I only know what I know!

Here is the thing that the kids should know: Economists thought so much of Paul Krugman that they gave him a Nobel Prize; me they ignore as much as possible. There may be something to say about the quality of work involved, though I dislike that Thought. This latest Point from Krugman still bothers me; I thinking that Stimulus should be more than Make-Work. I could delve into some economic aspects, and ask if Recession does not reflect the overuse of resources to some degree. Stimulus, under those conditions, will cancel the recovery aspects for resource use; especially if there is no secondary benefit from the use–like Make-Work. The Krugman thesis would negate current developing theories on resource overuse. This second generation of Thought would find Stimulus much less beneficial as first devised, and propel the Thought that Stimulus maintains a skew in resource pricing, specifically inciting inflationary Pricing; causing some down-the-Road excessive Production Costs for necessary enterprise. It is my creation of this idea which leads no one to want to talk with me!

I should first of all state that I am stealing all this material from links provided by Mark Thoma; a common occurrence for myself, if not for my Peers. This Post contends that the worst element would be if Wages fell against rising Prices. I could agree with that datum, but would insist that Prices are the element which must lower; nothing could be achieved by a Wage increase which would pressure a Price increase because of higher Production Costs. This later bugaboo is the real culprit, and the reason that health care should be separated from Employers. This style of Employer-sponsored health care always dictates that the highest quality care insurance must be provided to guarantee the productive support of Labor. Employer-sponsored health insurance, though, will never be eliminated as long as there is no Public Option. Labor must be assured of some type of medical protection, and the majority of Business should separate from the health care industry for their own benefit. It is difficult for me to understand Why such Business organizations do not!

I do not relatively believe the context of this data, as I do not believe there has been any marked degree of reduction in current Consumption. I do believe that Consumers are maxed out, and any Inflation in Pricing will lead to a reduction in Consumption. A declining Dollar inevitably will entail some degree of Inflation, and Consumption will decrease. Many economists like the weakening Dollar, saying that it will lead to increasing levels of Exports combined with declining levels of Imports. I hate to inform that the decline in American Consumption will always be more rapid than rise in amounts of Exports, and We will face a reducing Employment level. I cannot back the poetic rapture of the value of a declining American standard of living. lgl

Suspicion

You can find supposed Good News about the economy, though I still have serious reservations about the construct of the new information; I attempting to give the best framework of that data. Study James Hamilton’s estimates, and one finds a concentration of Autos and their Parts. Cash for Clunkers might have been legitimate Stimulus, though I still have serious doubts about the actual benefit of the program. We have to have a good Christmas Season, or We will have engendered major debt from all the Stimulus without actual gain. I worry that I am getting too old-fashioned for the modern economy, but hold major doubts about the modern economic engineering. One feels called to ask the Question: Why does a purportedly stable economy require such a Pump?

Read this article from the NYTimes, and ask about the majority of Consumption coming from Autos and Parts to make the good numbers for the latest GDP Report. Here We get the loss of Consumer and Business Credit of almost $215 billion year over year, and Commercial paper possessing a 40% drop for nonfinancial business. This means that not only are Consumers and Business not getting traditional Credit, but that the Investment level has dropped for large Corporations. Maybe I am an old Hayseed who looks at the teeth of horses, but what was the Stimulus beyond the Flash-Bang effects?

This is the type of Piece which makes me doubtful about the final outcome of all the Stimulus efforts. I have to ask how effective are the AP Testing methods, and want to know how much of the projected impact of the Stimulus consists of wishful thinking. The whole picture leaves me somewhat Cold, knowing the tendency of Government to exaggerate their polices, and knowing the heavy impact of the Downturn. No Recovery will occur without at least some Job Replacement, and the latest information does not look Good. I find myself suspicious of claims that We are heading upward again. lgl

