Saturday, January 31, 2009

Don't ask Me what I am saying!

Greg Mankiw stands Conservative, but rarely delves into reactionary; his equating the Pelosi measures with the Smoot-Hawley Tariff must be considered one of the reaction elements. Pelosi and Supporters wants American money to go to American labor. Greg and his Conservative friends want the cheapest materials, and the stimulus spread wherever it is most advantageous though this means underwriting foreign production. All of it remains a tornado in a Whirlpool, as the Production in Question could never equal even one percent of either GDP or Gross Government Expenditures. It is simply a Question of where formative Capital investment will be made: in an expensive, pollutant-conscious American industrial Park; or in a foul clime which sends its pollutants to the Himalayas where they can alter the Wind Currents of the entire World.

Paul Krugman expresses another Point upon the economic spectrum, one only having to downsize some of his language; I would certainly like to know what is a deflationary trap, when he has ever been in such a thing, and why it so difficult to escape one. I do know such things never occur much, and they seem to burst like Quail from a Covey, scattering in all directions. No one seems to advocate my desired option for monetary policy; namely, a "Pox on all their Houses!" Those who say I should calm down, I reply: There Once was a Time, in the heralded hedge of History, where and wence Government did not interfere in Business except to collect Taxes, and the Business did survive upon their own small pittance. Now, Governments seek to grant more in Aid than the Populace can grant as Tax, with the Government always acquiring Debt. Taxpayers cannot support their own Expenditure pattern now under current Tax, yet complete Fools feel that future Taxes can pay for their own Expenditures and Ours.

Read this Post from Mark Thoma to acquire a taste of Trade balances. Economists far too often assert an ‘All or Nothing’ element to financial discussions. How do you explain to Students the simple, yet complex, Trade notions. It must be reduced to magnitudes, I guess, and it will still seems woefully incomplete. Trade Factors: About 41% of American Trade cannot be altered–simply because We cannot produce those Materials and Goods here–about 80% of those Materials and Goods are mandatory–the American economy will start to crumple through their lack. This Trade would be maintained, even if We passed Smoot-Hawley verbatim once more. Another 30% of American Trade is annotable–which means it can be plotted on a standard economic model curve–with axis of Quantity and Tax amounts; the element here is that only extreme Tariff costs will noticeably constrict Trade quantities. The remaining Trade levels, about 30% of total Trade, should never have been produced in the first place, and production should be transferred to domestic products of greater benefit to All-foreign and domestic. Let not the Gods of War distract you, especially over a nonentity like Trade–which will never Start or Stop any economy. lgl

Friday, January 30, 2009

Placebos--the value of Bullsh**

All Americans, especially Politicians, should be forced to read and reread this article. The ‘Crowding Out’ Effect of overlarge borrowing is a basic fallacy, if the funds are deposited in the banking system in the interim; the borrowing simply creating new artificial Reserves. Don’t believe me, but it is true! There is a Problem with the artificiality of the Reserves, though, when they are based upon assumed debt; think of using Stock as collateral to purchase more Stock. Actual Growth based upon Debt is actually very reduced when there is a Second Mortgage. It reminds of Credit Swaps, the dangers of repayment loss multiplies drastically as the repayment is closer to the original debt. Steps 2-6 are intrinsically destroyed if Step 1 has proven a failure. The trouble with Debt is that it is equally unsecured in all its parts.

Understanding of the current economic difficulties can be seen in this article, which is a basic discussion of the Step 1 arena of Debt repayment. Every Economist will protest that Statement, but later Debt repayments are keyed to fulfillment of the original Debt obligations in these sectors. Orders for Durable Goods have been falling for 5 months, a 5.7% decrease in the year’s progression. The loss of business resilience because of lost Profitability impacts Debt repayments–where there are delays, or the accumulation of greater Debt levels. The Unemployment rate reaching 7.2% is also great hazard, in that manageable debt becomes a functional drain of Consumer Demand under the condition of Job loss.

One can find fault with Monetary policy under almost every condition, and this article helps to explain Why this is the case. Placebo options only generates long-term doubt in the efficacy of official policies. The sham of placebo politics can always be critiqued, and knowledge of the placebo placement will always become universally known; the reaction will be to limit and contain any reaction to the placebo. I like Tyler Cowen’s comment that there has been real economic shocks, and such activity will not be contained by imagery. Consumer Spending need to reduce, but also switch to Quality of Product–i.e., longevity of Product. lgl

Thursday, January 29, 2009

A lot of Junk

For want of a Nail, the Battle was lost! Are We in a like Scenario? Blackwater gets the Contracts solely because they do what it takes to protect the Package, even if it means spreading Blood over civilian streets. No one wants to work in Iraq if Terrorists are allowed to get close to themselves as they operate. Blackwater has even been known to threaten Iraqi soldiers if they bring weaponry in range; of course, Iraqi soldiers have also been known to be Terrorists who desire to kill Westerners. Now, a lack of Security precautions can only mean an increase of Terrorist incidents, and a reciprocal refusal of Westerners to place themselves at risk. Gone is Westerner aid to Iraq.

