Backlog of Social Security Disability Cases Leaves the Terminally Ill Waiting - WSJ.com
You wrote, "...the right wants to turn Americans into starving slaves, motivated by pain."
Perhaps you've never heard of such terms as "regression to the mean" and a "free lunch" - but, clearly, these are issues which the left and unions (and many less educated are both ignorant of and would choose and do choose to ignore).
The US has shown that education and new skills are necessary to compete (e.g. Apple, Facebook, etc.) but the government and unions believe labor-intensive manufacturing jobs can be brought back to the US (e.g. totally ignoring the regression-to-the-mean global economic situation).
To compound the liberal mistake, liberals buy into telling people they can continue to live an economic life that circumstances globally have changed - plus, additional social and entitlement benefits.
This is like living on credit cards when either prices go up and incomes don't - or both.
The US has known and been lectured since the 1960's and 70's that a day will come when its use of an outsize share of the world's resources will end.
To this day, Obama and his cohorts are telling voters they can ignore such a situation.
What I learned about socialism in Eastern Europe under communism and one reads about daily with respect to countries such as Greece, Italy and Spain is that more and more of what goes on economically is being done away from high taxes and the regulated economy - i.e. by the "grey economy".
Of course, this is anathema to those who believe socialization and government has all the answers - but, history attests too well otherwise. Yet, false beliefs and selective evidence can be all-too-comforting.
So, the apparent "drug-of-choice" is belief that doing the same things again and again in terms of social justice (read: equalization of economic outcomes) will somehow also incentivize growth - eventually. It may belie logic - but, such thoughts can be so liberally comforting.
Saturday, December 31, 2011
Thursday, December 29, 2011
FOCUS ON OPPORTUNITIES NOT OUTCOMES!: John H. Cochrane: The Fed's Mission Impossible - WSJ.com
John H. Cochrane: The Fed's Mission Impossible - WSJ.com
Let's try focusing on "opportunities" not deal with "outcomes".
The bane of all these policies is that we want to have safe outcomes and reduce risks. However growth, change and development is full of risks (again, anathema to liberals and Democrats).
If the economy could turn from subsidies, tax preferences, protective regulation, etc. and move to do everything it can to promote opportunities and reduced barriers to entry (there is nothing unions and big government likes more than barriers to entry to prevent competition), then the market could take care of itself.
Allow failure! Then investors know they have to watch out or they'll lose money.
As society is finding out over in Europe (and should be concerned about in the US), eventually the economic downside of these well-intended liberal policies of equalizing outcomes come up with a bill that is very difficult (if not impossible to pay).
No one really knows now how the Greeks will pay their bill. Obama and the Democrats think there will never be a serious attempt to collect on the entitlement spending bill they are running up! We'll see.
Let's try focusing on "opportunities" not deal with "outcomes".
The bane of all these policies is that we want to have safe outcomes and reduce risks. However growth, change and development is full of risks (again, anathema to liberals and Democrats).
If the economy could turn from subsidies, tax preferences, protective regulation, etc. and move to do everything it can to promote opportunities and reduced barriers to entry (there is nothing unions and big government likes more than barriers to entry to prevent competition), then the market could take care of itself.
Allow failure! Then investors know they have to watch out or they'll lose money.
As society is finding out over in Europe (and should be concerned about in the US), eventually the economic downside of these well-intended liberal policies of equalizing outcomes come up with a bill that is very difficult (if not impossible to pay).
No one really knows now how the Greeks will pay their bill. Obama and the Democrats think there will never be a serious attempt to collect on the entitlement spending bill they are running up! We'll see.
Wednesday, December 28, 2011
WHITHER THE NEW YEAR?: Jenkins: The Fannie and Freddie Hate Storm - WSJ.com
Jenkins: The Fannie and Freddie Hate Storm - WSJ.com
One could perhaps sum things up with the old adage about the "free lunch". Those who think there is one just hope they don't get hit with the backside or downside.
Likewise, the liberal agenda to equalize "outcomes" vs "opportunities" is another bane.
When you want equal outcomes, you believe there's a free lunch.
As noted, people soon feel they are entitled and government responds. Soon government takes too much from the economy to have growth or even sustainability. Borrowing (like a family living on credit cards) works for a while; but, eventually, the lenders figure there's no way they are going to be paid back.
The question before us is how this will all be handled?
Raising taxes on the rich, business and investors is appealing until you reach the "Laffer" moment when returns are less and less (think Illinois with its corporate tax increases or Europe in general).
Since the Laffer moment has certainly been reached in many parts of Europe (add in burdensome regulations as in the US), the question is open as to the next series of events? Printing money is highly in favor in many parts (few have likely visited Zimbabwe to see the downsides or are old enough to remember the German hyperinflation; and, of course, most want to ignore the 1970's in the US - just too long ago).
As for guilt - perhaps all too many are guilty for hoping more liberal policies and higher taxes are a solution. But, the liberals are telling us the rich can pick up the tab - so, little is done on their part to reign in spending or to provide equal opportunity incentives for growth. Oh yes, and the Republicans don't want immigrants.
One could perhaps sum things up with the old adage about the "free lunch". Those who think there is one just hope they don't get hit with the backside or downside.
Likewise, the liberal agenda to equalize "outcomes" vs "opportunities" is another bane.
When you want equal outcomes, you believe there's a free lunch.
As noted, people soon feel they are entitled and government responds. Soon government takes too much from the economy to have growth or even sustainability. Borrowing (like a family living on credit cards) works for a while; but, eventually, the lenders figure there's no way they are going to be paid back.
The question before us is how this will all be handled?
Raising taxes on the rich, business and investors is appealing until you reach the "Laffer" moment when returns are less and less (think Illinois with its corporate tax increases or Europe in general).
Since the Laffer moment has certainly been reached in many parts of Europe (add in burdensome regulations as in the US), the question is open as to the next series of events? Printing money is highly in favor in many parts (few have likely visited Zimbabwe to see the downsides or are old enough to remember the German hyperinflation; and, of course, most want to ignore the 1970's in the US - just too long ago).
As for guilt - perhaps all too many are guilty for hoping more liberal policies and higher taxes are a solution. But, the liberals are telling us the rich can pick up the tab - so, little is done on their part to reign in spending or to provide equal opportunity incentives for growth. Oh yes, and the Republicans don't want immigrants.
Tuesday, December 20, 2011
Q&A on Real Culprits: Goldman's Conundrum For 2012 - WSJ.com
Goldman's Conundrum For 2012 - WSJ.com
Statement: "all of them need to confess and repent. We are trying to expose Moody's and want people to know what happened and how were those shoddy mortgages given AAA ratings."
Response:
Since you imply confession and repentance is being sought outside of unions, liberals and the government, I'd suggest the religiously-toned objectives are misdirected.
As the above-alleged culprits believe the vagaries of the business cycle and the outcomes of wisdom, sagacity and hard work can be equalized and need to be, they are all responsible for raising the needed returns and salaries of those who can perform with the liberal regulatory and tax lodestones thrust upon them.
As such, it appears you are letting them off scot-free!
Anyone who bought a home or apartment in the maelstrom of the real estate bubble or the mortgages supporting the bubble should have rejected the 'process' design of liberal and socialist thinking for the more capitalist view of profit and return. The blatant question at the time was roughly "how can prices keep going up faster than incomes when there are no limits to supply?"
Similar questions have to be asked today in many areas. Many (most) aren't asking them.
Thus, one can't but suggest the tone of your blog must also be misdirected.
Statement: "all of them need to confess and repent. We are trying to expose Moody's and want people to know what happened and how were those shoddy mortgages given AAA ratings."
Response:
Since you imply confession and repentance is being sought outside of unions, liberals and the government, I'd suggest the religiously-toned objectives are misdirected.
As the above-alleged culprits believe the vagaries of the business cycle and the outcomes of wisdom, sagacity and hard work can be equalized and need to be, they are all responsible for raising the needed returns and salaries of those who can perform with the liberal regulatory and tax lodestones thrust upon them.
As such, it appears you are letting them off scot-free!
Anyone who bought a home or apartment in the maelstrom of the real estate bubble or the mortgages supporting the bubble should have rejected the 'process' design of liberal and socialist thinking for the more capitalist view of profit and return. The blatant question at the time was roughly "how can prices keep going up faster than incomes when there are no limits to supply?"
Similar questions have to be asked today in many areas. Many (most) aren't asking them.
Thus, one can't but suggest the tone of your blog must also be misdirected.
Saturday, December 17, 2011
THE GROCERY STORE ANALOGY: A Lump of Coal - Barrons.com
A Lump of Coal - Barrons.com
It's amazing how the evidence of the baneful effects of more government keep growing - but, as the old saying goes - "there's none so blind as those that will not see".
Somehow people still cling to the ridiculous (in terms of government bureaucracy) idea that when they go into the grocery store, they have a right to buy what they want - based on their own personal assessment of their own individual 'economic-utility' functions.
Yet, when these same liberals and all-wrought-up religious types think of others, they think they know better than these others.
Young people's reported growing support for Ron Paul starts to suggest at least some people are thinking that maybe we should all have more control over our lives.
Thanks for the always worthwhile editorial. Let's hope for a freer new year.
It's amazing how the evidence of the baneful effects of more government keep growing - but, as the old saying goes - "there's none so blind as those that will not see".
Somehow people still cling to the ridiculous (in terms of government bureaucracy) idea that when they go into the grocery store, they have a right to buy what they want - based on their own personal assessment of their own individual 'economic-utility' functions.
Yet, when these same liberals and all-wrought-up religious types think of others, they think they know better than these others.
Young people's reported growing support for Ron Paul starts to suggest at least some people are thinking that maybe we should all have more control over our lives.
Thanks for the always worthwhile editorial. Let's hope for a freer new year.
LIBERAL AND MORAL BAGGAGE THAT NEEDS TO BE REASSESSED! CUT HEAVY AND CUT HARD! Interview With Van Hoisington - Barrons.com
Interview With Van Hoisington - Barrons.com
Having laid out the issues, one can't help but ponder that Obama and the Democrats don't have a clue that they need to make cuts in their handouts; nor do they have a clue that excellence needs to be rewarded and mediocrity and under-performance not given support that drains the economy.
Ron Paul's appeal, which is reportedly particularly high among young people, would seem to bear the concern of the young out - they want jobs and feel able to bear the responsibility of working and earning - as long as they get to keep a fair share of what they earn.
Those public unions and the UAW that thought their golden retirement plans at age 50 ought to be very concerned.
On the Republican side, their moral baggage from the religious right doesn't allow them to really deal fairly with immigration or the drug problem.
If this was a family budget, there are families who know how to cut and those that don't.
My experience is that the sooner you cut and the heavier the cutbacks the better. You can always add back!
Having laid out the issues, one can't help but ponder that Obama and the Democrats don't have a clue that they need to make cuts in their handouts; nor do they have a clue that excellence needs to be rewarded and mediocrity and under-performance not given support that drains the economy.
Ron Paul's appeal, which is reportedly particularly high among young people, would seem to bear the concern of the young out - they want jobs and feel able to bear the responsibility of working and earning - as long as they get to keep a fair share of what they earn.
Those public unions and the UAW that thought their golden retirement plans at age 50 ought to be very concerned.
On the Republican side, their moral baggage from the religious right doesn't allow them to really deal fairly with immigration or the drug problem.
If this was a family budget, there are families who know how to cut and those that don't.
My experience is that the sooner you cut and the heavier the cutbacks the better. You can always add back!
THE MALESTROM OF SOCIAL CONSCIOUSNESS: Why Has the Recovery Been So Slow? - Barrons.com
Why Has the Recovery Been So Slow? - Barrons.com
It's certainly obvious that the idea of leveling incomes and economic and educational outcomes (i.e. high social benefits and taxes and regulations) is widely discussed and contrary to saving, investment and growth.
(For example, see the recent article on Wisconsin where the previous industrial strength of the state has been supplanted by government and healthcare workers.)
By so constraining the opportunities for 'average' Americans - in order to provide for the less fortunate - it could well be argued that the result is to only allow the extremely talented and capable to escape the malestrom of social-consciousness.
It's certainly obvious that the idea of leveling incomes and economic and educational outcomes (i.e. high social benefits and taxes and regulations) is widely discussed and contrary to saving, investment and growth.
(For example, see the recent article on Wisconsin where the previous industrial strength of the state has been supplanted by government and healthcare workers.)
By so constraining the opportunities for 'average' Americans - in order to provide for the less fortunate - it could well be argued that the result is to only allow the extremely talented and capable to escape the malestrom of social-consciousness.
Tuesday, December 13, 2011
PROCESS AND 'OTHER PEOPLE'S MONEY': Crovitz: Financial Regulation—Worse Than a Crime - WSJ.com
Crovitz: Financial Regulation—Worse Than a Crime - WSJ.com
It's also part of the problem when, to capture a phrase - regulators don't have "any skin in the game". In other words, they are dealing with other people's money, not their own.
In addition, regulators, as the article points out, are dealing with motherhood-type causes. What do I mean by this? Mothers generally are the member of the family that looks out for the welfare of the children. They expect and anticipate that the resources for this care will be there.
Mothers are not like the fathers in this simplistic (and admittedly sexist example) the 'breadwinners'. Someone else is responsible for providing the income.
This is clearly the liberal and Democratic (and union belief) - i.e. there are demands to be met (think of them as you will) and someone else is to provide the funding.
As a result, it is current consumption that trumps everything the mother-instinct of these liberals might consider. In the old farmer analysis of saving the seed-corn for the next season's planting, the mother instinct says, "I need food now", let's worry about the next season or the economy another day.
This has been the exact situation where liberals and unions make policy. They see needs and they abdure looking at the cost and what the consequences will be.
The next big issue is that since liberals don't have any skin-in-the-game, they think 'process' can trump product. As such, regulations and process are supposed to produce the halcyon results liberals (mothers) envisage.
The fact that evidence negates this view is again dismissed. Why? Because someone has been given consumption they haven't earned. The benefit has been delivered; and, the cost is borne by someone else.
Today, politicians like Obama keep saying it's the rich that are keeping the benefits to the middle class down. As long as the middle class believes they can get something for nothing, it's like a religious belief - i.e. eventually the benefice will come, just keep believing.
Until there's a return to getting what you deserve and can pay for back to society (i.e. not an entitlement) is reduced and balanced out, then the prognosis has to be one of anticipating more economically bad news (be it depression, recession, inflation or rampant inflation)!
It's also part of the problem when, to capture a phrase - regulators don't have "any skin in the game". In other words, they are dealing with other people's money, not their own.
In addition, regulators, as the article points out, are dealing with motherhood-type causes. What do I mean by this? Mothers generally are the member of the family that looks out for the welfare of the children. They expect and anticipate that the resources for this care will be there.
Mothers are not like the fathers in this simplistic (and admittedly sexist example) the 'breadwinners'. Someone else is responsible for providing the income.
This is clearly the liberal and Democratic (and union belief) - i.e. there are demands to be met (think of them as you will) and someone else is to provide the funding.
As a result, it is current consumption that trumps everything the mother-instinct of these liberals might consider. In the old farmer analysis of saving the seed-corn for the next season's planting, the mother instinct says, "I need food now", let's worry about the next season or the economy another day.
This has been the exact situation where liberals and unions make policy. They see needs and they abdure looking at the cost and what the consequences will be.
The next big issue is that since liberals don't have any skin-in-the-game, they think 'process' can trump product. As such, regulations and process are supposed to produce the halcyon results liberals (mothers) envisage.
The fact that evidence negates this view is again dismissed. Why? Because someone has been given consumption they haven't earned. The benefit has been delivered; and, the cost is borne by someone else.
Today, politicians like Obama keep saying it's the rich that are keeping the benefits to the middle class down. As long as the middle class believes they can get something for nothing, it's like a religious belief - i.e. eventually the benefice will come, just keep believing.
Until there's a return to getting what you deserve and can pay for back to society (i.e. not an entitlement) is reduced and balanced out, then the prognosis has to be one of anticipating more economically bad news (be it depression, recession, inflation or rampant inflation)!
Monday, December 12, 2011
THE BUBBLE AND THE PHOENIX: OECD Points to Mixed Slowdowns - WSJ.com
OECD Points to Mixed Slowdowns - WSJ.com
If one was to draw a parallel with the US housing bubble and suggest that too much government spending and too many policies that are anti-business exist and that the ability of governments to continue spending by borrowing in ways that will never reflect the amount of income their economies can provide to fund all of the spending the government (and many of its citizens want), then the question is how big the bubble will be allowed to grow and what happens then.
No country is really providing a stimulus to business or investment. They seem to hope that higher taxes and certainly, in the case of the US, even further expansion of government regulations and interference in the economy, will somehow be at best benign and that the miracle of economic growth will suddenly appear from the socialist world like a phoenix. However, this seems most unlikely.
If one was to draw a parallel with the US housing bubble and suggest that too much government spending and too many policies that are anti-business exist and that the ability of governments to continue spending by borrowing in ways that will never reflect the amount of income their economies can provide to fund all of the spending the government (and many of its citizens want), then the question is how big the bubble will be allowed to grow and what happens then.
No country is really providing a stimulus to business or investment. They seem to hope that higher taxes and certainly, in the case of the US, even further expansion of government regulations and interference in the economy, will somehow be at best benign and that the miracle of economic growth will suddenly appear from the socialist world like a phoenix. However, this seems most unlikely.
