The Presidential Climate Change Initiative has been announced, in it Obama works hand in hand with environmental groups and avoids congress. The initiative will be carried out through executive orders by a President that recently has been unfocused and busy addressing scandal, after scandal, after scandal. In his state of the union speech last February, Obama promised to protect future generations if congress did not act. Today he followed through on that promise by unveiling a climate action plan that includes measures to reduce greenhouse gas emissions, accelerate
renewable energy permitting on public lands, and prepare American
infrastructure for the impacts of climate change.
The
centerpiece of the plan is the announcement that the US Environmental
Protection Agency (EPA) will regulate greenhouse gas emissions from
existing power plants, in addition to the rules already in draft form
that are set to regulate emissions from new power plants. The White
House released a video to explain the importance of these steps in
addressing climate change by decarbonizing the economy. Republicans generally oppose government regulations and support free market solutions,
however, it appears that congressional Republicans would rather force
the Obama administration to regulate emissions then attempt to deal with this important issue. Many lawmakers have delayed action on this issue claiming that this
initiative is a job killer that will drive up the cost of energy.
Addressing the threat of climate change in a
comprehensive climate action plan is a major step towards reducing the effect of global warming, it may even encourage other countries to move in a similar direction. It's also important to remember that these
regulations are required by law, and if congressional Republicans don't
like them, they should propose a better solution. Large concerns surrounding climate change policies and how it will affect job creation do remain, some studies show that EPA regulations generally have a modestly positive impact on the economy and jobs but this has yet to be proven. Sadly Obama and lawmakers still seem unwilling to use the dreaded "C word, conserve".
I wrote and posted an article on Mon Dec 24, 2007, criticizing politicians for a lack of courage in environmental policies, it remains as relevant
today as when I wrote it. The post subject: Candidates shy away from "C"
word, I find it a shame that none of the Republican Presidential
candidates or president Obama tonight in his State Of The Union address
have mentioned any real innovative initiative concerning energy
conservation. There are many new and exciting ways to recycle and cut
energy waste. Public officials seem almost afraid to talk about
conserving energy, it is hard to think that they will offend someone or
that big business and lobbyist have made the subject taboo, maybe they
just don't care about America or the planet on which we live.
Simply mandating lower heating and higher cooling settings in government
offices and buildings would give the private sector the cover they need
to adjust their thermostats accordingly in offices and stores. A simple
yearly fee on inefficient vehicles paid to the states when licenses are
renewed would accomplish much in getting Americans to shed their gas
guzzlers and move America to more fuel efficient transportation. We are finally seeing a halt to
the manufacturing of the low end 80% furnaces that until recently were still being
installed in many new homes. We are also phasing out the sale of light fixtures
and appliances that fail to make good use of our remaining resources, these are
good ideas.
Over the last several years I have had reason to enter many large
buildings and offices in the
evenings or during weekends. It is truly amazing that on cold winters
nights, weekends, and over holidays thermostats are not set-back. Yes
all over America we heat empty buildings as though they are occupied. A
fair number of computers and lights that are often
left on long after everyone is gone for the day, it seems people don't
care
enough to make the slightest effort to turn down the heat or turn off a
light. Without a gentle nudge to conserve, America will never achieve
energy independence.
Innovation does not always involve creating and spending billions of
dollars, sometimes it means installing simple inexpensive timers in the right place or changing a person's perspective and attitude. Innovation means thinking of new ways to get the job done. As
we conserve, pollution is reduced. America's economy will be
strengthened by reducing the importation of energy, new jobs will be
generated by the industries that address these needs, and damage to the
climate from global warming lessened. Why are politicians so willing
and eager to ask America's sons and daughters to risk life and limbs in
foreign wars while unwilling to ask Americans to make such a minor
sacrifice? The President should lead the way by ending the many flights he takes on Air Force-1 to play golf and do fundraisers.
Footnote; on April 12, 2012, I posted what turned out to be one of the
most popular posts I have ever written, it deals with how each of us
impacts this planet we call home. If you are interested please take a
look.
http://brucewilds.blogspot.com/2012/04/whats-in-footprint.html
Thursday, June 27, 2013
Saturday, June 22, 2013
Living On The Dole
Few Americans ever really work through the numbers but the fact is if you can get enough from the Government in disability, unemployment, or some other kind of welfare why even jeopardize that income by thinking about taking a job. For all the moaning about how it is not enough and those living on the dole are forced into a life of poverty, in fact, those that suffer greatly often do so because of poor spending choices rather than the amount they receive. Long ago I was told, "it is not how much you make, it is how much and how you spend it". It is very difficult to help a friend or relative in financial trouble if they suffer from bad spending habits and continually make bad choices.
Another factor many people overlook is that society has layered government support program upon government support program. This means if you qualify for one program additional assistance may most likely be available. In this way, people receiving help or aid often double or triple dip, a plethora of "additional help" options exist and are often linked together. These range from food stamps, free phones plus internet, help paying for utilities, Medicaid and medical assistance, Pell Grants, programs to pay for school books, free school and summer lunch programs plus much more. Because of this, it is not uncommon for someone on aid that has spent all the money they receive to approach a nonprofit or quasi-government agency and ask for additional "special assistance" or help until they get back on their feet.
People have told me how the government sends them amounts ranging from $800 to $1,800 per month. if the average is say 1,400 per month that equals $16,800 a year. It should be noted they incur no work-related costs such as transportation to and from work or other costs like special clothing or child care. We must remember that many jobs pay just over minimum wage with few or no benefits, this means someone working a 40 hour work week 50 weeks a year or 2000 hours at $9.00 earns $18,000 a year. While it is true by circumstance that some people have no choice but to seek government help it is clear to see that the income from not working may be very close to that of a person that toils each day to earn a living. This trend is one of the reasons I have become so negative on the economy and society.
It is important to note the cost of living varies a great deal in different parts of the nation. While it may be very difficult to live on $20,000 a year in certain cities, in other areas the money buys more and goes a great deal farther. If you have little or no money where you live should be less of an option, meaning the smart move would be to choose a location other than New York or Beverly Hills in which to live. Much of this is about spending choices. If living on food stamps and were allowed only a dollar per meal you could buy a candy bar that would leave you hungry or an inexpensive bag of rice that would last for many meals. All these numbers should be adjusted as to whether someone lives alone or in a large household that spreads out and shares cost which can be a big benefit, again this is a case and matter of "choice".
Much of the information that I based this post on came from my observing how the demographics of average Americans such as the tenants living in my apartment complex has changed over the years. For example, I spoke with one woman who lost her job because she fell asleep at work, she soon went on disability. After buying a new car, even though her credit was not stellar, she then proceeded to replace her living room furniture, this was all recently. Her demise came when the government began to garnishee her checks for unpaid student loans, at that time she ran to social services for "emergency special assistance", and it was granted in the form of paying her rent for two months, but in the end, she had to surrender her apartment and move in with her sister. Another person getting a check from Uncle Sam uses the terminology of "I will be getting paid" next Tuesday as if the check was coming from an employer. She then talks about how she is too busy to look for a job. This is the sorry state that we have fallen into as a nation.
