is anything that prevents an individual from coming up with a new idea or a better idea to go into business for him or herself.
After all in a supply and demand relationship (which is really all that there is), when either side of the balance is distorted, disequilibriums occur.
Saturday, November 13, 2010
Heard on the Street: The Economics of Jobless Recoveries - WSJ.com
BASIC JOB ECONOMICS: Heard on the Street: The Economics of Jobless Recoveries - WSJ.com: "- Sent using Google Toolbar"
Other questions, which would seem to also apply to the US, relate to the skills needed and the capital required to provide a new job?
The University of Chicago economist Rajan makes a big point of the overall increase in the level of education required by information based economies (which after all is where good standards of living can be earned). With respect to education, this becomes an investment that both the society and the individual makes - as well as companies when they provide ongoing training courses.
If the less-skilled jobs (and many of the skilled) are taken by individuals in countries with a lower 'total labor cost' (see Art Laffers good article on the subject in this week's Wall Street Journal), then developed economies may have to rethink all the social benefits that are tacked onto the actual pay labor receives (e.g. workmens comp., early retirement, healthcare, etc.).
There is also of course the cost of the actual plant and equipment (a recent Malaysian clean energy plant cost roughly $1 billion for 1,000 jobs).
In light of the above, one wonders about how much thinking is going into understanding these critical factors? It would seem as though the UK is coming up with policies to drive bankers out of the UK (which would seem to be exactly the wrong move!
Other questions, which would seem to also apply to the US, relate to the skills needed and the capital required to provide a new job?
The University of Chicago economist Rajan makes a big point of the overall increase in the level of education required by information based economies (which after all is where good standards of living can be earned). With respect to education, this becomes an investment that both the society and the individual makes - as well as companies when they provide ongoing training courses.
If the less-skilled jobs (and many of the skilled) are taken by individuals in countries with a lower 'total labor cost' (see Art Laffers good article on the subject in this week's Wall Street Journal), then developed economies may have to rethink all the social benefits that are tacked onto the actual pay labor receives (e.g. workmens comp., early retirement, healthcare, etc.).
There is also of course the cost of the actual plant and equipment (a recent Malaysian clean energy plant cost roughly $1 billion for 1,000 jobs).
In light of the above, one wonders about how much thinking is going into understanding these critical factors? It would seem as though the UK is coming up with policies to drive bankers out of the UK (which would seem to be exactly the wrong move!
The Weekend Interview with Hector Murguia: Can Mexico Be Saved? - WSJ.com
STUPID DRUG WARS: The Weekend Interview with Hector Murguia: Can Mexico Be Saved? - WSJ.com: "- Sent using Google Toolbar"
America's moralistic anti-drug policies are to blame for too much misery around the world.
If there is a single war the US should give up on it's the 'drug war'!
All those supporting the drug war are guilty of all that goes down in Mexico, Columbia, etc. where populations are suffering from the insanity of telling people how to live their lives.
Perhaps it's the flip side of socialist entitlement policies that people don't need to be responsible for anything. I'd rather see an emphasis on individual responsibility which would include very liberal drug laws and much less social spending.
Gee, that would put a huge dent in government employee unions and we might be able to save enough in taxes to get the economy growing again?
America's moralistic anti-drug policies are to blame for too much misery around the world.
If there is a single war the US should give up on it's the 'drug war'!
All those supporting the drug war are guilty of all that goes down in Mexico, Columbia, etc. where populations are suffering from the insanity of telling people how to live their lives.
Perhaps it's the flip side of socialist entitlement policies that people don't need to be responsible for anything. I'd rather see an emphasis on individual responsibility which would include very liberal drug laws and much less social spending.
Gee, that would put a huge dent in government employee unions and we might be able to save enough in taxes to get the economy growing again?