Sunday, December 11, 2011
THE MISTAKES BEHIND ANOTHER MORTGAGE REFI GAME: Mortgage Refis Could Pump $80 Billion into the Economy - Barrons.com
Mortgage Refis Could Pump $80 Billion into the Economy - Barrons.com
Sadly, this seems more like misdirection in an attempt to overlook, ignore and turn away from the policy mistakes which make investing and having faith in the long-term viability of the American economy up for grabs.
We see in Europe how socialist cradle-to-grave welfare has crippled the economies. There is no growth and huge debts.
The same socialist model is at the heart of Obama and Democratic policies. These policies aren't changing! There is the dichotomy of those who believe 'demand-has-to-be-met' socially and those who believe you have to leave enough in the economy to support growth and reward for saving, investment and prudence.
This mortgage refi is again an attempt to award those who acted imprudently and its a blatant attempt to obscure the real policy issues that need challenging.
With Obama and others convinced and convincing the general public - as is also seen in Europe - that somehow money has to be there for all these union job protections, social benefit programs, etc - and, that higher taxes are an inconsequential inconvenience only (and heck, mostly against the rich and businesses), why should the public believe change is necessary to get back to a job-creating, robust economy?
Those living on the income from these mortgages (as with savers everywhere) are the people who ox will be gored to give one more liberal stimulus to equalize economic outcomes vs. opportunities.
Sadly, this seems more like misdirection in an attempt to overlook, ignore and turn away from the policy mistakes which make investing and having faith in the long-term viability of the American economy up for grabs.
We see in Europe how socialist cradle-to-grave welfare has crippled the economies. There is no growth and huge debts.
The same socialist model is at the heart of Obama and Democratic policies. These policies aren't changing! There is the dichotomy of those who believe 'demand-has-to-be-met' socially and those who believe you have to leave enough in the economy to support growth and reward for saving, investment and prudence.
This mortgage refi is again an attempt to award those who acted imprudently and its a blatant attempt to obscure the real policy issues that need challenging.
With Obama and others convinced and convincing the general public - as is also seen in Europe - that somehow money has to be there for all these union job protections, social benefit programs, etc - and, that higher taxes are an inconsequential inconvenience only (and heck, mostly against the rich and businesses), why should the public believe change is necessary to get back to a job-creating, robust economy?
Those living on the income from these mortgages (as with savers everywhere) are the people who ox will be gored to give one more liberal stimulus to equalize economic outcomes vs. opportunities.
Friday, December 9, 2011
THE DEITY OF SOCIALISM: Matthew Kaminski: A Silver Lining in Europe - WSJ.com
Matthew Kaminski: A Silver Lining in Europe - WSJ.com
The sad thing with socialism is that in many ways it mimics religion - i.e. it takes faith to hope that the desired outcome (of the socialist prayers) will come about.
When it doesn't, as with religions, where the faith produces belief but not the expected miracles, then the believer must be at fault and have transgressed. The underlying belief system can't be faulted nor can one fault the deity.
In socialism the deity is entitlement.
The sad thing with socialism is that in many ways it mimics religion - i.e. it takes faith to hope that the desired outcome (of the socialist prayers) will come about.
When it doesn't, as with religions, where the faith produces belief but not the expected miracles, then the believer must be at fault and have transgressed. The underlying belief system can't be faulted nor can one fault the deity.
In socialism the deity is entitlement.
Saturday, December 3, 2011
NOT FOR SOCIALISTICALLY POLITE DISCUSSION: The Punch and Judy Show - Barrons.com
The Punch and Judy Show - Barrons.com
Sadly, the PIIGs idea of living-within-your-means involves far more tax increases than government (or spending) cutbacks.
And, the average member of the public in these countries doesn't seem very enthused about any government spending cutbacks.
French friends report strong Socialist party support within the country and far more radically left policies than Sarkozy - who, it doesn't seem has had any particular success in delivering on his election promises of toning down the big government and its bureaucracies - both local, regional and national.
These countries all seem to remind one of the family that feels reasonable flush or sated as long as they still have borrowing capacity on their credit cards. When the rates go up or they are getting close to a credit limit, they may hue and cry.
But, do these countries really want to go back to work. It sure doesn't seem so. Somehow growth (like a job) is nice to talk about, but the idea of knuckling down to actually do the work a job (read: growth) would entail - well, that's not a subject for socialistically polite discussion.
Sadly, the PIIGs idea of living-within-your-means involves far more tax increases than government (or spending) cutbacks.
And, the average member of the public in these countries doesn't seem very enthused about any government spending cutbacks.
French friends report strong Socialist party support within the country and far more radically left policies than Sarkozy - who, it doesn't seem has had any particular success in delivering on his election promises of toning down the big government and its bureaucracies - both local, regional and national.
These countries all seem to remind one of the family that feels reasonable flush or sated as long as they still have borrowing capacity on their credit cards. When the rates go up or they are getting close to a credit limit, they may hue and cry.
But, do these countries really want to go back to work. It sure doesn't seem so. Somehow growth (like a job) is nice to talk about, but the idea of knuckling down to actually do the work a job (read: growth) would entail - well, that's not a subject for socialistically polite discussion.
Wednesday, November 30, 2011
THE POLITICS OF LIBERAL BELIEF SYSTEMS - WOE IN THE END - iT'S ONLY A MATTER OF TIME: George Melloan: A Political Solution for the Euro? - WSJ.com
George Melloan: A Political Solution for the Euro? - WSJ.com
You are right, the blame should be on the free-lunch, entitlement crowd made up of unions (particularly public employee unions) and liberals who want to equalize outcomes vs. any equalization of opportunity.
People wonder why there is such an increase in what is called the 'wage gap'. They don't realize at which set of feet it should be laid - i.e. at the feet of those who constrain opportunity in order to assure outcomes.
The greater the opportunity cost to hire an employee or to start a business, the greater the return and, at least nominal, reward will be necessary. Of course liberals discount this, but it should be staring them in the face.
Luckily liberals and unionists, like those with a strong religious faith, easily ignore the logical outcomes of their policies and hold to a faith that something different can and will happen eventually in the future.
Sadly for liberals, people actually like to be fairly compensated for their work and savings and they don't like it when those who barely if at all produce anything demand too great a tithe to be handed over to non-producers.
Does a member of a union or an employee of these European government owned enterprises imagine they are giving back to society what they are taking. Abjure the thought - otherwise, they'd survive in a truly competitive environment.
By looking around, those with an open mind to basic economics can easily fathom the answer and outcome of these policies. For those in liberal denial, no evidence will convince them that their faith is misplaced. Seems like a recurring and very old story.
You are right, the blame should be on the free-lunch, entitlement crowd made up of unions (particularly public employee unions) and liberals who want to equalize outcomes vs. any equalization of opportunity.
People wonder why there is such an increase in what is called the 'wage gap'. They don't realize at which set of feet it should be laid - i.e. at the feet of those who constrain opportunity in order to assure outcomes.
The greater the opportunity cost to hire an employee or to start a business, the greater the return and, at least nominal, reward will be necessary. Of course liberals discount this, but it should be staring them in the face.
Luckily liberals and unionists, like those with a strong religious faith, easily ignore the logical outcomes of their policies and hold to a faith that something different can and will happen eventually in the future.
Sadly for liberals, people actually like to be fairly compensated for their work and savings and they don't like it when those who barely if at all produce anything demand too great a tithe to be handed over to non-producers.
Does a member of a union or an employee of these European government owned enterprises imagine they are giving back to society what they are taking. Abjure the thought - otherwise, they'd survive in a truly competitive environment.
By looking around, those with an open mind to basic economics can easily fathom the answer and outcome of these policies. For those in liberal denial, no evidence will convince them that their faith is misplaced. Seems like a recurring and very old story.
Tuesday, November 29, 2011
REGULATORY SNOW AND TAXING MIRE: Mood in Euro-Zone Remains Gloomy - WSJ.com
Mood in Euro-Zone Remains Gloomy - WSJ.com
Where are the incentives in the Eurozone for entrepreneurs, investors or growth?
Rather than cut taxes to spur growth, taxes are raised.
Rather than cut regulations, the public unions are striking for more of the same.
It is still like an economic car stuck in the snow of bureaucratic regulation and mired in the drifts of high taxes with the only hope that there's a nearby gas pump to keep the engine running while it is being flooded with cheap credit in the hope that it can get away from the snow and mire.
Why not cut back the regulatory snow and taxing mire?
Where are the incentives in the Eurozone for entrepreneurs, investors or growth?
Rather than cut taxes to spur growth, taxes are raised.
Rather than cut regulations, the public unions are striking for more of the same.
It is still like an economic car stuck in the snow of bureaucratic regulation and mired in the drifts of high taxes with the only hope that there's a nearby gas pump to keep the engine running while it is being flooded with cheap credit in the hope that it can get away from the snow and mire.
Why not cut back the regulatory snow and taxing mire?
THE WRONGFUL PANDERINGS OF THOSE BEHIND OBAMA: Austan Goolsbee: Europe's Currency Road to Nowhere - WSJ.com
Austan Goolsbee: Europe's Currency Road to Nowhere - WSJ.com
Sadly Mr. Goolsbee, your comments reflect the baneful mentality of the man you recently worked for.
There is no reason not to cut to the point that business is encouraged - but, then again, that plays against the social justice mantra of those who honor outcome more than accomplishment and achievement.
Southern Europe could put forth policies to encourage entrepreneurship, excellence and reward - but, to do that, it would have to cut back on all the waste and pandering to dreams of social justice and equality of outcome that discourage, hamper and constrain (if not eviscerate) economic investment and growth.
To acquiesce to socialist and union-centric economics is not the right approach. Obama added public employees, questionable-at-best regulations and decided to berate the private sector in favor of union-centric, social-redistributionist policies. The result is no growth.
If Southern Europe wants to continue in that vain, the eventual economic cliff awaits.
Sadly Mr. Goolsbee, your comments reflect the baneful mentality of the man you recently worked for.
There is no reason not to cut to the point that business is encouraged - but, then again, that plays against the social justice mantra of those who honor outcome more than accomplishment and achievement.
Southern Europe could put forth policies to encourage entrepreneurship, excellence and reward - but, to do that, it would have to cut back on all the waste and pandering to dreams of social justice and equality of outcome that discourage, hamper and constrain (if not eviscerate) economic investment and growth.
To acquiesce to socialist and union-centric economics is not the right approach. Obama added public employees, questionable-at-best regulations and decided to berate the private sector in favor of union-centric, social-redistributionist policies. The result is no growth.
If Southern Europe wants to continue in that vain, the eventual economic cliff awaits.
HOW PUBLIC SECTOR UNIONS ARE LIKE THE ZANU PF: European Nations Pressure Own Banks for Loans - WSJ.com
European Nations Pressure Own Banks for Loans - WSJ.com
The governments and their public sector unions have no ability to cut back their spending. They don't see a disconnect between subsidized or meaningless unproductive jobs and investing for growth. In fact, it's just the opposite. They see no limit to their ability to tax and suck money and capital out of the economy for worker consumption.
This is the same as Obama and many liberal economists.
Governments need to have negative real rates of return to savers. Eventually, accumulated savings and even regular bank current account deposits are exhausted - as is happening now. And, with high taxes and low rates, there is neither the means nor the incentive for people to save.
As Zimbabwe discovered and many European countries are starting to discover, as you keep eating the economy's economic seed corn, eventually you run out of other people's harvests to take.
Governments and unions can't imagine there isn't a free lunch. They fail to even imagine that there is a limit to what they can suck out of the private economy.
It seems as though the bridge has been crossed and, while it would be nice to think these governments and large blocks of their population would see the need to actually invest in their economies, it seems beyond them. To them, investment is just higher taxes and more for government consumption and handouts and less for the private economy to survive on.
Public sector unions and the governments supporting them have far more in common with Robert Mugabe and the Zanu PF party than they could bear to acknowledge. His results will be their results - and those of many of the rest of us as well - unfortunately!
The governments and their public sector unions have no ability to cut back their spending. They don't see a disconnect between subsidized or meaningless unproductive jobs and investing for growth. In fact, it's just the opposite. They see no limit to their ability to tax and suck money and capital out of the economy for worker consumption.
This is the same as Obama and many liberal economists.
Governments need to have negative real rates of return to savers. Eventually, accumulated savings and even regular bank current account deposits are exhausted - as is happening now. And, with high taxes and low rates, there is neither the means nor the incentive for people to save.
As Zimbabwe discovered and many European countries are starting to discover, as you keep eating the economy's economic seed corn, eventually you run out of other people's harvests to take.
Governments and unions can't imagine there isn't a free lunch. They fail to even imagine that there is a limit to what they can suck out of the private economy.
It seems as though the bridge has been crossed and, while it would be nice to think these governments and large blocks of their population would see the need to actually invest in their economies, it seems beyond them. To them, investment is just higher taxes and more for government consumption and handouts and less for the private economy to survive on.
Public sector unions and the governments supporting them have far more in common with Robert Mugabe and the Zanu PF party than they could bear to acknowledge. His results will be their results - and those of many of the rest of us as well - unfortunately!
Saturday, November 26, 2011
ONE TAKES YOUR RIGHTS, THE OTHER YOUR MONEY AND JOBS: Romney vs. Obama: The Choice Ahead - Barrons.com
Romney vs. Obama: The Choice Ahead - Barrons.com
You have to admit that this article deals with the likely logical choices.
A moderate third party would be nice (as noted by Bill Gross on Bloomberg recently), but will it happen?
We also need to get rid of gerrymandered 'safe' voting districts where each party gets to elect from the extremist elements of the country (right and left).
It the old saying, "The Republicans take your rights (think anti-abortion religious crazies (and that's being kind)) and the Democrats take your money (think no jobs and off-shoring of jobs with liberal education policies and teachers unions caring more about their own job security and equality of outcomes rather than performance and opportunities).
You have to admit that this article deals with the likely logical choices.
A moderate third party would be nice (as noted by Bill Gross on Bloomberg recently), but will it happen?
We also need to get rid of gerrymandered 'safe' voting districts where each party gets to elect from the extremist elements of the country (right and left).
It the old saying, "The Republicans take your rights (think anti-abortion religious crazies (and that's being kind)) and the Democrats take your money (think no jobs and off-shoring of jobs with liberal education policies and teachers unions caring more about their own job security and equality of outcomes rather than performance and opportunities).
MISPRICING: Europe Straitened - Barrons.com
Europe Straitened - Barrons.com
Speaking of "mispricing", sometimes little tidbits tell a lot.
What I'm talking about is the old "free-lunch school" of endless government borrowings at low rates (negative real rates) without consequences - and, especially when used to support socialist ideals, unions, abundant entitlements, etc.
As a result, the banks here in Europe (Portugal was noted in a recent article) are now paying savers 4%. Clearly not the 7% plus that lenders to many sovereigns demand; but, still, far more than where the ECB set the borrowing rate.
Portent or not, the logic that money grows on trees to support unaffordable and socially demanded benefit programs ad infinitum may not be true seems to be such anathema to most that they patently dismiss it. Thus, they want the ECB to keep the party going. (Might we say as Uncle Ben is doing in the US.)
An interesting suggestion this week (can't recall by whom) was to allow Southern Europe to have two currencies. Let the governments pay their benefits and workers in a local euro and let two prices co-exist. They can keep the standard euro and depreciate their local euro. Who knows, it's another option where at least the ECB doesn't have to run it's printing presses.
Speaking of "mispricing", sometimes little tidbits tell a lot.
What I'm talking about is the old "free-lunch school" of endless government borrowings at low rates (negative real rates) without consequences - and, especially when used to support socialist ideals, unions, abundant entitlements, etc.
As a result, the banks here in Europe (Portugal was noted in a recent article) are now paying savers 4%. Clearly not the 7% plus that lenders to many sovereigns demand; but, still, far more than where the ECB set the borrowing rate.
Portent or not, the logic that money grows on trees to support unaffordable and socially demanded benefit programs ad infinitum may not be true seems to be such anathema to most that they patently dismiss it. Thus, they want the ECB to keep the party going. (Might we say as Uncle Ben is doing in the US.)
An interesting suggestion this week (can't recall by whom) was to allow Southern Europe to have two currencies. Let the governments pay their benefits and workers in a local euro and let two prices co-exist. They can keep the standard euro and depreciate their local euro. Who knows, it's another option where at least the ECB doesn't have to run it's printing presses.
Friday, November 25, 2011
BENEFICENCE (CHURCH AND STATE): Jamie Whyte: Politicians and the Economy - WSJ.com
Jamie Whyte: Politicians and the Economy - WSJ.com
Somehow it all gets down to which of the three schools of economic thought (e.g. vis-a-vis the 1930's Depression) one gives credence to.
1) The Keynesian School (discussed in this article) and close to the heart of socialists and union members - also read: "The Free-Lunch School".
2) The Monetarist School (think Milton Friedman).
When one excludes the fact that there is a third school (see below), the monetarist school makes sense. However, thanks to Ben Bernanke (flooding the economy with the money the monetarists thought was missing in the Great Depression) and President Obama (validating by his policies the 3rd school below), the monetarists dictum that a flood of cheap money is all that is needed to get an economy going, has now been shown to be false.
So here we are at #3.
3) The Laffer School. Here if taxes or regulations are too high, then growth won't take place.
Unions, most politicians currently in office and the socialist and entitled electorates don't even acknowledge this school exists. It implies a level of self-interest on the part of savers, investors and entrepreneurs that is just 'unacceptable'.
As this article notes, 52% marginal taxes are fine because they are supposed to have no impact on the economic investment or entrepreneurial actions of the individuals and businesses paying them; and, the funds are needed by government for all of the beneficent things it does (oh my gosh, 'beneficence' - sounds like some church or other? Well, maybe it's the same, Control of the many for the benefit of the few at the top!).