Bottom-line the percentage of the population on some type of assistance from the government has grown to where it is unsustainable. While some people claim that it is a case that the minimum wage jobs simply pay to little, in reality, the problem is that the government is far too generous spending money that it does not have. We should think of the wages small business can afford to pay as the real benchmark of what kind of income and lifestyle a person can aspire to. America must rethink the meaning of the word "deserve", we must lower the bar as to what people on the dole should expect, living in air-conditioned comfort with a flat-screen television and a wireless phone is beyond reason. Those who actually work should enjoy a higher standard of living than those who can't work or choose to live on the government tit.
Footnote; The large government deficit spending has driven much of this, the post below goes into the ugly numbers behind the curtain. Other related articles may be found in my blog archive, thanks for reading and comments are encouraged,
http://brucewilds.blogspot.com/2013/01/ugly-math-made-simple.html
Another factor many people overlook is that society has layered government support program upon government support program. This means if you qualify for one program additional assistance may most likely be available. In this way, people receiving help or aid often double or triple dip, a plethora of "additional help" options exist and are often linked together. These range from food stamps, free phones plus internet, help paying for utilities, Medicaid and medical assistance, Pell Grants, programs to pay for school books, free school and summer lunch programs plus much more. Because of this, it is not uncommon for someone on aid that has spent all the money they receive to approach a nonprofit or quasi-government agency and ask for additional "special assistance" or help until they get back on their feet.
People have told me how the government sends them amounts ranging from $800 to $1,800 per month. if the average is say 1,400 per month that equals $16,800 a year. It should be noted they incur no work-related costs such as transportation to and from work or other costs like special clothing or child care. We must remember that many jobs pay just over minimum wage with few or no benefits, this means someone working a 40 hour work week 50 weeks a year or 2000 hours at $9.00 earns $18,000 a year. While it is true by circumstance that some people have no choice but to seek government help it is clear to see that the income from not working may be very close to that of a person that toils each day to earn a living. This trend is one of the reasons I have become so negative on the economy and society.
It is important to note the cost of living varies a great deal in different parts of the nation. While it may be very difficult to live on $20,000 a year in certain cities, in other areas the money buys more and goes a great deal farther. If you have little or no money where you live should be less of an option, meaning the smart move would be to choose a location other than New York or Beverly Hills in which to live. Much of this is about spending choices. If living on food stamps and were allowed only a dollar per meal you could buy a candy bar that would leave you hungry or an inexpensive bag of rice that would last for many meals. All these numbers should be adjusted as to whether someone lives alone or in a large household that spreads out and shares cost which can be a big benefit, again this is a case and matter of "choice".
Much of the information that I based this post on came from my observing how the demographics of average Americans such as the tenants living in my apartment complex has changed over the years. For example, I spoke with one woman who lost her job because she fell asleep at work, she soon went on disability. After buying a new car, even though her credit was not stellar, she then proceeded to replace her living room furniture, this was all recently. Her demise came when the government began to garnishee her checks for unpaid student loans, at that time she ran to social services for "emergency special assistance", and it was granted in the form of paying her rent for two months, but in the end, she had to surrender her apartment and move in with her sister. Another person getting a check from Uncle Sam uses the terminology of "I will be getting paid" next Tuesday as if the check was coming from an employer. She then talks about how she is too busy to look for a job. This is the sorry state that we have fallen into as a nation.
Bottom-line the percentage of the population on some type of assistance from the government has grown to where it is unsustainable. While some people claim that it is a case that the minimum wage jobs simply pay to little, in reality, the problem is that the government is far too generous spending money that it does not have. We should think of the wages small business can afford to pay as the real benchmark of what kind of income and lifestyle a person can aspire to. America must rethink the meaning of the word "deserve", we must lower the bar as to what people on the dole should expect, living in air-conditioned comfort with a flat-screen television and a wireless phone is beyond reason. Those who actually work should enjoy a higher standard of living than those who can't work or choose to live on the government tit.
Footnote; The large government deficit spending has driven much of this, the post below goes into the ugly numbers behind the curtain. Other related articles may be found in my blog archive, thanks for reading and comments are encouraged,
http://brucewilds.blogspot.com/2013/01/ugly-math-made-simple.html
Thursday, June 20, 2013
Realistic Expectations for the Economy
The term "the new normal" has not been used much as of late, but going forward it may be about to return. Many investors and the public at large may be about to realize that central banks can only do so much through printing money and lowering interest rates. Both these actions carry with them some very strong and nasty side effects. Markets have become very distorted as money has flowed into risky assets in search of higher yields. It could be we are about to see the markets morph into a "realizing market", one that grinds slowly downward. Another possibility is that at some point the wisdom of buying every pullback changes and the market simply drops like a stone.
So what has brought us to this place? We have seen many companies cut their work forces, replaced workers with lower paid employees, and outsourced to offshore factories to increase profits. For many companies profits have grown but sales have remained relatively flat, in some cases margins have been squeezed and only cost cutting has moved them forward. Sales have been propelled forward by cheap money and often not because of real or pent up demand. Speculation based on mere hope is not a solution to our complex problems, long term planning is in short supply. How will America react to the stress that comes from slow economic growth, how will it effect our budget and culture as the long term cost burden of carrying the unemployed builds.
Huge government deficit spending of nearly $4,500 each year per man woman and child has propped up America's GDP during the last several years. This money, much of it borrowed will become a long term drag on the economy going forward. Sadly much of this money has been poorly spent, it was to be used to buy us time in which to address many of the structural problems that plague our economic future. Unfortunately this has not been done, instead government has fiddled away the time in deadlock. Even the tailwind of lower energy cost through the massive expansion of the natural gas supplies has not been enough to move the economy forward. Much of what has occurred should be considered a one off that is behind us. The deflationary effects of the crisis may be behind us, prices only go so low before beginning to rise.
The reality is our future cannot be sustained on just the exports of Boeing aircraft, the manufacture of some kind of computer tablet, or internet usage. We need to look at more substantial and broader based benchmarks. Silly talk about the fact that the deficit is beginning to shrink is like saying it is now safe to jump into the water because in is no longer as deep as it was ignores reality, the depth has dropped to ten feet after being at twelve. Bottom-line all this trickles down to job growth, and it is nothing to brag about, more troubling is that the quality of these jobs is distressful and pathetic.
What we should expect going forward is very slow growth. As QE comes to an end and the government tries to deal with runaway spending, whether through sequester or more targeted cutbacks, the headwinds to the economy will be felt. Expect the burden of past debts and future promises made to those retiring and unable to find good jobs to weigh heavily upon society. Recent protest and outburst in countries like Brazil, Turkey, and throughout Europe may get worse. Tensions are elevated in many parts of the world and we cannot rule out the possibility of a major war. The world is rapidly changing and nobody has a crystal ball that will predict how this will all play out, but one thing is certain, and that is storm clouds are on the horizon.
Footnote; Two other post strongly tie into this message, they are listed below. Other related articles may be found in my blog archive, thanks for reading, comments are encouraged,
http://brucewilds.blogspot.com/2013/01/ugly-math-made-simple.html
http://brucewilds.blogspot.com/2013/03/the-young-will-be-burdened.html
So what has brought us to this place? We have seen many companies cut their work forces, replaced workers with lower paid employees, and outsourced to offshore factories to increase profits. For many companies profits have grown but sales have remained relatively flat, in some cases margins have been squeezed and only cost cutting has moved them forward. Sales have been propelled forward by cheap money and often not because of real or pent up demand. Speculation based on mere hope is not a solution to our complex problems, long term planning is in short supply. How will America react to the stress that comes from slow economic growth, how will it effect our budget and culture as the long term cost burden of carrying the unemployed builds.
