Sharp Divide at the Federal Reserve - Barrons.com
The Obama Administration and its policies keep reminding me of the Catholic Church in Spain and Portugal at the time of the Inquisition.
They have such faith in their Keynesian beliefs.
That those beliefs are malicious and wrong doesn't affect or get to them at all. It's their abiding faith in them that guides their actions.
We also all know what the impact of the Inquisition was on the Spanish economy. Something else Obama's policies have in common with those of the 16th century.
Wednesday, August 31, 2011
UNEXPECTED CONSEQUENCES: Review & Outlook: The Labor Board Wants You - WSJ.com
Review & Outlook: The Labor Board Wants You - WSJ.com
If one assumes Google's employees won't unionize (college educated, current unemployment rate 4%) but that the small furniture manufacturer's might, then one has to assume the furniture manufacturer will close its doors and we'll be importing that furniture.
Along the same line of thinking, it's likely that the furniture manufacturer has some employees who have just finished high school (current unemployment rate 9%) or not even finished high school (current unemployment rate 14%, per an article in this week's Barrons Magazine).
So, the very area where we want to add jobs, the Obama Administration will encourage employers to not create employment.
Liberals are so consistent. They do things that always have unexpected or unwanted consequences and they expect someone else to pick up the tab.
If one assumes Google's employees won't unionize (college educated, current unemployment rate 4%) but that the small furniture manufacturer's might, then one has to assume the furniture manufacturer will close its doors and we'll be importing that furniture.
Along the same line of thinking, it's likely that the furniture manufacturer has some employees who have just finished high school (current unemployment rate 9%) or not even finished high school (current unemployment rate 14%, per an article in this week's Barrons Magazine).
So, the very area where we want to add jobs, the Obama Administration will encourage employers to not create employment.
Liberals are so consistent. They do things that always have unexpected or unwanted consequences and they expect someone else to pick up the tab.
Tuesday, August 30, 2011
TIPPING POINTS: Confidence Data Hurt Dollar, Euro - WSJ.com
Confidence Data Hurt Dollar, Euro - WSJ.com
The question is where is the tipping point.
There was a tipping point for Greece and for Ireland and Portugal.
It's Alice through the Looking Glass that there is always magic money to fund government spending and deficits with no consequences.
To date, the consequences have been slow growth and stable to rising unemployment. The interest rate hobgoblin has yet to appear (except for Greece, etc.).
But, like the bubble in US housing prices not too far back, the bubble of the cross in interest rates between rewarding savers and costing borrowers is still a vast gap that is only growing bigger.
The closing of that gap can't be a pretty sight - however, it turns out the gap will be closed with massive cutbacks, stupendous economic growth or significant inflation.
Gold's price today would suggest the latter is high up there in the range of probabilities.
The question is where is the tipping point.
There was a tipping point for Greece and for Ireland and Portugal.
It's Alice through the Looking Glass that there is always magic money to fund government spending and deficits with no consequences.
To date, the consequences have been slow growth and stable to rising unemployment. The interest rate hobgoblin has yet to appear (except for Greece, etc.).
But, like the bubble in US housing prices not too far back, the bubble of the cross in interest rates between rewarding savers and costing borrowers is still a vast gap that is only growing bigger.
The closing of that gap can't be a pretty sight - however, it turns out the gap will be closed with massive cutbacks, stupendous economic growth or significant inflation.
Gold's price today would suggest the latter is high up there in the range of probabilities.
THE INFLATIONARY GENII: Minutes: Fed Weighed Asset Purchases - WSJ.com
Minutes: Fed Weighed Asset Purchases - WSJ.com
Or, as is getting more and more media time - including on Bloomberg's Tom Keene - is the idea of targeting something like nominal GDP.
In other words, since the policies of the government inhibit reasonable investing, go back to the cook the numbers game. Make it seem as though things are growing. Flood the economy with money. Inflate away all debt (i.e. do it very quickly and Bill Gross was premature, but not wrong about Treasuries).