Thursday, November 11, 2010
Karl Rove: Obama Has a Listening Problem - WSJ.com
THE DEMOCRATS PHILOSOPHICAL QUANDARY: Karl Rove: Obama Has a Listening Problem - WSJ.com
Clearly Obama comes from the school that believes people are 'entitled' and 'deserving' and thus they should have - all of which has to be paid for; no matter what the consequences to those who produce.
This is the flip side of the basic economic quandary it would appear Obama and the Democrats are in. Coming from a socialist-type (or communist-type) social view, they don't understand how incentives to produce, save, invest work. All they know is to divide up what there is and hope the supply is there. Because - someone else is doing the providing.
The opposite group of people - the producers - weigh the advantages of taking risks, foregoing immediate gain for future gain, etc. But, these people don't want to see their future gain taken to support non-producers.
This is the quandary: As Art Laffer has pointed out, higher and higher taxes may have been the actual cause or the tipping point cause of the prolonging of the 1930's recession.
The idea that it was monetary policy is certainly an appealing alternate view, which has been picked up by Bernanke and Obama.
Logic however would support the fiscal/tax policy argument - i.e. too much of the rewards for growing the economy were taken by government for redistribution, so those who can grow the economy decided to sit this tax round out.
Clearly Obama comes from the school that believes people are 'entitled' and 'deserving' and thus they should have - all of which has to be paid for; no matter what the consequences to those who produce.
This is the flip side of the basic economic quandary it would appear Obama and the Democrats are in. Coming from a socialist-type (or communist-type) social view, they don't understand how incentives to produce, save, invest work. All they know is to divide up what there is and hope the supply is there. Because - someone else is doing the providing.
The opposite group of people - the producers - weigh the advantages of taking risks, foregoing immediate gain for future gain, etc. But, these people don't want to see their future gain taken to support non-producers.
This is the quandary: As Art Laffer has pointed out, higher and higher taxes may have been the actual cause or the tipping point cause of the prolonging of the 1930's recession.
The idea that it was monetary policy is certainly an appealing alternate view, which has been picked up by Bernanke and Obama.
Logic however would support the fiscal/tax policy argument - i.e. too much of the rewards for growing the economy were taken by government for redistribution, so those who can grow the economy decided to sit this tax round out.
Monday, November 8, 2010
As Global Economy Shifts, Companies Rethink, Retool - WSJ.com
WHAT NO ONE WANTS TO TALK ABOUT: As Global Economy Shifts, Companies Rethink, Retool - WSJ.com
Let's see?
If the US wants to dampen down US consumption, it could do what Europe does - put up the price of everything with a VAT tax and cut wages.
Then, to ask the Europeans to consume more, it could ask them to cut social benefits and the taxes to support them so that the individual consumers would have both more money in their pockets and lower priced goods.
Does anyone expect either to be advocated (at least publicly) by Mr. Obama or Mr. Geithner?
Let's see?
If the US wants to dampen down US consumption, it could do what Europe does - put up the price of everything with a VAT tax and cut wages.
Then, to ask the Europeans to consume more, it could ask them to cut social benefits and the taxes to support them so that the individual consumers would have both more money in their pockets and lower priced goods.
Does anyone expect either to be advocated (at least publicly) by Mr. Obama or Mr. Geithner?
Statistics don't help in the battle between stimulus and austerity - WSJ.com
THE GEITNER, LAGARDE OSTRICH: Statistics don't help in the battle between stimulus and austerity - WSJ.com
One is either an ostrich or not.
What does one mean by 'ostrich'? Well, think of the two farmers.
Each farmer knows that he/she has to save 10% of each crop as seed for the next crop.
However one farmer (say Greece) just can't save 10%, it wants to consume more.
Another farmer, say China, decides it wants to grow and so it saves 20% and goes a bit hungry.
According to Geitner, et al, something is wrong with China, it's producing too much at too good prices.
Over time, the high cost of goods in Europe makes it hard for European individuals and businesses to be able to afford to be competitive and to be competitively productive. This can include featherbedding and work rules in Greece, etc.