Huge government deficit spending of nearly $4,500 each year per man woman and child has propped up America's GDP during the last several years. This money, much of it borrowed will become a long term drag on the economy going forward. Sadly much of this money has been poorly spent, it was to be used to buy us time in which to address many of the structural problems that plague our economic future. Unfortunately this has not been done, instead government has fiddled away the time in deadlock. Even the tailwind of lower energy cost through the massive expansion of the natural gas supplies has not been enough to move the economy forward. Much of what has occurred should be considered a one off that is behind us. The deflationary effects of the crisis may be behind us, prices only go so low before beginning to rise.
The reality is our future cannot be sustained on just the exports of Boeing aircraft, the manufacture of some kind of computer tablet, or internet usage. We need to look at more substantial and broader based benchmarks. Silly talk about the fact that the deficit is beginning to shrink is like saying it is now safe to jump into the water because in is no longer as deep as it was ignores reality, the depth has dropped to ten feet after being at twelve. Bottom-line all this trickles down to job growth, and it is nothing to brag about, more troubling is that the quality of these jobs is distressful and pathetic.
What we should expect going forward is very slow growth. As QE comes to an end and the government tries to deal with runaway spending, whether through sequester or more targeted cutbacks, the headwinds to the economy will be felt. Expect the burden of past debts and future promises made to those retiring and unable to find good jobs to weigh heavily upon society. Recent protest and outburst in countries like Brazil, Turkey, and throughout Europe may get worse. Tensions are elevated in many parts of the world and we cannot rule out the possibility of a major war. The world is rapidly changing and nobody has a crystal ball that will predict how this will all play out, but one thing is certain, and that is storm clouds are on the horizon.
Footnote; Two other post strongly tie into this message, they are listed below. Other related articles may be found in my blog archive, thanks for reading, comments are encouraged,
http://brucewilds.blogspot.com/2013/01/ugly-math-made-simple.html
http://brucewilds.blogspot.com/2013/03/the-young-will-be-burdened.html
Sunday, June 16, 2013
Governments Spying On Their Citizens
Many people would say that Governments spying on their citizens appears to have become a global phenomena, but is it? It sounds like many of the countries in Europe find the revelations of the America government collecting and sifting through "metadata" as somewhat distasteful. It should be pointed out that Europe also shares many of the same problems with terrorist attacks that we in America face. It is generally thought that the countries engaged is such covert and Orwellian actions are generally paranoid states with totalitarian rulers or the non-democrat systems that exist in countries such as China, North Korea, Iran, and a host of other places.
Sadly this comes at a time that it is pulling our eyes off China's massive cyber theft of secrets from America. The story leaked by the Guardian reveals that the NSA collected, in one single 30 day period in March, 97 billion pieces of “intelligence” worldwide, including several billion culled directly from the United States. All of this reveals several things, including that Google, Facebook, and others flat out lied about not giving the NSA “direct access,” and that the Obama Administration has been lying about spying on hundreds of millions of Americans. In the eyes of the world, it leaves us unclean and lessens our claim to the high ground and as a beacon of freedom and democracy.
Some people draw a sharp the distinction between metadata versus content, and whether it is just being stored or looked at, then we have others focusing on the issue of if this is even constitutional or violates the fourth amendment. Metadata is like when you get physical snail mail, it has a certain shape, weight, and type of envelope, and an address and a return address and a stamp and usually a date and routing numbers. And it’s going to a particular mailbox at a particular address—that’s all metadata. The content is what it’s inside the envelope. In a digital space, the metadata is always associated with content, the content being the actual phone call and conversation. To some, the metadata is far more valuable to them because it gives them an index of everything and they can access the content as well with a warrant.
It is ironic that this comes front and center at a time that a number of unrelated but troubling scandals have been surfacing. And "damn troubling" they are, but just as bad is the lack of outrage and follow through in demanding accountability. We have even seen the clowns entrusted at the highest levels of our government sit before investigative hearings and oversight boards and straight out lie to Congress. With this being allowed to happen how can claims that these programs protect our rights and responsibly use taxpayer monies have any validity. They have made a mockery of the notion that we have built in oversight, and that laws and rules are being followed. In reality one could say, we have no real oversight of government programs.
To say those in charge of government programs like Eric Holder, James Clapper, Steven Miller and others were "confused during testimony or forced to mislead Congress for a greater good" is not something that the average citizen like you or myself would be allowed to claim, we would be thrown straight into jail. We must remind ourselves from time to time these are not all about state secrets, many issues such as the IRS manipulating and discriminating against Tea Party tax status, and issues of who knew what or when at the White House concerning Benghazi should not be hidden under the cloak of national security.
Within the confines of this mess, other questions arise, and the media and the spin machines go into full on mode. For example is the 29-year-old whistle blower of the secret NSA program Edward Snowden a hero or traitor? One thing is clear the internal system for whistleblowing inside government is broken. It is interesting to see what strange bedfellows politics make as people can come down on either side of this issue depending on past statements or which way the wind is blowing. We are easily distracted from the crux of the issue, whether the program needs to exist, and if the mind-boggling amount of money being spent on collecting and saving mountains of data could be put to better use.
I will put it here, on record, that I consider total "bullshit" the defense that it is all worth it if we stop an attack or save an American life, this type of generality, is shrouded and enhanced by fear. The largest terrorist attack on record was the poorly conceived, and a bit of a fluke, the attack on 9-11 should have never succeeded, the weapons were box cutters, and burning towers collapsed after not being evacuated. The attack should never resulted in such a massive loss of life. It is a dangerous world and attacks will happen, we must be prudent, not paranoid, we must plan for the future and utilize our resources in a way that minimizes the motivation and desire to plot such schemes. Let America go forward bravely and remember the inspirational words of Franklin Roosevelt "We have nothing to fear but fear itself".
Footnote; My apologies to anyone I might have offended by the way I have stated my feelings, but not for the feelings themselves, we all have a right to our own opinion. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged. Below is a more recent post concerning the direction of our society,
http://brucewilds.blogspot.com/2013/09/are-we-creating-orwellian-society.html
Sadly this comes at a time that it is pulling our eyes off China's massive cyber theft of secrets from America. The story leaked by the Guardian reveals that the NSA collected, in one single 30 day period in March, 97 billion pieces of “intelligence” worldwide, including several billion culled directly from the United States. All of this reveals several things, including that Google, Facebook, and others flat out lied about not giving the NSA “direct access,” and that the Obama Administration has been lying about spying on hundreds of millions of Americans. In the eyes of the world, it leaves us unclean and lessens our claim to the high ground and as a beacon of freedom and democracy.