The relationship between saver and borrower has clearly been sundered. In the early 1980s it was at least discussed as an issue of 'crowding out' and the possible need (as a last resort) to print money.
Now, the only question is how much to print and when.
I recall a story a friend told me once about a musician in Wiemar Germany during the inflation of the early 1920s.
The man had performed one night and took half his money earned that night to buy dinner, saving the other half for breakfast. In the morning, his money had lost so much value that he couldn't afford any breakfast.
Or, as is getting more and more media time - including on Bloomberg's Tom Keene - is the idea of targeting something like nominal GDP.
In other words, since the policies of the government inhibit reasonable investing, go back to the cook the numbers game. Make it seem as though things are growing. Flood the economy with money. Inflate away all debt (i.e. do it very quickly and Bill Gross was premature, but not wrong about Treasuries).
The relationship between saver and borrower has clearly been sundered. In the early 1980s it was at least discussed as an issue of 'crowding out' and the possible need (as a last resort) to print money.
Now, the only question is how much to print and when.
I recall a story a friend told me once about a musician in Wiemar Germany during the inflation of the early 1920s.
The man had performed one night and took half his money earned that night to buy dinner, saving the other half for breakfast. In the morning, his money had lost so much value that he couldn't afford any breakfast.
Q&A: WHY NOT REPLACE ILLEGAL IMMIGRANTS?: Obama Pick Kreuger to Join Growth Debate - WSJ.com
Obama Pick Kreuger to Join Growth Debate - WSJ.com
Question:
"You can solve unemployment and illegal immigration at the same time.
Replace illegal workers by using longest unemployed policy. As each employed illegal alien is found and returned the first listed unemployed is required to do that job or forfeit all benefits. The faster you deport the illegal aliens the faster the unemployment is solved."
Answer:
You know deep down you are in la-la-land don't you?
Let's see? The unemployed person making, say $40,000 a year with benefits (or much more), is going to take a job for $20,000 a year?
Or, the American who joined a union and worked on a seniority system where performance was secondary - if at all - is going to replace someone who knew they really had to work to get paid.
This idea is the most wishful, boldfaced wrong thinking.
It is very sad.
The issue is best summed up by the unemployment numbers someone quoted in this week's Barrons - i.e. that respectively 4%, 9% and 14% unemployment rates applied to those with college, a high school graduation degree and no graduation from high school.
As such, those chronically unemployed would likely be those with no high school diploma - or, they'd be competing with jobs filled by those with such a situation (the likely circumstances of illegal immigrants).
The President and liberals have told the bottom of the educational rung that they are 'entitled' to equal things like healthcare, etc. They know they don't have to work.
A much more insightful comment was to recognize that labor will have a clearing price at which people would be hired. To do this, things like Obamacare need to be killed off.
Likewise, we need policies to make America business friendly.
Note, such a committee to make the US business friendly was not and has not really been created (albeit the committee with Immelt, etc.). Where's a report.
Instead, the President is appointing someone to the Council of Economic Advisers, Krueger, who says minimum wage rates don't impact employment.
I can tell you from broad personal experience that minimum wage rates encourage substitution of equipment - especially in the fast food industry, a place where there used to be many low wage, starter jobs.
And, to make himself look like even a more consummate idiot, the President then takes the opposite tack and is apparently going to argue for a $5,000 credit for new hires.
He doesn't see the dichotomy between the two positions because a high minimum wage is part of liberal dogma (the old 'living wage').
We are truly in a 1984 George Orwell situation.
Your idea sadly is one of such ideas.
Question:
"You can solve unemployment and illegal immigration at the same time.
Replace illegal workers by using longest unemployed policy. As each employed illegal alien is found and returned the first listed unemployed is required to do that job or forfeit all benefits. The faster you deport the illegal aliens the faster the unemployment is solved."
Answer:
You know deep down you are in la-la-land don't you?
Let's see? The unemployed person making, say $40,000 a year with benefits (or much more), is going to take a job for $20,000 a year?
