Category Archives: Economy

FORTY-ONE STRAIGHT MONTHS OVER EIGHT PERCENT

Unemployment has been 8% or higher for the last 41 months and Barack Obama said in Ohio on Friday that the country is headed in the right direction.  If that’s the case, I have to ask just where it is he thinks we should go?

The U6 number which includes would-be workers who have given up and dropped off the stats is pushing very close to 15%.  The country hasn’t experienced such economic malaise lasting this long since the Great Depression, literally.

Increasing taxes on the rich won’t create jobs.  Adding an immeasurable cost of doing business with a health care plan when we still don’t know what’s in it won’t create jobs.  Blocking energy programs like the Keystone Pipeline and placing moratoriums on drilling in the Gulf doesn’t create jobs.  Subsidizing green energy programs like Solyndra hasn’t created any net jobs.  The Joint Economic Committee led by Congressman Kevin Brady issued a report saying that the Obama recovery now ranks dead last in modern times.  Spending stimulus, housing bailouts, auto bailouts, financial bailouts, cash for clunkers, extending unemployment benefits and $5 trillion in deficit spending left the Obama recovery dead last in modern times.

If you are a President, how do you create jobs?  You don’t.  Business creates jobs; you clear the road stand aside and cheer.  You don’t stand in the middle, over-regulate and jeer — and then blame the lack of progress on your predecessor.

WALKER WINS WISCONSIN, WHAT DOES IT MEAN

People vote their pocketbook and their deepest convictions.  Economics, abortion, gun rights and distaste for the opposing party are the four factors, broadly defined, that figure prominently in any election.  The Walker recall attempt only involved two, economics and opponent distaste.  Economics was the determining factor.

When campaigning for office in 2009, Scott Walker pledged to bring down the cost of state government and to deliver on the economy.  He did both.  Imagine that, a politician who keeps his promises.  It didn’t go unnoticed.  Wisconsin’s unionized government workers were among the very highest paid in any state and so far above their private sector equivalents that a sense of unfairness prevailed among the voters.  Why should I subsidize a government worker with my tax dollars when he or she already makes more than I do for the same work?

Unemployment in Wisconsin is 6.7%, far below the 8.2% national average.  On a per capita basis that translates to nearly 20% fewer people out of work in the state.

A lot was at stake here and everyone knew it.  An all out effort to defeat Walker was made by the unions and the Democratic Party.  The campaign was vicious at times and turned downright dirty when desperate Democrats introduced an unsubstantiated rumor at the last minute that Walker had fathered a child out of wedlock.  Feelings of opponent distaste ran high.  Nevertheless, some 11% of self declared Democrats voted for the Republican.  Fair is fair.

Wisconsin is a blue state.  Some pundits now say it will be in play in November.  I don’t know.  But one thing is sure; the wind is blowing our way.

HOW UNEMPLOYMENT IS COUNTED

The answer to the question “What is the U.S. unemployment rate?” is another question – which unemployment rate?  The U.S. Labor Department reports unemployment several ways.

U-3 Unemployment is the statistic most often quoted by the press.  But U-3 only counts as unemployed those people who have applied for a job in the last 4 weeks and have registered their application(s) with a government unemployment office.  So what the popular U-3 statistic counts is not people who are unemployed; it counts people who are currently looking for work.  There is big a difference.  In fact, it doesn’t even reflect all the people who have looked for work in the last 4 weeks, only those who reported their search to the government.  Job seekers who are no longer eligible for unemployment compensation and who apply directly to an employer instead of through an employment office are not unemployed as far as the U-3 number is concerned.  U-3 is currently 8.2%

U-6 Unemployment counts people who have applied in the last six months and also includes people only working part time on involuntary workfare in order to qualify for government benefits.  Obviously U-6 catches more of the truly unemployed.  However even U-6 doesn’t include the long term unemployed or anyone not actively seeking work.  U-6 is currently in the range of 15%.

In good economic periods the spread between U-3 and U-6 is much lower and therefore less important.  U-6 is by far the more realistic number reflecting true unemployment.  Reporting U-3 is more favorable to Barack Obama but this is not another case of MSM bias.  U-2 has always been the standard reference because it is less volatile.

INCOME DISPARITY

A picture of income disparity

Vertical scale = per capita income Horizontal scale = population segments

This chart was published in Mother Jones to make some point or another about the shame of income disparity in America.  The chart is taken from a book titled “The Haves and the Have-Nots,” by the World Bank economist Branko Milanovic. I don’t know why Milanovic selected these countries and can only surmise it was because they were the three fastest growing major economies in the world over some recent time frame.

