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!
Tuesday, November 29, 2011
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...
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