Somehow it all gets down to which of the three schools of economic thought (e.g. vis-a-vis the 1930's Depression) one gives credence to.
1) The Keynesian School (discussed in this article) and close to the heart of socialists and union members - also read: "The Free-Lunch School".
2) The Monetarist School (think Milton Friedman).
When one excludes the fact that there is a third school (see below), the monetarist school makes sense. However, thanks to Ben Bernanke (flooding the economy with the money the monetarists thought was missing in the Great Depression) and President Obama (validating by his policies the 3rd school below), the monetarists dictum that a flood of cheap money is all that is needed to get an economy going, has now been shown to be false.
So here we are at #3.
3) The Laffer School. Here if taxes or regulations are too high, then growth won't take place.
Unions, most politicians currently in office and the socialist and entitled electorates don't even acknowledge this school exists. It implies a level of self-interest on the part of savers, investors and entrepreneurs that is just 'unacceptable'.
As this article notes, 52% marginal taxes are fine because they are supposed to have no impact on the economic investment or entrepreneurial actions of the individuals and businesses paying them; and, the funds are needed by government for all of the beneficent things it does (oh my gosh, 'beneficence' - sounds like some church or other? Well, maybe it's the same, Control of the many for the benefit of the few at the top!).
Tuesday, November 22, 2011
THE GROWTH CLOCK NEEDS ATTENTION NOT JUST TALK: Debt Crisis Is a Symptom of Wider Failings - WSJ.com
Debt Crisis Is a Symptom of Wider Failings - WSJ.com
It would seem as though EU citizens need to see the halcyon call of socialists has consequences. And, those consequences include a lack of jobs and growth.
The young need to see it and the old need to recognize it. But, this doesn't seem to be the case in much of Europe.
More taxes just mean less for the individuals and private sector and more for the bureaucrats, unions and politically entitled.
Those who think job protections are fair when there is 20% unemployment have a lesson to learn.
There are many ticking clocks. None of them very friendly.
Sadly, there's no interest in doing more than hoping the economic growth clock will start ticking. No politician has the guts to actually oil its works or wind it or even set it on level ground.
To do so would upset all too many other clocks.
It would seem as though EU citizens need to see the halcyon call of socialists has consequences. And, those consequences include a lack of jobs and growth.
The young need to see it and the old need to recognize it. But, this doesn't seem to be the case in much of Europe.
More taxes just mean less for the individuals and private sector and more for the bureaucrats, unions and politically entitled.
Those who think job protections are fair when there is 20% unemployment have a lesson to learn.
There are many ticking clocks. None of them very friendly.
Sadly, there's no interest in doing more than hoping the economic growth clock will start ticking. No politician has the guts to actually oil its works or wind it or even set it on level ground.
To do so would upset all too many other clocks.
GOSPEL AND ACCEPTED GOSPEL: Profits Rise as GDP Revised Lower - WSJ.com
Profits Rise as GDP Revised Lower - WSJ.com
It is amazing that all those 'solons' in the Wall Street protest movement never raise questions about why more companies aren't being started and more jobs being created?
Wouldn't it be interesting to have a panel (from wherever, including non-Liberals) to look at every regulation and evaluate its impact on 'opportunity' to start businesses, invest in businesses, improve one's education, create jobs, etc.
Clearly , Sarbanes Oxley, ObamaCare, immigration policies, Dodd-Frank and limits on oil drilling are at the top of such a list.
Sadly, neither party ones to really attack causative factors that have no negative impact on the Federal Budget.
One might say, no one wants to challenge 'accepted gospel'.
It is amazing that all those 'solons' in the Wall Street protest movement never raise questions about why more companies aren't being started and more jobs being created?
Wouldn't it be interesting to have a panel (from wherever, including non-Liberals) to look at every regulation and evaluate its impact on 'opportunity' to start businesses, invest in businesses, improve one's education, create jobs, etc.
Clearly , Sarbanes Oxley, ObamaCare, immigration policies, Dodd-Frank and limits on oil drilling are at the top of such a list.
Sadly, neither party ones to really attack causative factors that have no negative impact on the Federal Budget.
One might say, no one wants to challenge 'accepted gospel'.
Sunday, November 20, 2011
Tick-tock, tick-tock: Review & Outlook: Bailout of First Resort - WSJ.com
Review & Outlook: Bailout of First Resort - WSJ.com
Let's see?
The housing bubble was fine and dandy as long as prices kept going up even though incomes didn't. Eventually it burst to the downside - and, we're still in a correction phase.
Likewise, the government debt bubble all seems fine and dandy as long as interest rates stay low. But, no one has an incentive to save with negative real interest rates (the equivalent of the incomes to support house prices). So, as long as the printing presses don't really ignite inflation, all is halcyon.
But, when the sovereign debt bubble bursts - as is almost happening (and really happening in some places) - the choice will be the housing bubble equivalent - of course opposite direction - i.e. much higher interest rates and/or a flood of debt-devaluing-money-printing the ensuing inflation.
Tick-tock, tick-tock...
Let's see?
The housing bubble was fine and dandy as long as prices kept going up even though incomes didn't. Eventually it burst to the downside - and, we're still in a correction phase.
Likewise, the government debt bubble all seems fine and dandy as long as interest rates stay low. But, no one has an incentive to save with negative real interest rates (the equivalent of the incomes to support house prices). So, as long as the printing presses don't really ignite inflation, all is halcyon.
But, when the sovereign debt bubble bursts - as is almost happening (and really happening in some places) - the choice will be the housing bubble equivalent - of course opposite direction - i.e. much higher interest rates and/or a flood of debt-devaluing-money-printing the ensuing inflation.
Tick-tock, tick-tock...
BUBBLE #2 HAS BEEN STARRING US IN THE FACE- WE JUST DON'T LIKE WHAT WE SEE: Europe's Game of Political Chairs Doesn't Impress Markets - WSJ.com
Europe's Game of Political Chairs Doesn't Impress Markets - WSJ.com
Interestingly said - but, as Selzer alludes, if doesn't point out, the raft of politicians and union leaders believes there is a free lunch.
All the talk of the ECB coming to the rescue is like a family running up a limit on its credit cards. In other words, do they cut back their spending, live within their income, try to get a better job - or, as with the heavily indebted EU states (and the US), do they want the printing presses to roll out more credit?
Clearly, the objective is more credit.
After all, people have been told they are entitled. The unions haven't a clue how to start a business and socialist and union-centric governments don't want to encourage non-union, free-market businesses to compete with feather-bedded, regulatory-heavy businesses - as Selzer points out.
The US is in the same position.
The quagmire is like that of the housing market. In the US housing bubble, it was unsustainable housing price increases moving out-of-tandem with incomes.
In the world of sovereign debt, it's low interest rates moving out-of-tandem with the incentive of the private economy to save and transfer the savings to government borrowing for the socialist state.
To say the housing bubble was the first big bubble of the millenia is fairly easy; to say the sovereign debt bubble is the next - well, that would seem fairly easy too.
But, as with housing, how many really want to admit what is starring them in the face?
Interestingly said - but, as Selzer alludes, if doesn't point out, the raft of politicians and union leaders believes there is a free lunch.
All the talk of the ECB coming to the rescue is like a family running up a limit on its credit cards. In other words, do they cut back their spending, live within their income, try to get a better job - or, as with the heavily indebted EU states (and the US), do they want the printing presses to roll out more credit?
Clearly, the objective is more credit.
After all, people have been told they are entitled. The unions haven't a clue how to start a business and socialist and union-centric governments don't want to encourage non-union, free-market businesses to compete with feather-bedded, regulatory-heavy businesses - as Selzer points out.
The US is in the same position.
The quagmire is like that of the housing market. In the US housing bubble, it was unsustainable housing price increases moving out-of-tandem with incomes.
In the world of sovereign debt, it's low interest rates moving out-of-tandem with the incentive of the private economy to save and transfer the savings to government borrowing for the socialist state.
To say the housing bubble was the first big bubble of the millenia is fairly easy; to say the sovereign debt bubble is the next - well, that would seem fairly easy too.
But, as with housing, how many really want to admit what is starring them in the face?
THE ONGOING MISMATCH: High-Grade Corporates Benefit from Europe's Woes - Barrons.com
High-Grade Corporates Benefit from Europe's Woes - Barrons.com
As with the during-bubble run-up in housing prices in excess of income changes; so now, it would seem there is a developed world run-up in demand for new debt (even Greece in supposed austerity has a projected 10% of GDP deficit for the upcoming year) that is totally out-of-sync with the real returns offered to savers to provide the funding for the debt.
And, as governments' need low rates to be able to afford the interest due on their debt; and, as growth isn't happening under the regulatory and fiscal frameworks these governments feel necessary politically; and, as the governments (US and EU) appear to want money to be printed...
draw your own conclusions.
As with the during-bubble run-up in housing prices in excess of income changes; so now, it would seem there is a developed world run-up in demand for new debt (even Greece in supposed austerity has a projected 10% of GDP deficit for the upcoming year) that is totally out-of-sync with the real returns offered to savers to provide the funding for the debt.
And, as governments' need low rates to be able to afford the interest due on their debt; and, as growth isn't happening under the regulatory and fiscal frameworks these governments feel necessary politically; and, as the governments (US and EU) appear to want money to be printed...
draw your own conclusions.
Friday, November 18, 2011
FISCAL POLICY ICE AND SNOWDRIFTS: History Repeats In Policy Blunders - Barrons.com
History Repeats In Policy Blunders - Barrons.com
There is also the old-saying about "garbage-in-garbage-out".
In this case, it would appear the garbage is to ignore Art Laffer's many comments.
As said a few days back, why not approve this new pipeline and give a bunch of people jobs? (In this case, it's the environment lobby that needs appeasement) Same with more oil drilling off the coast of the US. - all totally outside of austerity policies.
The regulatory burden (Obama's and others such as Sarbanes Oxley) - all designed with seeming good intentions have nothing to do with austerity - they just hold back business.
The austerity debate is really more of a red herring of the socialist-union alliance that wants high levels of government spending - and, this alliance believes it is a free lunch.
The policies that are holding back the economic 'car' need to change. Flooding the engine and a heavy foot on the spending and borrowing accelerator do nothing to overcome the fiscal policy ice and snowdrifts.
There is also the old-saying about "garbage-in-garbage-out".
In this case, it would appear the garbage is to ignore Art Laffer's many comments.
As said a few days back, why not approve this new pipeline and give a bunch of people jobs? (In this case, it's the environment lobby that needs appeasement) Same with more oil drilling off the coast of the US. - all totally outside of austerity policies.
The regulatory burden (Obama's and others such as Sarbanes Oxley) - all designed with seeming good intentions have nothing to do with austerity - they just hold back business.
The austerity debate is really more of a red herring of the socialist-union alliance that wants high levels of government spending - and, this alliance believes it is a free lunch.
The policies that are holding back the economic 'car' need to change. Flooding the engine and a heavy foot on the spending and borrowing accelerator do nothing to overcome the fiscal policy ice and snowdrifts.
Thursday, November 17, 2011
THE RELATIONSHIP OF BORROWERS TO SAVERS (OR MONEY PRINTERS): Bond Market Calls the Shots in Europe - Barrons.com
Bond Market Calls the Shots in Europe - Barrons.com
The same is true in the United States - much to the less-than-realistic imagination of the socialist types like Obama and the public employee unions - all of whom somehow believe that if you 'wish for an outcome', then eventually, that's what will happen.
Even if history shows that not to be the case - witness union-centric socialist economic policies collapsing the economies of Greece, etc. And, as with GM, once the equity is gone, someone has to step in to revive what has been depleted.
When everyone keeps wanting to borrow (crowding-out by sovereigns noted) and no one wants to save (i.e. a negative real return), then something has to give.
Either savers need to be paid more or borrowers have to borrow less or start paying back.
Which way will the winds blow?
The same is true in the United States - much to the less-than-realistic imagination of the socialist types like Obama and the public employee unions - all of whom somehow believe that if you 'wish for an outcome', then eventually, that's what will happen.
Even if history shows that not to be the case - witness union-centric socialist economic policies collapsing the economies of Greece, etc. And, as with GM, once the equity is gone, someone has to step in to revive what has been depleted.
When everyone keeps wanting to borrow (crowding-out by sovereigns noted) and no one wants to save (i.e. a negative real return), then something has to give.
Either savers need to be paid more or borrowers have to borrow less or start paying back.
Which way will the winds blow?
THE ILLUSION OF A FREE LUNCH: Simon Moore: Britain's Gas-Price Gamble - WSJ.com
Simon Moore: Britain's Gas-Price Gamble - WSJ.com
Needless to say, any government intervention has consequences. The old law of physics about actions and reactions.
If costs are raised everywhere through higher taxes, there are implications in terms of fewer jobs being created.
People also live less well because everything costs more, salaries don't increase and people have to make do with less.
As people make do with less, the opportunity to create better, newer cities diminishes along with the jobs to build these cities.
As this article says, the less government interference in what people want (electric power) and the way in which the market supplies it (i.e. no subsidies), the better!
In terms of unknowns, it seems as though everyday is bringing more frightening news about the banking and sovereign debt crises - all of which should be laid directly at the feet of governments and their voting blocks that think there is a free government lunch. Clearly there is no such free lunch!
Needless to say, any government intervention has consequences. The old law of physics about actions and reactions.
If costs are raised everywhere through higher taxes, there are implications in terms of fewer jobs being created.
People also live less well because everything costs more, salaries don't increase and people have to make do with less.
As people make do with less, the opportunity to create better, newer cities diminishes along with the jobs to build these cities.
As this article says, the less government interference in what people want (electric power) and the way in which the market supplies it (i.e. no subsidies), the better!
In terms of unknowns, it seems as though everyday is bringing more frightening news about the banking and sovereign debt crises - all of which should be laid directly at the feet of governments and their voting blocks that think there is a free government lunch. Clearly there is no such free lunch!
Thursday, November 10, 2011
WHY NOT PUNISH UNION THUGGERY COSTING TAXPAYERS - THE LIRR SCANDAL: Review & Outlook: Europe's Entitlement Reckoning - WSJ.com
Review & Outlook: Europe's Entitlement Reckoning - WSJ.com
Fair is fair, but the unions are being given a free ride - particularly the public employee unions.
Sadly, the US unions and the Democrats haven't even a clue as to what they are doing to the economy. It's all free lunches to the deserving.
Yesterday, there was a report on the scandal of union members (the LIRR in this case) gaming the disability system.
Was there any indication that any public official saw this as an outrage and that the perpetrators (90% of retirees from the LIRR) be obligated to repay their ill gotten gains? I didn't and haven't seen it.
Fair is fair, but the unions are being given a free ride - particularly the public employee unions.
Sadly, the US unions and the Democrats haven't even a clue as to what they are doing to the economy. It's all free lunches to the deserving.
Yesterday, there was a report on the scandal of union members (the LIRR in this case) gaming the disability system.
Was there any indication that any public official saw this as an outrage and that the perpetrators (90% of retirees from the LIRR) be obligated to repay their ill gotten gains? I didn't and haven't seen it.
Saturday, November 5, 2011
THE TIMES DON'T REALLY SEEM TO BE CHANGING: Greek Referendum and Swaps Option Raise Huge Risks - Barrons.com
Greek Referendum and Swaps Option Raise Huge Risks - Barrons.com
In the same way the housing bubble, as it was building, seemed to be a house built on the sand of rising prices but not rising incomes; so too, the current environment,where interest rates are effectively zero or negative (thus no encouragement to save and defer gratification) yet governments are spending far more than their economies can give them with ever rising taxes, seems to be economic environment built on sand.
What the storm will be that wracks these economies and whether a particular storm will have the same destructive impact on all of them is clearly unknown.
However, this article starts to touch on them.
(As a simple example, we see low rates paid on savings here in Portugal; yet, Friday's news was that the Portuguese banks don't have the funds to lend to Portugal's largest companies that need to roll over EUR ($?) 3 billion in debt.)
Clearly, the economic balancing act between borrowers and savers is askew; and,looking for the Fed or ECB to keep printing money can't end well.
We know fiscal and regulatory policies are inhibiting growth in the US and here in many parts of Europe.
The housing bubble went on far longer than a number of people thought (the rest being blissfully ignorant). So too, people demanding and wanting things from government that are ultimately unaffordable seems to be going on far longer than one would hope.
Then again, politicians are afraid to talk about it.
In the same way the housing bubble, as it was building, seemed to be a house built on the sand of rising prices but not rising incomes; so too, the current environment,where interest rates are effectively zero or negative (thus no encouragement to save and defer gratification) yet governments are spending far more than their economies can give them with ever rising taxes, seems to be economic environment built on sand.
What the storm will be that wracks these economies and whether a particular storm will have the same destructive impact on all of them is clearly unknown.
However, this article starts to touch on them.
(As a simple example, we see low rates paid on savings here in Portugal; yet, Friday's news was that the Portuguese banks don't have the funds to lend to Portugal's largest companies that need to roll over EUR ($?) 3 billion in debt.)
Clearly, the economic balancing act between borrowers and savers is askew; and,looking for the Fed or ECB to keep printing money can't end well.
We know fiscal and regulatory policies are inhibiting growth in the US and here in many parts of Europe.
The housing bubble went on far longer than a number of people thought (the rest being blissfully ignorant). So too, people demanding and wanting things from government that are ultimately unaffordable seems to be going on far longer than one would hope.
Then again, politicians are afraid to talk about it.
