Monday, August 27, 2012

Advice to Obama on Jobs Formation

President Obama has had a disastrous effect on US jobs and household income. If Obama were open to constructive advice, what would you tell him?

Here is one man's list of positive steps Obama might take, if he were serious about the problem:
Measure No. 1Prove that you are not anti-business. Rebuke your National Labor Relations Board for persecuting Boeing for building a plant in a right-to-work state, place the burden on regulatory agencies to prove that the benefits of new regulations exceed their costs using realistic estimates of benefits, redress for the blackmail of secured Chrysler creditors during theDetroit bailout, and pass free trade agreements that have already been negotiated. Whatever you do, cease and desist talk of “you did not build that.” That insult revealed your true feelings about the business community, more than any other of your public statements.
Measure No. 2Do everything in your power to reduce energy costs. Lower energy costs create jobs by reducing production costs and improving international competitiveness. Stop stalling and make drilling leases available on government land, call off frivolous environmentalist attacks on new fracking technology, and cease and desist on your plans to regulate coal fired electricity out of business.  Drop ethanol mandates for gasoline.
Measure No. 3Create conditions that encourage businesses to hire and the unemployed to seek and accept jobs. Do not extend unemployment benefits beyond a generous date certain, lower the minimum wage especially for youths, and stop the rampant approvals by the Social Security Administration and the administrative courts of lifetime disability for minor illnesses, both physical and mental. Withdraw executive orders that overturn the signal achievement of the Clinton Administration, the welfare reform act of 1986.
Measure No. 4Reduce uncertainty of households and businesses caused by unsustainable deficits and uncertain future tax liabilities. Extend all of the Bush tax cuts  until Congressional  passage of  broad tax reforms that eliminate all tax preferences and lower tax rates, eliminate the unnecessary and duplicative federal programs identified by the Government Accounting Office, bring  the proposals of the Bowles-Simpson deficit commission to Congress for serious discussion, include the one hundred trillion dollars of unfunded liabilities of Medicare and Social Security in the budget deficit to show the urgency of entitlement reform, and replace  the convoluted and partisan Obama Care bill with bi-partisan health-care reform. Until these fundamental issues are addressed, business will not hire and people will not spend.
Measure No. 5:  Free the housing market from government intervention to work off excess inventories quickly. Government-decreed mortgage modifications, subsidies, and threats against mortgage companies prevent the housing market from finding its bottom from which recovery begins. Announce credible plans for the liquidation of Freddie Mac and Fannie Maeto remove the federal government from the mortgage business, where it does not belong.
Measure No. 6Cease and desist promoting crony-capitalist government-private partnerships that serve political agendas rather than earning profits and creating jobs. Let private markets, rather than the energy department, allocate capital to companies that make products people wish to buy, rather than to Solyndras, Volts, and other green energy boondoggles. Let regular courts navigate failing companies like GM and Chrysler through bankruptcy proceedings so that they can emerge as competitive companies unbeholden to organized labor or government diktat.
Measure No. 7Seek and accept the resignations of die-hard Keynesian advisors behind the failed trillion dollar stimulus and who favor more stimulus.  They are out of touch with modern economic analysis’s consensus that temporary fiscal measures are ineffective. Keynesian advisors have made the President look foolish and inept with ludicrous arguments that more expenditures on transfers for food stamps and unemployment benefits create jobs and generate recovery. (I guess we should all go on food stamps to promote recovery).
If Obama had enacted these policies (which would have garnered strong Republican support) a year ago, a strong recovery would be underway, the U. S. economy would be on its way to regaining its competitive edge, and jobs would be expanding. He would be sailing to an easy electoral victory by reaching across the aisles to get things done for the American people.

Instead, with two months until the election, Obama presides over the worst economic recovery in history, despite a catastrophic increase in federal debt under his administration. The unemployment rate is stuck at 8.3 percent, of which 40 percent are long term unemployed. The 13 million unemployed are joined by another 10 million, who are underemployed or have given up looking for a job. The poverty rate is the highest since the mid 1960s, and a half million workers have joined the ranks of the disabled, many as their unemployment benefits expired.
Obama’s enactment of a real jobs program a year ago would have been the equivalent of Bill Clinton’s 1986: “We must end welfare as we know it.” Clinton was a pragmatic politician who knew where the center lay.  Obama does not. He will not budge in his ideology or support of his special interests. His intransigence will likely cost him reelection.
In his stump speeches, Obama asks the crowd: “Do you want to go back to the failed policies of the past?”  Well, his economic policies have failed, and he is not offering any new ideas. In asking for votes, he is promising more of the same “failed policies.”_Paul Roderick Gregory in Forbes
Anyone who has studied the formation of Obama's mindset -- from his earliest memories onward -- will understand that Obama is not open to the advice offered above. He has other plans in mind, which do not allow for any strengthening of the US private sector, vis a vis the government.