The Reward System

Conferences have always bothered me, as they seek Excuse for past behavior, rather than true conduct of future policy; read this Post from James Hamilton. The capital adequacy statement only says that the Fed flooded the markets with Cash, the markets did not take the Bait, and Production did not return to normal; yet the Process is touted for the salvation from a Condition never realized, and possibly never viable. Compensation is touted as the bugaboo which geared the Risk-taking; everyone careful not to name actual fraud, no one could not say that more than Bernie Madoff and Co. should have been jailed. Bernanke was careful not to expound on the role of Derivatives, and Blinder simply mentions the need for regulation; everyone careful to not mention the Fed power to limit financial instruments which carry exterior liability (where Buyers are left uninformed of long-term extension of liability–i.e., the opposite of Corporate limitation of liability where added Costs cannot be added on at later date). The Resolution mechanism may not be a terrible as mentioned, as Chapter 11 bankruptcies have developed over much of a century, and the idea of a better system of regulation satisfaction encases much denial of outside Party rights by infringement. Making the Fed’s job easier may not be a beneficial outcome of regulation. The very complexity of the mechanism may be one of the truly successful impediments to outrageous propagation of poor financial instruments; any Reward of liability elimination for Banks would spread the practices of deviancy of instruments. We do have to prevent the obstacles of the Past, but much discussed could possibly facilitate continuance of bad practice.

One should read this article with the required liter of jaundice. Everyone knows when they enter the realm of Insider Trading, and has a relatively good idea when the liability starts to impact. I do not believe in the Insider Trading regulations and their punishment, knowing Hayek’s emphasis on information; and knowing this was the very information he found so critical. The entire Concept of punishing this information distribution would seem Self-Defeating, as well as impossible in an environment of spread risks and enhancements. How often is this information spread by Insiders who are invested with the individual investment firms they talk with? Why should Anyone be forced to take a financial loss, when they can witness a financial disaster developing? The fact of reality not recognized is that We exist in an extended environment of financial interest, and stopping advance warnings will never work, no matter what restrictions are applied. One has to ask if those restrictions could possibly be worthwhile.

Read this Post and ask yourself how rational is the Market system. Market flux is always based upon irrational behavior of a high percentage of Participants; any lack of such irrationality would lead to a stability of market pricing. It is the degree of Risk which provides Market movement, and successful Choice carries the only Reward. Business and Investment can make fortunes without taxation of Others, but Markets cannot. This knowledge could well help one adjust to the difference of the Market. You have to outguess your Peers, or face the same rate of Return as your Peers, which must be a loss if Anyone has gained from the transactions. One has to get to the correct path before Others, or one will sink into the common pool. Remember that the common adage of market growth depends on the refusal of corporate management to issue additional Stock to weaken their Stock price. lgl

Why do We fail?

What is the standard utilized for protection of the Innocent and Guilty in the entire process of Libel and Slander. I observed this element of American law, and still cannot tell you after decades of watching Case after Case. The Chamber of Commerce is one stuffy organization, long noted for sharp reaction to criticism; sort of like the American Red Cross and their sincerely overpaid leadership. The Yes Men, on the other hand, have been well known for pursuit of the American dollar. One has to ask if the presence of Greed applies any restrictions on Free Speech, or leaves one open to liability. It is clear that the truth behind all accusations is accepted, and that both organizations are working on the Edge. I also wonder that the Courts accept Cases which are nothing more than ruffled feathers in an atmosphere most noted for such. I would throw out the Case for lack of Content if I were presiding Judge, but maybe the Court wants to establish a point of order guiding Conduct.

I watched the PBS history of Herbert Hoover last night, and decided that George W. Bush will gain far more advantage in terms of post-office Respect. Barrack Obama occupies the Office today, and We are at a position where ‘More is not Better’. Business screams for more liquidity, but Everyone knows that Growth is stymied by lack of Demand; liquidity cannot affect Demand without willingness to increase Worker compensation, no one hears great Calls for that except out of Organized Labor. George W. Bush should already be muttering like previous Executives of Texaco about his replacement, when he should feel grateful. My fear is that Obama will not learn his Job in sufficient time to stop Inflation, and curb Business excesses; it is the Corporate push to regain the Profits of the last Boom which is the greatest current threat to the American economy.

One can ask how the two previous paragraphs relate to one another. Well, it shows the same attitude of pushing present practice into disaster. The Investment banks knew they were going down, long before the Downturn; yet, they continued their destructive practices, without any attempt at more adaptive change. The Auto executives knew that their Consumer base was shifting out of their control, but insisted on continuance of their basic Corporate policies. The Chamber of Commerce suit is simply continuation of polices based upon bureaucracy which has led to previous contempt for the Organization; a Public Relations organization need be able to debate with conflicting interests without getting mad, or changing the playground rules. I worry deeply when Corporations adopt the general guidelines of a Civil Service bureaucracy. I would like to introduce the Concept of ‘Being too Big to Succeed’. lgl

A cheaper medical system

Here are some loose numbers in relatively hard terms about Health Care Costs in the United States. The first Step in true health care reform must be the federal establishment of limited Cost structures for Government subsidy of health care Costs. The concept being that Everyone gets equal aid, but that the medical aid will be very limited, and clearly outlined for Cost. I have previously proposed that any new medical program only pay for two complete medical examinations per year, and that the individual would be totally responsible for recuperative Costs. This means that the Patient must provide for their own medical protection, though the Government would pay for any detection of the medical problems.