Wall Street wants to save the Bonuses, though the Profits upon which those Bonuses are supposed to be based are not there. There is great emphasis on retaining Employees, and how their Salaries are actually low. First, One has to ask the majority of American Labor if financial employees have low Salaries. Second, after the Mess which they created, One has to ask if the retention of these financial employees is so beneficial. As a Boss type, I would believe that it is time to cut Labor Costs overall under the current pattern of Losses, and that Dismissals should be based on the lack of performance among the Employees themselves. Why do Wall Street Bosses get to ignore the Downsize formula they so traditionally insist that other Businessmen adopt?

How does One establish a Corner on a monopoly? I would start a Courier Jet service if the Corporate Jets are really being sold. One could charge about $2300 per air hour ferrying Corporate executives around, with a probable air time Cost of around $1300 per hour. The trouble resides in the fact that Corporations are not really changing practice, and will not until Executives are thrown from office. Their replacement, though, would not likely alter current Corporate practice. Corporate position stands as the Product of Politics rather than Performance, and the perks of the Top include luxury Travel, expensive Tickets to popular events, and Meals which rival White House cuisine; no one concerned with performance–Losses only entailing the loss of lower class Employees. There will not be change in Corporate structure until Corporations are legally entailed by law to maintain competitive slates of Corporate Board members; none designated to hold any position within the Company after Victory–said decisions to be make by the Board itself by Secret Ballot during each monthly Board meeting–Performance must be achieved or there is an immediate loss of superior position. lgl

Wednesday, January 28, 2009

Here is where We are at.

Should WE prepare for Inflation or Deflation. This article basically suggests that Inflationary factors are relatively constant within the financial crisis, while Deflationary threat reflects only modeling chaos rather than a shortage of funds. It is a sentiment with which I agree. Almost all economic models are devoted to the detail of performance, in order to attain accuracy. Skewed patterns of illiquidity will always present extreme results; it is a question of containing magnitudes in proper forum. Inflationary factors are always based upon maintaining Profitability within Business enterprise, and quick to rise under threat (businessman and employee like to maintain consistency of Dietary programs). Flushing the system with Cash will have predicable economic consequences down the Road, though Short-term values of extra Cash does little to stimulate in the absence of Consumer Demand.

William Shughart explains the Situation rather effectively. Nothing substitutes equitably for Consumer Demand, and Public expenditures does not generate sizable Consumer Demand (I estimate only about 7 Cents for every Public dollar spent on infrastructure, and I will be slaughtered for that assessment). The only effective Consumer Demand stimulus remains outright Welfare payments, and this program holds great danger for proper economic signaling within the economy. Any Economist has to remember that the Public Sector is a lousy Purchase Consumer in comparison to almost any element of the Private Sector; this due to the lack of sustained Sales, and thereby the established economic system Profits distribution system (the Public Sector always assuming the ability to organize such a distribution system effectively).

D.W. MacKenzie takes the traditional Conservative route of promoting Tax Cuts in a very effective Read. I do not agree with this Consensus, though, for a number of reasons. The last Boom was based upon extreme Profit ratios for Business, with an oversupply of low-Cost Labor to generate Consumer Demand. The Business structure failed in that there was an oversupply of Labor, inducing an excess Labor Cost throughout the Private Sector; the whole inflating Resource Costs without proper Product Price reduction. The truism exists that Business Profits should have been halved, while Labor Costs had been reduced by around my estimate of 13%. The Labor Costs actually absorbed the natural Business Profits, while the Product consumption generating the Business economic Profits was actually unfunded; consider the rapid increase in Consumer Debt. Normal economic constraints will have to be reestablished for the Decline to reverse. lgl

Tuesday, January 27, 2009

I'm Back

The World is not ready for digital. Analog signals will be sent for a while rather than face the wrath of Households, what with the federal program being short of the Cash necessary to subsidize the Changeover. The issue has been long in development–and will be longer. I still wonder at the quality of TV service, as my own personal format seems overly defective under severe Weather conditions. Millions of Households will likely have to listen to the sirens again for serious Weather dangers, in that digital will be off the Air under the impact of Storms. This may be another Great Leap Backwards for Mankind.

I also find this Story a little hard to swallow. I was in Mesa as the Cardinals secured their position for the Super Bowl, and watched a TV station show multiple Jets setting on an airfield within a mile of the Stadium–with onboard systems running without Police supervision. The TV station wanted to criticize the lack of Security. I, on the other hand, thought of the hundreds of gallons of Avigas being burned, simply to grant the High Rollers a quick exit from Town. That situation leads Me to believe that the great loss of Revenue is overrated, especially as all the $3 million TV Time-spots have been sold. The Pro teams will probably be the next industry asking for Bailouts from the federal government.

I did enjoy my Vacation, and stayed away from the Papers and News channels. It is likely that I will have to play Catch-Up to hear what great disasters have befallen the Country; it singularly gratifying that no one can make it much worse than it already is of the economic front. Obama and Congress seem set to double the current year Spending of the federal government, simply to repay the Plungers who lost their shirts; a marked difference from true Capitalism where losers are left to live like Everyone else. lgl