Saturday, August 25, 2012

Obama's Cronyism Destroys America's Future

Previously published on Al Fin blog

US Incomes Drop More In Obama "Recovery" Than During the Great Recession

American incomes declined more in the three-year expansion that started in June 2009 than during the longest recession since the Great Depression, according an analysis of U.S. Census Bureau data by Sentier Research LLC.

Median household income fell 4.8 percent on an inflation- adjusted basis since the recession ended in June 2009, more than the 2.6 percent drop during the 18-month contraction, the research firm’s Gordon Green and John Coder wrote in a report today. Household income is 7.2 percent below the December 2007 level, the former Census Bureau economic statisticians wrote.

“Almost every group is worse off than it was three years ago, and some groups had very large declines in income,” Green, who previously directed work on the Census Bureau’s income and poverty statistics program, said in a phone interview today. “We’re in an unprecedented period of economic stagnation.” _SFGate

This may be why more and more US children and adults aspire to become cronies and parasites, rather than doctors, engineers, and architects. More in the video below:

Children these days may be dumbed down, but they are not totally stupid. They understand that in an economy run by Obama and the Chicago mob, being a crony may be their best opportunity to succeed.

Crony Chronicles website growing in relevance

Monday, August 20, 2012

What You Need to Know About China

1) China’s economy is not just slowing, it is entering a serious correction.  The investment bubble that has been driving Chinese growth has popped, and there are no quick “stimulus” fixes left.  There is the very real possibility of some form of financial crisis in China before year’s end.
2) China is in the midst of a once-in-a-decade leadership transition that has not been going smoothly.  The transition will take place, but it has paralyzed the Chinese leadership’s ability to respond to the country’s growing economic troubles.  China’s leaders believe time is on their side; they do not “get” how serious and urgent the situation is, and that what has always “worked” is no longer working.
3) China’s economic problems spell trouble for the U.S. on several fronts.
  • First, China is flirting with devaluing its currency to boost exports—a move that will put it in direct conflict with Mitt Romney’s commitments on this issue.
  • Second, China is already dumping excess capacity in steel and other products onto the export market, a tactic that is likely to inflame trade tensions and reinforce imbalances in the global economy.
  • Third, in a worst case scenario, China may be tempted to provoke a conflict in the South China Sea to redirect popular discontent onto an external enemy.
_Patrick Chovanec

China has had a run of good luck. But China's leaders do not understand that their good fortune is likely to change, given the level of corruption and outright criminality in high places within the government and country.

Most outside observers remain in a daze, infatuated by China's rapid rise, its rumoured capital reserves, and its rush to build shiny and dazzling -- although largely empty and soon to collapse -- infrastructure.

Investors want to be told how to make a lot of money in China, when that wave may have already broken.

Friday, August 17, 2012

The True Obama Legacy: A Widespread Misery

Unemployment is up in 44 US states.  No Improvement seen nationally in 2012.

Unemployment jumped to 8.3 percent in Alabama from 7.8 percent in June, and climbed to 7.7 percent in Alaska from 7.2 percent, today’s report showed. Nevada, where the rate rose to 12 percent from 11.6 percent, remained the state with the highest level of joblessness in the country.

Rhode Island, at 10.8 percent, was second, followed by California at 10.7 percent.

North Dakota had the lowest unemployment rate in the nation, even as it rose to 3 percent from 2.9 percent the prior month.

Two states, Idaho and Rhode Island, showed a drop in their unemployment rates. Joblessness was unchanged in four states.

Unemployment in New York rose to 9.1 percent, the highest since 1983, and payrolls dropped by 3,700 workers.

The jobless rate has exceeded 8 percent for 42 consecutive months, the longest stretch in the post-World War II era. _Mish
Exactly as predicted by Al Fin back in 2008, the legacy of Obama's policies has been a reduction in opportunity, jobs, and income. It is becoming more difficult in the US to find jobs, to buy a house, and to support a family.