Doctors would soon come to understand that they had only limited funds for detection of medical problems. They would themselves devise what medical procedures are necessary for such detection. The Government could aid in this assessment by a Statement of what the maximum payment would be for any examination–I would suggest a sum less than $200 per Patient Visit. Doctors, and the rest of Us should know, can readily tell almost all medical problems under such periodic examinations of spaced 6 months, and Blood Tests reveal almost all conditions which are treatable. Doctors realize that there can be only be a certain success rate, no matter what funds have been provisioned for detection, and such period exams would discover 98% of all medical problems within the optimum discovery time for treatment.

The beauty of such Government support lies in leaving the entirety of payment for medical treatment within the hands of the Patient. Health Insurance will still be the responsibility of the Patient, though approximately 40% of the medical cost of health care has been removed from the shoulders of the Insurance industry. The whole system would be open to All, cost effective for medical underwriting, set a Cost limit for medical discovery, and leave the Doctors both protected from medical malpractice according to legal standards while giving them the necessary medical information for effective medical treatment. This would obviate almost all of the unnecessary medical observation treatments, while probably actually enhancing current medical outcomes. It simply takes sensible outline of medical treatment–hardly a possibility in the face of Voter demands and lobbyist activity for advantage; We should still at least try! lgl

Of Mice and Men, and other Stupid Things

I have always had a bias against keeping any living animal except for something I could eat under necessity. People can understand Why I have neither Wife or Children. This short article explains Why Pets should not be kept, at least rationed. It is not that I dislike the family Mutt; it only consisting of a Statement that it costs too much to keep one without an economic purpose. The key element is not the food production for the animals, but the wastage of all economic resources involved. Veterinarians waste more energy and labor on Pets than on productive farm animals. Pets Costs often exceed the Drug and Maintenance Costs of a human health patients. There are Pet cemeteries which charge huge Costs, and Pet coffins which exceed some human coffins in Cost. The element which truly amazes, though, comes from the fact that Those closest to the initial farm environment are more likely to have Pets, and spend the exorbitant Costs on the animals. Is this simply a rebellion against our Upbringing, or are We simply entering into a hidden senility?

Here are the Agreements which make it possible to charge Taxpayers a penalty no matter what; irrespective of Interest rates raising or lowering. One wonders as to the true nature of the Credit freeze, considering the nature of these agreements. It is really revealing that Goldman Sachs were behind this type of Agreement once again. No wonder Goldman always has the potential and resources to come out ahead. I think the Goldman executives ought to get their bonuses, as they are much more efficient than the old-style Mafiosas.

What can one say about Dean Baker. He is often too strident, and makes observations which sometimes stretch the imagination. Yet it is a fact that he reports on the stupidities which are often much worse. Here again he shows the stupidity of Others. Real Estate Buyers lack the capitalization to purchase the high Cost of Housing under the current recessionary conditions, and here the Realtors suggest a further Price Support for unsold Housing. What Market can possibly clear, if the Government is the Price Support of last resort? We find this in Housing, but also in the Auto sector, the financial sector, and in some basic areas of Retail–notably Food. I will put the current debacle in a form which will be hotly condemned: the Recession came because too many people had too much reward from the previous Boom, and the economy could not award Interest on the funds without increase in Sales; something which could not be sustained due to Price increases. Investors had to lose a major chunk of previous Income, and refusal to allow this loss will cripple Us in the end. lgl

Tough Love--possiblty unrequited!

My mind has a tendency to wander, as Some may have noticed, which it did upon reading this Post by Bryan Caplan. Now it is a very good argument, and he relatively has proven his point, though I find little relevance to the assessment. Still, I will score him as correct. My mind turned to the proper level of Public Spending which would provide the proper Military deterrence; a concept which I believe evaporates under the ranting of Politicians in most inopportune moments. I decided that traditional methods were wrong, simply because they did not deter.