Some people draw a sharp the distinction between metadata versus content, and whether it is just being stored or looked at, then we have others focusing on the issue of if this is even constitutional or violates the fourth amendment. Metadata is like when you get physical snail mail, it has a certain shape, weight, and type of envelope, and an address and a return address and a stamp and usually a date and routing numbers. And it’s going to a particular mailbox at a particular address—that’s all metadata. The content is what it’s inside the envelope. In a digital space, the metadata is always associated with content, the content being the actual phone call and conversation. To some, the metadata is far more valuable to them because it gives them an index of everything and they can access the content as well with a warrant.
It is ironic that this comes front and center at a time that a number of unrelated but troubling scandals have been surfacing. And "damn troubling" they are, but just as bad is the lack of outrage and follow through in demanding accountability. We have even seen the clowns entrusted at the highest levels of our government sit before investigative hearings and oversight boards and straight out lie to Congress. With this being allowed to happen how can claims that these programs protect our rights and responsibly use taxpayer monies have any validity. They have made a mockery of the notion that we have built in oversight, and that laws and rules are being followed. In reality one could say, we have no real oversight of government programs.
To say those in charge of government programs like Eric Holder, James Clapper, Steven Miller and others were "confused during testimony or forced to mislead Congress for a greater good" is not something that the average citizen like you or myself would be allowed to claim, we would be thrown straight into jail. We must remind ourselves from time to time these are not all about state secrets, many issues such as the IRS manipulating and discriminating against Tea Party tax status, and issues of who knew what or when at the White House concerning Benghazi should not be hidden under the cloak of national security.
Within the confines of this mess, other questions arise, and the media and the spin machines go into full on mode. For example is the 29-year-old whistle blower of the secret NSA program Edward Snowden a hero or traitor? One thing is clear the internal system for whistleblowing inside government is broken. It is interesting to see what strange bedfellows politics make as people can come down on either side of this issue depending on past statements or which way the wind is blowing. We are easily distracted from the crux of the issue, whether the program needs to exist, and if the mind-boggling amount of money being spent on collecting and saving mountains of data could be put to better use.
I will put it here, on record, that I consider total "bullshit" the defense that it is all worth it if we stop an attack or save an American life, this type of generality, is shrouded and enhanced by fear. The largest terrorist attack on record was the poorly conceived, and a bit of a fluke, the attack on 9-11 should have never succeeded, the weapons were box cutters, and burning towers collapsed after not being evacuated. The attack should never resulted in such a massive loss of life. It is a dangerous world and attacks will happen, we must be prudent, not paranoid, we must plan for the future and utilize our resources in a way that minimizes the motivation and desire to plot such schemes. Let America go forward bravely and remember the inspirational words of Franklin Roosevelt "We have nothing to fear but fear itself".
Footnote; My apologies to anyone I might have offended by the way I have stated my feelings, but not for the feelings themselves, we all have a right to our own opinion. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged. Below is a more recent post concerning the direction of our society,
http://brucewilds.blogspot.com/2013/09/are-we-creating-orwellian-society.html
Saturday, June 15, 2013
Inflation Lurks, Beneath And Hidden
After much thought, I have come to the conclusion that while inflation appears tame and is not showing up in a big way the seeds have been planted, and the number of them is somewhat shocking. Inflation lurks beneath the surface and is hidden away in the dark corners of our future. Want to know where the real cost of things is going, just look at the replacement cost from recent storms and natural disasters. Several things to consider when trying to understand inflation come to mind, first competition tends to keep price increases in check, and our slow growth economy is helping the consumer in many areas. People concerned about inflation down the road point out that an increase in the speed or velocity that money moves about the economy or where money flows could change all that.
Another factor that masks what is really happening is super and artificially low-interest rates created by the expansion of the monetary base, for example, you can now rent or buy an automobile with a payment so low that it becomes difficult to say no, too many a lower payment means no inflation. This is really apparent in the housing market where mortgage rates have plunged causing the monthly payment of principal and interest on a thirty-year loan to be $435 for each hundred thousand dollars borrowed down from $665 just a few years ago. This is a one-off and has temporarily skewed values playing havoc with both construction and rental markets. Do not be lulled into complacency as low interest-rates have a dark side that includes discouraging saving and hurting those that have.
Those who do not see inflation as a threat point to the fact that a computer costs far less today than in the past, innovation does help, but one factor concerning cost that often gets overlooked is how long an item will last. Face it, we live in a disposable society. Many things are built not to last, or in ways that they can not be repaired. When an item is purchased we should look at the length of its useful life and if it will have any residual value, then amortize the cost over the life of the item. This becomes more interesting when factoring in how instant gratification based our society has become. In the morning when I open the original front door of my home built in 1920 I often think of the new homes today where a front door has to be replaced after only ten years, this is a "quality inflationary cost factor" that we tend to forget.
Understanding value helps solve and adds clarity to this complex inflation puzzle. For years as society rapidly changed and our technical abilities advanced we were able to produce more for less, we also rushed to pick the low hanging fruit so to speak, when it comes to the world's limited natural resources. An example that I used in my book was about the lobster, it used to be superabundant and dirt cheap. They were so plentiful that they were fed to prison inmates and children in orphanages. Farmers fertilized their fields with them as a substitute for manure, and servants would bargain not to be fed lobster any more than two or three times a week. The lobsters are no longer so abundant.
In recent years we have seen food prices, gas and oil, and the cost of many commodities like lumber begin to move upward, much of the increases have been prevented by substitution, but I contend that most of this has already occurred. Politicians seem to concentrate on the short game, even then they are far behind the curve. They lack the courage and have an aversion to tackling the problems of long term planning. Please note, the model of growth the world is pursuing based on consumer and government spending while creating more debt is very new in the history of mankind and has not proven to be sustainable in the long run. Countries that appeared to have a strong base like Japan and the Soviet Union have proved that looks can be deceiving, flawed systems crumble when put under stress.
The monster that puts all this at risk may be named inflation, and inflation may be lurking just around the corner or beneath the next problem concerning food or oil production. Over the years most Americans and people in many countries have enjoyed seeing their standard of living rise, the bigger homes, with multiple cars in the driveway has been the result of this trend for many. This may be about to end. Many of us still find ourselves in awe when we look at the rapid advances in technology and production that have taken place over the last several decades, but to think that they will continue at this pace and in a way that will impact prices to the extent they have may be overlooking other factors like population growth coupled with diminishing resources. The monster when unleashed will take a very large toll!
Footnote; For more about inflation and about the speed that it can be unleashed please read the post below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged,
http://brucewilds.blogspot.com/2013/01/surprising-facts-about-inflation.html
Another factor that masks what is really happening is super and artificially low-interest rates created by the expansion of the monetary base, for example, you can now rent or buy an automobile with a payment so low that it becomes difficult to say no, too many a lower payment means no inflation. This is really apparent in the housing market where mortgage rates have plunged causing the monthly payment of principal and interest on a thirty-year loan to be $435 for each hundred thousand dollars borrowed down from $665 just a few years ago. This is a one-off and has temporarily skewed values playing havoc with both construction and rental markets. Do not be lulled into complacency as low interest-rates have a dark side that includes discouraging saving and hurting those that have.
Those who do not see inflation as a threat point to the fact that a computer costs far less today than in the past, innovation does help, but one factor concerning cost that often gets overlooked is how long an item will last. Face it, we live in a disposable society. Many things are built not to last, or in ways that they can not be repaired. When an item is purchased we should look at the length of its useful life and if it will have any residual value, then amortize the cost over the life of the item. This becomes more interesting when factoring in how instant gratification based our society has become. In the morning when I open the original front door of my home built in 1920 I often think of the new homes today where a front door has to be replaced after only ten years, this is a "quality inflationary cost factor" that we tend to forget.