So much of Europe and the US ignore the need to reward producers and savers and instead concentrate on social benefits, etc. - ignoring the long-term cost to society of doing so! The ignorance of an ostrich hiding its head in the sand.
One is either an ostrich or not.
What does one mean by 'ostrich'? Well, think of the two farmers.
Each farmer knows that he/she has to save 10% of each crop as seed for the next crop.
However one farmer (say Greece) just can't save 10%, it wants to consume more.
Another farmer, say China, decides it wants to grow and so it saves 20% and goes a bit hungry.
According to Geitner, et al, something is wrong with China, it's producing too much at too good prices.
Over time, the high cost of goods in Europe makes it hard for European individuals and businesses to be able to afford to be competitive and to be competitively productive. This can include featherbedding and work rules in Greece, etc.
So much of Europe and the US ignore the need to reward producers and savers and instead concentrate on social benefits, etc. - ignoring the long-term cost to society of doing so! The ignorance of an ostrich hiding its head in the sand.
Fed Governor Doubts Program - WSJ.com
UNDERUTILIZED OR OVERPRICED RESOURCES?: Fed Governor Doubts Program - WSJ.com
What seems to be unduly glossed over (or totally ignored by Bernanke, et al) is that certain inputs - be they labor or capital are being mispriced or having their prices distorted by fiscal policies coming out of Washington and state governments.
Thus, the comment "We see an economy which has a very high level of under utilization of resources and a relatively slow growth rate" may not in any way be 'underutilizing' what are 'overpriced' assets.
The country and its policy makers should be talking about how taxes and entitlements and the drug laws (amongst others) are providing distortions that hurt competitiveness and entrepreneurial incentives and create major global political upheaval (esp. the drug laws).
What seems to be unduly glossed over (or totally ignored by Bernanke, et al) is that certain inputs - be they labor or capital are being mispriced or having their prices distorted by fiscal policies coming out of Washington and state governments.
Thus, the comment "We see an economy which has a very high level of under utilization of resources and a relatively slow growth rate" may not in any way be 'underutilizing' what are 'overpriced' assets.
The country and its policy makers should be talking about how taxes and entitlements and the drug laws (amongst others) are providing distortions that hurt competitiveness and entrepreneurial incentives and create major global political upheaval (esp. the drug laws).
Thursday, November 4, 2010
Daniel Henninger: Unlock the American Economy - WSJ.com
A SIMPLE ECONOMIC PRO-JOBS MODEL:Daniel Henninger: Unlock the American Economy - WSJ.com
Right on - and, perhaps a suggestion for an even clearer focus - is to say jobs are number one and for them to be number one, the US has to make itself the best place in the world to locate and grow a business.
This means unequivocally that social programs come second - not first. They get funded out of what's left, not what there is to take!
Whether one thinks of the farmer that knows he has to save 10% of his crop to provide the seed for the next crop (and to grow needs to save maybe 12% or more);
Or, one thinks of the employer who has lots of itinerant family members who have their hands out and would like to be 'given' some money before the employer pays his own workers and consultants,
These are the models we need - save and grow and pay producers first!
Right on - and, perhaps a suggestion for an even clearer focus - is to say jobs are number one and for them to be number one, the US has to make itself the best place in the world to locate and grow a business.
This means unequivocally that social programs come second - not first. They get funded out of what's left, not what there is to take!
Whether one thinks of the farmer that knows he has to save 10% of his crop to provide the seed for the next crop (and to grow needs to save maybe 12% or more);
Or, one thinks of the employer who has lots of itinerant family members who have their hands out and would like to be 'given' some money before the employer pays his own workers and consultants,
These are the models we need - save and grow and pay producers first!
In Washington, an Awkward Triangle of Power - WSJ.com
BASIC CORRELATION ANALYSIS AND THE CURRENT COUNTER-REFORMATION SOCIAL PROGRAMS: In Washington, an Awkward Triangle of Power - WSJ.com
It would seem as though even the President is starting to at least talk as though he needs to consider the needs of business if business is going to create jobs. But the true correlation is likely well-beyond his ability to understand it.