Monday, October 31, 2011
LONG-TERM GROWTH POLICIES AND RATIONALIZING LABOR COSTS: Growth Key for Euro-Zone Deal - WSJ.com
Growth Key for Euro-Zone Deal - WSJ.com
Governments talk growth but they don't do what long-term growth requires - instead, it's borrow now for an extra trip to the discount store selling imported goods.
Why not talk about rationalizing the cost of labor? Of course, we know why not. The unions feel they're entitled to certain types of jobs and therefore those are the jobs there should be. But clearly the economic models that bring together all of the forces that make economies thrive or crash are ignored.
(As an example, Cain is supporting the idea of enterprise zones in depressed areas that forego minimum wage laws.)
Also, nothing is said about supporting long-term plans (tax, regulatory, etc.) to support growth. It's all short-term support that again is nothing more than one more shopping trip on the country's credit card.
When one reads that 6% interest is 'unsustainable' for Italy long term, the US should think back at what rates were like in the 1980's - let alone the 1970's.
Governments talk growth but they don't do what long-term growth requires - instead, it's borrow now for an extra trip to the discount store selling imported goods.
Why not talk about rationalizing the cost of labor? Of course, we know why not. The unions feel they're entitled to certain types of jobs and therefore those are the jobs there should be. But clearly the economic models that bring together all of the forces that make economies thrive or crash are ignored.
(As an example, Cain is supporting the idea of enterprise zones in depressed areas that forego minimum wage laws.)
Also, nothing is said about supporting long-term plans (tax, regulatory, etc.) to support growth. It's all short-term support that again is nothing more than one more shopping trip on the country's credit card.
When one reads that 6% interest is 'unsustainable' for Italy long term, the US should think back at what rates were like in the 1980's - let alone the 1970's.
Saturday, October 29, 2011
BEYOND DEBTOR'S PRISON: Animal Spirits Rising - Barrons.com
Animal Spirits Rising - Barrons.com
Somehow, it would seem as though the US has pioneered the solution to the obloquy of debtor's prison.
But, the Europeans seem averse to the idea of moving on and a fresh start.
Some comments this weekend on the perfidious nature of Greek social benefits was, sad-to-say, even more of an eye opener to the nexus of the Greek's problems.
But, bankruptcy, no other credit and time to reflect and restart would seem and suggest itself as preferential to what is happening now.
Oh yes, the world should take note that socialist policies with expanded government benefits doesn't pencil out in the end. But, then again, who should be lending to the US government either?
Somehow, it would seem as though the US has pioneered the solution to the obloquy of debtor's prison.
But, the Europeans seem averse to the idea of moving on and a fresh start.
Some comments this weekend on the perfidious nature of Greek social benefits was, sad-to-say, even more of an eye opener to the nexus of the Greek's problems.
But, bankruptcy, no other credit and time to reflect and restart would seem and suggest itself as preferential to what is happening now.
Oh yes, the world should take note that socialist policies with expanded government benefits doesn't pencil out in the end. But, then again, who should be lending to the US government either?
The Democrat-Union Succubus: This Week: Greek Deal, Gupta Charges, H-P Turnabout - WSJ.com
This Week: Greek Deal, Gupta Charges, H-P Turnabout - WSJ.com
Another Take on Jobs and Incomes
If one thinks about jobs in the economy in a broader sense, there is an easy analogy to ordinary personal behavior - i.e. if something goes up in price (labor costs), one looks to make substitutions (capital goods).
As unions and liberals define labor as needing this benefit and that, the cost of labor goes up (both in terms of real costs and net costs or benefits to the employed).
As a result, producers that want to stay in business have to pay attention to global competition.
As recently reported, Obama's Administration has put in more and more expensive regulations that cost American businesses real money. Thus, less money left to pay labor.
In a poor African country, a farmer won't own machinery, he'll find it cheaper to hire low-paid laborers. In the US, it's just the opposite.
But, to have the skills to handle sophisticated capital goods (equipment) or to run a highly sophisticated business (advanced information technologies) takes skills. These get paid commensurately higher salaries.
Thus, as the liberal part of society tries to equalize outcomes, it marginalizes the incentive to develop skills. As a result, there is high unemployment (due to wage distortion and substitution) and large numbers of unfilled jobs where particular skill sets are needed.
The solution to the unemployment problem begins by recognizing the need to remove artificial inhibitors to demand (labor) meeting supply (job openings and job opportunities).
Occupy Wall-Streeters have succumbed to the Democratic-Union succubus that they are 'entitled' so they should get - rather than the need to remove restraints to opportunity.
Another Take on Jobs and Incomes
If one thinks about jobs in the economy in a broader sense, there is an easy analogy to ordinary personal behavior - i.e. if something goes up in price (labor costs), one looks to make substitutions (capital goods).
As unions and liberals define labor as needing this benefit and that, the cost of labor goes up (both in terms of real costs and net costs or benefits to the employed).
As a result, producers that want to stay in business have to pay attention to global competition.
As recently reported, Obama's Administration has put in more and more expensive regulations that cost American businesses real money. Thus, less money left to pay labor.
In a poor African country, a farmer won't own machinery, he'll find it cheaper to hire low-paid laborers. In the US, it's just the opposite.
But, to have the skills to handle sophisticated capital goods (equipment) or to run a highly sophisticated business (advanced information technologies) takes skills. These get paid commensurately higher salaries.
Thus, as the liberal part of society tries to equalize outcomes, it marginalizes the incentive to develop skills. As a result, there is high unemployment (due to wage distortion and substitution) and large numbers of unfilled jobs where particular skill sets are needed.
The solution to the unemployment problem begins by recognizing the need to remove artificial inhibitors to demand (labor) meeting supply (job openings and job opportunities).
Occupy Wall-Streeters have succumbed to the Democratic-Union succubus that they are 'entitled' so they should get - rather than the need to remove restraints to opportunity.
CRYING BABIES: Doubts Rise on EU Deal - WSJ.com
Doubts Rise on EU Deal - WSJ.com
Sadly, the culpable parties are the unions and socialists who create and sustain unrealistic expectations of a free lunch with no consequences.
Now that the lunch bill is coming do, people are looking everywhere to find someone to blame who is perhaps not quite faced with such a large bill and such meager resources.
The US is doing the same and the Occupy Wall Street Crowd is even more emblematic of blaming the wrong people.
It's the old look in the mirror first issue.
People want more than what their neighbors and the rest of society want to give them; they don't want to work as hard as they should or take the risks that bring rewards.
Socialism thinks the 'other guy' can always give up something for the socialists to have more.
Eventually the game ends. It just seems to have ended sooner in Greece than elsewhere. Socialists are like little children. They want something so they think they should have it. Whether the parents can afford it is immaterial. How many crying babies have we all heard?
Sadly, the culpable parties are the unions and socialists who create and sustain unrealistic expectations of a free lunch with no consequences.
Now that the lunch bill is coming do, people are looking everywhere to find someone to blame who is perhaps not quite faced with such a large bill and such meager resources.
The US is doing the same and the Occupy Wall Street Crowd is even more emblematic of blaming the wrong people.
It's the old look in the mirror first issue.
People want more than what their neighbors and the rest of society want to give them; they don't want to work as hard as they should or take the risks that bring rewards.
Socialism thinks the 'other guy' can always give up something for the socialists to have more.
Eventually the game ends. It just seems to have ended sooner in Greece than elsewhere. Socialists are like little children. They want something so they think they should have it. Whether the parents can afford it is immaterial. How many crying babies have we all heard?
Friday, October 28, 2011
Regulatory shut-down of small business and entrepreneur lending: Allan H. Meltzer: Four Reasons Keynesians Keep Getting It Wrong - WSJ.com
Allan H. Meltzer: Four Reasons Keynesians Keep Getting It Wrong - WSJ.com
From my own conversations with people, a key stumbling block that needs removal is the regulations and regulatory environment that has effectively neutered the banking system.
Sure there are low rates, but no one except those who fit within the definitions of acceptable risk from Washington politicians and regulators can qualify.
Thus, the powerful job creating engine of small entrepreneurs and businesses has effectively been shut down.
From my own conversations with people, a key stumbling block that needs removal is the regulations and regulatory environment that has effectively neutered the banking system.
Sure there are low rates, but no one except those who fit within the definitions of acceptable risk from Washington politicians and regulators can qualify.
Thus, the powerful job creating engine of small entrepreneurs and businesses has effectively been shut down.
THE 'YES' AND 'NO' OF PARENTING: EU Pact Does Little to Lift Greek Spirits - WSJ.com
EU Pact Does Little to Lift Greek Spirits - WSJ.com
People don't want to see what they don't want to see.
(I think of a little kid who wants candy. One parent says 'no, it isn't good for you' etc.
The other parent doesn't want to say no.
Who does the kid go to?
And, to make the joke even funnier; when the kid is obese, has early diabetes and rotted teeth, who does the 'yes' parent blame? Of course not his or herself. The government must be to blame - or, society!)
People don't want to see what they don't want to see.
(I think of a little kid who wants candy. One parent says 'no, it isn't good for you' etc.
The other parent doesn't want to say no.
Who does the kid go to?
And, to make the joke even funnier; when the kid is obese, has early diabetes and rotted teeth, who does the 'yes' parent blame? Of course not his or herself. The government must be to blame - or, society!)
GROWTH AND JOB CONSEQUENCES: The Irony of the EU Deal - WSJ.com
The Irony of the EU Deal - WSJ.com
You may not have much of an economics background - but, think who is setting interest rates? In the US, it is clearly the Fed. And, both those with money (including retirees) and those who would borrow (other than government and super-sized corporations) are facing government engineered and dictated regulatory obstacles.
So, put the blame where it belongs - and, that is 'government' and regulators.
Market prices should reflect the value to you or me of deferring consumption and saving for a rainy day; and, the value to people with new ideas for a business or investment of borrowing money. That would be the clearing price for different types of saving and investment and borrowing and equity instruments.
All is distorted.
My favorite example to think of is the UK one with a 50% tax rate. Suppose an entrepreneur wanted to borrow 5 million pounds. The bank would lend it for 5 years.
To pay the bank back the principal, the investor would have to earn 10 million pre-tax to get 5 after-tax.
Add to this some additional risk factors for the need for a higher investment return, etc. and you can see what happens to growth.
I'd say blame government and those who think social spending doesn't have growth and job consequences.
You may not have much of an economics background - but, think who is setting interest rates? In the US, it is clearly the Fed. And, both those with money (including retirees) and those who would borrow (other than government and super-sized corporations) are facing government engineered and dictated regulatory obstacles.
So, put the blame where it belongs - and, that is 'government' and regulators.
Market prices should reflect the value to you or me of deferring consumption and saving for a rainy day; and, the value to people with new ideas for a business or investment of borrowing money. That would be the clearing price for different types of saving and investment and borrowing and equity instruments.
All is distorted.
My favorite example to think of is the UK one with a 50% tax rate. Suppose an entrepreneur wanted to borrow 5 million pounds. The bank would lend it for 5 years.
To pay the bank back the principal, the investor would have to earn 10 million pre-tax to get 5 after-tax.
Add to this some additional risk factors for the need for a higher investment return, etc. and you can see what happens to growth.
I'd say blame government and those who think social spending doesn't have growth and job consequences.
Too much chronic care and too little higher education: Taxes Remain Stumbling Block For Deficit Panel - WSJ.com
Taxes Remain Stumbling Block For Deficit Panel - WSJ.com
There are clearly two opposite philosophical and economical perspectives here and perhaps they are best highlighted by the following:
An article this week in the Wall Street Journal pointed out that Massachusetts was spending some 70% of its healthcare budget on 'chronic care' and that the state was thinking of asking private insurers and managed care outfits to take over the management of such healthcare.
Now, to put a point on it - we have people in the process of dying!
Another series (this time of articles) including an Obama administration speech over the past two weeks was decrying the 'high cost' of 'higher education'.
There were clearly times in the past where the government wasn't taxing and spending its money on such chronic medical care and instead was providing 'affordable' college educations at state colleges!
So, now we find the young are once again sacrificing their futures for the old and dying. Etc.
Clearly something is wrong with our policies for the chronically ill!
(I know in my 93 year old father's case, the doctors and hospital would have been more-than-glad to keep him alive on a respirator and colostomy bag (chronic care). Luckily, we were able to let him die with some dignity - saving Medicare likely hundreds of thousands of dollars.)
There are clearly two opposite philosophical and economical perspectives here and perhaps they are best highlighted by the following:
An article this week in the Wall Street Journal pointed out that Massachusetts was spending some 70% of its healthcare budget on 'chronic care' and that the state was thinking of asking private insurers and managed care outfits to take over the management of such healthcare.
Now, to put a point on it - we have people in the process of dying!
Another series (this time of articles) including an Obama administration speech over the past two weeks was decrying the 'high cost' of 'higher education'.
There were clearly times in the past where the government wasn't taxing and spending its money on such chronic medical care and instead was providing 'affordable' college educations at state colleges!
So, now we find the young are once again sacrificing their futures for the old and dying. Etc.
Clearly something is wrong with our policies for the chronically ill!
(I know in my 93 year old father's case, the doctors and hospital would have been more-than-glad to keep him alive on a respirator and colostomy bag (chronic care). Luckily, we were able to let him die with some dignity - saving Medicare likely hundreds of thousands of dollars.)
Thursday, October 27, 2011
How many non-workers does a worker support today (vs. the past)? - implications and results: Economy, Politics Fan American Discontent - WSJ.com
Economy, Politics Fan American Discontent - WSJ.com
An interesting thought here might be the following - because clearly, while there are iPod, iPad advantages today, many people are looking back and saying they had it better growing up than kids and young people today (I particularly think how much more fun college was when the drinking age was 18!).
Notwithstanding, the economic robustness with which Americans came out of WW II and the 1950's had the US consuming a far greater percentage of the worlds resources than it does today. (Today, of course, it's still something like 25% and 3% last I recall.)
So, in a way, the US has been under-investing to maintain its economic prowess.
Here, it's clearly the liberal view that all should have benefits - not just those that earn them or receive them from private charity.
So, this gets us into the next issue, which is how many people each worker in the US now supports. A simple number to take would be to compare the number of workers per Social Security recipient.
Very blandly, this says each young person has to support far more 'others' than the young person of 20 or 40 years ago. Read into this what one will! (Note: there is no real social security or medicare trust fund where the US can just pull money out of a bank account. What the US has to do is take tax money to pay off the loans held by the trust. Again, a drain on the funds the economy would have for investment vs. consumption.)
An interesting thought here might be the following - because clearly, while there are iPod, iPad advantages today, many people are looking back and saying they had it better growing up than kids and young people today (I particularly think how much more fun college was when the drinking age was 18!).
Notwithstanding, the economic robustness with which Americans came out of WW II and the 1950's had the US consuming a far greater percentage of the worlds resources than it does today. (Today, of course, it's still something like 25% and 3% last I recall.)
So, in a way, the US has been under-investing to maintain its economic prowess.
Here, it's clearly the liberal view that all should have benefits - not just those that earn them or receive them from private charity.
So, this gets us into the next issue, which is how many people each worker in the US now supports. A simple number to take would be to compare the number of workers per Social Security recipient.
Very blandly, this says each young person has to support far more 'others' than the young person of 20 or 40 years ago. Read into this what one will! (Note: there is no real social security or medicare trust fund where the US can just pull money out of a bank account. What the US has to do is take tax money to pay off the loans held by the trust. Again, a drain on the funds the economy would have for investment vs. consumption.)
Some real issues we should think about: Europe Leaders Forge Greek Bond Deal - WSJ.com
Europe Leaders Forge Greek Bond Deal - WSJ.com
Someone asks whether we aren't sick of hearing about Greece?
Well, could it be that the media is focusing on Greece to avoid people starting to think there might be something wrong with Obamanomics?
Just ponder a simple precept - i.e. that everyone needs money; and, few countries have enough and are running deficits. The real rate of return to savers is negative (so why save money and lose purchasing power). So, the ECB and Fed are printing money.
So - too much government spending and socialist consumption. No incentives for investment or growth (just the opposite - more and more tax increases - especially on investors and entrepreneurs and no change to labor laws to spur hiring or make it easier). As with GM and Chrysler, private lenders to Greece get a haircut or wiped out (??? how much is covered by default insurance).
Now one has to ask oneself if it doesn't seem that all of this is going to end badly; and, the longer it takes to end, the bigger the badly?
Someone asks whether we aren't sick of hearing about Greece?
Well, could it be that the media is focusing on Greece to avoid people starting to think there might be something wrong with Obamanomics?
Just ponder a simple precept - i.e. that everyone needs money; and, few countries have enough and are running deficits. The real rate of return to savers is negative (so why save money and lose purchasing power). So, the ECB and Fed are printing money.
So - too much government spending and socialist consumption. No incentives for investment or growth (just the opposite - more and more tax increases - especially on investors and entrepreneurs and no change to labor laws to spur hiring or make it easier). As with GM and Chrysler, private lenders to Greece get a haircut or wiped out (??? how much is covered by default insurance).
Now one has to ask oneself if it doesn't seem that all of this is going to end badly; and, the longer it takes to end, the bigger the badly?
Sunday, October 23, 2011
Senator Markey and Malarkey: Clean Energy Is Winning in the U.S. — Letters to the Editor - WSJ.com
Clean Energy Is Winning in the U.S. — Letters to the Editor - WSJ.com
Gee - I read a lot of the new clean energy magazines - I haven't a clue where Markey gets his data - but it sure reminds me of the old saying 'figures lie and liars use figures'.