Understanding value helps solve and adds clarity to this complex inflation puzzle. For years as society rapidly changed and our technical abilities advanced we were able to produce more for less, we also rushed to pick the low hanging fruit so to speak, when it comes to the world's limited natural resources. An example that I used in my book was about the lobster, it used to be superabundant and dirt cheap. They were so plentiful that they were fed to prison inmates and children in orphanages. Farmers fertilized their fields with them as a substitute for manure, and servants would bargain not to be fed lobster any more than two or three times a week. The lobsters are no longer so abundant.
In recent years we have seen food prices, gas and oil, and the cost of many commodities like lumber begin to move upward, much of the increases have been prevented by substitution, but I contend that most of this has already occurred. Politicians seem to concentrate on the short game, even then they are far behind the curve. They lack the courage and have an aversion to tackling the problems of long term planning. Please note, the model of growth the world is pursuing based on consumer and government spending while creating more debt is very new in the history of mankind and has not proven to be sustainable in the long run. Countries that appeared to have a strong base like Japan and the Soviet Union have proved that looks can be deceiving, flawed systems crumble when put under stress.
The monster that puts all this at risk may be named inflation, and inflation may be lurking just around the corner or beneath the next problem concerning food or oil production. Over the years most Americans and people in many countries have enjoyed seeing their standard of living rise, the bigger homes, with multiple cars in the driveway has been the result of this trend for many. This may be about to end. Many of us still find ourselves in awe when we look at the rapid advances in technology and production that have taken place over the last several decades, but to think that they will continue at this pace and in a way that will impact prices to the extent they have may be overlooking other factors like population growth coupled with diminishing resources. The monster when unleashed will take a very large toll!
Footnote; For more about inflation and about the speed that it can be unleashed please read the post below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged,
http://brucewilds.blogspot.com/2013/01/surprising-facts-about-inflation.html
Tuesday, June 11, 2013
ECB Scheme Under Court Scrutiny
The promise by the European Central Bank to do "whatever it takes" to save the euro is again being challenged. Germany's constitutional court will hold two days of hearings, before spending several months considering if the ECB's bailout plan infringes upon Germany sovereignty and issues its ruling. The court cannot revoke the ECB bond-buying scheme but in considering whether it violates the German parliament's sovereign right to control the budget, it could challenge certain aspects of the program, such as its "unlimited" nature. In a previous case, the Constitutional Court decided that the eurozone's bailout system was legal, but said the German lower house of parliament should be consulted fully on future bailouts.
The ECB's vow to buy up the bonds of eurozone countries if they come under severe pressure has been credited with arresting the eurozone crisis. There are fears that a court ruling against it could reignite market panic. The head of Germany's own central bank is expected to tell the court that the policy breaches Germany's constitution. Bundesbank President Jens Weidmann believes it is illegal because there is no limit to Germany's spending liability under the scheme, and that it is effectively a back-door way of providing loans to other countries' governments. At the outset of the hearing court President Andreas Vosskuhle said the success of the bond program would play "no role" in the assessment of its constitutionality.
The court will also hear from supporters of the scheme, such as the German ECB board member Joerg Asmussen. He told Germany's top-selling Bild newspaper recently that a court order to withdraw the program would have "significant consequences", and that it is the only thing that has restored confidence in the euro. ECB President Mario Draghi was herald as a hero when he unveiled the program last year when fears of a catastrophic euro breakup flared. Draghi has called the Outright Monetary Transactions (OMT) scheme "probably the most successful monetary policy measure undertaken in recent time". After announcing the scheme last year, fear abated and confidence has returned, so far the ECB has not needed to put its plan into action.
The interest rates on government debt has fallen back from the unsustainable levels that forced several governments to take bailouts. Before OMT was announced even Italy that carries a huge amount of debt was threatened with "bailout talk". The ECB says any country that needed OMT intervention would only get help if it first signed up to a bailout from other EU countries and then lived by the conditions of that bailout. A negitive court ruling could hamper the effectiveness of the OMT, which has giving investors the confidence to buy bonds issued by troubled countries such as Spain and Italy, it has insured these investors that the ECB would intervene on the secondary market if any government were at serious risk of defaulting on its debt.
Footnote; This post is related to another I recently wrote about the fact that a EU Banking Union remains very elusive and a distant dream,
http://brucewilds.blogspot.com/2013/05/eu-banking-union-in-several-years-maybe.html
Sunday, June 9, 2013
Predicting the future, and Hindsight mirrors
Predicting the future is an impossible task, a fools errand, full of pitfalls. Still we listen and soak in all that is said, we even spend a tremendous amount of money to gain an edge in knowing what maybe just around the corner. Looking back over the last ten years I suspect things have not unfolded
as you might have predicted. When you see how the world has developed,
the twist and turns are most unpredictable. Nowhere is this more apparent then in the economy, whether it is in the areas of interest rates and inflation or the rise and fall of companies. Surprise and awe, highlighted with bouts of shock is what we should expect going forward.
The fact is you can not be sure if you will still be around in ten years, where you will be living, or with whom. A television commercial recently talked about a hindsight mirror, unfortunately they said the mirror had been recalled as they were not providing a clear reflection as advertized, when looking into the mirror people were disappointed that they did not see 20-20 as promised. They also mentioned that they had problems with the foresight goggles, it seems they have been discontinued because they tend to fog up, thus unable to provide a clear picture of the future.
Even when you think back to a time when the signs should of been obvious, now with the help of hindsight we often find that the light simply did not come on. It seems we should not underestimate our ability to stagger forward oblivious of reality and blind to what lies ahead regardless of our effort to shed light on future events. It seems we can not even trust our ability to recall past event without distorting them or coloring them with bias. Economist still debate if it was the economic policies of Roosevelt or the second World War that lead us out of the great depression.
Then comes the issue of "Black Swans", this term is used to describe events that seem to descend out of nowhere, author Nassim Taleb has brought insight to this area and to the idea of "antifragile" systems, a term he uses to look at many of the modern systems developed by man. Mother nature can be the one that delivers these surprises, think of the 2011 hit on Japan in the form of a tsunami that became a nuclear plant meltdown. This is proof that complex systems can often contain flaws that go undetected or are not addressed.
In his recent book, Taleb uses the example of how a turkey is fed day after day by a butcher, and how this confirms his love for the bird. When Thanksgiving arrives the turkeys are not only surprised, they are shocked by events as they unfold. Taleb clearly makes the point that we can not use the recent past and day to day events of yesterday as a way to predict the future. At the same time it is not always reliable to use statistics that are often invalid and skewed to make certain points. It was recently pointed out that Bill Gates and I have an average net worth of about $20 billion, I only wish as larger portion was mine. Telling me about “average” stock market returns is about as valid and relevant as this reference to wealth.
