Hungary Goes For Growth - WSJ.com
Socialists and liberals believe taxes don't impact behavior. One of the many reasons why the pending explosion of tax increases on producers (read: businesses and individuals with good incomes and likely owners or investors in businesses) isn't seen as one of the reasons jobs aren't being created in the US.
As the old saying goes, "There's none so blind as those that will not see".
Or, as a Polish friend used to say (but not sure of the spelling) "Svai blinda" (which meant "the blind leading the blind")
Tuesday, June 15, 2010
Saturday, June 12, 2010
Are we are on a road to economic recovery in mid-June 2010?
In terms of the economy, just another passing thought: other papers this weekend are highlighting the number of homes in foreclosure and those yet to be foreclosed upon but where homeowners are at least 60 days behind in payments.
As for me, it's hard to see how people in foreclosure or close to it are going to be out borrowing new funds or adding to retail sales growth - rather, just the opposite.
And, to add icing on the cake (and also perhaps to explain why retail sales have been holding up as well as they have - without massive increase in reported consumer debt), the report is out that ALL of the shrinkage in consumer debt is coming from consumers DEFAULTING on it. Concomitantly, the report goes on to say, those that haven't defaulted are actually adding to their debt.
Somehow - one wonders if this is really any kind of foundation for a recovery?
As for me, it's hard to see how people in foreclosure or close to it are going to be out borrowing new funds or adding to retail sales growth - rather, just the opposite.
And, to add icing on the cake (and also perhaps to explain why retail sales have been holding up as well as they have - without massive increase in reported consumer debt), the report is out that ALL of the shrinkage in consumer debt is coming from consumers DEFAULTING on it. Concomitantly, the report goes on to say, those that haven't defaulted are actually adding to their debt.
Somehow - one wonders if this is really any kind of foundation for a recovery?
Friday, June 11, 2010
The Consumption Balloon
In terms of employment, take a look at the 'labor conundrum' (to little of the wage cost goes to the employee) and the fact that we have geared the economy more everyday to the support of 'consumption' vs. 'investment'.
If one agrees that we need a better educated workforce, then allowing teachers unions to degrade the quality of education, while increasing substantially the cost, is but another dislocation!
Anyone with a bit of common sense knows government (esp. state and local) has been unionized and is out of control.
Bottom line is the US needs to focus on investment; but how does this happen when everyone's entitled to a free social lunch?
The consumption side of the economy is like a balloon, it's either going to burst (like housing, where prices were also illogical and unsustainable) or the excess is going to be let out more slowly.
Based on Obamacare, etc. - the let out slowly idea is off the table.
If one agrees that we need a better educated workforce, then allowing teachers unions to degrade the quality of education, while increasing substantially the cost, is but another dislocation!
Anyone with a bit of common sense knows government (esp. state and local) has been unionized and is out of control.
Bottom line is the US needs to focus on investment; but how does this happen when everyone's entitled to a free social lunch?
The consumption side of the economy is like a balloon, it's either going to burst (like housing, where prices were also illogical and unsustainable) or the excess is going to be let out more slowly.
Based on Obamacare, etc. - the let out slowly idea is off the table.
Thursday, June 10, 2010
House Readies Bill to Zero Out Capital-Gains Taxes on Small Firms - WSJ.com
TRICKS UP GOVERNMENT SLEEEVES: House Readies Bill to Zero Out Capital-Gains Taxes on Small Firms - WSJ.com
Somehow, the picture of trying to manipulate the economy as indicated by the above bill, is countered by all the other tax shenanigans (not least of which is the carried interest bill - which, somehow suggests you have 18 months or so to invest in a small business, but you better not have too much money or make to big an investment or be too successful - the liberals are out to tax you to pay for their programs).
The government can't bring itself to confront the real dilemma it has both inherited and blown out the ceiling on its own - which is the idea that people are entitled to benefits first. Then both by taxing anyone who is successful and running up government credit card like debts with no limit, somehow people should feel confident creating jobs and risking capital and be willing to invest long hours - maybe hoping for a big gain; but, with the real worry starring them in the face that any big gains will have to be sacrificed to government efforts to support outrageous union pensions, healthcare for non-producers, unaffordable early retirements, etc., etc., etc.