One also can't help but see that if 'clean energy' is a 'minor' part of the total energy picture (supplying the energy needs of Americans - whether petrol for cars or electricity for homes and factories, etc.), then, if the industry employs more people than convention means of providing energy - there has to be 2 big questions:
1) The salaries must be very much lower;
and/or
2) The sector must be vastly 'less' productive (more people and less energy).
Either way, Markey seems to be validating exactly what he trying to disprove.
Gee - I read a lot of the new clean energy magazines - I haven't a clue where Markey gets his data - but it sure reminds me of the old saying 'figures lie and liars use figures'.
One also can't help but see that if 'clean energy' is a 'minor' part of the total energy picture (supplying the energy needs of Americans - whether petrol for cars or electricity for homes and factories, etc.), then, if the industry employs more people than convention means of providing energy - there has to be 2 big questions:
1) The salaries must be very much lower;
and/or
2) The sector must be vastly 'less' productive (more people and less energy).
Either way, Markey seems to be validating exactly what he trying to disprove.
Wednesday, October 19, 2011
SOCIALLY-MINDED WRONG-HEADEDNESS: Divided CFTC Approves Limits on Speculative Bets - WSJ.com
Divided CFTC Approves Limits on Speculative Bets - WSJ.com
Something 'wrong-headed'. But then again, there are those that believe a socially-minded person makes better economic decisions than one that is not; and, that their position has to trump that of actual doers.
Just think how the socially-minded would like $10 oil; but, then again, no one would produce it and the world would suddenly run out.
It's the old game of price controls vs. market forces.
The sovereign debt game is exactly that now. The blow-out will clearly be stupendous and make the housing bubble a sideshow - unless something serious is done to reign in government spending.
But, how can government not tax and spend when there are all these 'social needs'?
Something 'wrong-headed'. But then again, there are those that believe a socially-minded person makes better economic decisions than one that is not; and, that their position has to trump that of actual doers.
Just think how the socially-minded would like $10 oil; but, then again, no one would produce it and the world would suddenly run out.
It's the old game of price controls vs. market forces.
The sovereign debt game is exactly that now. The blow-out will clearly be stupendous and make the housing bubble a sideshow - unless something serious is done to reign in government spending.
But, how can government not tax and spend when there are all these 'social needs'?
Tuesday, October 18, 2011
PRINTING, SKEWING, UNINTENDED CONSEQUENCES: Bernanke Details Evolution of Fed Policy - WSJ.com
Bernanke Details Evolution of Fed Policy - WSJ.com
There was an interesting article in this week's Barrons that highlighted that low interest rates also encourage banks not to lend (risk adjusted) but rather to buy government bonds (let alone what can be said of the bane of Basel II and III).
Surprisingly (or not) this was omitted from the above article and one assumes Bernanke's discussion.
Thus, as often happens, the law of unintended consequences finds less lending from attempts to skew the yield curve and to print money.
There was an interesting article in this week's Barrons that highlighted that low interest rates also encourage banks not to lend (risk adjusted) but rather to buy government bonds (let alone what can be said of the bane of Basel II and III).
Surprisingly (or not) this was omitted from the above article and one assumes Bernanke's discussion.
Thus, as often happens, the law of unintended consequences finds less lending from attempts to skew the yield curve and to print money.
Monday, October 17, 2011
After-tax net income repays loans:Wells Fargo Profit Rises, Revenue Slips - WSJ.com
Wells Fargo Profit Rises, Revenue Slips - WSJ.com
See Barrons discussion of how low rates hobbled business lending by banks in Japan.
There is no free lunch and the Fed is ignorant (and clearly the Dems don't have a clue) of the impact of their artificially low rates on the motivation of banks to lend.
An interesting exercise is to consider how much a business borrower needs to earn pre-tax to repay a bank loan - especially if they are a sole proprietor or S-corp - not just with current tax rates but the tax rates the Obama Administration and liberals would like to saddle high earners with.
Many politicians seem to forget that loans are repaid with after-tax net income.
See Barrons discussion of how low rates hobbled business lending by banks in Japan.
There is no free lunch and the Fed is ignorant (and clearly the Dems don't have a clue) of the impact of their artificially low rates on the motivation of banks to lend.
An interesting exercise is to consider how much a business borrower needs to earn pre-tax to repay a bank loan - especially if they are a sole proprietor or S-corp - not just with current tax rates but the tax rates the Obama Administration and liberals would like to saddle high earners with.
Many politicians seem to forget that loans are repaid with after-tax net income.
Talking about growth but doing nothing to encourage it: Southern Europe Could Learn From Ireland - WSJ.com
Southern Europe Could Learn From Ireland - WSJ.com
The entire article is worth a read; but, a trenchant quote (that government's are ignoring at their peril.
"...Spending cuts and tax increases drive GDP down faster than the deficit, causing the deficit:GDP ratio to rise rather than fall. These measures are being imposed on economies with rigid labor markets, no history of entrepreneurial innovation, high taxes, and regulations that strangle their private sectors. That is not to say that the roles played by governments should not be reduced: They should. But without growth-inducing reforms, all the cutting will continue to be for naught..."
The entire article is worth a read; but, a trenchant quote (that government's are ignoring at their peril.
"...Spending cuts and tax increases drive GDP down faster than the deficit, causing the deficit:GDP ratio to rise rather than fall. These measures are being imposed on economies with rigid labor markets, no history of entrepreneurial innovation, high taxes, and regulations that strangle their private sectors. That is not to say that the roles played by governments should not be reduced: They should. But without growth-inducing reforms, all the cutting will continue to be for naught..."
Saturday, October 15, 2011
From the world of unexpected consequences - Bernanke and a Japan lesson: The Fed's Moves Have Backfired - Barrons.com
The Fed's Moves Have Backfired - Barrons.com
"...Translated from Fed speak, lower long-term rates will make borrowers more willing to borrow while lenders will be more eager to lend.
But, Hunt points out, ultra-low interest rates could have the opposite effect. To earn a profit, banks have to cover their costs, from payroll, overhead, taxes and "elevated" fees to the Federal Deposit Insurance Corp. Then they have to earn a spread to compensate for the risk the borrower could default. At very low interest rates, there aren't enough basis points left to lend profitably. The historical precedent is Japan, where banks would rather buy government bonds than make loans."
"...Translated from Fed speak, lower long-term rates will make borrowers more willing to borrow while lenders will be more eager to lend.
But, Hunt points out, ultra-low interest rates could have the opposite effect. To earn a profit, banks have to cover their costs, from payroll, overhead, taxes and "elevated" fees to the Federal Deposit Insurance Corp. Then they have to earn a spread to compensate for the risk the borrower could default. At very low interest rates, there aren't enough basis points left to lend profitably. The historical precedent is Japan, where banks would rather buy government bonds than make loans."
On Fed 'gas' and Democratic 'ice': The Fed's Moves Have Backfired - Barrons.com
The Fed's Moves Have Backfired - Barrons.com
" In other words, the Fed could set some target for the jobless rate—currently stuck at 9.1%—and indicate it will keep interest rates low until it sees that rate come down meaningfully"
This reminds me of someone keeping their foot on the gas while the car's wheels are spinning on ice. (In other words, if fiscal and other policies are economic ice, the monetary gas will do nothing. We also know what eventually happens with the hole the spinning wheels make in the ice!)
" In other words, the Fed could set some target for the jobless rate—currently stuck at 9.1%—and indicate it will keep interest rates low until it sees that rate come down meaningfully"
This reminds me of someone keeping their foot on the gas while the car's wheels are spinning on ice. (In other words, if fiscal and other policies are economic ice, the monetary gas will do nothing. We also know what eventually happens with the hole the spinning wheels make in the ice!)
Friday, October 14, 2011
Housing is tough; why not go for some or any of the easy stuff? GOP Candidates Ignore Housing Question in Debate - Barrons.com
GOP Candidates Ignore Housing Question in Debate - Barrons.com
While the above is interesting, it does skirt two rather salient points:
1) If incomes are down 10% since 2000, then what would happen to actual income-adjusted housing prices and housing standards?
One can't but guess people need to buy cheaper, smaller houses and it's likely the prices of housing have yet to come down some (let alone that incomes aren't rising, jobs aren't being created, etc.).
2) There are a plethora of things that could be done on a regulatory, tax, etc. policy front that don't cost anything except cherished values of government control. (I'd take this to include the drug laws but Sarbanes Oxley and ObamaCare would be a start.)
This isn't being done. So, let housing slide down the list and focus on the easy stuff first.
While the above is interesting, it does skirt two rather salient points:
1) If incomes are down 10% since 2000, then what would happen to actual income-adjusted housing prices and housing standards?
One can't but guess people need to buy cheaper, smaller houses and it's likely the prices of housing have yet to come down some (let alone that incomes aren't rising, jobs aren't being created, etc.).
2) There are a plethora of things that could be done on a regulatory, tax, etc. policy front that don't cost anything except cherished values of government control. (I'd take this to include the drug laws but Sarbanes Oxley and ObamaCare would be a start.)
This isn't being done. So, let housing slide down the list and focus on the easy stuff first.
Wednesday, October 12, 2011
Q&A - Union naivete: UAW Local Rejects Deal With Ford - WSJ.com
UAW Local Rejects Deal With Ford - WSJ.com
Question:
(CB)"...What amazes me is how naive people like you are to the education level of people in the labor unions...."
Answer:
What's sad is how simplistically you miss the point and the issue.
The unions have the mentality that they want high wages and benefits (including legacy benefits) and thus the world has to change to provide them.
The alternative is to recognize the complex interactions of a changing world and then try to make the best of them.
The unions are ignoring larger economic issues (as is the President). That is one of the problems with a Keynesian approach to economics.
Keynesians also ignore the basic forces that drive their own economic lives (such as grocery shopping) when they expand their economic view to include the macro-economy.
There is a basic equation that describes the relationship of jobs, etc.
Production = labor costs + capital costs + raw materials costs
It's all well and good to try to boost labor costs (gross to employer), but the 'production' or product cost is determined by competition - not the wishes of unions.
Capital costs include the cost of borrowed capital and the return on investors' funds put into the business (think of how the UAW and the Obama administration wiped out stock and bond investors).
Raw material costs are bought from global markets.
Thus, as an example, the unions and the Obama administration boost the cost of labor. They increase both regulations and regulatory risk (another cost factor impacting 'labor' costs vis-a-vis ObamaCare, for example; impacting capital costs vis-a-vis Dodd-Frank, FDIC regulations, bank bashing, higher taxes on entrepreneurs and investors; increasing raw material costs by having an anti-oil policy and misdirecting funds to favored new clean-energy policies, etc.).
So, the government is driving up costs across the board. The unions are at-a-minimum supportive and complicit.
Thus, one shouldn't be surprised that the only part of the American economy doing well are those companies that can overcome all of the economic obstacles of labor, government, etc.
There are various ways in which these obstacles can be overcome - such as:
1. Outsource production (both in the USA (i.e. non-union, etc.)
2. Substitute equipment (i.e. capital) for labor.
3. Increase per worker productivity (technology)
You get the idea.
Question:
(CB)"...What amazes me is how naive people like you are to the education level of people in the labor unions...."
Answer:
What's sad is how simplistically you miss the point and the issue.
The unions have the mentality that they want high wages and benefits (including legacy benefits) and thus the world has to change to provide them.
The alternative is to recognize the complex interactions of a changing world and then try to make the best of them.
The unions are ignoring larger economic issues (as is the President). That is one of the problems with a Keynesian approach to economics.
Keynesians also ignore the basic forces that drive their own economic lives (such as grocery shopping) when they expand their economic view to include the macro-economy.
There is a basic equation that describes the relationship of jobs, etc.
Production = labor costs + capital costs + raw materials costs
It's all well and good to try to boost labor costs (gross to employer), but the 'production' or product cost is determined by competition - not the wishes of unions.
Capital costs include the cost of borrowed capital and the return on investors' funds put into the business (think of how the UAW and the Obama administration wiped out stock and bond investors).
Raw material costs are bought from global markets.
Thus, as an example, the unions and the Obama administration boost the cost of labor. They increase both regulations and regulatory risk (another cost factor impacting 'labor' costs vis-a-vis ObamaCare, for example; impacting capital costs vis-a-vis Dodd-Frank, FDIC regulations, bank bashing, higher taxes on entrepreneurs and investors; increasing raw material costs by having an anti-oil policy and misdirecting funds to favored new clean-energy policies, etc.).
So, the government is driving up costs across the board. The unions are at-a-minimum supportive and complicit.
Thus, one shouldn't be surprised that the only part of the American economy doing well are those companies that can overcome all of the economic obstacles of labor, government, etc.
There are various ways in which these obstacles can be overcome - such as:
1. Outsource production (both in the USA (i.e. non-union, etc.)
2. Substitute equipment (i.e. capital) for labor.
3. Increase per worker productivity (technology)
You get the idea.
Tuesday, October 11, 2011
On the source of decent wages: Report: Repatriation Tax Holiday a 'Failed' Policy - WSJ.com
Report: Repatriation Tax Holiday a 'Failed' Policy - WSJ.com
'Decent Wages' are what the Greeks wanted and previously got.
Once you move away from the supply and demand forces of an open economy to try and take from some and give to others, problems arise.
The unions may think high benefit, early retirement is an entitled decent wage; but, when you go to the store, do you buy based on price, the quality of the product or how much the workers made?
You know the basic equation for production = labor + capital + raw materials.
It's all well and good to keep increasing the 'labor' component, but the final test is whether the production is profitable (let alone 'break even').
As regulations and unions impact the returns and cost of any and all components, something has to give.
We are in a competitive global economy.
You want to make money on your savings and investment and you want your work to earn enough to cover the cost to the employer of paying you.
If something is distorted - i.e. as the Wall Street protesters feel in that there is money just lying around that could be providing them decent paying jobs, then why aren't some of them going out and creating those jobs?
If they don't want to create the jobs and they don't have a job, then they should ask what forces are inhibiting someone from creating those jobs - and, clearly, the profit motive says entrepreneurs will create jobs at some level of compensation.
If, with the alleged high profits of Wall Street such jobs aren't being created, then the place to look for problems is Washington and Albany.
Why is it that the labor component of production doesn't work to create jobs?
a) If investment returns are too low, why is that (taxes, etc.)?
b) If raw materials costs are too high, then why limit energy drilling - for example; or, why talk about having to pay more for electricity (green power); etc.
c) Or, if regulation and policy make labor too iffy a cost and too high a cost, what can be done about that? Should schools be based on vouchers? Should employee benefits be reduced or made optional? What can be done to reduce the 'gross' cost to the employer? Etc.
The issues are rather obvious; but, unions and Dem's would like to ignore the facts. Most Republicans aren't much better.
So, yes, it might be nice to dream and complain about not having 'decent wages' but to really produce them, one understand where they come from.
The Greeks are learning there's no 'free lunch'. Too bad the Wall Streeters aren't targeting the union halls and liberal politicians and the President. These are the people who support their wishes for good jobs but enact policies that inhibit their creation.
'Decent Wages' are what the Greeks wanted and previously got.
Once you move away from the supply and demand forces of an open economy to try and take from some and give to others, problems arise.
The unions may think high benefit, early retirement is an entitled decent wage; but, when you go to the store, do you buy based on price, the quality of the product or how much the workers made?
You know the basic equation for production = labor + capital + raw materials.
It's all well and good to keep increasing the 'labor' component, but the final test is whether the production is profitable (let alone 'break even').
As regulations and unions impact the returns and cost of any and all components, something has to give.
We are in a competitive global economy.
You want to make money on your savings and investment and you want your work to earn enough to cover the cost to the employer of paying you.
If something is distorted - i.e. as the Wall Street protesters feel in that there is money just lying around that could be providing them decent paying jobs, then why aren't some of them going out and creating those jobs?
If they don't want to create the jobs and they don't have a job, then they should ask what forces are inhibiting someone from creating those jobs - and, clearly, the profit motive says entrepreneurs will create jobs at some level of compensation.
If, with the alleged high profits of Wall Street such jobs aren't being created, then the place to look for problems is Washington and Albany.
Why is it that the labor component of production doesn't work to create jobs?
a) If investment returns are too low, why is that (taxes, etc.)?
b) If raw materials costs are too high, then why limit energy drilling - for example; or, why talk about having to pay more for electricity (green power); etc.
c) Or, if regulation and policy make labor too iffy a cost and too high a cost, what can be done about that? Should schools be based on vouchers? Should employee benefits be reduced or made optional? What can be done to reduce the 'gross' cost to the employer? Etc.
The issues are rather obvious; but, unions and Dem's would like to ignore the facts. Most Republicans aren't much better.
So, yes, it might be nice to dream and complain about not having 'decent wages' but to really produce them, one understand where they come from.
The Greeks are learning there's no 'free lunch'. Too bad the Wall Streeters aren't targeting the union halls and liberal politicians and the President. These are the people who support their wishes for good jobs but enact policies that inhibit their creation.
Sunday, October 9, 2011
Children running amuck: Why Labor Backs 'Occupy Wall Street' - WSJ.com
Why Labor Backs 'Occupy Wall Street' - WSJ.com
Ms. Henry is clearly one of those people who want something and because they want it, it should happen.
The fact that they are actually working against the very things they want is beyond their ability to see; and, those that are really causing the problem have convinced her it can't possibly be 'their' fault - of course we are speaking about government policies and union policies that breed, fester and all to go epidemic - the sense of entitlement.
The world is full of people who want a free lunch and there's nothing more grating than not getting it when the leaders you've elected and have been pandering to you to get elected finally can't deliver.
