Economy's Rescue Only Half Done - WSJ.com
Perhaps the focus on manufacturing is also a red herring.
It's an appealing red herring because the jobs and the education required to hold those jobs were looked upon as lifetime employment.
As industry replaced agriculture and information replaced industry, societies have had to undergo wrenching changes. Right now China is undergoing the change from an agrarian to an industrial economy, while also leaping into the information age.
California (before the taxes and burdens of State entitlements crippled it) had found a way by attracting the best and the brightest to have a thriving economy that rapidly absorbed new workers with jobs that continued to be able to offer higher and higher wages. This is what one would think the country should be looking for.
It's all nice and good to think there were halcyon days of lifetime manufacturing work with a high school education; but, just as mechanized farming replaced hand labor, so that people were suddenly able to eat better and only 1-2% (vs. 98% in the Middle Ages, with most people never having enough to eat) of society could grow all of society's food; so the US has to recognize that either additional capital or low cost labor are now providing more goods at lower cost.
The government is failing its citizens who want to move ahead by deciding it has to keep giving out benefits and spending resources that need to go into the economy as 'additional capital' into 'additional personal consumption'.
The governmental entities that have been doing this the longest, with the most deleterious effects - e.g. California and Michigan - should be a warning of what's to come. Sadly, they are the model for the Obama/Pelosi administration.
Thursday, December 31, 2009
California Here We Come! article: Economy's Rescue Only Half Done - WSJ.com
Economy's Rescue Only Half Done - WSJ.com
It is interesting to read the last part of this article in which there is a discussion of a commission to address the deficit.
As in other WS Journal articles on this 'Commission', it's clear that its goal is to find cover to raise taxes - i.e. to permanently deliver to the government a bigger share of the nation's output of goods and services.
The article begins by reiterating how the mortgage market has effectively been nationalized in that taxpayer funds are directly subsidizing mortgage rates to keep them down.
When one adds up all these 'distortions' to a free economy - balancing out saving and investing, returns to capital and labor (highlighted by the UAW bailout vis-a-vis GM and the union favoring bills, which even found their way into the healthcare overhaul legislation), humongous borrowing demands of the government, which is basically trying to prop up the economy like an out-of-work (or part-time) worker who keeps up the appearance of a previous lifestyle by running up his credit cards, everything has a very uneasy feeling about it.
A, perhaps further along, parallel is the California governor asking for a federal bailout in lieu of addressing the state's overspending and overtaxing that every commenter clearly wrote about in their comments to yesterday's WSJ article.
If the Obama administration acts like the Democrats who've run California for all these years (and, where does Pelosi come from?), isn't it like the old rubric "if it quacks like a duck and looks like a duck, it must be a duck!". In other words, is there any reason to believe - unless a miracle happens both to the Republican Party's platform and the election results next November - that the country's heading down the California Road?
It is interesting to read the last part of this article in which there is a discussion of a commission to address the deficit.
As in other WS Journal articles on this 'Commission', it's clear that its goal is to find cover to raise taxes - i.e. to permanently deliver to the government a bigger share of the nation's output of goods and services.
The article begins by reiterating how the mortgage market has effectively been nationalized in that taxpayer funds are directly subsidizing mortgage rates to keep them down.
When one adds up all these 'distortions' to a free economy - balancing out saving and investing, returns to capital and labor (highlighted by the UAW bailout vis-a-vis GM and the union favoring bills, which even found their way into the healthcare overhaul legislation), humongous borrowing demands of the government, which is basically trying to prop up the economy like an out-of-work (or part-time) worker who keeps up the appearance of a previous lifestyle by running up his credit cards, everything has a very uneasy feeling about it.
A, perhaps further along, parallel is the California governor asking for a federal bailout in lieu of addressing the state's overspending and overtaxing that every commenter clearly wrote about in their comments to yesterday's WSJ article.
If the Obama administration acts like the Democrats who've run California for all these years (and, where does Pelosi come from?), isn't it like the old rubric "if it quacks like a duck and looks like a duck, it must be a duck!". In other words, is there any reason to believe - unless a miracle happens both to the Republican Party's platform and the election results next November - that the country's heading down the California Road?