The deck is loaded against small business. Higher interest rates are only a matter of when, not if. And, it doesn't take a genius to figure out that Greek style policies are running a muck through the Democrats in Congress.
The Republicans have also not shown themselves in the past to have the stomach to rein in government spending - sadly, just the opposite.
So, the betting odds would seem to favor the need for much worse times to come before their could be even the hint of a political consensus to provide enough to the private sector to let it earn a rate of return that would justify job creation.
And, the cost of labor has to come down. Not in terms of direct wages, but in terms of government taxes and indirect costs mandated by government.
Will it happen? Sure looks like the small businessman is smart enough to know not to bet with charlatans!
Somehow, the picture of trying to manipulate the economy as indicated by the above bill, is countered by all the other tax shenanigans (not least of which is the carried interest bill - which, somehow suggests you have 18 months or so to invest in a small business, but you better not have too much money or make to big an investment or be too successful - the liberals are out to tax you to pay for their programs).
The government can't bring itself to confront the real dilemma it has both inherited and blown out the ceiling on its own - which is the idea that people are entitled to benefits first. Then both by taxing anyone who is successful and running up government credit card like debts with no limit, somehow people should feel confident creating jobs and risking capital and be willing to invest long hours - maybe hoping for a big gain; but, with the real worry starring them in the face that any big gains will have to be sacrificed to government efforts to support outrageous union pensions, healthcare for non-producers, unaffordable early retirements, etc., etc., etc.
The deck is loaded against small business. Higher interest rates are only a matter of when, not if. And, it doesn't take a genius to figure out that Greek style policies are running a muck through the Democrats in Congress.
The Republicans have also not shown themselves in the past to have the stomach to rein in government spending - sadly, just the opposite.
So, the betting odds would seem to favor the need for much worse times to come before their could be even the hint of a political consensus to provide enough to the private sector to let it earn a rate of return that would justify job creation.
And, the cost of labor has to come down. Not in terms of direct wages, but in terms of government taxes and indirect costs mandated by government.
Will it happen? Sure looks like the small businessman is smart enough to know not to bet with charlatans!
Health Care Option Shows Promise at a Cost - WSJ.com
Q&A: Health Care Option Shows Promise at a Cost - WSJ.com
Question:
Doesn't the healthcare customer need to feel the pain? Otherwise we'll ALL want BMW care, and we'll want someone else to pay for it. That's just not sustainable in a global free market. At some point, won't large employers just ship their labor-intensive work to India and Nepal, and leave our spoiled Americans unemployed?
Answer:
As for shipping jobs offshore, its already blatantly happening. Ford shipping jobs to Mexico was in yesterday's paper.
I saw in one of the projections on Obamacare that a family of four would be paying about $24,000 per year for healthcare.
It's like minimum wages - if the job is worth $3 per hour, then at $8 the job disappears.
(I recall in the late '80's a financial presentation by a major franchise owner. At the time, one of the interminable minimum wage debates was being raised. He told his audience, "look, if wages go up $1 per hour, then I'll just invest $10,000 in each of my fast food restaurants to let customers refill their own cups of soda." Well, both happened.
He also told his audience that the machines would let him eliminate at least one employee - i.e. fewer entry level jobs!
Etc., etc. this is one reason why it would seem as though we have a lot of worse times ahead.
Knuckling down and getting out of the way would seem a good strategy - and, as seen in Europe - all those promised social benefits aren't going to all be there! So, watch out retirees!
European youth haven't caught on, nor have those in America to what is really happening.
I recall how people used to take pride in the fact that parents were able to leave their children with better jobs and a better country to live in.
Clearly (even discussed in a recent article), the current view is that the future won't be any better - at best - and that the young should plan on paying for what their parents want to live on now! JUST ASTOUNDING!
Question:
Doesn't the healthcare customer need to feel the pain? Otherwise we'll ALL want BMW care, and we'll want someone else to pay for it. That's just not sustainable in a global free market. At some point, won't large employers just ship their labor-intensive work to India and Nepal, and leave our spoiled Americans unemployed?
Answer:
As for shipping jobs offshore, its already blatantly happening. Ford shipping jobs to Mexico was in yesterday's paper.