Traditional warfare seems destined to be defeated by Small Arms, carried by irregulars who cannot be identified in the light of Day. This can be easily ascertained every time that a million-dollar weapons system is decommissioned by a $200 IUD placed by someone who does not possess even a High School education. It is a Fool’s Errand to think there can be adequate defense through the creation of highly advanced weapons systems of huge Cost. I once posed a Question left unanswered by the last Round of debate over the building of the new Fighters and Bombers for the American fleet. The Question was simple: What happens after We face an equally-equipped Enemy force, where each Side has already lost 1000 planes? I extended my Social gaffe by asking for the length of Time necessary to produce the new style Fighter under discussion. One can be truly surprised by how cold an atmosphere can become, after asking such Questions. I did establish that there is a need for mass formations in Defense formations; Knights of the Sky do not work well.

We shall return to the topic at hand. One: you want everyone possible to be armed. Two: you want these people to have as much Training as they can possibly integrate within their own environment. Three: you want a reward system for success in the chosen system of defense, and serious punishment for violation of those defensive rules. I thereby come up with this defense strategy: Every Junior High and High School student should be given appropriate military training, taught to work as a unit under the principles of Small Unit tactics. This Training should replace physical education with equal devotion of time. Every individual should be given a Small Arms weapon upon their Eighteenth Birthday, along with 300 Rounds of ammunition for rifles. Any usage of such weaponry in any capacity other than military defense or Target practice to achieve qualification status will lead to a 6-year Draft into the Armed Forces for the Offender. Every individual who can prove Proficiency on the Weapons range each year, will be given a $1000 Tax Rebate, and another 100 Rounds of ammunition. All forms of criminal behavior, with misuse of the issued Arms or otherwise, will be considered a 6-year Enlistment in the Armed Services; the later to establish Penal battalions utilized for heavy construction labor on Public and Military projects. Scare You? You must have a criminal bent! lgl

Talk about Late to the Party

I am sick and tired of people trying to dance around Taxes. The basic element is that the federal government is spending far too much, and collecting far too few tax revenues. The Condition cannot last for any length of Time, or We are going to experience market forces far more adverse, than deficit spending is beneficial. I also tire of the argument of Revenue Neutrality, some assumed position where taxation should never become greater, in the interest of sustained economic performance; who can point to a period of sustained economic performance? These things last as long as they do, and rarely for any great length at all–think decades here. There is some gain to GDP, if all you consider is whether your Salary will be paid until the end of the year. User fees are taxes, but We need them; especially if We continue to adopt expensive programs which can only be paid through to the next Recession anyway. Real advantage insists that We cancel the bad garbage, before We spread the new garbage, but such a thing will never happen.

What is wrong with this assessment? Congress evades the constraints of a Debt Limit, and so, the Debt Limit should be abolished. This reminds of the Farmer who tore down his fence line, so that his neighbors could not complain that his Cows were out again. Those neighbors are important by the way, at least in the nature of the Debt. Almost all of the segments of foreign society from which we borrow has previously suggested some methodology for elimination of American debt from their portfolios, and possibly substituting an alternate Currency for the Dollar as an international Trade instrument. One of these times, they might take themselves seriously, and then Americans will be searching for alternate Currencies to pay their bills. Speak no Evil, lest they send you the bill in the worst form possible.

We are so clearly in a superior position, both at Home and Internationally, that the beige book can hardly find improvement. This after the Spending of How many Dollars on worthless efforts to stimulate the economy? One of the worst aspects of the current Recession is the inability of Any to report failure of any type; everything is getting better, except that really nothing is getting better. I won’t call the beige book of the Fed a disaster, yet if One withdrew the Inflation which purportedly does not exist, there might be reported losses. I don’t think that the reportage would be a bother either to American Worker or American Investor, as they would like some recognition of their problems. lgl

The Old Enemy--Government

Ezra Klein discusses the issue which Employees must understand, but so Few do. Business management is not known for altruism, and any form of benefit is a form of Compensation to these sharks of the bottom line. One should take the other end of the Argument as well though, and understand that they believe that dividends to Stockholders are necessary Compensation which is financed from their own Gain or Compensation. The idea that health care savings should translate to Dividend gain is anathema to your average Business manager, who believes the demands of Stockholders already are too destructive. Readers must understand that the mind-set of Business managers deem such a switch as an unacceptable Cost. They also conceive of a combination of Wage increase and health care compensation increase as a double Wage increase, and totally unacceptable. This style of business management believes that both Employees and Stockholders rob them of the benefits of their enterprise, but that there is no way to reduce this unfair discrimination. Here is the real difficulty in gaining Business management acceptance of uniform health care coverage.