The Greeks are finding that out and anyone with basic logic and math skills can see that if you beat up on bankers and come up with regulatory rules that sound good but are hollow (lets say Basel II for starters), then the banks don't lend (see the article recently on the banker in Texas who said every loan gets a thorough going-over and going-over again by the FDIC). So the government sets rules which inhibit bankers from lending - but then, of course, the government hues and cries it is innocent.
What is scary is that the crazies like this writer are about in the land spreading entitlement blah blah that is further hurting job creation. And, these people don't get it.
Sadly, there aren't enough politicians risking taking them on. Like kids with no adult supervision, children can easily run amuck.
Ms. Henry is clearly one of those people who want something and because they want it, it should happen.
The fact that they are actually working against the very things they want is beyond their ability to see; and, those that are really causing the problem have convinced her it can't possibly be 'their' fault - of course we are speaking about government policies and union policies that breed, fester and all to go epidemic - the sense of entitlement.
The world is full of people who want a free lunch and there's nothing more grating than not getting it when the leaders you've elected and have been pandering to you to get elected finally can't deliver.
The Greeks are finding that out and anyone with basic logic and math skills can see that if you beat up on bankers and come up with regulatory rules that sound good but are hollow (lets say Basel II for starters), then the banks don't lend (see the article recently on the banker in Texas who said every loan gets a thorough going-over and going-over again by the FDIC). So the government sets rules which inhibit bankers from lending - but then, of course, the government hues and cries it is innocent.
What is scary is that the crazies like this writer are about in the land spreading entitlement blah blah that is further hurting job creation. And, these people don't get it.
Sadly, there aren't enough politicians risking taking them on. Like kids with no adult supervision, children can easily run amuck.
Saturday, October 8, 2011
The Daily Democratic Gaff: Up & Down Wall Street - Barrons.com
Up & Down Wall Street - Barrons.com
"... If real growth is absent, employment and real income growth will not return. Real growth cannot develop with the national debt overhang. " BM
And, not just the debt overhang.
It's easy to see there has to be someone to blame - someone else of course - when things turn nasty.
But when one sees the Greeks striking against cutting wages and dismissing employees who have no meaningful job; yet, there may not be money to pay the wages in a matter of weeks, one does have to wonder if people who rely on others to keep coming up with the wherewithal haven't a problem that is un-addressed?
What is said is that Democrats are coming up with plans these very Greek strikers would believe in; and, with the same mindset.
As you say - there's no idea of real growth policies. Every day there is something else anti-growth the Administration embarks upon.
Sadly, there's no reporter or Republican candidate with a daily diatribe against the daily gaff of the Democrats and the President. Ah well!
"... If real growth is absent, employment and real income growth will not return. Real growth cannot develop with the national debt overhang. " BM
And, not just the debt overhang.
It's easy to see there has to be someone to blame - someone else of course - when things turn nasty.
But when one sees the Greeks striking against cutting wages and dismissing employees who have no meaningful job; yet, there may not be money to pay the wages in a matter of weeks, one does have to wonder if people who rely on others to keep coming up with the wherewithal haven't a problem that is un-addressed?
What is said is that Democrats are coming up with plans these very Greek strikers would believe in; and, with the same mindset.
As you say - there's no idea of real growth policies. Every day there is something else anti-growth the Administration embarks upon.
Sadly, there's no reporter or Republican candidate with a daily diatribe against the daily gaff of the Democrats and the President. Ah well!
On Elites and Then Elites: Up & Down Wall Street - Barrons.com
Up & Down Wall Street - Barrons.com
If by 'financial elite' you refer to the solons who dream up regulatory nightmares like Basel II and III and the generous liberal political souls who believe in a free lunch for the poor (let Barney Frank and Chris Dodd and of course the dear president come to mind) - then I would agree.
But, I believe these are the exculpated parties.
As such, you appear to call-to-account the liberal belief in being able to regulate away unpleasantness. So Basel says sovereign debt or AAA paper is like cash. No more thinking needed!
As such, the 'elite' might be and have been more like lemmings and faultless.
If by 'financial elite' you refer to the solons who dream up regulatory nightmares like Basel II and III and the generous liberal political souls who believe in a free lunch for the poor (let Barney Frank and Chris Dodd and of course the dear president come to mind) - then I would agree.
But, I believe these are the exculpated parties.
As such, you appear to call-to-account the liberal belief in being able to regulate away unpleasantness. So Basel says sovereign debt or AAA paper is like cash. No more thinking needed!
As such, the 'elite' might be and have been more like lemmings and faultless.
Friday, October 7, 2011
The math of starting a business in Britain: Central Banks Step Up Battle to Contain Crisis - WSJ.com
Central Banks Step Up Battle to Contain Crisis - WSJ.com
The math of starting a business in Britain:
Borrow 1,000,000 pounds. Payback loan in 5 years.
Business Profits = ?
Well, the direct equity to be paid back per year would be (1m/5 ) 200,000.
Since this would be subject to tax (at 50%), then just to pay back the loan, the borrower would have to earn 400,000 (that is before any money for living expenses).
So for 1 million in borrowing, the business would have to generate 400,000 per year to pay it back in 5 years.
Gee - how many businesses can generate that kind of return - before of course any profits to the investor or entrepreneur?
The math of starting a business in Britain:
Borrow 1,000,000 pounds. Payback loan in 5 years.
Business Profits = ?
Well, the direct equity to be paid back per year would be (1m/5 ) 200,000.
Since this would be subject to tax (at 50%), then just to pay back the loan, the borrower would have to earn 400,000 (that is before any money for living expenses).
So for 1 million in borrowing, the business would have to generate 400,000 per year to pay it back in 5 years.
Gee - how many businesses can generate that kind of return - before of course any profits to the investor or entrepreneur?
Wednesday, October 5, 2011
catch 22: IMF Floats Bond-Buying Proposal in Europe - WSJ.com
IMF Floats Bond-Buying Proposal in Europe - WSJ.com
All the socialist countries (including the US) appear like the family living on credit cards - and now, suddenly, market forces want to adjust interest rates.
It would seem as though there is a catch 22. In other words, if the economy is in the tank, the rates stay low but taxes and growth can't compensate for social spending. If the economy rebounds, then interest rates will rise and the cost of previous social spending will be unpayable.
The outcome in either case would appear to be less than sanguine.
All the socialist countries (including the US) appear like the family living on credit cards - and now, suddenly, market forces want to adjust interest rates.
It would seem as though there is a catch 22. In other words, if the economy is in the tank, the rates stay low but taxes and growth can't compensate for social spending. If the economy rebounds, then interest rates will rise and the cost of previous social spending will be unpayable.
The outcome in either case would appear to be less than sanguine.
Saturday, October 1, 2011
Fool me once...fool me twice...: Markets Struggle to Price Uncertainty - Barrons.com
Markets Struggle to Price Uncertainty - Barrons.com
Let's see:
> The regulators snookered the banks into taking on Sovereign paper instead of keeping cash, gold or making loans to entrepreneurs.
> There isn't much of any growth - especially in the heavily socialized and unionized Southern parts of Europe.
> So all these countries talk about a 'growth agenda' (ostensibly so people won't concentrate on the terrible state they are in or their anti-investment, anti-growth polices; and, then, to top it off, they raise taxes.
Isn't this sort of like "fool me once...fool me twice..."?
Let's see:
> The regulators snookered the banks into taking on Sovereign paper instead of keeping cash, gold or making loans to entrepreneurs.
> There isn't much of any growth - especially in the heavily socialized and unionized Southern parts of Europe.
> So all these countries talk about a 'growth agenda' (ostensibly so people won't concentrate on the terrible state they are in or their anti-investment, anti-growth polices; and, then, to top it off, they raise taxes.
Isn't this sort of like "fool me once...fool me twice..."?
The type of presidential campaign I'd like to see - focused on jobs and the economy: Amateur Hour at the White House - WSJ.com
Amateur Hour at the White House - WSJ.com
It would be interesting to see some candidate for President - any candidate - spend all their time talking about restoring the economy.
What would this mean to me?
For starters, any day there is news about some anti-business, anti-economic policy being pursued by Obama (take the SEC this week and its prosecution based on negligence).
There are clearly those from the Obama administration and the general population who don't want solutions for the economy itself, they want 'to blame' someone else for the problem; or, to first ensure that the socialist benefits of liberal programs are protected (i.e. why not raise taxes on the very people who create jobs? That can't be a problem! Warren Buffet's in favor of it, right?).
Every day, a preferred candidate would start their stump speech with something that needs to be changed and is holding back the economy (this would not include taxing oil companies or preventing Boeing from opening a factory in the South. It clearly might include things to equalize the taxes businesses would pay in the US vs. another country.)
It would be interesting to see some candidate for President - any candidate - spend all their time talking about restoring the economy.
What would this mean to me?
For starters, any day there is news about some anti-business, anti-economic policy being pursued by Obama (take the SEC this week and its prosecution based on negligence).
There are clearly those from the Obama administration and the general population who don't want solutions for the economy itself, they want 'to blame' someone else for the problem; or, to first ensure that the socialist benefits of liberal programs are protected (i.e. why not raise taxes on the very people who create jobs? That can't be a problem! Warren Buffet's in favor of it, right?).
Every day, a preferred candidate would start their stump speech with something that needs to be changed and is holding back the economy (this would not include taxing oil companies or preventing Boeing from opening a factory in the South. It clearly might include things to equalize the taxes businesses would pay in the US vs. another country.)
Thursday, September 29, 2011
HEALTH CARE: Henninger: Taking Cain Seriously - WSJ.com
Henninger: Taking Cain Seriously - WSJ.com
I keep thinking - re: health insurance - that it would be nice if people had a few choices. Among them could be: (1) The Leftist Everything We Think You Need Plan (i.e. cost e.g. $1000); (2) You Get to Pick and Choose Your Insured Events Plan (i.e. cost e.g. $300 - $1,000); and, (3) The Healthy Choice Plan (with no subsidies for other plans) (i.e. cost $100).
I keep thinking - re: health insurance - that it would be nice if people had a few choices. Among them could be: (1) The Leftist Everything We Think You Need Plan (i.e. cost e.g. $1000); (2) You Get to Pick and Choose Your Insured Events Plan (i.e. cost e.g. $300 - $1,000); and, (3) The Healthy Choice Plan (with no subsidies for other plans) (i.e. cost $100).
Saturday, September 24, 2011
UAW eating seed-corn: Twisting the Night Away - Barrons.com
Twisting the Night Away - Barrons.com
The litany of the horrid mindset in Washington goes on.
The other telling and scary allision of the week is to look at the UAW's settlement with GM (cash bonuses, salary increases) at the same time that the Democrats are more interested in having taxpayers subsidize the research into new car technologies that the US auto companies should be doing with their money.
So, instead of disaster relief funding, the Dems are glad to have taxpayers keep overpaying UAW auto workers. So, all taxpayers should subsidize those who are members of unions and who would rather eat the seed-corn of their company's futures rather than forgo immediate gratification.
Since the UAW economic model seems to be that of the current administration, is it any wonder the economy is in the doldrums?
The litany of the horrid mindset in Washington goes on.
The other telling and scary allision of the week is to look at the UAW's settlement with GM (cash bonuses, salary increases) at the same time that the Democrats are more interested in having taxpayers subsidize the research into new car technologies that the US auto companies should be doing with their money.
So, instead of disaster relief funding, the Dems are glad to have taxpayers keep overpaying UAW auto workers. So, all taxpayers should subsidize those who are members of unions and who would rather eat the seed-corn of their company's futures rather than forgo immediate gratification.
Since the UAW economic model seems to be that of the current administration, is it any wonder the economy is in the doldrums?
OBAMA'S UAW MODEL FOR THE ECONOMY: Obama's Jobs Act: Too Little, Too Late - Barrons.com
Obama's Jobs Act: Too Little, Too Late - Barrons.com
All of the above would seem to be vastly too kind and ignorant of the long-term and current maliciousness of Obama's policies to economic growth.
As his view of the economy is basically a UAW-type mindset, it all depends on whether one thinks running a policy from the perspective of a UAW union official or from the perspective of an investor or entrepreneur will create economic growth?
Frankly, the UAW doesn't have much of a record - having wiped out the previous set of investors (i.e. private) and looking like it would rather take current bonuses and increased wages with the taxpayer not getting back their investment (i.e. public) and the industry and unions (US car makers and the UAW) wanting the public to bankrupt their investment into technologies to keep them in business.
What a scary model for the running of the US economy!
All of the above would seem to be vastly too kind and ignorant of the long-term and current maliciousness of Obama's policies to economic growth.
As his view of the economy is basically a UAW-type mindset, it all depends on whether one thinks running a policy from the perspective of a UAW union official or from the perspective of an investor or entrepreneur will create economic growth?
Frankly, the UAW doesn't have much of a record - having wiped out the previous set of investors (i.e. private) and looking like it would rather take current bonuses and increased wages with the taxpayer not getting back their investment (i.e. public) and the industry and unions (US car makers and the UAW) wanting the public to bankrupt their investment into technologies to keep them in business.
What a scary model for the running of the US economy!
Friday, September 23, 2011
On Democratic Tax Cuts: Economic Signals Heighten Worries of a Double-Dip - WSJ.com
Economic Signals Heighten Worries of a Double-Dip - WSJ.com
As for Democratic tax cuts, it might be noted that the populist nature of these cuts ignores what most business economists would call common sense - i.e. they are short term and balanced with proposed higher taxes on entrepreneurs and investors.
Bottom line, investors want the money in their pocket - not their employees or those on the Federal dole.
As for Democratic tax cuts, it might be noted that the populist nature of these cuts ignores what most business economists would call common sense - i.e. they are short term and balanced with proposed higher taxes on entrepreneurs and investors.
Bottom line, investors want the money in their pocket - not their employees or those on the Federal dole.
ONE OF THE THINGS WRONG WITH THE DEMOCRAT'S APPROACH TO INVESTMENT IN THE ECONOMY: Economic Signals Heighten Worries of a Double-Dip - WSJ.com
Economic Signals Heighten Worries of a Double-Dip - WSJ.com
Another sign of what's wrong with Democratic economic policies (unless you favor the right of unions to be subsidized by everyone else in the economy) is the Democrats desire to fund research into next generation automotive technologies to "keep car production in this country".
Let's just admit that its UAW car production and that the union would rather have bonuses, higher wages and benefits with their new contract than to make sure there employers have the funds to invest in the future of their industry.
Clearly Obama and the unions see nothing wrong with this. Why should they forego current rewards and sacrifice for the future.
Clearly again this is emblematic of the antipodal beliefs unions and the Democrats have with respect to restoring economic growth. They want the benefits of growth but don't want to pay for it. Take it from someone else!
Another sign of what's wrong with Democratic economic policies (unless you favor the right of unions to be subsidized by everyone else in the economy) is the Democrats desire to fund research into next generation automotive technologies to "keep car production in this country".
Let's just admit that its UAW car production and that the union would rather have bonuses, higher wages and benefits with their new contract than to make sure there employers have the funds to invest in the future of their industry.
Clearly Obama and the unions see nothing wrong with this. Why should they forego current rewards and sacrifice for the future.
Clearly again this is emblematic of the antipodal beliefs unions and the Democrats have with respect to restoring economic growth. They want the benefits of growth but don't want to pay for it. Take it from someone else!
Wednesday, September 21, 2011
OBAMA'S UAW AND ZIMBABWE ECONOMY STRATEGY: Don't Shout for Operation Twist - Barrons.com
Don't Shout for Operation Twist - Barrons.com
It is evident on Bloomberg now for weeks that there is the feeling that 'inflation' as noted above can be benign. But like all things that history says are too good to be true, while housing may be bailed out, everyone has to be ignoring the history of the 1970's and 1980's.
We know there has been a government bond and interest rate bubble building, but, with every utterance, the Keynesians shown their utter lack of understanding of realistic economic principles.
They think they can encourage a revival of the economy by flooding entitlement money. But, they do everything in their power to make producers realize the government is out to get them. They just don't see it!
A visit to Europe shows what union-centric, socialist policies do. But, closer to home, there is the UAW. As Obama would like to make the US economy into the image of what the UAW would like to see - high union wages, a closed union shop, etc. - he fails to realize that the UAW brought down General Motors and forced it into bankruptcy.
Private sector taxpayers under the tax gun of government and the borrowing capacity of these taxpayers and the printing press of the Federal Reserve bailed out the UAW.
If the Fed is left to have to bail out the entire country - just think Zimbabwe.
It is evident on Bloomberg now for weeks that there is the feeling that 'inflation' as noted above can be benign. But like all things that history says are too good to be true, while housing may be bailed out, everyone has to be ignoring the history of the 1970's and 1980's.
We know there has been a government bond and interest rate bubble building, but, with every utterance, the Keynesians shown their utter lack of understanding of realistic economic principles.
They think they can encourage a revival of the economy by flooding entitlement money. But, they do everything in their power to make producers realize the government is out to get them. They just don't see it!
A visit to Europe shows what union-centric, socialist policies do. But, closer to home, there is the UAW. As Obama would like to make the US economy into the image of what the UAW would like to see - high union wages, a closed union shop, etc. - he fails to realize that the UAW brought down General Motors and forced it into bankruptcy.
Private sector taxpayers under the tax gun of government and the borrowing capacity of these taxpayers and the printing press of the Federal Reserve bailed out the UAW.
If the Fed is left to have to bail out the entire country - just think Zimbabwe.