But, as with all sorts of projections - the old econometric analysis projection game - everything ends up dependent on key variables and factors that are included in the math.
It would seem rather obvious that the correlations between taxes that are too high end up creating job losses and a lack of job-creating vigor - one can't help but think of Michigan and California.
Yet, this basic correlation in which too much is taken by government is unlikely to the starting point.
But, we already know what the outcome of the current political framework and government programs at a national level is showing - and that is a lack of jobs.
Going back and tinkering with the inputs of the linear progression model could perhaps show why; but, it's pretty obvious that there is something holding back (if not eating into and destroying) the potential of the US to grow, evolve, change and create jobs.
Somehow, the banter back and forth in all these articles misses the idea of blatantly obvious correlations.
I guess if the goal is to focus on benefits and care for the poor and elderly, it's like the counter-reformation - i.e. you fight change so hard you hold yourself back.
It would seem as though even the President is starting to at least talk as though he needs to consider the needs of business if business is going to create jobs. But the true correlation is likely well-beyond his ability to understand it.
But, as with all sorts of projections - the old econometric analysis projection game - everything ends up dependent on key variables and factors that are included in the math.
It would seem rather obvious that the correlations between taxes that are too high end up creating job losses and a lack of job-creating vigor - one can't help but think of Michigan and California.
Yet, this basic correlation in which too much is taken by government is unlikely to the starting point.
But, we already know what the outcome of the current political framework and government programs at a national level is showing - and that is a lack of jobs.
Going back and tinkering with the inputs of the linear progression model could perhaps show why; but, it's pretty obvious that there is something holding back (if not eating into and destroying) the potential of the US to grow, evolve, change and create jobs.
Somehow, the banter back and forth in all these articles misses the idea of blatantly obvious correlations.
I guess if the goal is to focus on benefits and care for the poor and elderly, it's like the counter-reformation - i.e. you fight change so hard you hold yourself back.
Wednesday, November 3, 2010
Gridlock Isn't as Bullish as Markets Think - Barrons.com
CORRELATIONS, LINKS AND THE 'OLE' INEXORABLE: Gridlock Isn't as Bullish as Markets Think - Barrons.com
Could these perhaps be 'naked' correlations?
In other words, rather than leave these out in the open, what would the correlations be if paired with say 'percent of GDP being spent by government'?
Another interesting correlation would be the 'direction of housing prices over the past year / past 2 years / 3 years'.
As the old project, correlation game goes, it all depends on whether things have changed.
And, it would seem as though the inexorable is clearly marching on - and, one suggestion for the 'inexorable' would be the growing sense of 'unearned and unfunded entitlements'.
Could these perhaps be 'naked' correlations?
In other words, rather than leave these out in the open, what would the correlations be if paired with say 'percent of GDP being spent by government'?
Another interesting correlation would be the 'direction of housing prices over the past year / past 2 years / 3 years'.
As the old project, correlation game goes, it all depends on whether things have changed.
And, it would seem as though the inexorable is clearly marching on - and, one suggestion for the 'inexorable' would be the growing sense of 'unearned and unfunded entitlements'.
Ari Fleischer: Lessons From the Last Republican House - WSJ.com
START WITH MAKING BUSINESS THE FAVORITE UNCLE: Ari Fleischer: Lessons From the Last Republican House - WSJ.com
It would seem to be worthwhile to consider totally turning around the way entitlements and benefits are approached - i.e. to deal with these matters as a family would - based on income.
Right now the idea is to borrow and soak the rich - or, as the French unions recently demonstrated, any business with profits can always pay more toward early retirement benefits.
Bottom line would be that American should start by figuring out what it will take to make America the best place in the world to start and maintain a business (reading loud and clearly, "this means jobs").