I empathize with this author, as I have always felt the same way. There is always the better Post out there, the one which better explains the current idea which you are trying to inform upon. It has simply not yet been found by yourself at the time of the current Writing. You can go through the hard and difficult process of adding addendums to your Posts, or simply ignore the additional value-added by others; my natural method of Choice. This course produces a distrust among your readership in the long-run, though this is somewhat cancelled by the fact that there is rarely long-term readership in blogging. I do have a relatively open Comments section, though it rarely has traffic; maybe the Readers realize I ignore such commentary to greatest degree. I must get back to the context of this paragraph, though, and finish by saying that there is no final Word in the world of blogging, and that the Reader must stay as current as the authors.

This rather tepid interview reflects the great difficulty of Government intervention in the economy. This consists of the elimination of Government intervention from the economy. No one has really ever done it; the Government comes in, and then never leaves. The bureaucratic nature of Government always insists on finding alternate justification for their maintenance of a presence in Space where they have invaded. Government presence will always become oppressive; I remember the story of a friend, who built a fence around his house before his place was even incorporated into the City. The Fence was becoming Aged, and he thought he would replace it. He found that he had to have a Permit, not only to build a new Fence, but to take out the old fencing; all on registered Property affixed before incorporation into the City. By the way, the Permits carry a Price-tag to pay for the bureaucracy, and the old and new Fencing carries a taxation. My friend did not mention that he had to pay a Tax to dispose of the old materials, though he did mention the new City sales tax on materials for the Fence. Government operates in such manner, whether at High or Low ends of the scale. We will soon get a Bank taxation on our dealings, much like We pay the Government to use our phones; simply to pay for the bureaucracy! lgl

Disorderly Order

There are Those who take the tough path like Paul Volcker, and then there are the politicians. The repeal of the 1933 Glass-Steagall Act allowed the big Banks access to the investment cash of the Equities markets; a huge amount of Cash carrying a huge level of Profits, the substance desired by the Banks. The problem came in the form that it also made the Banks subject to the huge level of Losses which could come through a Recessionary decline in Equity pricing. The trouble appears as the federal government poses to backstop the Banks, through a number of legal and regulatory instruments; meaning that the Taxpayers always get stuck with the bill. I am on Volcker’s side, knowing that the federal government will always get the bill, come every Recession time; the Banks having already made and distributed the Profits along the way in the previous Boom. This will always be the Case, as long as the federal government does not separate Banks and securities. The Politicians, on the other hand, always have received the Contributions of the Sky-pilots of the Booms so that the practice of mixing continues; and the Taxpayers will again and again be made to assume the raised debt. There are Those who desire a better world, and Those who insist on the Roman circuses; the Crowd will always win, and Civilizations will always fall. Think of what could have been saved, if Egyptians had not invented Paper!

Here is the Argument with which I have the most difficulty. The claim states that Banks must be big to finance large Credit consumption. Why? I know of no Bank, or regulatory officer in review of such bank, who would make any loan of excessive size, in percentage terms of the assets of the bank. This means that they outsource any large loan to partner banks so that the Risk is spread. The only thing that the Glass-Steagall Act inhibits in this process is the freedom to escape from regulatory review of the stability of the outsourcing. Simply put, poor Risk ventures are cancelled out by the difficulty of accessing the necessary funding through the outsource process. The later is the problem for the large Banks, because it naturally cancels the interior huge Profits to the bank of origin, as well as the insecurity of the loan process. The loan process continues, though, even if it is more difficult to subscribe with less Profit. There is no real need for Banks of huge size, except for huge Salaries and huge Bonuses.