THE UNPOPULAR DILEMMA: The Fed's Operation Twist Plan Unnerves Investors - Barrons.com
The Fed's Operation Twist Plan Unnerves Investors - Barrons.com
What's really scary is that Obama keeps putting his economic foot in his mouth with almost every utterance; yet, these utterances sound logical to the economically ill-informed.
Thus, there won't be any economic rebound and the stagflation of the 1970s is likely to look halcyon to what Obama and his Keynesians are cooking up.
It may be that some actual pro-growth, anti-union, anti-government policies will emerge to slow and/or try to turn around the slide into the increasingly greater mismatch between what government takes in (and/or can take in) and what it spends.
But, there's no evidence to date of this happening. Both in Europe and the US, those who want aren't those producing enough to provide what they want - so, they have to take, print or borrow.
What's really scary is that Obama keeps putting his economic foot in his mouth with almost every utterance; yet, these utterances sound logical to the economically ill-informed.
Thus, there won't be any economic rebound and the stagflation of the 1970s is likely to look halcyon to what Obama and his Keynesians are cooking up.
It may be that some actual pro-growth, anti-union, anti-government policies will emerge to slow and/or try to turn around the slide into the increasingly greater mismatch between what government takes in (and/or can take in) and what it spends.
But, there's no evidence to date of this happening. Both in Europe and the US, those who want aren't those producing enough to provide what they want - so, they have to take, print or borrow.
Tuesday, September 20, 2011
THE END OF THE FREE LUNCH: SShould Busted Greece - WSJ.com
Should Busted Greece - WSJ.com
Think where all the money really went?
In other words, unions and labor laws are part of why the economy isn't growing and there are too many public employees (almost totally non-productive) and too much is going out in entitlements and retirement benefits.
And, money is borrowed from savers and spent by non-producers. So, don't blame the bankers, blame the politicians and those they dole out the taxpayers and lenders money too.
All these western democracies have allowed a build-up of entitlements, etc. that the economies can't support. The politicians would rather have the lenders blamed because they won't lend anymore. They certainly don't want to blame themselves and those vast members of the public who've been led to believe there is a 'free lunch'.
Suddenly, people are finding out there is a bill due for that free lunch and they can't understand why things 'have-to' change. Which is understandable, but doesn't solve the problems at hand.
Think where all the money really went?
In other words, unions and labor laws are part of why the economy isn't growing and there are too many public employees (almost totally non-productive) and too much is going out in entitlements and retirement benefits.
And, money is borrowed from savers and spent by non-producers. So, don't blame the bankers, blame the politicians and those they dole out the taxpayers and lenders money too.
All these western democracies have allowed a build-up of entitlements, etc. that the economies can't support. The politicians would rather have the lenders blamed because they won't lend anymore. They certainly don't want to blame themselves and those vast members of the public who've been led to believe there is a 'free lunch'.
Suddenly, people are finding out there is a bill due for that free lunch and they can't understand why things 'have-to' change. Which is understandable, but doesn't solve the problems at hand.
Monday, September 19, 2011
Throwing out incumbents in Congress: Are we heading into another recession? - Irwin Kellner - MarketWatch
Are we heading into another recession? - Irwin Kellner - MarketWatch
Q: Would it be a bad thing to throw out all incumbents in Congress?
A: The bad thing could be that the problems in Washington reflect the divide in the American public with liberals wanting big government, lots of regulations and higher taxes (countries doing this having no growth) and conservatives wanting smaller government, less regulations and lower taxes (which produce growth).
Obama and liberals see no relationship between their policies and high jobless rates. They follow a Keynesian economic policy. They don't recognize it as failed and would run the economy as the UAW drove GM into the ground. But, the liberals expect a different outcome.
The Republicans are plagued by the religious right and aren't very gutsy (excludes Ron Paul).
What the country probably needs is Ron Paul's aggressive libertarian policies - if it wants to restore growth and maintain a high standard of living (if you aren't living on entitlements).
So, the country is divided and thus Congress is deadlocked - for good reason. It reflects the antipodal and divided view of the electorate.
Q: Would it be a bad thing to throw out all incumbents in Congress?
A: The bad thing could be that the problems in Washington reflect the divide in the American public with liberals wanting big government, lots of regulations and higher taxes (countries doing this having no growth) and conservatives wanting smaller government, less regulations and lower taxes (which produce growth).
Obama and liberals see no relationship between their policies and high jobless rates. They follow a Keynesian economic policy. They don't recognize it as failed and would run the economy as the UAW drove GM into the ground. But, the liberals expect a different outcome.
The Republicans are plagued by the religious right and aren't very gutsy (excludes Ron Paul).
What the country probably needs is Ron Paul's aggressive libertarian policies - if it wants to restore growth and maintain a high standard of living (if you aren't living on entitlements).
So, the country is divided and thus Congress is deadlocked - for good reason. It reflects the antipodal and divided view of the electorate.
WHAT THE FED IS OVERLOOKING: Fed Ponders Jobs, Inflation Targets - WSJ.com
Fed Ponders Jobs, Inflation Targets - WSJ.com
What the Fed seems to be grossly overlooking was brought home by some recent conversations with people back in the US (and, it's also somewhat reported in the media).
In other words, a lack of credit. In part brought about by regulatory excess (i.e. the banks are afraid to lend); and, in part brought about by government policies such as the lawsuit against mortgage loan originators to the tune of 100's of billions of dollars.
With absolutely insane economic policies from the Administration (such as today's tax the millionaires and don't recognize the value of capital gains - or, in other words, stop the investment and venture machine - after all, it doesn't create government jobs or union jobs, so what good is it) and bureaucrats and regulators out to punish lending and investment, is it any wonder that houses don't sell and businesses don't borrow.
The Fed needs to recognize that the credit / lending relationship in the country is broken. The government wants to convince the public (which is easily led along unfortunately) to believe that it isn't at fault for the economic policies holding back the economy, etc. Rather, it's the banks and greedy private business people.
Things are clearly getting worse and the Administration can't seem to stop coming up with policies, almost daily, to reinforce its incompetent management of a free economy. Until this freedom is restored, the Fed's policies are a bubble that is only going to appear to ameliorate what is rotting from within due to the policies of Obama.
What the Fed seems to be grossly overlooking was brought home by some recent conversations with people back in the US (and, it's also somewhat reported in the media).
In other words, a lack of credit. In part brought about by regulatory excess (i.e. the banks are afraid to lend); and, in part brought about by government policies such as the lawsuit against mortgage loan originators to the tune of 100's of billions of dollars.
With absolutely insane economic policies from the Administration (such as today's tax the millionaires and don't recognize the value of capital gains - or, in other words, stop the investment and venture machine - after all, it doesn't create government jobs or union jobs, so what good is it) and bureaucrats and regulators out to punish lending and investment, is it any wonder that houses don't sell and businesses don't borrow.
The Fed needs to recognize that the credit / lending relationship in the country is broken. The government wants to convince the public (which is easily led along unfortunately) to believe that it isn't at fault for the economic policies holding back the economy, etc. Rather, it's the banks and greedy private business people.
Things are clearly getting worse and the Administration can't seem to stop coming up with policies, almost daily, to reinforce its incompetent management of a free economy. Until this freedom is restored, the Fed's policies are a bubble that is only going to appear to ameliorate what is rotting from within due to the policies of Obama.
Friday, September 16, 2011
Worth a Read: Henninger: Obama's Two Economies - WSJ.com
Henninger: Obama's Two Economies - WSJ.com
"WONDER LAND SEPTEMBER 15, 2011
Obama's Two Economies
For Barack Obama, the private economy is an intellectual abstraction.
Thus repeated Barack Obama on Monday, promoting his jobs plan: "Should we keep tax breaks for millionaires and billionaires?"
So said a news report Monday on the plan's tax details: "The largest chunk of Mr. Obama's tax package comes from limiting itemized deductions for families with more than $250,000 in yearly taxable income and individuals with more than $200,000, including those for home-mortgage interest, state and local property taxes and charitable donations. The White House says that measure would raise roughly $400 billion over 10 years."
There was more clarity in a previous presidency about the meaning of "is" than about Barack Obama's elastic definition of a millionaire. Another familiar part of the political background noise in politics is the president's animus toward something called "business." This is taken to mean he dislikes the undeserving fat cats of banking and corporate management. At this level, the president's American Jobs Act is progress: From its details emerges a clear understanding of Mr. Obama's beliefs about what he takes to be the engines of the American economy. How it works. How it grows.
For Barack Obama, the private economy is an intellectual abstraction.
For Mr. Obama, there is no such thing as the American economy. Instead, there are two Americas with separate economies—one public, the other private. The economy of the public sector—the money it spends and the direct or indirect recipients of its spending—is the real economy, the one that matters for the health of the country. Mr. Obama's second economy, the one most people think of as the private sector, is an intellectual abstraction. It's like the distant planets that astronomers regard as real but have discovered using mathematical calculations. It is believed that life forms exist in the private economy, but they do so as datapoints inside the White House Office of Management and Budget.
The plan's biggest outlays are the payroll tax cut and tax credit for new hires. Few owners in the private economy would have identified a 12-month break from payroll taxes or the credit as the best incentive for elevating long-term employment. The payroll tax cut's primary purpose is to enable an Obama mathematical abstraction known as the Keynesian multiplier.
By the way, the plan's third-to-last paragraph—call it the Rick Perry Footnote—says the $175 billion payroll tax holiday won't impact Social Security payments: "Social Security will still receive every dollar it would have gotten otherwise, through a transfer from the General Fund into the Social Security Trust Fund." This sounds like a Ponzi scheme.
Once past the tax-cuts-for-temps, the jobs plan drops anchor in the public economy. The "targets" of the plan's $447 billion of spending are industries and people who are or always will be dependent on payments from public budgets. The plan's parts operate almost entirely inside the public-sector ecosystem.
The primary categories of workers identified helped by the plan are teachers, police, firefighters, construction workers, "boiler repairmen." The plan would put people to work modernizing 35,000 public schools, repairing transit systems and airports, and developing "high-speed rail corridors." The $10 billion National Infrastructure Bank is a "government-owned entity," with the government guaranteeing loans due to "market gaps" for infrastructure financing. The American Jobs Act sounds like a jobs plan more for developing China than for the 21st century U.S. economy.
The plan asserts it will put people back to work "in key areas that are central to America's future competitiveness." Then it says it will allow the rehiring of teachers, police and firefighters "who have been laid off because of budget cuts." But people have been laid off in the other economy, too. This week Bank of America said it would lay off 30,000 people. Last month, HSBC bank announced massive layoffs. Stories abound of new college graduates living at home, unemployed. A study out this week from the Institute for Financial Literacy says college graduates have become the fastest-growing group of bankruptcy filers.
The Obama $0.5 trillion jobs plan reflects no recognition of the unemployed people connected to the U.S.'s most competitive and dynamic industries. Notwithstanding all that Democratic intellectuals such as Richard Florida have written about the party's future lying with sophisticated knowledge workers, these people fall outside the president's field of vision. Barack Obama (and his activist base) has talked nonstop about helping "the middle class," but it's clear this is a static, backward-looking notion of what makes up the American middle class.
Because Mr. Obama and his circle divide the economy into two parts, with the private economy merely a satellite orbiting the public sun, he has proven incapable of offering policies for the whole nation. A Whole America plan to lift both blue-collar and white-collar workers would have included some gesture toward a broad-based Bowles-Simpson tax reform, rather than wait for the debt panel to act. The plan's mention of reforming Sarbanes-Oxley (for small and new business only) merely promises to "work with" the SEC to "explore ways." A pipedream.
The American Jobs Act is a jobs plan for Barack Obama's America. The United States is a bigger country than that.
Write to henninger@wsj.com"
"WONDER LAND SEPTEMBER 15, 2011
Obama's Two Economies
For Barack Obama, the private economy is an intellectual abstraction.
Thus repeated Barack Obama on Monday, promoting his jobs plan: "Should we keep tax breaks for millionaires and billionaires?"
So said a news report Monday on the plan's tax details: "The largest chunk of Mr. Obama's tax package comes from limiting itemized deductions for families with more than $250,000 in yearly taxable income and individuals with more than $200,000, including those for home-mortgage interest, state and local property taxes and charitable donations. The White House says that measure would raise roughly $400 billion over 10 years."
There was more clarity in a previous presidency about the meaning of "is" than about Barack Obama's elastic definition of a millionaire. Another familiar part of the political background noise in politics is the president's animus toward something called "business." This is taken to mean he dislikes the undeserving fat cats of banking and corporate management. At this level, the president's American Jobs Act is progress: From its details emerges a clear understanding of Mr. Obama's beliefs about what he takes to be the engines of the American economy. How it works. How it grows.
For Barack Obama, the private economy is an intellectual abstraction.
For Mr. Obama, there is no such thing as the American economy. Instead, there are two Americas with separate economies—one public, the other private. The economy of the public sector—the money it spends and the direct or indirect recipients of its spending—is the real economy, the one that matters for the health of the country. Mr. Obama's second economy, the one most people think of as the private sector, is an intellectual abstraction. It's like the distant planets that astronomers regard as real but have discovered using mathematical calculations. It is believed that life forms exist in the private economy, but they do so as datapoints inside the White House Office of Management and Budget.
The plan's biggest outlays are the payroll tax cut and tax credit for new hires. Few owners in the private economy would have identified a 12-month break from payroll taxes or the credit as the best incentive for elevating long-term employment. The payroll tax cut's primary purpose is to enable an Obama mathematical abstraction known as the Keynesian multiplier.
By the way, the plan's third-to-last paragraph—call it the Rick Perry Footnote—says the $175 billion payroll tax holiday won't impact Social Security payments: "Social Security will still receive every dollar it would have gotten otherwise, through a transfer from the General Fund into the Social Security Trust Fund." This sounds like a Ponzi scheme.
Once past the tax-cuts-for-temps, the jobs plan drops anchor in the public economy. The "targets" of the plan's $447 billion of spending are industries and people who are or always will be dependent on payments from public budgets. The plan's parts operate almost entirely inside the public-sector ecosystem.
The primary categories of workers identified helped by the plan are teachers, police, firefighters, construction workers, "boiler repairmen." The plan would put people to work modernizing 35,000 public schools, repairing transit systems and airports, and developing "high-speed rail corridors." The $10 billion National Infrastructure Bank is a "government-owned entity," with the government guaranteeing loans due to "market gaps" for infrastructure financing. The American Jobs Act sounds like a jobs plan more for developing China than for the 21st century U.S. economy.
The plan asserts it will put people back to work "in key areas that are central to America's future competitiveness." Then it says it will allow the rehiring of teachers, police and firefighters "who have been laid off because of budget cuts." But people have been laid off in the other economy, too. This week Bank of America said it would lay off 30,000 people. Last month, HSBC bank announced massive layoffs. Stories abound of new college graduates living at home, unemployed. A study out this week from the Institute for Financial Literacy says college graduates have become the fastest-growing group of bankruptcy filers.
The Obama $0.5 trillion jobs plan reflects no recognition of the unemployed people connected to the U.S.'s most competitive and dynamic industries. Notwithstanding all that Democratic intellectuals such as Richard Florida have written about the party's future lying with sophisticated knowledge workers, these people fall outside the president's field of vision. Barack Obama (and his activist base) has talked nonstop about helping "the middle class," but it's clear this is a static, backward-looking notion of what makes up the American middle class.
Because Mr. Obama and his circle divide the economy into two parts, with the private economy merely a satellite orbiting the public sun, he has proven incapable of offering policies for the whole nation. A Whole America plan to lift both blue-collar and white-collar workers would have included some gesture toward a broad-based Bowles-Simpson tax reform, rather than wait for the debt panel to act. The plan's mention of reforming Sarbanes-Oxley (for small and new business only) merely promises to "work with" the SEC to "explore ways." A pipedream.
The American Jobs Act is a jobs plan for Barack Obama's America. The United States is a bigger country than that.
Write to henninger@wsj.com"
Wednesday, September 14, 2011
WHAT THE TIMES PORTEND: Fed Policies to Lower Rates Further Could Hurt Stocks - Barrons.com
Fed Policies to Lower Rates Further Could Hurt Stocks - Barrons.com
Just think 1937 and Art Laffer's view of why.
Then ask, is Obama following any different policies?
With government in the way, the US is squandering opportunities - but, of course there are two viewpoints, as in Greece. In one case, the workers are so important, that they will sacrifice the economy, perhaps slowly, as median income figures show in the US in recent days.
The alternative of rewarding saving and investment means the transfer payments have to be cut way back and many policies (sacred cows that they may be such as the drug war and hate of immigrants) may have to be changed.
Clearly Obama is continuing to really ramp up the pro-union, anti-business policies and oblivious to what he is really doing.
Some may applaud his actions; others will take notice and act according to their own viewpoints.
So far, it would appear as though Obama policies aren't helping the overall economy and those needing jobs. But, as with any religion, there are those who 'want-to-believe' and they will believe - hoping for a different outcome, this time!
Just think 1937 and Art Laffer's view of why.
Then ask, is Obama following any different policies?
With government in the way, the US is squandering opportunities - but, of course there are two viewpoints, as in Greece. In one case, the workers are so important, that they will sacrifice the economy, perhaps slowly, as median income figures show in the US in recent days.
The alternative of rewarding saving and investment means the transfer payments have to be cut way back and many policies (sacred cows that they may be such as the drug war and hate of immigrants) may have to be changed.
Clearly Obama is continuing to really ramp up the pro-union, anti-business policies and oblivious to what he is really doing.
Some may applaud his actions; others will take notice and act according to their own viewpoints.
So far, it would appear as though Obama policies aren't helping the overall economy and those needing jobs. But, as with any religion, there are those who 'want-to-believe' and they will believe - hoping for a different outcome, this time!