I saw in one of the projections on Obamacare that a family of four would be paying about $24,000 per year for healthcare.
It's like minimum wages - if the job is worth $3 per hour, then at $8 the job disappears.
(I recall in the late '80's a financial presentation by a major franchise owner. At the time, one of the interminable minimum wage debates was being raised. He told his audience, "look, if wages go up $1 per hour, then I'll just invest $10,000 in each of my fast food restaurants to let customers refill their own cups of soda." Well, both happened.
He also told his audience that the machines would let him eliminate at least one employee - i.e. fewer entry level jobs!
Etc., etc. this is one reason why it would seem as though we have a lot of worse times ahead.
Knuckling down and getting out of the way would seem a good strategy - and, as seen in Europe - all those promised social benefits aren't going to all be there! So, watch out retirees!
European youth haven't caught on, nor have those in America to what is really happening.
I recall how people used to take pride in the fact that parents were able to leave their children with better jobs and a better country to live in.
Clearly (even discussed in a recent article), the current view is that the future won't be any better - at best - and that the young should plan on paying for what their parents want to live on now! JUST ASTOUNDING!
U.S. Trade Deficit Expands - WSJ.com
FACT FROM FICTION: U.S. Trade Deficit Expands - WSJ.com
One really wonders whether even if consumers in the US should suddenly find large extra checks in the mail from Uncle Sam whether the goods demanded would be imported or produced domestically.
Certainly the policies of the government both now and as forecast for the future include lower net returns to businesses, entrepreneurs and investors and higher and higher costs for domestic labor, government and union retirement programs, etc., etc., etc. - none of this would seem to inspire especially small or mid-sized businesses to take on any additional risks. Nor would it or should it encourage banks to take on the 'staring you in the face risks' attendant to the governments fiscal, social and tax policies.
It may be well and good to focus on unused capacity in the US; but, if the capacity is now going to cost more to operate (as noted above with respect to costs and returns), then the hurtle number to utilize the capacity has a greater and greater gap.
Greece has shown that interest rate surprises come about quickly - much more quickly than the time it takes to amortize loans to re-initiate or start production.
But somehow, all these facts are just too unpleasant to enter into a lot of comments on the economy!
I liked the remark about interest on the debt now being $1 billion a day. Ask how much of that is American treasure being shipped out to Arab countries (to build new cities in the desert and fancy new airlines, etc.) and to China to support industrial development?
But heck, there are UAW pensions and now public union pensions and free healthcare to be provided by the government here in the US. So, let's borrow now and forget about tomorrow.
Sadly, those who look to the future are usually those who create jobs. Those with their hands on the taxpayer credit cards usually don't create jobs, they just no how to run up humongous bills.
One really wonders whether even if consumers in the US should suddenly find large extra checks in the mail from Uncle Sam whether the goods demanded would be imported or produced domestically.
Certainly the policies of the government both now and as forecast for the future include lower net returns to businesses, entrepreneurs and investors and higher and higher costs for domestic labor, government and union retirement programs, etc., etc., etc. - none of this would seem to inspire especially small or mid-sized businesses to take on any additional risks. Nor would it or should it encourage banks to take on the 'staring you in the face risks' attendant to the governments fiscal, social and tax policies.
It may be well and good to focus on unused capacity in the US; but, if the capacity is now going to cost more to operate (as noted above with respect to costs and returns), then the hurtle number to utilize the capacity has a greater and greater gap.
Greece has shown that interest rate surprises come about quickly - much more quickly than the time it takes to amortize loans to re-initiate or start production.
But somehow, all these facts are just too unpleasant to enter into a lot of comments on the economy!
I liked the remark about interest on the debt now being $1 billion a day. Ask how much of that is American treasure being shipped out to Arab countries (to build new cities in the desert and fancy new airlines, etc.) and to China to support industrial development?
But heck, there are UAW pensions and now public union pensions and free healthcare to be provided by the government here in the US. So, let's borrow now and forget about tomorrow.
Sadly, those who look to the future are usually those who create jobs. Those with their hands on the taxpayer credit cards usually don't create jobs, they just no how to run up humongous bills.