There will never be a ‘resolution authority’ of sufficient size to curtail the excesses of big banks with the power to manipulate Securities. The idea of holding more Capital reserves is ridiculous, as no such Reserves could be accumulated; the loan process would be stopped in entirety for lack of excess funds. Reserves on Deposits can be maintained, Reserves on Securities depend upon a fickle market with no respect for Bankers. Reserves on Deposits could never achieve sufficient size to cover Securities borrowing. The Solutions are traditional in this discussion, and practical working failures. What worked was the process developed under the Glass-Steagall Act, and probably no other process will actually provide Safety to the practice. Now to convince an irritable Banker who sees their Bonuses evaporate, and their employees–the Politicians of previous discussion. We need to build a huge Circus tent over Wall Street. lgl

Where goes the Nation?

I began reading this Post through provision of a link by Greg Mankiw. Bauman has many points, always a difficulty in provision of a coherent review, but they revolve around some important elements. I personally believe that the increase in atmospheric temperature has far more to do with planetary oscillation and solar flares than it does to human concentration of greenhouse gases, but who is a Scientist here; I will give ten Brownie points to Anyone who can accurately define the term ‘Scientist’. I drive a big old Pickup which is too old, and therefore care nothing about either Prius or Echo. Methane from Cows always takes a hit, but there is about as much coming from humanity, and it dissipates at a particularly rapid rate; there is even some Thought which suggests that Plant growth would be inhibited because of a lack of said gas. I will not go so far as say that high Smokestacks actually retard fertilizer for plants, though it might make as much Sense as suggesting long-term Gas emissions by humanity can affect Earth’s atmosphere. There is a little more to the story, when you suggest Ocean currents drag an amazing amount of CO2 from the atmosphere; I have suggested almost twice as much as Plant life when considering the entire planet. It only goes to show that I am a unreconstructed rebel, and in serious need of therapy; please let her be young, female, good-looking, and not unduly critical.

I agree with this guy, though Bob Herbert should put a few facts to the equation. The first fact which should be the idea that Bankers, especially Investment Bankers, are not really part of the Production process. Their sole role is to bring finance to Production efforts, and further, to ensure that the Production financing is solidly-based with some degree of certainty that the investment will be repaid. Checking the economic scope, We find that these individuals failed drastically on both counts. We do not need a sensible fiscal policy, We do not need a visionary economic policy, We do not need Consumer Demand incentives even; what We do need is replacement of a proven ineffective leadership of our financial organizations. Americans have lost Sight of the old adage of ‘Fire the Losers’ and even more, ‘Throw out the corrupt Politicians’. A reversion to older American temperament may be all We need; you find the rail, and I will find the feathers and heat the Tar.

I decided to provide this link, possibly because the poor man remembers an old Meatloaf tune. The first thing that need be said is that America will never sell their way out of the slump she is in. Loss of domestic Demand will always exceed foreign sales under the impact of a declining dollar. Economic claims otherwise must be viewed as some degree of idiocy; We need a strong dollar at home to maintain domestic purchases. Abandonment of the greatest Consuming Public in the world is never a Solution, and never will be an optimum movement. The Dollar is going to come back, because foreign nations are in greater danger of losing their Consumption markets than are American companies. Those Consumers in all terms are Americans. Will this always remain the Case?–No! Will American Consumers, on the other hand, ever drop from favor among foreign or domestic Producers–get real! The World needs Us, and it makes the World angry. At the same time, no one needs our Politicians or our Lobbyists; it might be the time for their requiem. lgl

The correctness of being Wrong!

What is wrong with this Sounds-good article? The first insinuation in the article suggests that firms are forced to cut back on their labor elements—Wrong! Popular persuasion has always implied that the firms are under pressure of outrageous Costs and no Sales, and that they are forced to let go their labor. The remedy under these conditions lays in granting these firms more Tax concessions, whereas they will rehire their labor. Wrong! Firms are conditioned to scrape labor from any endeavor they can to maximize Profits. They will follow this dictum under any and all circumstances, and have a horrible tendency to reduce their labor cadre while lapping up all new Tax concessions. Do not expect any great Movement from the Business world rehiring the poor Workers, simply because We allow them to deduct much more. Hint: They will never hire people to stand around, and when there are no Sales; they find much cheaper lawn ornaments.

I throw this Post from Paul Krugman out there, though I am some mystified by the exact point he is making; basically that Conservatives are far too sensitive and react badly. Stephen Colbert would explain that Conservatives know How to take a Joke, if only the Government would correctly inform what the humor was in the Joke. I have myself come to the understanding that Conservatives need some form of propaganda, simply to provide a lead Steer for their herd movement. Still, it might be more laudable than the shaman dreams of the liberals, especially those dreams aided with the usage of peyote. I cannot comment on Dubner and Levitt, as I have not read them, perhaps the best form of criticism; one cannot be chastened for not having read so much in the world of literature, if you avoid the literary circuit.