What the chart says to me is (1) the poorest group in the U.S. is infinitely better off than the poorest group in the other nations, (2) income disparity is the least in the U. S.  This is apparent all along the scale from the most impoverished to the wealthiest as shown by the relative flatness of the U.S. curve, (3) whatever faults the American economic system may have, they are insignificant when compared to the other systems because every group is better off in America, particularly the lower income ones.  Mother Jones picked a rose and called it a thorn.

China is a socialist country; India is not; Brazil is somewhere in between.  Nevertheless, the chart is a good illustration of the superiority of an economic system that incentivizes individual entrepreneurialism and protects the rewards for success with a healthy respect for property rights.  It’s a fact of life that equal treatment is bound to produce unequal results because people are not equal.  The capitalistic system gets the best from the best; socialism does not.  And if China can be taken as an example, socialism doesn’t reduce income disparity either.

THE MAN WHO SHOULD BE PRESIDENT

The most predictable financial crisis the nation has ever faced and Democrats fight every attempt to thwart it.  Our problems are Afghanistan, Iran, jobs, declining quality of healthcare and skyrocketing federal debt.  But all the Democrats want to discuss is sex.

It is hard to know which is worse, this diversionary tactic by the Democratic machine or Republicans for giving it legs.  Given Obama’s horrible record on both domestic and international fronts, you can hardly blame the Democrats for wanting to change the subject.  Paul Ryan is the man with the right message and he sticks to it.  The candidates would do well to do the same.

PERILOUS TIMES

The headlines below are un-edited from the Drudge Report on Feb. 15,2012.  I regrouped them into rough categories and dropped some punctuation, those are the only changes made.  Arranged this way the headlines paint a picture of a U.S policy to weaken itself militarily in face of rising external threats, the possibility of Iran’s promulgating a second holocaust , turning a blind eye to China’s human rights record while they conduct a vast military buildup, unabated political corruption, the direction the Arab Spring is taking, the failure of Obama’s economic policies and a growing loss of personal freedoms.

Ahmadinejad to show off new nuke facilities
Obama weighing up to 80% cut in U.S. nukes
LESS warheads than China!

GAS PRICE UP 83% DURING OBAMA
WARSHIPS SAIL THROUGH HORMUZ.
Iran Says It Will Cut Oil Supplies to 6 European Nations
US, Europe look at crippling financial lifeline.

Decision On Iran Attack To Be Made ‘By Summer’
Heightened Security in U.S. Over Iran Threat;
Police Guard Jewish, Israeli Targets.

OBAMA WELCOMES CHINA’S ‘PEACEFUL RISE’
China blocks visit by religious envoy

Canada unveils new Internet monitoring rules
Moroccan gets 3 years for anti-king video
Man jailed for ‘not having dog license’
FOOD POLICE REJECT HOMEMADE LUNCH
MAKE PRESCHOOLER EAT ‘CAFETERIA NUGGETS’
NYPD ‘Stop and Frisks’ Hit All-Time High

Mexican official: US travel warning ‘ridiculous’

REPORT: Chicago most corrupt city in USA
Issa moves to hold Holder in contempt
Another solar company goes under

BUDGET BUST: Obama’s deficit spending $17k per person, $70k per family
Towns go dark with post office closings
Flights by U.S. airlines hit 10-year low.

New Libya delegate to UN: Gays threaten ‘human race’
Egypt state media accuses US of spreading anarchy

Newspaper depicts Merkel in Nazi uniform

MEMORANDUM MACHT FREI

This photo-shopped picture of German Chancellor Angela Merkel was printed in a Greek newspaper.  The offensive image was captioned “Memorandum macht frei” a slogan relating to the Auschwitz extermination camp of World War II.

These are only the headlines, from only one publication, on only one day and it’s not even lunch time. We are indeed living in perilous times. Obama voters, are you sure you want Barack Obama in charge for four more years?

GREECE

THE PARTHENON, 2 MILES and 26 CENTURIES AWAY

Right across the street from the Parliament building in Athens there stands an outdoor café.  Many times I have sat and sipped  Ouzos at that cafe watching the changing of the guard as one stoic protector of the palace replaced another.  They strut and stomp across the plaza then placidate themselves in front of those little wooden houses that look like they belong more in cartoons rather than standing as bastions of government.  There are two guards.  Each carries an unarmed rifle.  They don’t protect anything of course; it’s a show, a demonstration of sorts.