Off the top of the list, the corporate tax rate is too high; immigration restrictions are a disaster (businesses need to be able to easily bring in employees from all parts of the world); tax rates on entrepreneurs (the old $250,000 are too high and all the extra taxes for the healthcare bill are crazy high).
People need to feel the US will treat them fair (and better than other countries) on taxes and regulations.
Sure the teachers unions and public employees need a major reorientation and the some states will go BK if they can't get their own taxes, etc. under control.
Business needs to be treated as the 'favorite uncle' not a 'black sheep'.
The black sheep should be those who feel 'entitled' to take more from society than they are giving back (let's start with some of these public employees who spike their benefits) and yes, Medicare and Medicaid - cap it and adjust benefits.
The end result of making the US 'business friendly' will be that there isn't the money for all these benefits!
It would seem to be worthwhile to consider totally turning around the way entitlements and benefits are approached - i.e. to deal with these matters as a family would - based on income.
Right now the idea is to borrow and soak the rich - or, as the French unions recently demonstrated, any business with profits can always pay more toward early retirement benefits.
Bottom line would be that American should start by figuring out what it will take to make America the best place in the world to start and maintain a business (reading loud and clearly, "this means jobs").
Off the top of the list, the corporate tax rate is too high; immigration restrictions are a disaster (businesses need to be able to easily bring in employees from all parts of the world); tax rates on entrepreneurs (the old $250,000 are too high and all the extra taxes for the healthcare bill are crazy high).
People need to feel the US will treat them fair (and better than other countries) on taxes and regulations.
Sure the teachers unions and public employees need a major reorientation and the some states will go BK if they can't get their own taxes, etc. under control.
Business needs to be treated as the 'favorite uncle' not a 'black sheep'.
The black sheep should be those who feel 'entitled' to take more from society than they are giving back (let's start with some of these public employees who spike their benefits) and yes, Medicare and Medicaid - cap it and adjust benefits.
The end result of making the US 'business friendly' will be that there isn't the money for all these benefits!
Jim DeMint: Welcome, Senate Conservatives - WSJ.com
TAX RATES IMPACT ON JOB CREATION:Jim DeMint: Welcome, Senate Conservatives - WSJ.com
What might help bring back jobs? Start with fair tax rates:
Yes the middle class is hurting - but sadly, its a reflection of the results of 'why' we are in the economic fix we are in and 'not' the solution.
Did you ever work for someone who also had a lot of family that he or she was taking care of that weren't working or had 'needs' that became your bosses 'priority'.
And then when it came time to get paid, the boss said, "sorry we are out of money, cash flow is short"; and, you well knew it was because the money had gone to relatives?
Well, this is what you are suggesting is the right policy for the country!
In other words, why not think - heck, if you work and save and invest and educate yourself and constantly work to improve your skills and capabilities, the society has a limit (percentage) it can take of what you make?
I'd say 15%! Anything beyond 15% is robbery and definitely a 'disincentive' to ork and save and invest and educate yourself and constantly work to improve your skills and capabilities.
With this 15%, society can do all the things you might want it to do; but, as with any family budget, you have a choice of living within it or borrowing and living beyond it. Right now the US is taxing success at way more than 15% in most cases and not living within its budget!
As a result, those who could provide jobs find it doesn't pay to do so, etc.
What might help bring back jobs? Start with fair tax rates:
Yes the middle class is hurting - but sadly, its a reflection of the results of 'why' we are in the economic fix we are in and 'not' the solution.
Did you ever work for someone who also had a lot of family that he or she was taking care of that weren't working or had 'needs' that became your bosses 'priority'.
And then when it came time to get paid, the boss said, "sorry we are out of money, cash flow is short"; and, you well knew it was because the money had gone to relatives?
Well, this is what you are suggesting is the right policy for the country!
In other words, why not think - heck, if you work and save and invest and educate yourself and constantly work to improve your skills and capabilities, the society has a limit (percentage) it can take of what you make?