Here is Dubner on Dubner; he doesn’t sound like that difficult of a Demon. I feel like the Fox channel, trying to smear some dude I have heard of (actually have) about something I know nothing about, because some people might champion Opinions different from our own stated desires. I wonder what happened in American society, which demands that your own surgical operations must become News, where the Government can be ignored immediately because Government publications could find just about any data, and Journalism creates its own Rabble to rouse. I remember when there was an element of honesty to American society, one in which you could find admissions of personal Self-Interest. I know that I am a flyweight blight upon the spirit of America and its intellectualism, yet I yearn for those mystical days of yore, where you could honestly tell a blowhard that he was full of Shit. lgl

A real view of Life and Living

The ardent Student should study this Piece, propelled as it is by two of the Participants of those years in question. Let me say first I belong to None of the Above, as far as political or economic thought is concerned. I trace my lineage back to some obscure references by the original Keynes, who at one time did insist that normal Markets formation could never occur when there was excess Government intervention. The basic component behind this thesis must be that Government expenditures must at some point reduce and leave the market structure, in order for Prices within the Markets to return to normal. Sustained Government stimulus is, in itself, the wrong path to follow. I will say that I am likely the sole advocate for such economic policy left in the World; I will man the ramparts until old age does consume me!

I suppose that I might present some justification for such outrageous behavior. Prices are always raised upon Commodities with the expenditure of Government funds, especially when they are deficit-funded; a condition which is almost universal whenever One talks about economic stimulus, you could say it is all debt-finance. These Prices never drop to normal when the Government expenditure is continuous, and the Inflation of Pricing is a really reverse taxation which seriously impacts all economic activity. I could give a fancy economic model talking about the calculus limits of Population size minus some residual percentage, over some calculus limit of technological advance minus some residual percentage, all subtracting some coefficient of residual Speed by percentage of Time; but I would obviously get it wrong, and no one could understand the situation any better. I will simply state that there is ever-increasing taxation of Private economic activity through higher Commodity pricing under the impact of Stimulus.

The important thing I would like to forward to my Readers consists of the fact Keynes once knew that Stimulus had to be transitional, and the evil effects of Stimulus accumulate over continuance of Stimulus policy. He may have somewhat recanted such philosophy in later Age, but We all have Senior Moments, some of which can be permanently impairing. The thing I would arrive at is the Statement that Republican Tax Cuts are being swiftly overshadowed by the hidden taxation of the Stimulus. There is a point where Tax Cuts are disadvantageous, and We probably arrived at that point prior to the Bush Tax Cuts. The only real benefit of the Clinton economic era was a minor reversal of the adverse trend. No one has to agree with my assessment, and luckily, almost no one does; and I will probably reach the Poorhouse before these Detractors; though I must say that Recovery for everyone will be hard to endure. I will warn my Readers now: Do not trust common belief too deeply, as Such has led to every Recession and War that the World has ever seen. lgl

Oh, that Dreaded Tax!

Greg Mankiw tries to do the VAT some justice, but the Value-Added Tax has too many pitfalls to be easily classified. It removes Business from the realm of taxation, which Business personnel and Economists think is great. The trouble comes precisely from this removal of Business from the Tax base. Business funds the greatest majority of Government lobbying activities, and Business-sponsored Government Spending ranks equally as expensive as the Business-derided Welfare payments. Always fear the political influence which gains from Government expenditure, but pays nothing for the privilege. How Greg relates the VAT to the Flat Tax I do not know, as it substitutes a constantly levied Tax for a singular Tax payment. I am not saying that it cannot be done, but I imagine that the logic is very convoluted.

The basic argument revolves around the composition of tax, and who it should impact directly. There is no question that the Tax revenues must be raised, and they must show some correspondence to Government Expenditures. Some say that the desired Solution is for every segment of the Population to pay for the Cost of their benefit from the Expenditure. This context would clearly establish that contrary to the wild proclamations of the Business world, Business gets many more dollars in benefit than they suffer in taxation. The Profits from Service contracts rival the Cost of any Department of Government, and affect probably less than 1% of the actual Population; not counting Workers and Stockholders, who receive payment only after Business management is satisfied with the payment system for the entire Business. Under the previous logic commonly supported by Business, such businesses should pay at least a hundred times what they do pay in taxes.

