Treasury Bonds Diss Bernanke as Yields Surge - Barrons.com
Randy writes, "...The real test may come, according to Shepherdson, if wages start escalating as the result of competition for qualified employees -- even while those lacking the requisite skill sets remain jobless. If average hourly earnings start to rise, "the Fed would have no choice more or less regardless of the rate of economic growth," he writes."
A few months back the CEO and COO of Facebook were on Bloomberg talking about how the salaries they were paying people had 'doubled' in the last five years.
With half the population not graduating from high school (pick your reasons but think social liberals and unions to start), it may well be we are in a situation where half the population is only capable of making buggy whips and such when the rest of the economy is driving futuristic automobiles.
Obama says you deserve the same healthcare whether educated and productive or uneducated and not working, young and able to contribute to society or living past a last few months on high priced medical care.
When young people are struggling, often jobless and in debt for their educations and public employees stop working at 50 with extravagant pensions and benefits and society spends more on keeping someone in jail for the use of drugs than it does to put someone through college - is it unreasonable to think something is wrong?
Wednesday, March 28, 2012
Monday, March 26, 2012
IS THE BILL COMING DUE FOR THE OBAMA FREE LUNCH? Treasurys Pile Up With Dealers - WSJ.com
Treasurys Pile Up With Dealers - WSJ.com
It would seem interesting to tie this situation into the situation going on in peripheral European countries like Portugal and Spain where the banks are saddled with too much government paper.
Is this a sign that the real economy has had enough of government borrowing; or, was something left out of the article in terms of crowding out private borrowing?
Clearly Bill Gross was onto something a while back when he talked about how these low rates discourage banks from lending to private borrowers - i.e. the low rates don't adequately compensate for the risks of lending to the given borrower.
It would seem interesting to tie this situation into the situation going on in peripheral European countries like Portugal and Spain where the banks are saddled with too much government paper.
Is this a sign that the real economy has had enough of government borrowing; or, was something left out of the article in terms of crowding out private borrowing?
Clearly Bill Gross was onto something a while back when he talked about how these low rates discourage banks from lending to private borrowers - i.e. the low rates don't adequately compensate for the risks of lending to the given borrower.
Friday, March 23, 2012
Q&A: Portugal Hit by Strike - WSJ.com
Portugal Hit by Strike - WSJ.com
Q (LF):
Looks like extended periods of reduction of government safety net support for unemployed and cuts in public services and increases in taxes is a "winning formula for stimulating higher rates of real growth(sic)." How long do governments have to follow policies which are obviously not working before they change their policies.
A:
I'm not sure what magic wand you think can be waived.
What is clearly not happening is to cut taxes (and all the things taxes pay for) and make the regulatory and legal environment business friendly.
It's the same debate that exists in the US - i.e. after a certain level of tax distortion, demand for goods shrinks and the incentive to set up new businesses and expand old ones leaves.
A trenchant question would seem to be "are educated young people staying in Portugal (i.e. to help grow the economy and make it stronger) or are they leaving?" From what I've seen, they are leaving.
Q (LF):
Looks like extended periods of reduction of government safety net support for unemployed and cuts in public services and increases in taxes is a "winning formula for stimulating higher rates of real growth(sic)." How long do governments have to follow policies which are obviously not working before they change their policies.
A:
I'm not sure what magic wand you think can be waived.
What is clearly not happening is to cut taxes (and all the things taxes pay for) and make the regulatory and legal environment business friendly.
It's the same debate that exists in the US - i.e. after a certain level of tax distortion, demand for goods shrinks and the incentive to set up new businesses and expand old ones leaves.
A trenchant question would seem to be "are educated young people staying in Portugal (i.e. to help grow the economy and make it stronger) or are they leaving?" From what I've seen, they are leaving.
Thursday, March 22, 2012
GM Readies Plan to Trim Europe Output - WSJ.com
GM Readies Plan to Trim Europe Output - WSJ.com
People think government benefits are 'free'. They forget that a 20% - 23% VAT (with an extra car tax of an additional 20% or so in Portugal) shift the 'economic utility' curve for cars.
So the car unions ought to attack the welfare state and massive numbers of public employees who drain the resources of the public to buy cars.
There is no free lunch!
People think government benefits are 'free'. They forget that a 20% - 23% VAT (with an extra car tax of an additional 20% or so in Portugal) shift the 'economic utility' curve for cars.
So the car unions ought to attack the welfare state and massive numbers of public employees who drain the resources of the public to buy cars.
There is no free lunch!
Wednesday, March 21, 2012
Q&A, Republicans and the poor: Dick Armey and Matt Kibbe: What Do Republicans Believe? - WSJ.com
Dick Armey and Matt Kibbe: What Do Republicans Believe? - WSJ.com
Q (PM):
...It is not their religion that loses [the Republicans] their elections. It is their hatred of the poor and not wanting the poor to succeed...."
Answer:
Don't you think have the parties reversed here?
It's the Democrats who support the Teachers Unions (and vice-versa). They deprive kids of an education (see today's WSJ article on the problem this is causing the country).
Likewise, all the money siphoned off to pay entitlements and keep the prison guards employed (see the article in a recent WSJ or LA Times pointing out that it costs more to keep a single prisoner in jail in California than the average family's take-home pay.