I'd say 15%! Anything beyond 15% is robbery and definitely a 'disincentive' to ork and save and invest and educate yourself and constantly work to improve your skills and capabilities.
With this 15%, society can do all the things you might want it to do; but, as with any family budget, you have a choice of living within it or borrowing and living beyond it. Right now the US is taxing success at way more than 15% in most cases and not living within its budget!
As a result, those who could provide jobs find it doesn't pay to do so, etc.
Obama Is Dealt a Tough Hand - WSJ.com
THE ANTI-JOB MAN WHO DOESN'T KNOW IT: Obama Is Dealt a Tough Hand - WSJ.com
In terms of jobs, if you are familiar with the expression "regression to the mean" - the US has been doing exactly that. We have an excess share of the world's resources and lived a better lifestyle.
But, to keep that share of resources and/or the lifestyle, the US has to be able to give something comparable back.
Instead, the US is blaming business and looking for government to provide what the average American wants but can't pay for - whether early retirement, greater health benefits, etc.
So, the productive sector is being bled to provide it. Of course, not benefit receiver wants to see this and since these people vote, why tell them something they won't want to believe.
The Tea Party is far more up front than most Republicans. (I don't know if you saw the interesting yardstick discussion in this paper a few months back where at either end of a yardstick were left and right viewpoints. While the Dem's were at 36", the Republicans were put at 28".
The other problem the Republicans have is their pandering to the religious right. Those of us in the middle think of these people as 'crazy' (not too dissimilar from crazy Muslims). And, the religious right loses elections. Witness California just yesterday!
So, the problems aren't really being addressed and perhaps will be brought closer to the surface - thus, maybe we are getting closer to the end of the 3rd of 9 innings. But, we'll have to see.
If you get a chance to read the Steele biography of Cornelius Vanderbilt, he has good comments about how the US changed by the 1870's with the vast expansion of railroads and the building up of large corporations with their myriad workforces.
A not dissimilar momentous change is occurring with respect to information technology. I can do my job from any country I want, work when I want, do several different types of jobs at the same time.
Thus, there is no reason for me to be in a place with crime, high taxes, pollution, political risk, etc. All of which companies have to consider; but, with modern communication and transportation systems, they also have to serve their shareholders/owners and maximize returns.
The US is largely blind (certainly all Democrats) to what happens when the above factors impacting business are negative.
It may be unpleasant when a company decides to relocate (the list out of California a friend just sent went on for page after page), but government doesn't ask why or what it could do to change it. The workers blame the business, they don't blame the government (or sometimes a union).
So, as they say in science and problem-solving, the first thing to do is to figure out what the real problem is to identify.
At least the Republicans are able to identify the tax issue. Sadly, they make up for their good sense with their bad views on immigration policy. Yadda, yadda....
In terms of jobs, if you are familiar with the expression "regression to the mean" - the US has been doing exactly that. We have an excess share of the world's resources and lived a better lifestyle.
But, to keep that share of resources and/or the lifestyle, the US has to be able to give something comparable back.
Instead, the US is blaming business and looking for government to provide what the average American wants but can't pay for - whether early retirement, greater health benefits, etc.
So, the productive sector is being bled to provide it. Of course, not benefit receiver wants to see this and since these people vote, why tell them something they won't want to believe.
The Tea Party is far more up front than most Republicans. (I don't know if you saw the interesting yardstick discussion in this paper a few months back where at either end of a yardstick were left and right viewpoints. While the Dem's were at 36", the Republicans were put at 28".
The other problem the Republicans have is their pandering to the religious right. Those of us in the middle think of these people as 'crazy' (not too dissimilar from crazy Muslims). And, the religious right loses elections. Witness California just yesterday!
So, the problems aren't really being addressed and perhaps will be brought closer to the surface - thus, maybe we are getting closer to the end of the 3rd of 9 innings. But, we'll have to see.