I wish I was smarter, and better. Many of us would settle for someone very wise that we trusted and that cared about us to guide us through the mine fields of life, but reality is, each of us is more or less on our own. Believe it or not, some people even disguise and cloak themselves as our friends as they navigate through life with hidden agendas that advance their position or cause at our expense. Thus, I have reached the conclusion that "I would rather be lucky then good", this has been reinforced by all I have observed. Be assured we cannot trust the garbage spewed out from the media or what we read on the internet. The only exception is what you read on my post, I'm not lying, at least not this time.
Footnote; This post dovetails with two others about believing those talking heads on the media, the link are below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged.
http://brucewilds.blogspot.com/2012/03/you-dont-know-that.html
http://brucewilds.blogspot.com/2013/09/200-of-nothing.html
The fact is you can not be sure if you will still be around in ten years, where you will be living, or with whom. A television commercial recently talked about a hindsight mirror, unfortunately they said the mirror had been recalled as they were not providing a clear reflection as advertized, when looking into the mirror people were disappointed that they did not see 20-20 as promised. They also mentioned that they had problems with the foresight goggles, it seems they have been discontinued because they tend to fog up, thus unable to provide a clear picture of the future.
Even when you think back to a time when the signs should of been obvious, now with the help of hindsight we often find that the light simply did not come on. It seems we should not underestimate our ability to stagger forward oblivious of reality and blind to what lies ahead regardless of our effort to shed light on future events. It seems we can not even trust our ability to recall past event without distorting them or coloring them with bias. Economist still debate if it was the economic policies of Roosevelt or the second World War that lead us out of the great depression.
Then comes the issue of "Black Swans", this term is used to describe events that seem to descend out of nowhere, author Nassim Taleb has brought insight to this area and to the idea of "antifragile" systems, a term he uses to look at many of the modern systems developed by man. Mother nature can be the one that delivers these surprises, think of the 2011 hit on Japan in the form of a tsunami that became a nuclear plant meltdown. This is proof that complex systems can often contain flaws that go undetected or are not addressed.
In his recent book, Taleb uses the example of how a turkey is fed day after day by a butcher, and how this confirms his love for the bird. When Thanksgiving arrives the turkeys are not only surprised, they are shocked by events as they unfold. Taleb clearly makes the point that we can not use the recent past and day to day events of yesterday as a way to predict the future. At the same time it is not always reliable to use statistics that are often invalid and skewed to make certain points. It was recently pointed out that Bill Gates and I have an average net worth of about $20 billion, I only wish as larger portion was mine. Telling me about “average” stock market returns is about as valid and relevant as this reference to wealth.
I wish I was smarter, and better. Many of us would settle for someone very wise that we trusted and that cared about us to guide us through the mine fields of life, but reality is, each of us is more or less on our own. Believe it or not, some people even disguise and cloak themselves as our friends as they navigate through life with hidden agendas that advance their position or cause at our expense. Thus, I have reached the conclusion that "I would rather be lucky then good", this has been reinforced by all I have observed. Be assured we cannot trust the garbage spewed out from the media or what we read on the internet. The only exception is what you read on my post, I'm not lying, at least not this time.
Footnote; This post dovetails with two others about believing those talking heads on the media, the link are below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged.
http://brucewilds.blogspot.com/2012/03/you-dont-know-that.html
http://brucewilds.blogspot.com/2013/09/200-of-nothing.html
Tuesday, June 4, 2013
British Pound And An Independant Scotland
An event in the not to distant future that may effect the British currency is when voters in Scotland will be given the choice of opting for independence
in a referendum in September 2014. This is something much of the world has yet to weigh in on. A separate Scotland has three options, unilaterally keeping
the pound, creating a Scottish currency or joining the euro. All of these alternative currency arrangements depend on the rest of the UK agreeing to the union and terms, an independent Scottish state might have to accept "significant policy constraints" under such a pact.Many reasons exist for maintaining
a "Sterling Zone," The Scottish government said a currency union would be in everyone's interests economically and benefit both Scotland and the
rest of the UK, but the 58 million citizens of the UK will be in no hurry to give away any of their sovereignty
over monetary and potentially other economic policy to five million
people in another state.
Sterling is a fully convertible currency, this means that if any country in the world wants to use sterling it can. Examples of a fully convertible currency being used by other nations include Panama and El Salvador using the US dollar. Using the pound for a period, is a well proven route for countries leaving British rule (New Zealand/Ireland/Australia etc). However Scotland’s right to use sterling is stronger than other countries due to the fact that Scotland owns a population percentage share of the Bank of England (BOE), and so we will just be using a currency and services of a bank that we part-own with the other UK countries. So all that is being proposed is that Scotland will maintain the currency union that was formed hundreds of years ago and still works while leaving the political one that doesn’t.
The question remains whether a newly independent Scottish state is prepared to accept significant limits on its economic sovereignty. This could mean that the Westminster government would have more control over Holyrood than Germany has over its euro-zone partners. This is based on England, Wales and Northern Ireland accounting for roughly 90% of the proposed sterling zone monetary union, whereas the German economy makes up 30% of the 17-member euro-zone. The fear is that the rest of the UK, as the larger economy, would be much more exposed to the risk of an independent Scotland running into fiscal and financial difficulties. Abandoning current arrangements would represent a deep venture into uncharted waters.
Scottish Finance Secretary John Swinney said such a system would let an independent Scotland "use the vital tax and other economic powers of independence to create jobs, grow the economy and build a fairer country". Many people think that Westminster would want to have a currency union because more than £45bn of goods and services are sold to Scottish customers, and oil and gas from Scottish waters would contribute billions of pounds to the sterling zone's balance of payments. "What the Treasury's paper is designed to do is to make things sound as difficult and obstructive as possible and I don't really think it is a helpful contribution to the debate.Swinney said "The chancellor is arguing in his paper that the UK would be the successor state, that it would hold on to the pound and we somehow could not get access to that."
The Scottish are saying that Sterling and the BOE are part Scottish owned even after independence. If Scotland gets no assets then why should it pay the debt, this includes the recent cost of bailing out two Scottish banks. Should the current UK debt be borne entirely by England, Wales, and Northern Ireland? The currency Scotland decides to use matters to the people, they want to know their coins, notes, savings and investments are securely backed. The choice of the pound, the euro or a new Scottish currency is of fundamental importance to the debate on Scottish independence. There is, amid this, some disagreement over who owns the pound sterling, and the Bank of England. The Scottish government says Scotland can expect to share such institutions, post-independence, having spent 300 years building them up within the UK. But the UK Government takes the view that if Scotland votes to leave the UK, it can't expect to make demands of the UK's institutions.
For Scotland it makes sense not to put a currency barrier in way of trade. Keeping the Bank of England, and the pound sterling, still gives them the choice to launch their own currency at some future date. Interestingly Scotland can not just op in to the Euro, rules require the country has its own currency and has participated in the exchange rate mechanism for at least two years. So, far from the scare story of being forced to join the Euro, Scotland couldn’t join, even if they wanted to. Launching their own currency would be costly and difficult at the outset of independence, The economists who work for the UK Government and in the treasury know all of this, and many will work to ensure an independent Scotland keeps the pound, to many this is just political maneuvering in the hope of maintaining control of Scottish taxation at Westminster.