Frankly, it's only the GOP that tries to hold back this tax and spend social entitlement policy mantra of the Democrats. And, as you might know from your own experience, if you don't save and invest, you have nothing to fall back on in emergencies or the funds to create new jobs.
Democratic policies of taxing the public to support public employment or benefits for non-producers, etc. just saps the economy of needed investment capital. Etc., etc.
Q (PM):
...It is not their religion that loses [the Republicans] their elections. It is their hatred of the poor and not wanting the poor to succeed...."
Answer:
Don't you think have the parties reversed here?
It's the Democrats who support the Teachers Unions (and vice-versa). They deprive kids of an education (see today's WSJ article on the problem this is causing the country).
Likewise, all the money siphoned off to pay entitlements and keep the prison guards employed (see the article in a recent WSJ or LA Times pointing out that it costs more to keep a single prisoner in jail in California than the average family's take-home pay.
Frankly, it's only the GOP that tries to hold back this tax and spend social entitlement policy mantra of the Democrats. And, as you might know from your own experience, if you don't save and invest, you have nothing to fall back on in emergencies or the funds to create new jobs.
Democratic policies of taxing the public to support public employment or benefits for non-producers, etc. just saps the economy of needed investment capital. Etc., etc.
Saturday, March 10, 2012
RISKS TO A RECOVERY: Positive Trends in February Jobs Report - Barrons.com
Positive Trends in February Jobs Report - Barrons.com
Yes, things could change; but, Southern Europe shows how economies built on debt don’t last. Democrats are hoping that ‘this time it’s different’. And, it would be hard to not to have to accept that all the Republican presidential candidates have some serious flaws.
It’s hard not to see the US recovery in part as a house of economic cards built on huge amounts of government debt.
Debt that could be curtailed by cutting back government spending – but we are talking entitlements and clearly Obama believes everyone is entitled to as much healthcare, etc. as the government can provide for free (see the latest Government ruling on California’s request to charge an extremely modest co-pay for doctor visits and prescriptions under Medicaid).
We know a family living on credit cards to supplement their income (we are talking here of roughly a 40% fillip) can often feel flush. Greece and much of sovereign Europe are finding out the limits to borrowing – is the US all that different?
So, things could be done to reduce government spending, but things aren’t being done; and, as now frequently being talked about, 2013 will bring about tax increases. And, to Democrats, this just means more tax receipts. To economic cognoscenti, higher taxes tend to provide diminishing returns (look at Illinois and Maryland as recent examples).
Then, of course, there is the evidence from Europe where budget gaps were closed with higher taxes and economic growth becomes even more of a non-starter.
Friday, March 9, 2012
WHY NOT START A BUSINESS? MINDSETS AND INHIBITORS: Young Workers See Pay Shrink - WSJ.com
Young Workers See Pay Shrink - WSJ.com
Another thing we all should be asking ourselves is why, if we have unemployment, why aren't people finding themselves in a position to start their own business or to get together with others to start a business?
There are lots of known answers - some of which include the liberal mindset that people are 'entitled' first and/or that people really don't have choices (disproven by the illegal immigrants who take huge risks to get to the US and work very hard once here).
Other issues are the broad financially related mindsets of Democrats in particular who see no need to reward saving, investment and risk-taking and only see tax dollars to be redistributed by the beneficent hand of government.
Likewise, the gross and broad distortions of government believing they can pick economic and/or technological winners (e.g. by trying to support particular sources of energy and raising the cost of all production; or, as they did by raising the price of imported steel to support the domestic steel industry, all those American exporters who used steel then lost business).
And, with 'hidden taxes' people think there is no cost for unemployment insurance, workmen's compensation or they mis-perceive the true cost - including the cost of providing benefits like Medicare, Medicaid, etc.
Another interesting economic example is here in Portugal where taxes effectively 'double' the cost of a new car (and used cars). The economic ripple effect has never been calculated from anything I've seen; but, my empirical observation would be that the perceived benefit in terms of added revenue to the government is actually false (people don't buy very many cars) and the ripple effect (less demand, less productivity, lower quality of life, etc.) is emblematic of an economy that is not growing.
Another thing we all should be asking ourselves is why, if we have unemployment, why aren't people finding themselves in a position to start their own business or to get together with others to start a business?
There are lots of known answers - some of which include the liberal mindset that people are 'entitled' first and/or that people really don't have choices (disproven by the illegal immigrants who take huge risks to get to the US and work very hard once here).
Other issues are the broad financially related mindsets of Democrats in particular who see no need to reward saving, investment and risk-taking and only see tax dollars to be redistributed by the beneficent hand of government.
Likewise, the gross and broad distortions of government believing they can pick economic and/or technological winners (e.g. by trying to support particular sources of energy and raising the cost of all production; or, as they did by raising the price of imported steel to support the domestic steel industry, all those American exporters who used steel then lost business).
And, with 'hidden taxes' people think there is no cost for unemployment insurance, workmen's compensation or they mis-perceive the true cost - including the cost of providing benefits like Medicare, Medicaid, etc.
Another interesting economic example is here in Portugal where taxes effectively 'double' the cost of a new car (and used cars). The economic ripple effect has never been calculated from anything I've seen; but, my empirical observation would be that the perceived benefit in terms of added revenue to the government is actually false (people don't buy very many cars) and the ripple effect (less demand, less productivity, lower quality of life, etc.) is emblematic of an economy that is not growing.
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