If you get a chance to read the Steele biography of Cornelius Vanderbilt, he has good comments about how the US changed by the 1870's with the vast expansion of railroads and the building up of large corporations with their myriad workforces.
A not dissimilar momentous change is occurring with respect to information technology. I can do my job from any country I want, work when I want, do several different types of jobs at the same time.
Thus, there is no reason for me to be in a place with crime, high taxes, pollution, political risk, etc. All of which companies have to consider; but, with modern communication and transportation systems, they also have to serve their shareholders/owners and maximize returns.
The US is largely blind (certainly all Democrats) to what happens when the above factors impacting business are negative.
It may be unpleasant when a company decides to relocate (the list out of California a friend just sent went on for page after page), but government doesn't ask why or what it could do to change it. The workers blame the business, they don't blame the government (or sometimes a union).
So, as they say in science and problem-solving, the first thing to do is to figure out what the real problem is to identify.
At least the Republicans are able to identify the tax issue. Sadly, they make up for their good sense with their bad views on immigration policy. Yadda, yadda....
Tuesday, November 2, 2010
Pressure Builds on Obama to Shake Up Inner Circle - WSJ.com
BLAME THE GUY WHO WANTS A PAYCHECK: Pressure Builds on Obama to Shake Up Inner Circle - WSJ.com
Blame the guy who wants to keep what he earns!
Sadly, the White House, Pelosi and many Democratic voters still believe in the free lunch - i.e. they can tax, berate, regulate and fail to support business and support expanded entitlements that are all over the ballpark (but in particular retirees, healthcare and unions) and that somehow this will help make a more competitive business climate in the US to keep jobs here.
Are they in a real life or a real world or a real planet?
They are like the employer who has lots of itinerant family members who always get a handout from the boss before he pays his employees and consultants. Then the boss wonders why his business isn't doing to well (can we say outsourcing and moving jobs abroad)!
Blame the guy who wants to keep what he earns!
Sadly, the White House, Pelosi and many Democratic voters still believe in the free lunch - i.e. they can tax, berate, regulate and fail to support business and support expanded entitlements that are all over the ballpark (but in particular retirees, healthcare and unions) and that somehow this will help make a more competitive business climate in the US to keep jobs here.
Are they in a real life or a real world or a real planet?
They are like the employer who has lots of itinerant family members who always get a handout from the boss before he pays his employees and consultants. Then the boss wonders why his business isn't doing to well (can we say outsourcing and moving jobs abroad)!
Opinions Are Split on Fed Policy Move - WSJ.com
THE MICRO-LENDING PARALLEL: Opinions Are Split on Fed Policy Move - WSJ.com
Why does the micro-lending (Gameen Bank) come to mind?
Well, it does seem as though the Fed is thinking of trying to boost the amount of lending (or money) in the economy.
But, is this 'non-micro' loan facility going to support the start of a business or an investment or just consumption?
Logic would say that as long as the US is 'not' the location of choice for business growth and expansion, the funds will just go to consumption - including overpaid public (union) employees, entitlement programs, unionized teachers that can't and don't know how to teach, early retirees (that should be paying for their own early retirement), overly generous healthcare programs, etc.
None of these are investments for the future and, as with a micro-loan that went for a 'wedding' vs. a 'business', the chances of payback are slim longer term.
Why does the micro-lending (Gameen Bank) come to mind?
Well, it does seem as though the Fed is thinking of trying to boost the amount of lending (or money) in the economy.
But, is this 'non-micro' loan facility going to support the start of a business or an investment or just consumption?
Logic would say that as long as the US is 'not' the location of choice for business growth and expansion, the funds will just go to consumption - including overpaid public (union) employees, entitlement programs, unionized teachers that can't and don't know how to teach, early retirees (that should be paying for their own early retirement), overly generous healthcare programs, etc.
None of these are investments for the future and, as with a micro-loan that went for a 'wedding' vs. a 'business', the chances of payback are slim longer term.