Or, the American who joined a union and worked on a seniority system where performance was secondary - if at all - is going to replace someone who knew they really had to work to get paid.
This idea is the most wishful, boldfaced wrong thinking.
It is very sad.
The issue is best summed up by the unemployment numbers someone quoted in this week's Barrons - i.e. that respectively 4%, 9% and 14% unemployment rates applied to those with college, a high school graduation degree and no graduation from high school.
As such, those chronically unemployed would likely be those with no high school diploma - or, they'd be competing with jobs filled by those with such a situation (the likely circumstances of illegal immigrants).
The President and liberals have told the bottom of the educational rung that they are 'entitled' to equal things like healthcare, etc. They know they don't have to work.
A much more insightful comment was to recognize that labor will have a clearing price at which people would be hired. To do this, things like Obamacare need to be killed off.
Likewise, we need policies to make America business friendly.
Note, such a committee to make the US business friendly was not and has not really been created (albeit the committee with Immelt, etc.). Where's a report.
Instead, the President is appointing someone to the Council of Economic Advisers, Krueger, who says minimum wage rates don't impact employment.
I can tell you from broad personal experience that minimum wage rates encourage substitution of equipment - especially in the fast food industry, a place where there used to be many low wage, starter jobs.
And, to make himself look like even a more consummate idiot, the President then takes the opposite tack and is apparently going to argue for a $5,000 credit for new hires.
He doesn't see the dichotomy between the two positions because a high minimum wage is part of liberal dogma (the old 'living wage').
We are truly in a 1984 George Orwell situation.
Your idea sadly is one of such ideas.
Basic Math Skills and the President
Can you believe the President? The guy he wants to appoint to the Council of Economic Advisers on one hand says minimum wage rates don't influence employment. And next, the President is suggesting a $5,000 credit for hiring a new employee?
How many people can buy into this? It's very scary!
Actually, I'd hope not just young people but also the baby boomers would wake up and say the math doesn't compute!
How many people can buy into this? It's very scary!
Actually, I'd hope not just young people but also the baby boomers would wake up and say the math doesn't compute!
Monday, August 29, 2011
AGAIN, THE GREAT DISCONNECT: Pimco's Gross Has 'Lost Sleep' Over Bad Bets - WSJ.com
Pimco's Gross Has 'Lost Sleep' Over Bad Bets - WSJ.com
There is a clear and evident disconnect between rewarding savers for foregoing current rewards and the cost to those that borrow.
The Fed has printed the money for the government to borrow at low rates in the US.
In Europe, there has been the delusion of safety for Southern European bonds that is now becoming unwound.
The logic that savers expect a return for foregoing current consumption at a level to meet the demands of borrowers is seemingly far more out-of-whack than house prices during the bubble run-up in US housing.
How this will unwind and when is again like the housing bubble. Some left too soon and some didn't realize they needed to leave.
This bubble reminds one of a great battleship. It doesn't turn on a dime, but when it does turn, watch out.
Greece found this out and those in charge of US fiscal policy (e.g. Obama, et al.) have just today admitted what they don't know in their selection of someone to the Council of Economic Advisers who believes minimum wage rates have no impact on hiring.
There is a clear and evident disconnect between rewarding savers for foregoing current rewards and the cost to those that borrow.
The Fed has printed the money for the government to borrow at low rates in the US.
In Europe, there has been the delusion of safety for Southern European bonds that is now becoming unwound.
The logic that savers expect a return for foregoing current consumption at a level to meet the demands of borrowers is seemingly far more out-of-whack than house prices during the bubble run-up in US housing.
How this will unwind and when is again like the housing bubble. Some left too soon and some didn't realize they needed to leave.
This bubble reminds one of a great battleship. It doesn't turn on a dime, but when it does turn, watch out.
Greece found this out and those in charge of US fiscal policy (e.g. Obama, et al.) have just today admitted what they don't know in their selection of someone to the Council of Economic Advisers who believes minimum wage rates have no impact on hiring.
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