Tuesday, September 13, 2011
WHY STIMULUS II IS A BAD IDEA - OPTIONS: Obama Seeks to End Tax Breaks to Pay for Jobs Plan - WSJ.com
Obama Seeks to End Tax Breaks to Pay for Jobs Plan - WSJ.com
Let's hope the Republicans balk at this squandering of resources to support public unions, etc.
Let's also hope the Republicans can come up with a gutsy alternative.
Now a serious stimulus would be to hold up on ObamaCare and Dodd-Frank and have them have to be re-voted on by a subsequent Congress. Also, to cut the corporate income tax and show a serious effort to control entitlement costs (i.e. 18-19% of GDP cap) so investors would know their taxes aren't going to go through the roof.
Also, Art Laffer had a good idea for enterprise zones in poor neighborhoods.
These would be serious attempts to make the business climate in America more job-friendly.
Obama's plan is Stimulus II and we all know how unsuccessful Stimulus I was.
Let's hope the Republicans balk at this squandering of resources to support public unions, etc.
Let's also hope the Republicans can come up with a gutsy alternative.
Now a serious stimulus would be to hold up on ObamaCare and Dodd-Frank and have them have to be re-voted on by a subsequent Congress. Also, to cut the corporate income tax and show a serious effort to control entitlement costs (i.e. 18-19% of GDP cap) so investors would know their taxes aren't going to go through the roof.
Also, Art Laffer had a good idea for enterprise zones in poor neighborhoods.
These would be serious attempts to make the business climate in America more job-friendly.
Obama's plan is Stimulus II and we all know how unsuccessful Stimulus I was.
Monday, September 12, 2011
Tradeoff Math: Obama Seeks to End Tax Breaks to Pay for Jobs Plan - WSJ.com
Obama Seeks to End Tax Breaks to Pay for Jobs Plan - WSJ.com
So let's see?
Take from some high paying productive jobs. Discourage those people from working, reinvesting in their businesses and paying people for real work; and, instead, keep some public employee union hacks on their jobs.
So, what will be the present value of the net impact on jobs?
I'd say we lose 2 good jobs for every hack union job. But, that's just a guess.
So let's see?
Take from some high paying productive jobs. Discourage those people from working, reinvesting in their businesses and paying people for real work; and, instead, keep some public employee union hacks on their jobs.
So, what will be the present value of the net impact on jobs?
I'd say we lose 2 good jobs for every hack union job. But, that's just a guess.
Saturday, September 10, 2011
CPI-U and Real Inflation Numbers in the US: Barron's: More Quantitative Easing By Fed Is Needed - Barrons.com
Barron's: More Quantitative Easing By Fed Is Needed - Barrons.com
Someone else just provided the following information on inflation:
"I believe that even this number vastly understates true inflation, because of a major underweighting of medical costs, but pretend it is as good as gold. The 12-month trend in annual CPI-U has been as follows:
CPI Index …. Annual
..Month .... Change
..Aug-10 ……. 1.15%
..Sep-10 ……. 1.14%
..Oct-10 ……. 1.17%
..Nov-10 ……. 1.14%
..Dec-10 ….. 1.50%
..Jan-11 ……. 1.63%
..Feb-11 ……. 2.11%
..Mar-11 ……. 2.68%
..Apr-11 ……. 3.16%
..May-11 ……. 3.57%
..Jun-11 ……. 3.56%
..Jul-11 …. 3.63%
Does this trend look like inflation is under contol, and that QE3 will be a painless slam dunk for the Fed?"
Someone else just provided the following information on inflation:
"I believe that even this number vastly understates true inflation, because of a major underweighting of medical costs, but pretend it is as good as gold. The 12-month trend in annual CPI-U has been as follows:
CPI Index …. Annual
..Month .... Change
..Aug-10 ……. 1.15%
..Sep-10 ……. 1.14%
..Oct-10 ……. 1.17%
..Nov-10 ……. 1.14%
..Dec-10 ….. 1.50%
..Jan-11 ……. 1.63%
..Feb-11 ……. 2.11%
..Mar-11 ……. 2.68%
..Apr-11 ……. 3.16%
..May-11 ……. 3.57%
..Jun-11 ……. 3.56%
..Jul-11 …. 3.63%
Does this trend look like inflation is under contol, and that QE3 will be a painless slam dunk for the Fed?"
The Failure of Outcome-Based Policies vs. Opportunity-Based Ones: Barron's: More Quantitative Easing By Fed Is Needed - Barrons.com
Barron's: More Quantitative Easing By Fed Is Needed - Barrons.com
Outcome based policies and true belief.
Liberals seem to have this belief that they should focus on equality of outcomes. Thus, entitlement policies that run off the cliff and support for unionization with the belief that somehow salaries and benefits can be whatever one wants with no economic consequences.
The same is the liberal belief in education. Reduce excellence and performance so the weakest students don't feel left out.
And, what-do-you-know? Both the economy and educational levels of young people are below par! Could there be something about outcome-based vs. opportunity-based policies that is similar and that only appears to be successful?
Clearly the economy is suffering from unrealistic and putative regulatory policies. Most of the media can't stand Ron Paul for being the most vocal critic of what ails the economy.
Outcome based policies and true belief.
Liberals seem to have this belief that they should focus on equality of outcomes. Thus, entitlement policies that run off the cliff and support for unionization with the belief that somehow salaries and benefits can be whatever one wants with no economic consequences.
The same is the liberal belief in education. Reduce excellence and performance so the weakest students don't feel left out.
And, what-do-you-know? Both the economy and educational levels of young people are below par! Could there be something about outcome-based vs. opportunity-based policies that is similar and that only appears to be successful?
Clearly the economy is suffering from unrealistic and putative regulatory policies. Most of the media can't stand Ron Paul for being the most vocal critic of what ails the economy.
On Economic Engines, Foot-on-Brake and Long-Lasting Damage: Barron's: More Quantitative Easing By Fed Is Needed - Barrons.com
Barron's: More Quantitative Easing By Fed Is Needed - Barrons.com
The comment "to lower interest rates..." would seem rather meaningless in the light of the Administration's ongoing efforts to vilify and punish the banking system.
Whether it is the large banks with regulatory and legal attacks to contend with or the smaller banks that would logically help to fun smaller businesses, the banks aren't going to be lending! (See the article in the last few weeks on the small Texas bank giving back its charter because of the putative nature of regulatory excess.)
This is the apparent delusion of Democrats and liberals - i.e. that they can regulate their vision of a better world and that it has no consequences in the real world.
The fallacy is that there are consequences and none of the liberal establishment's effort to blame anyone but government and to have regulations to protect consumers but not encourage investors or business is blatant. Yet, the media is giving Obama and his pals a veritable 'free ride'.
Liberal policies are a heavy foot on the brake. Their accelerator efforts can't easily overcome the foot on the brake and to try and change the monetary fuel mix is going to have long-term deleterious consequences on the economic engine.
We saw this in the 1970s in the US. An ultimate extreme has been Zimbabwe. Moderate cases exist in Venezuela and an in-your-face case is Greece.
The comment "to lower interest rates..." would seem rather meaningless in the light of the Administration's ongoing efforts to vilify and punish the banking system.
Whether it is the large banks with regulatory and legal attacks to contend with or the smaller banks that would logically help to fun smaller businesses, the banks aren't going to be lending! (See the article in the last few weeks on the small Texas bank giving back its charter because of the putative nature of regulatory excess.)
This is the apparent delusion of Democrats and liberals - i.e. that they can regulate their vision of a better world and that it has no consequences in the real world.
The fallacy is that there are consequences and none of the liberal establishment's effort to blame anyone but government and to have regulations to protect consumers but not encourage investors or business is blatant. Yet, the media is giving Obama and his pals a veritable 'free ride'.
Liberal policies are a heavy foot on the brake. Their accelerator efforts can't easily overcome the foot on the brake and to try and change the monetary fuel mix is going to have long-term deleterious consequences on the economic engine.
We saw this in the 1970s in the US. An ultimate extreme has been Zimbabwe. Moderate cases exist in Venezuela and an in-your-face case is Greece.
Thursday, September 8, 2011
A NON-KEYNESIAN JOB CREATION SUGGESTION: U.S. Hits Builders With Pay Probe - WSJ.com
U.S. Hits Builders With Pay Probe - WSJ.com
Another example of union-pandering and job destruction!
Wouldn't it be nice to see a Republican response to Obama's Keynesian speech tonight on job creation a proposal to make the entire US a right-to-work labor environment. Also, disband the NLRB.
If one took a vote, I'd strongly expect the Republican response to be far better at job creation.
Another example of union-pandering and job destruction!
Wouldn't it be nice to see a Republican response to Obama's Keynesian speech tonight on job creation a proposal to make the entire US a right-to-work labor environment. Also, disband the NLRB.
If one took a vote, I'd strongly expect the Republican response to be far better at job creation.
Wednesday, September 7, 2011
THE QUAGMIRE OF DECLINE AND STAGNATION: European Stock Drop Reflects Global Economic Worries - WSJ.com
European Stock Drop Reflects Global Economic Worries - WSJ.com
Ah but the 'right' thing is exactly the opposite for major parts of the population.
Those with jobs like all the protections - even if it means few new jobs are created and their own jobs are increasingly at risk.
Others see the need for growth and that it will take regulatory changes and tax changes to support growth.
These are opposite points of view.
As in the US, with roughly half of the people paying no income taxes, raising taxes on the rich is very appealing.
Meanwhile, those with capital realize it doesn't pay to take any risks with it so jobs are both not created and moved offshore.
People who currently rely on government will have to rely less or the economy will slowly decay. Is there anyone with the political will to take this on anywhere? You are right that none appear to be there. And, the public in most countries doesn't see the necessity of doing anything. They believe an unstable economic situation isn't really unstable and that by borrowing and taxing somehow jobs will eventually be created and benefits won't need to be cut.
This is truly 'la-la-land'. (See yesterday's Los Angeles Times article on how those on the right and left, while broadly unhappy with the economy, want only 'their solution' to be used. And, on the left, it is more of what has gotten the economy into its current quagmire of decline and stagnation.
Ah but the 'right' thing is exactly the opposite for major parts of the population.
Those with jobs like all the protections - even if it means few new jobs are created and their own jobs are increasingly at risk.
Others see the need for growth and that it will take regulatory changes and tax changes to support growth.
These are opposite points of view.
As in the US, with roughly half of the people paying no income taxes, raising taxes on the rich is very appealing.
Meanwhile, those with capital realize it doesn't pay to take any risks with it so jobs are both not created and moved offshore.
People who currently rely on government will have to rely less or the economy will slowly decay. Is there anyone with the political will to take this on anywhere? You are right that none appear to be there. And, the public in most countries doesn't see the necessity of doing anything. They believe an unstable economic situation isn't really unstable and that by borrowing and taxing somehow jobs will eventually be created and benefits won't need to be cut.
This is truly 'la-la-land'. (See yesterday's Los Angeles Times article on how those on the right and left, while broadly unhappy with the economy, want only 'their solution' to be used. And, on the left, it is more of what has gotten the economy into its current quagmire of decline and stagnation.
Tuesday, September 6, 2011
2nd century AD similarities: HEARD ON THE STREET: Bank Suits Pinch Investors - WSJ.com
HEARD ON THE STREET: Bank Suits Pinch Investors - WSJ.com
Who to blame? Bankers?
Sorry, but everyone was buying houses with the same beliefs.
It's fun and easy to blame people for following along with the general belief systems, but the real problem was that no one was doing any serious thinking about the relationship of housing, incomes and limitations on supply.
The same is going on now with the free lunch of low interest rates supporting unaffordable government spending while pursuing and supporting policies that discourage risk taking and economic growth (both in the US and Europe).
Whatever is out there can't be good!
The blame has to start with the politicians; but, at the same time, they reflect popular will - as well expressed in today's LA Times, which reports partisans of both parties wanting to fight it out.
But, there are three basic viewpoints on the economy - Keynesians, monetarists and Lafferities.
I'm a Lafferite in that I see anti-business polices overwhelming monetary stimulus. This affects both Europe and the US.
I don't know if you caught the comments from one of the finance ministers today - I think it was on Bloomberg, about how austerity policies raising taxes do nothing to encourage risk taking and growth.
It's like the 2nd century AD with plague decimating the population and the barbarian hordes active on the periphery of the empire.
The plague of socialist entitlements is decimating everything. So, beware and do your best to find a refuge.
Who to blame? Bankers?
Sorry, but everyone was buying houses with the same beliefs.
It's fun and easy to blame people for following along with the general belief systems, but the real problem was that no one was doing any serious thinking about the relationship of housing, incomes and limitations on supply.
The same is going on now with the free lunch of low interest rates supporting unaffordable government spending while pursuing and supporting policies that discourage risk taking and economic growth (both in the US and Europe).
Whatever is out there can't be good!
The blame has to start with the politicians; but, at the same time, they reflect popular will - as well expressed in today's LA Times, which reports partisans of both parties wanting to fight it out.
But, there are three basic viewpoints on the economy - Keynesians, monetarists and Lafferities.
I'm a Lafferite in that I see anti-business polices overwhelming monetary stimulus. This affects both Europe and the US.
I don't know if you caught the comments from one of the finance ministers today - I think it was on Bloomberg, about how austerity policies raising taxes do nothing to encourage risk taking and growth.
It's like the 2nd century AD with plague decimating the population and the barbarian hordes active on the periphery of the empire.
The plague of socialist entitlements is decimating everything. So, beware and do your best to find a refuge.
ISSUES & COMMENTS: Poll Shows Voter Discontent Deepens Ahead of Obama Jobs Plan - WSJ.com
Poll Shows Voter Discontent Deepens Ahead of Obama Jobs Plan - WSJ.com
Yes, there are many issues - but, I feel as though the Laffer argument about what continued the Depression in the 1930's has now been validated by the facts.
I.e. we had the monetarists, Keynesians and Laffer. The Keynesian policies didn't work in the 30s, so we had the other two.
Now that monetarist and Keynesian policies have been shown not to work when faced with anti-business fiscal policies, it is clear to me that Laffer was onto something - i.e. when you push taxes up (with Obama implied but misallocations as you note) and support unions (Boeing, Gibson Guitar, NLRB, etc.) - the economy isn't going to rise.
There is also the 'regression to the mean' where the US has 3% of the world's population and uses 25% of its resources.
So, one would think that the government (except liberal policies find such anathema) would have pro-business policies knowing we need to create jobs.
We have to recognize there are clearing prices for labor as a component of production (we are talking here gross expense not net pay). This is ignored by gross policies and a short term 2% cut of employee sharing costs doesn't work.
There are tons of wonderful articles on what the Obama Admin, is doing that is anti-business.
What isn't talked about is the philosophy of liberals to try and equalize outcomes vs. opportunity. The results are seen all over the economy and in society. Education that isn't geared to excellence but equal outcomes is the mantra in California and other states.
To not allow competitive vouchers to support educational excellence is but one example.
We can't have an unequal and globally non-competitive tax rate. Japan has the same thing so companies locate production offshore.
You may recall the buzz-word of a few years back - the 'platform economy'.
Here big companies want to offload the equity cost and business risk of variable production.
This risk isn't being taken up domestically. I'd say Bush's tax cuts helped rather than hurt here as small business could more quickly build equity.
Ah well. The LA Times reported a hardening of positions on both the left and right - even though many on the left think the economy is going down the wrong road.
So, it makes sense for gold to go up; and, last I recall at the beginning of the year the forecasts were for 3%+ growth by the 4th quarter of 2011 and just now on Tom Keene on Bloomberg an actual decline was discussed.
Yes, there are many issues - but, I feel as though the Laffer argument about what continued the Depression in the 1930's has now been validated by the facts.
I.e. we had the monetarists, Keynesians and Laffer. The Keynesian policies didn't work in the 30s, so we had the other two.
Now that monetarist and Keynesian policies have been shown not to work when faced with anti-business fiscal policies, it is clear to me that Laffer was onto something - i.e. when you push taxes up (with Obama implied but misallocations as you note) and support unions (Boeing, Gibson Guitar, NLRB, etc.) - the economy isn't going to rise.
There is also the 'regression to the mean' where the US has 3% of the world's population and uses 25% of its resources.
So, one would think that the government (except liberal policies find such anathema) would have pro-business policies knowing we need to create jobs.
We have to recognize there are clearing prices for labor as a component of production (we are talking here gross expense not net pay). This is ignored by gross policies and a short term 2% cut of employee sharing costs doesn't work.
There are tons of wonderful articles on what the Obama Admin, is doing that is anti-business.
What isn't talked about is the philosophy of liberals to try and equalize outcomes vs. opportunity. The results are seen all over the economy and in society. Education that isn't geared to excellence but equal outcomes is the mantra in California and other states.
To not allow competitive vouchers to support educational excellence is but one example.
We can't have an unequal and globally non-competitive tax rate. Japan has the same thing so companies locate production offshore.
You may recall the buzz-word of a few years back - the 'platform economy'.
Here big companies want to offload the equity cost and business risk of variable production.
This risk isn't being taken up domestically. I'd say Bush's tax cuts helped rather than hurt here as small business could more quickly build equity.
Ah well. The LA Times reported a hardening of positions on both the left and right - even though many on the left think the economy is going down the wrong road.
So, it makes sense for gold to go up; and, last I recall at the beginning of the year the forecasts were for 3%+ growth by the 4th quarter of 2011 and just now on Tom Keene on Bloomberg an actual decline was discussed.
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