Wednesday, June 9, 2010
Health Care Option Shows Promise at a Cost - WSJ.com
Q&A: Health Care Option Shows Promise at a Cost - WSJ.com
William writes, "....the 'medical home' is a site where more than the traditional gatekeeper primary care activity can happen. The goal is to create a place where most care can be delivered in the right way, at the right time, and at a reasonable cost....Many of the monitoring and reimbursement schemes weren't possible when HMOs were first conceived. "
Response:
Hi William, thanks for all the particularly thoughtful comments on the medical home.
I recognize your parallel with new technological options - but, I'd still argue that in both cases, the Medical Home and HMO are quite parallel.
The biggest difference (which was brought out in the article) is that the Medical home is currently more expensive than standalone care plans.
However, all of the objectives of the medical home are there for HMOs with the added bonus that the HMO is targeting cost control. Competing HMOs let patients evaluate cost and quality of care tradeoffs to some extent.
My experience is more with healthcare and health insurance from the 1980's and early 1990's (in California).
I saw that incentives to have people pay more of a bill (50/50 vs 80/20 for example or the use of a health savings account) had a measurable impact on the cost of their insurance. The individual health care buyer made their own tradeoffs. Some wanted to save up front (insurance) and some wanted a higher insurance payout. Others took a look at different and modified versions of HMOs.
My concern is that we are giving away the store and to think that without a pricing component to balance out supply and demand and economic utility, the country will never be able to rein in healthcare. More and more is a cost borne by the government through taxes.
Thus, someone else is paying for a person's healthcare.
Our economy isn't growing (read the Laffer article on the liklihood of a double dip recession) and it needs to cut back consumption if it is going to have the wherewithal to invest capital into businesses that can create real jobs.
I have friends in the US closing their businesses to get a government job. This means their employees are out of work and they in fact often make more money with far fewer hassles.
There's the old economic maxim called "economic utility". The dreamers think society can afford whatever it takes to meet the utility desires of the poor, retired and out of work. Sadly, the net left for society to function and create jobs and wealth was too little under Bush (obfuscated in part by the housing bubble). Now it's evident in a jobless rebound with unspeakable budget deficits.
I know I'm not going to change anything. It's just interesting to see what happens when one goes on record and looks back years hence.
Cheers.
William writes, "....the 'medical home' is a site where more than the traditional gatekeeper primary care activity can happen. The goal is to create a place where most care can be delivered in the right way, at the right time, and at a reasonable cost....Many of the monitoring and reimbursement schemes weren't possible when HMOs were first conceived. "
Response:
Hi William, thanks for all the particularly thoughtful comments on the medical home.
I recognize your parallel with new technological options - but, I'd still argue that in both cases, the Medical Home and HMO are quite parallel.
The biggest difference (which was brought out in the article) is that the Medical home is currently more expensive than standalone care plans.
However, all of the objectives of the medical home are there for HMOs with the added bonus that the HMO is targeting cost control. Competing HMOs let patients evaluate cost and quality of care tradeoffs to some extent.
My experience is more with healthcare and health insurance from the 1980's and early 1990's (in California).
I saw that incentives to have people pay more of a bill (50/50 vs 80/20 for example or the use of a health savings account) had a measurable impact on the cost of their insurance. The individual health care buyer made their own tradeoffs. Some wanted to save up front (insurance) and some wanted a higher insurance payout. Others took a look at different and modified versions of HMOs.
My concern is that we are giving away the store and to think that without a pricing component to balance out supply and demand and economic utility, the country will never be able to rein in healthcare. More and more is a cost borne by the government through taxes.
Thus, someone else is paying for a person's healthcare.
Our economy isn't growing (read the Laffer article on the liklihood of a double dip recession) and it needs to cut back consumption if it is going to have the wherewithal to invest capital into businesses that can create real jobs.
I have friends in the US closing their businesses to get a government job. This means their employees are out of work and they in fact often make more money with far fewer hassles.
There's the old economic maxim called "economic utility". The dreamers think society can afford whatever it takes to meet the utility desires of the poor, retired and out of work. Sadly, the net left for society to function and create jobs and wealth was too little under Bush (obfuscated in part by the housing bubble). Now it's evident in a jobless rebound with unspeakable budget deficits.
I know I'm not going to change anything. It's just interesting to see what happens when one goes on record and looks back years hence.
Cheers.
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