If Scotland wants independence then so be it, but sorting out the political and economic ties with the rest of the UK, may be difficult. Scotland has to be allowed to stand on its own two feet without the rest of the UK financially and economically supporting it. The Euro proves that more than one sovereign country cannot easily use the same currency. Portugal, Ireland, Greece, Italy and Spain have discovered that you cannot have full independence and share a currency. Another problem is that if the UK Government is to agreeable to a separation, will Wales and Northern Ireland move towards independence? That might encourage similar movements in Catalonia, Belgium, Northern League in Italy, Basques, Cornish, and among the Poles. Careful what you wish for, this could lead to a great deal of internal civil strife.
Sterling is a fully convertible currency, this means that if any country in the world wants to use sterling it can. Examples of a fully convertible currency being used by other nations include Panama and El Salvador using the US dollar. Using the pound for a period, is a well proven route for countries leaving British rule (New Zealand/Ireland/Australia etc). However Scotland’s right to use sterling is stronger than other countries due to the fact that Scotland owns a population percentage share of the Bank of England (BOE), and so we will just be using a currency and services of a bank that we part-own with the other UK countries. So all that is being proposed is that Scotland will maintain the currency union that was formed hundreds of years ago and still works while leaving the political one that doesn’t.
The question remains whether a newly independent Scottish state is prepared to accept significant limits on its economic sovereignty. This could mean that the Westminster government would have more control over Holyrood than Germany has over its euro-zone partners. This is based on England, Wales and Northern Ireland accounting for roughly 90% of the proposed sterling zone monetary union, whereas the German economy makes up 30% of the 17-member euro-zone. The fear is that the rest of the UK, as the larger economy, would be much more exposed to the risk of an independent Scotland running into fiscal and financial difficulties. Abandoning current arrangements would represent a deep venture into uncharted waters.
Scottish Finance Secretary John Swinney said such a system would let an independent Scotland "use the vital tax and other economic powers of independence to create jobs, grow the economy and build a fairer country". Many people think that Westminster would want to have a currency union because more than £45bn of goods and services are sold to Scottish customers, and oil and gas from Scottish waters would contribute billions of pounds to the sterling zone's balance of payments. "What the Treasury's paper is designed to do is to make things sound as difficult and obstructive as possible and I don't really think it is a helpful contribution to the debate.Swinney said "The chancellor is arguing in his paper that the UK would be the successor state, that it would hold on to the pound and we somehow could not get access to that."
The Scottish are saying that Sterling and the BOE are part Scottish owned even after independence. If Scotland gets no assets then why should it pay the debt, this includes the recent cost of bailing out two Scottish banks. Should the current UK debt be borne entirely by England, Wales, and Northern Ireland? The currency Scotland decides to use matters to the people, they want to know their coins, notes, savings and investments are securely backed. The choice of the pound, the euro or a new Scottish currency is of fundamental importance to the debate on Scottish independence. There is, amid this, some disagreement over who owns the pound sterling, and the Bank of England. The Scottish government says Scotland can expect to share such institutions, post-independence, having spent 300 years building them up within the UK. But the UK Government takes the view that if Scotland votes to leave the UK, it can't expect to make demands of the UK's institutions.
For Scotland it makes sense not to put a currency barrier in way of trade. Keeping the Bank of England, and the pound sterling, still gives them the choice to launch their own currency at some future date. Interestingly Scotland can not just op in to the Euro, rules require the country has its own currency and has participated in the exchange rate mechanism for at least two years. So, far from the scare story of being forced to join the Euro, Scotland couldn’t join, even if they wanted to. Launching their own currency would be costly and difficult at the outset of independence, The economists who work for the UK Government and in the treasury know all of this, and many will work to ensure an independent Scotland keeps the pound, to many this is just political maneuvering in the hope of maintaining control of Scottish taxation at Westminster.
If Scotland wants independence then so be it, but sorting out the political and economic ties with the rest of the UK, may be difficult. Scotland has to be allowed to stand on its own two feet without the rest of the UK financially and economically supporting it. The Euro proves that more than one sovereign country cannot easily use the same currency. Portugal, Ireland, Greece, Italy and Spain have discovered that you cannot have full independence and share a currency. Another problem is that if the UK Government is to agreeable to a separation, will Wales and Northern Ireland move towards independence? That might encourage similar movements in Catalonia, Belgium, Northern League in Italy, Basques, Cornish, and among the Poles. Careful what you wish for, this could lead to a great deal of internal civil strife.
Sunday, June 2, 2013
Bernanke and 'Helicopter Money'
After a few hours of intense economic research this morning I came to the conclusion that it must be the government or crazy fools that pay these economist and academics to come up with the stupid and dumb ideas that fill the papers and internet. To layer more insanity on top of this, they actually get paid to attend and speck at lavish conferences to promote their ideas. In his 2012 Jackson
Hole speech Michael Woodford suggested a version of flexible inflation
targeting whereby the central bank commits future monetary policy to a
permanently higher nominal target (such as the path of nominal GDP) and
discussed various tools within that framework, including permanent
increases in the monetary base via fiscal transfers. He said that in a situation of
persistently weak economic conditions it makes sense to consider all
options including tools that have stayed long in the closet.
Adair Turner also talked about a different option, and suggested the, "helicopter
money" or permanent money creation solution. This is an idea that was originally
discussed by Milton Friedman (Friedman 1948) and more recently by
Bernanke back in 2003 in relation to the zero growth and "lost decade" problem in Japan. As Bernanke has suggested it can be implemented via transfers to
households and businesses via a tax cut coupled with incremental
purchases of government debt, so that the tax cut is in effect financed
by money creation. Although this idea
has been around a long time it is considered taboo. The non-standard monetary
policies used in response to the recent crisis have all led to an increase in
the size of central banks’ balance sheets but in the recent experience
no central bank, has purposefully increased
the monetary base and committed to keep this additional money in
circulation permanently.
By the term "Helicopter money" I mean overt money finance of increased fiscal deficits, some economist think in some circumstances it may be the only certain way to stimulate nominal demand, and may carry with it less risk to future financial stability than the unconventional monetary policies currently being deployed. The crucial first question is: do we want more nominal demand? Most say yes if we are confident that some of the increase will take the form of increased real output or and if some increase in the inflation rate is in itself desirable. These conditions seem likely to apply in many developed economies today, with nominal GDP growth rates very low and being pressured by private sector de-leveraging following the financial crisis. It seems that we have reached the point where some economist are desperate or just wish to experiment and play with our money. The great thing, even if they are wrong they still get paid!
By the term "Helicopter money" I mean overt money finance of increased fiscal deficits, some economist think in some circumstances it may be the only certain way to stimulate nominal demand, and may carry with it less risk to future financial stability than the unconventional monetary policies currently being deployed. The crucial first question is: do we want more nominal demand? Most say yes if we are confident that some of the increase will take the form of increased real output or and if some increase in the inflation rate is in itself desirable. These conditions seem likely to apply in many developed economies today, with nominal GDP growth rates very low and being pressured by private sector de-leveraging following the financial crisis. It seems that we have reached the point where some economist are desperate or just wish to experiment and play with our money. The great thing, even if they are wrong they still get paid!