Question: Isn't the Falling Money Supply the Problem?
Answer:
Hi Alex,
The key is cause or effect. I think your money argument is still part of the effect (although in its own right causative).
The causes would seem more all-encompassing (e.g. we need to have an absolutely world-class, most-friendly business climate - which we don't have). This means the Republicans have to open up on immigration. The Democrats on being pro-business and anti-entitlements.
You are right that things are going to take huge amounts of capital to support the highest paying future jobs (e.g. Malaysia is building a billion dollar plant to support 1,000 jobs).
We also need to get rid of teacher unions. We can't afford to pander to their seniority and lack of performance.
Having made America immigration open and educationally strong, we also (for example) need to have competitive corporate and personal income tax rates (again, which we don't).
So money supply to me is more of an effect of having an anti-business climate which both keeps entrepreneurs and businesses from coming to the US and drives those there away.
Hi Alex,
The key is cause or effect. I think your money argument is still part of the effect (although in its own right causative).
The causes would seem more all-encompassing (e.g. we need to have an absolutely world-class, most-friendly business climate - which we don't have). This means the Republicans have to open up on immigration. The Democrats on being pro-business and anti-entitlements.
You are right that things are going to take huge amounts of capital to support the highest paying future jobs (e.g. Malaysia is building a billion dollar plant to support 1,000 jobs).
We also need to get rid of teacher unions. We can't afford to pander to their seniority and lack of performance.
Having made America immigration open and educationally strong, we also (for example) need to have competitive corporate and personal income tax rates (again, which we don't).
So money supply to me is more of an effect of having an anti-business climate which both keeps entrepreneurs and businesses from coming to the US and drives those there away.
Rebel Movement Takes Center Stage - WSJ.com
OBAMA AS AN EMPLOYER OF RELATIVES FIRST: Rebel Movement Takes Center Stage - WSJ.com
Somehow, watching Obama these last few days, I reminded of the employer with a good business, lots of relatives and unpaid employees.
The employer (Obama, Pelosi, et. al.) have a good business (the US economy); but, they also have lots of relatives (i.e. those on entitlements, esp. Medicare, Medicaid and other welfare programs) who don't work at all, but need money and support.
So, the employer keeps telling its employees that "sorry, I don't have any money to pay you this week!" (When in fact, everyone knows the money to pay salaries and commissions is going to the relatives who mostly don't work.)
Needless to say, the business starts to go down. The actual workers are less and less productive; and, gee, they leave for other jobs (can we say 'outsourcing' and moving plants offshore).
And, as with Obama, the employer doesn't see what the problem is - after all, relatives come first (i.e. non-producers) - they have needs. The employees (i.e. producers) just need to wait and get by on less. Isn't that more fair Obama states.
What is incredible is that he and the Democrats really believe their management of the economy is the right approach.
(Oh yes, there's a comparable story for unions.)
Somehow, watching Obama these last few days, I reminded of the employer with a good business, lots of relatives and unpaid employees.
The employer (Obama, Pelosi, et. al.) have a good business (the US economy); but, they also have lots of relatives (i.e. those on entitlements, esp. Medicare, Medicaid and other welfare programs) who don't work at all, but need money and support.
So, the employer keeps telling its employees that "sorry, I don't have any money to pay you this week!" (When in fact, everyone knows the money to pay salaries and commissions is going to the relatives who mostly don't work.)
Needless to say, the business starts to go down. The actual workers are less and less productive; and, gee, they leave for other jobs (can we say 'outsourcing' and moving plants offshore).
And, as with Obama, the employer doesn't see what the problem is - after all, relatives come first (i.e. non-producers) - they have needs. The employees (i.e. producers) just need to wait and get by on less. Isn't that more fair Obama states.
What is incredible is that he and the Democrats really believe their management of the economy is the right approach.
(Oh yes, there's a comparable story for unions.)
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