If Americans re-elect this incompetent clown poseur of a president, they will deserve their increasingly desperate future.

Sunday, August 12, 2012

A Global Decline; A US Choice

China's banking system is a mess. And it is not reassuring to foreign observers that China's super-rich are exiting the country in record numbers.

If China continues to scale down its importation of commodities, a large part of the support for inflated oil prices will be removed. Should that happen, the main thing holding up oil prices would be continued fears over a war between Iran and Israel.

But it is more likely that Israel will wait and see what is likely to happen in Syria, before it pulls the trigger on an all-out attack against Iran's nuclear bomb-making facilities. Much of the Arab and Muslim worlds appear to be self-destructing, and no one knows how things will look if the dust finally settles.

Iran is being held together by bubble gum and baling wire, with a bit of duct tape around the edges for appearance' sake. Without the support of Russia and China, the main axis of Islamic terror -- Syria and Iran -- would collapse. Should that happen, dismantling Saudi support for global Islamic terrorism should be relatively easy, using modern tools of information warfare.

But the relationship between Russia and China is beginning to show signs of strain, as China increasingly eyes the resource riches of Eastern Siberia -- while the population of Russia shrinks and Russia's military decays.

Things could go very badly wrong if the leaders of China and Russia react irrationally to the changes in fortune which seem to be approaching for both nations.

Someone needs to tell Putin that Russia is not Stalinist USSR any longer. And someone needs to tell China's leaders that the current state of politico-economic limbo is unsustainable.

Europe is heading into recession. Unless Germany retreats from its insane Energiewende policy, Europe is headed into catastrophe.

And finally, the US faces a choice in November between a chic stasis and a staid dynamism. If the US makes the dynamic choice, the rest of the world is likely to fall in line. If the US chooses stasis, the resulting power vacuum will likely lead to dire global consequences, as already bad choices grow worse.

Wednesday, August 08, 2012

China: Blustering Its Way Into the Economic Future

China's Leading Indicator Decline
Leading Indicator:

It contains information on money supply, foreign direct investment contractual value, andShanghai stock market turnover, as well as:

Interest rate spread is the difference between the weighted-average yield of the seven-year or above Treasury bond with those of one year or less.

Consumer Expectation Index is compiled by the CEMAC using a monthly survey conducted in thirty major cities covering 70,000 individuals.

Ratio of industrial sales to production is the ratio of the total value of industrial sales divided by the total value of industrial production in the same month. This ratio tries to capture the inventory cycle in the industrial sector. Industries included are mining and manufacturing.

Number of new investment projects started tracks the number of new fixed-asset investment projects started. The government uses this as a leading indicator for future investment growth and economic expansion.

Index of Logistics refer to the volume of freight transportation and total tonnage of cargo reported by sixteen major coastal ports. _PragCap
If China's leading economic indicators are pointing toward a downturn, once could find no sign of hesitation in China's all-out pursuit of high value foreign acquisitions:
As the map below from Stratfor shows, ever since 2010, when China pledged over $100 billion to develop commercial projects in Africa, the continent has now become de facto Chinese territory. Because where the infrastructure spending has taken place, next follow strategic sovereign investments, and other modernization pathways, until gradually Africa is nothing but an annexed territory for Beijing, full to the brim with critical raw materials, resources and supplies. So while the "developed world" was and continues to deny the fact that it is broke, all the while having exactly zero money to invest in expansion, China is quietly taking over the world. Literally. _Zerohedge

Besides Africa, China is buying assets in Canada, the US, the UK, and elsewhere across Europe, South America, and beyond.

This may well represent an attempt to preserve capital assets which are no longer completely safe inside China. The political stability of China may be just as overstated as the economic stability inside the middle kingdom.

The short term effects of China's commodities buying spree may be bullish on markets. The long term effect may be quite different, if China begins to come unglued. Watch and see.

Sunday, August 05, 2012

Little Old Lady Ejects 5 Armed Punks from Jewelry Store in Only 15 Seconds!

It took this elderly white haired lady just 15 seconds to clear her jewelry store of 5 armed robbers -- intent on a "smash and grab" quick in and out robbery.

Five young energetic punk robbers, full of their oats, against 1 little old lady from Pasadena California. Guess who turned tail and ran?

Handguns have always been considered a "great leveler," negating advantages of height, weight, age, and sex. In this case, the little old gray-haired lady illustrates the point nicely.