I wonder where they are now.  Today the demonstrations are in the same place but they are of a different kind.  There are fires on the plaza.  Did they burn those silly little guard houses, I wonder.  I do know, however, that the protesters burned the German flag.  They didn’t burn the German flag because Germany contributed more funds than any other European nation to help Greece out.  They burned the flag because Germany stopped.  Feed a hungry bear and he will lick your hand.  Stop and he will bite it off.

The root problem in Greece is not financial; it is cultural.  If the Soviet Union was the triumph of Communism, then Greece is the triumph of Socialism.  The country has a history of economic distress.  In 1922 the government decreed that 50% of all privately held money in banks had to be given to the government.  The national treasury gave bonds in exchange, to be repaid on 20 years with a nominal interest rate of 6 ½ %.  Neither interest nor principle were ever paid.  The people bailed the country out, involuntarily.  It happened again in 1926, four years later another bailout.  In 1932 the country declared a moratorium on their international debt.  Bailed out again, this time by the international community, again involuntarily.

Should the world do it again?  For humanitarian reasons, perhaps we must, but for how long and how much.  Philanthropy overdone eventually becomes license for continued misbehavior.  It is Europe’s problem and Europe is doing its best to solve it.  Germany enjoys the largest and strongest economy in Europe so the cross falls primarily on the German people to bear.  We empathize.  We have been there.

THE REAL UNEMPLOYMENT RATE IS 12-19%

You remember Rick Santelli.  He is the floor trader whose spontaneous outrage gave birth to the Tea Party.  Here is his assessment of the just released 8.3 % unemployment figure, a number that put a smile on the face of Barack Obama.  Santelli finds that the favorable looking number resulted from two not so favorable causes, an adjustment in the calculations and more people dropping off the unemployment list because they have given up seeking for work.

The unemployed number is intended to count only those people who want work, so students who have yet to enter the work force and retired folks are excluded.  That makes sense.  However, people who do want work but have given up and dropped out of the system are also excluded.  That is a distortion.  Statistically speaking, they are neither employed nor unemployed.  They don’t have jobs but are treated as though they do not exist.

There is no official tally of their numbers but various estimates say the published unemployment rate would be somewhere between 12 and 19 percent if these truly unemployed were considered officially unemployed.

Click here for the Santelli video.

JOB HUNTING OBAMA STYLE IS LIKE DEER HUNTING, THE AIM IS TO KILL

Investors Business Daily is biased.  Is there a newspaper today that isn’t?  But all bias is not political; the IBD’s bias doesn’t lean left or right.  As the name implies, the paper is pro investor, pro business and pro capitalism.  That means they are biased in favor of jobs.  The IBD is purely an investment and business paper and they report on these endeavors every day.  That makes the paper somewhat of an expert on the subjects of economic growth and job creation.

In a recent article titled Obama’s Job-Killing Machine Rolls On, the IBD points out some glaring examples of how Obama has snuffed out jobs.  AT&T was ready to hire 5,000 people for well paying new jobs until Eric Holder’s Justice Department sued and the FCC came forth and opposed AT&T’s merger with T-Mobile.  And then there is the infamous Keystone Pipeline which was steadfastly opposed by Obama until the Republican Party in control of the House of Representatives forced his hand.  More than 10,000 jobs were at stake.  Obama has kept one promise he made on the campaign trail; electricity bills are skyrocketing.  New EPA rules have caused three generating plants to be closed already with the attendant jobs lost.

Obama doesn’t just fail to create jobs; his administration pro-actively takes steps that kill jobs, new jobs that would occur naturally, jobs that need no assistance from stimulation programs, no subsidies and no cost to taxpayers.  President Reagan was never more correct than when he said “Government isn’t the solution to the problem.  Government is the problem!”

 

 

“WE ARE NOT HIRING UNTIL OBAMA IS GONE”

Waco, Georgia businessman Bill Looman boldly displays signs on all his trucks reading “New Company Policy. We are not hiring until Obama is gone”.  That is a very gutsy move but Looman did it.  How many others must there be out there there who feel the same way but don’t publish it publicly

If Obama loses the election and the Democratic Party loses the Senate you will see a mood change in this country that will knock your socks off overnight.  When the mood changes so will the economy.  It is sovereign nations that are in trouble, not the business community.  Capitalism has not failed us, democracy has.  And the same democracy can turn us about and set us in a proper direction again.

America is a well founded country and we may get another 50 years or more out of the old gal before the world succumbs to the predictions of Plato, the concern expressed by Benjamin Franklin and the warning of Alexis de Tocqueville.