Tuesday, December 29, 2009
An Official Notice of Future 'Crowding Out' of Private Investment: Fed Proposes Tool to Drain Extra Cash - WSJ.com
Fed Proposes Tool to Drain Extra Cash - WSJ.com
It's been rather obvious that the Fed is likely to have to step in to help funding the government's borrowing again in 2010.
As such, it will effectively be either using 'new printing' or 'crowding out' of private investment.
This sure looks like the Fed is trying to float a red herring of monetary prudence to obfuscate the first stages of crowding out.
They almost make it sound like something good that banks won't have the money to fund business borrowing to create jobs. But, isn't that what the government really wants - more people obliged to work for government or be on government's dole?
Are we really through the first inning yet of this economic game?
It's been rather obvious that the Fed is likely to have to step in to help funding the government's borrowing again in 2010.
As such, it will effectively be either using 'new printing' or 'crowding out' of private investment.
This sure looks like the Fed is trying to float a red herring of monetary prudence to obfuscate the first stages of crowding out.
They almost make it sound like something good that banks won't have the money to fund business borrowing to create jobs. But, isn't that what the government really wants - more people obliged to work for government or be on government's dole?
Are we really through the first inning yet of this economic game?
Monday, December 28, 2009
Market Clearing Activities or Another Bubble? U.S. Looks Abroad in Another Week of Big Borrowing - WSJ.com
U.S. Looks Abroad in Another Week of Big Borrowing - WSJ.com
If this isn't a bubble, then what is?
The paper again today is replete with articles highlighting the parallel hopes for a revival of the private economy, an expansion of the government's role in the economy, huge and ongoing government demands for capital and no incentive to save.
As for programs to support business there is hopeful talk by economist and market participants but popular angst and antipathy in comments blaming banks for current levels of unemployment.
Do the above comments suggest the American economy is righting itself to fairly compete in the global economy and add jobs? Or, is it going in the wrong direction?
It appears clear that the government is more concerned with supporting what are clearly non-clearing prices for housing, etc. with additional subsidies that can come from only one place - the freely clearing forces of the market.
If this isn't a bubble, then what is?
The paper again today is replete with articles highlighting the parallel hopes for a revival of the private economy, an expansion of the government's role in the economy, huge and ongoing government demands for capital and no incentive to save.
As for programs to support business there is hopeful talk by economist and market participants but popular angst and antipathy in comments blaming banks for current levels of unemployment.
Do the above comments suggest the American economy is righting itself to fairly compete in the global economy and add jobs? Or, is it going in the wrong direction?
It appears clear that the government is more concerned with supporting what are clearly non-clearing prices for housing, etc. with additional subsidies that can come from only one place - the freely clearing forces of the market.
Sunday, December 27, 2009
Shorting the Economic Recovery - Interview with Kevin Duffy and Bill Laggner - Barrons.com
Shorting the Economic Recovery - Interview with Kevin Duffy and Bill Laggner - Barrons.com: "Shorting the Economic Recovery
By ROBIN GOLDWYN BLUMENTHAL | MORE ARTICLES BY AUTHOR
A Q&A WITH KEVIN DUFFY AND BILL LAGGNER: Two hedge-fund managers predict the economy's next leg down. Shorting Goldman Sachs."
This article is worth reading!
By ROBIN GOLDWYN BLUMENTHAL | MORE ARTICLES BY AUTHOR
A Q&A WITH KEVIN DUFFY AND BILL LAGGNER: Two hedge-fund managers predict the economy's next leg down. Shorting Goldman Sachs."
This article is worth reading!
Saturday, December 26, 2009
Tedford Bets on Rising Inflation - WSJ.com
Tedford Bets on Rising Inflation - WSJ.com
Telford's project also track with the facts of a highly to substantively putative fiscal policy and a highly stimulative monetary policy. On one hand the government is putting more and more obstacles in front of real economic growth and job creation; while, with the other (monetary policy), it assumes it can overcome the higher taxes, pro-union, labor cost increasing policies that make investment and job creation less attractive and higher risk.
It's hard to see a different outcome - in particular with the risk of rising costs for Federal borrowing which will ripple or crash through the economy - almost at any time.
It's hard to see a difference between the nirvanaland hopes of the administration today and that of homebuyers in the recent bubble.
It may also be that Federal spending, based on borrowing, is replacing the normal inflationary impact of private bank lending and borrowing.