There are dangers in breaking this taboo, just because outright monetary financing is possible does not mean it should be pursued. We should recognize that the proposal undermines fiscal discipline in this specific environment, "helicopter money" should be regarded as an available option that carries more risk then benefit. Proponents say that if Japan had used this policy when Ben Bernanke proposed it in 2003, they would now have a mix of higher real GDP, higher price levels, and lower public debt to GDP. But economist may be "too clever by half," those of us in business know that demand drives investment, and that real demand, based on true needs of people involved in meaningful and profitable jobs is the true source of solid growth. Efforts to place temporary props under a poorly structured economy are destined to end in tears once the momentum ends.
Wow, what a tangled web politicians and bankers can weave, moral hazard be damned. Even the idea of how or who should just give out the money, and in what quantity, regardless the goal be it to gain favor politically, or to in effect shock the economy back to life, is unsettling. A promise that this would be or is a "one time event" would not be a guarantee, but would be enough to put us on a dangerous and slippery slope. Bottom-line, this idea and such talk at a high level economic summit is just another way to transfer wealth, put another band-aid on top of other band-aids, and proof that things are not working. Governments supporting failing banks, that are in turn supporting bankrupt sovereign governments. Such talk also adds validity to my post about how we should fear the power of this new financial-political complex.
http://brucewilds.blogspot.com/2012/10/the-financial-political-complex.html
Footnote; Lord Turner was considered one of two leading contenders to succeed Sir Mervyn King last fall when I wrote the post below. Of course, the views talked about indicate that Lord Turner would not be a cautious or placid Bank of England governor.
http://brucewilds.blogspot.com/2012/10/a-helicopter-drop-for-england.html
Obamacare means partime work!
Obamacare means millions of American workers are having their work weeks cut to under thirty hours a week. The rippling effects will be both broad and profound. It will not only lessen the incomes of many workers and force them to find a second job, but it will put many on some kind of program that gives them aid from the government to cover part of their healthcare coverage. The effect on our culture will be people work less, like the much talked about 35 hour French work week, Americans will drift farther into the "not working" status. This is why we are seeing more jobs created, Obamacare is distorting the unemployment picture that has always been based on the idea of a forty hour work week.
For example in Fort Wayne, Ind. where I live, the school system just announced that they are cutting hours for hundreds of part-time employees such as teacher assistants and cafeteria workers. Leaders at the district say the Affordable Care Act is partly to blame. They work six-hour days for a 30-hour work week, starting on June 3, the last week of the school year, most of the employees affected will drop down to a 25-hour work week. “It’s not what we would have liked to have done,” said Kathy Friend, chief financial officer with FWCS. “Reducing hours is not good for the employees, but it is also not good for the schools who depend on their support. But we had to do it.”
Principals recently notified affected employees of the changes. In all, Friend said there are about 840 FWCS employees working 30 hours a week. Beginning in January of 2014, President Obama's Affordable Care Act requires employers to provide a health care option to anyone working 30 hours a week or more. Adding that new eligibility to its part-time employees, which currently are not eligible for health care, would cost FWCS about $10 million it does not have, FWCS, the largest school corporation in Indiana, is already working through a budget shortfall.
The examples are not limited to just my city, recently Papa John’s CEO John Schattner announced that the company would be cutting employee hours to offset future expenditures mandated by the Affordable Health Care Act. The average pizza will also retail for approximately 11 to 14 cents more. Schattner was a Romney supporter who supports universal health care, but disapproves of the president’s bill to deliver it, He said, "The good news is 100 percent of the population is going to have health insurance. We're all going to pay for it." Schattner explained, he labeled his decision as pragmatic, rather than political.
Other fast food restaurants such as an Omaha-based Wendy's franchisee will also be cutting all non-management workers' hours to part time in order to avoid paying health insurance. The company announced that all non-management positions will have their hours reduced to 28 a week. Gary Burdette, Vice President of Operations for the local franchise, says the cuts are coming because the new Affordable Health Care Act requires employers to offer health insurance to employees working 32-38 hours a week. Under the current law they are not considered full time and that as a small business owner, he can't afford to stay in operation and pay for everyone's health insurance.
There are 11 Wendy's restaurants in the metro. "It has a huge effect on me and pretty much everybody that I work with," says one worker who understands the reasoning and says other part-timers at other fast-food restaurants are facing the same problem. "I'm hoping that I can get some sort of promotion because then I would get my hours, but everybody is shooting for that because of the hours being cut." Burdette says the decision that affects around 100 employees was a tough one and he understands why people are upset. Management employees will continue to have benefits as they are officially full time. I can only think that this might have something to do with the monthly increase in job numbers, it now takes four part-time workers to do the work three full time employees did in the past.
Footnote; For more on the recent unemployment numbers please view the post below,
http://brucewilds.blogspot.com/2013/03/job-numbers-not-that-great.html
For example in Fort Wayne, Ind. where I live, the school system just announced that they are cutting hours for hundreds of part-time employees such as teacher assistants and cafeteria workers. Leaders at the district say the Affordable Care Act is partly to blame. They work six-hour days for a 30-hour work week, starting on June 3, the last week of the school year, most of the employees affected will drop down to a 25-hour work week. “It’s not what we would have liked to have done,” said Kathy Friend, chief financial officer with FWCS. “Reducing hours is not good for the employees, but it is also not good for the schools who depend on their support. But we had to do it.”
Principals recently notified affected employees of the changes. In all, Friend said there are about 840 FWCS employees working 30 hours a week. Beginning in January of 2014, President Obama's Affordable Care Act requires employers to provide a health care option to anyone working 30 hours a week or more. Adding that new eligibility to its part-time employees, which currently are not eligible for health care, would cost FWCS about $10 million it does not have, FWCS, the largest school corporation in Indiana, is already working through a budget shortfall.
The examples are not limited to just my city, recently Papa John’s CEO John Schattner announced that the company would be cutting employee hours to offset future expenditures mandated by the Affordable Health Care Act. The average pizza will also retail for approximately 11 to 14 cents more. Schattner was a Romney supporter who supports universal health care, but disapproves of the president’s bill to deliver it, He said, "The good news is 100 percent of the population is going to have health insurance. We're all going to pay for it." Schattner explained, he labeled his decision as pragmatic, rather than political.
Other fast food restaurants such as an Omaha-based Wendy's franchisee will also be cutting all non-management workers' hours to part time in order to avoid paying health insurance. The company announced that all non-management positions will have their hours reduced to 28 a week. Gary Burdette, Vice President of Operations for the local franchise, says the cuts are coming because the new Affordable Health Care Act requires employers to offer health insurance to employees working 32-38 hours a week. Under the current law they are not considered full time and that as a small business owner, he can't afford to stay in operation and pay for everyone's health insurance.
There are 11 Wendy's restaurants in the metro. "It has a huge effect on me and pretty much everybody that I work with," says one worker who understands the reasoning and says other part-timers at other fast-food restaurants are facing the same problem. "I'm hoping that I can get some sort of promotion because then I would get my hours, but everybody is shooting for that because of the hours being cut." Burdette says the decision that affects around 100 employees was a tough one and he understands why people are upset. Management employees will continue to have benefits as they are officially full time. I can only think that this might have something to do with the monthly increase in job numbers, it now takes four part-time workers to do the work three full time employees did in the past.
Footnote; For more on the recent unemployment numbers please view the post below,
http://brucewilds.blogspot.com/2013/03/job-numbers-not-that-great.html