Telford's project also track with the facts of a highly to substantively putative fiscal policy and a highly stimulative monetary policy. On one hand the government is putting more and more obstacles in front of real economic growth and job creation; while, with the other (monetary policy), it assumes it can overcome the higher taxes, pro-union, labor cost increasing policies that make investment and job creation less attractive and higher risk.
It's hard to see a different outcome - in particular with the risk of rising costs for Federal borrowing which will ripple or crash through the economy - almost at any time.
It's hard to see a difference between the nirvanaland hopes of the administration today and that of homebuyers in the recent bubble.
It may also be that Federal spending, based on borrowing, is replacing the normal inflationary impact of private bank lending and borrowing.
As Slump Hits Home, Cities Downsize Their Ambitions - WSJ.com
As Slump Hits Home, Cities Downsize Their Ambitions - WSJ.com
(Lloyd wrote: "Cities should not only downsize their ambitions, but also wages and benefits to workers. If tax revenues are down 11%, so should the salaries and benefits of all workers be adjusted. When revenue goes back up, then readjust them. When regular taxpayers are hurting, so should the federal, state and local workers. There will come a time that they will have wished that they bit the bullet with us.")
Lloyd is right on the money.
Part of the problem that the US economy is exacerbating under the current administration rather than correcting is that government has grown too big and pervasive and those who are paying for government are being starved of the services they are paying for. (As above, high government benefits in Phil. but no street cleaning.)
In the aggregate, it is even worse as tax money goes to subsidize government jobs that are overpaid in most cases (underpaid in a few); but, allocated to the delivery of services that are beyond what the society can fairly afford. Society doesn't work like the communist ideal - rather, just the opposite.
An interesting quote from an old article (2009) in the WSJ sums up the problem of overpaid government workers:
"Ohanian has written numerous papers on the Depression. In one earlier paper, he pinned the persistence of high unemployment on New Deal policies, "which raised real wages substantially above market-clearing levels, which in turn kept employment and output low."
Franklin D. Roosevelt's administration did prolong the Depression with a mixture of high taxes and price-fixing, as some economists and historians are beginning to acknowledge."
If government continues to take the taxes out of society and overpay for employment of government workers, it distorts the whole society.
Since a lot of the current economic recovery is based on interest rate distortions, government borrowing and Fed printing, the liklihood of a second economic downleg increases if foreign central banks decide not to print their own currencies to buy US Treasuries - as forecast by some to have started and others as likely come April. Who knows? But the risks are there and they are being ignored as the article states by public unions, which have been striking for wage increases. Unbelievable!
(Lloyd wrote: "Cities should not only downsize their ambitions, but also wages and benefits to workers. If tax revenues are down 11%, so should the salaries and benefits of all workers be adjusted. When revenue goes back up, then readjust them. When regular taxpayers are hurting, so should the federal, state and local workers. There will come a time that they will have wished that they bit the bullet with us.")
Lloyd is right on the money.
Part of the problem that the US economy is exacerbating under the current administration rather than correcting is that government has grown too big and pervasive and those who are paying for government are being starved of the services they are paying for. (As above, high government benefits in Phil. but no street cleaning.)
In the aggregate, it is even worse as tax money goes to subsidize government jobs that are overpaid in most cases (underpaid in a few); but, allocated to the delivery of services that are beyond what the society can fairly afford. Society doesn't work like the communist ideal - rather, just the opposite.
An interesting quote from an old article (2009) in the WSJ sums up the problem of overpaid government workers:
"Ohanian has written numerous papers on the Depression. In one earlier paper, he pinned the persistence of high unemployment on New Deal policies, "which raised real wages substantially above market-clearing levels, which in turn kept employment and output low."
Franklin D. Roosevelt's administration did prolong the Depression with a mixture of high taxes and price-fixing, as some economists and historians are beginning to acknowledge."
If government continues to take the taxes out of society and overpay for employment of government workers, it distorts the whole society.
Since a lot of the current economic recovery is based on interest rate distortions, government borrowing and Fed printing, the liklihood of a second economic downleg increases if foreign central banks decide not to print their own currencies to buy US Treasuries - as forecast by some to have started and others as likely come April. Who knows? But the risks are there and they are being ignored as the article states by public unions, which have been striking for wage increases. Unbelievable!
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