I could relish the replacement of the personal Income tax, if Capital Gains and Corporate Income taxation were maintained. This system would not only bring some 20% Tax break to Households, but also lower Corporate aggregation of Capital to some 14 year replacement, instead of the current 8-9 year match. Contrary to popular belief, this sustained level of aggregation is unnecessary for full employment, especially as 30% of said funds go to Stockholder Earnings, and 20% go to a Bonus program for high level Executives who have never proven their value to their organization as such level of Return. Simply because you can reward yourself with higher Salary and benefits does not mean you should. I would like to see the establishment of a Remuneration Court system, where all Wages, Salaries, Benefits, and Earnings must be approved before implementation; all such payments to be compared to other payment systems within the industrial sector, exterior to the industrial sector, and with comparison to foreign companies. Some systemic overview of the process could present great benefits. lgl

Signs of Imminent Doom

How to get to know your new Nobel laureate? Try this article. I accept quite readily Oliver Williamson’s theories on vertical integration, which can often be the efficient solution. Ward Bowman actually once said that it is the only path of leadership under certain circumstances. I have no bias against voluntary associations, especially if it closes adverse competition and loss of Profitability. Elinor Ostrom’s Work remains a little harder to pin down and prove, at least to my satisfaction. Voluntary associations without interior discipline seem hard, the latter accomplishable only when alternatives are equally difficult; so that the Participants will not bolt. I might be missing some element of her work which I should really read, but I can agree with her methodology of conflict resolution under voluntary association. Her preclusion of Top-Down solutions may be my only bone of contention, as I estimate that such solutions possess not greater failure rate than any other; there being successful resolutions in observed cases.

Nancy Folbre goes far to show that federal employment consists in a hard search and reward system to acquire skilled labor within an very competitive labor market. I have some problems with the analysis, knowing that federal and State employment have sufficient share of the labor market as to be Trend-setters. The full Cost of employment has to accept the fact that federal employees de facto constitute the largest union in the country. One has to ask who is the dog, and which is the tail which is wagging. I find the lack of representative alternate bids for labor abandons the field to a hidden union–at both the federal and State levels. The larger the size of Private sector labor associations, the more normalized is the labor employment pattern with federal and State employees.

Read this thing, and ask if voluntary associations have effective draft. The G20 probably exhibits as close an approximation to a voluntary association as can be found, and there is clearly not defensible network for association discipline. Punishing individual members for failure of compliance simply worsens a poorly-assessed framework of operation. The member government structures are separated from the membership cadre concerned with the G20 associations, the latter of whom have no disciplinary power within their own country. Conformance to G20 decisions are unenforceable, unless they are so draconian that no single member of the G20 would accept the stricture. Here you will find common failure of the voluntary association structure. Such is life. lgl

The fundamental system of Choice

I am fast doing what many other economists are doing this morning, trying to get a handle on who Elinor Ostrom and Oliver E. Williamson are; not even close to what they do. A quick scan by myself tells me that they have been around, and have done quite well in the Honors area. It informs that perhaps I should expand my Reading habits. Both work in the arena of economic governance, an area of interest to myself. Now the question becomes Why has the Nobel committee chosen them this year? The answer will supply Us with possible rationale for the Choice at this specific time.

The first fact which should be presented is this Prize actually comes from the Serviges Riksbank, not the original grant of Alfred Nobel. We are in a Time where there is great fear in the Banking community of exterior controls being placed upon themselves. Banks fear for their Profitability, they fear bureaucratic regulation, and most ardently, they fear for an alternate Choice system for the appointment of bank leadership. They naturally would like to highlight the work of two individuals who are on record as Supporters of the concept of natural selection of that leadership; as defined by the banks themselves. This is not to say that the work of these Two is not great, or not supportive of the level of the award which they have been given. It is simply to state that Politics operates even on the Nobel Committee.

Williamson’s theory may be under some attack presently, as corporations have lately shown some degree of economic inefficiency. Ostrom’s theory that common business practice often hides response to motives not recognized by regulation may be somewhat overstated, but who is going to challenge the first woman recipient of the Nobel prize? I guess what I am trying to say is only that Both have put in the fieldwork to deserve the Prize, and Both have presented potential value to their extension of economic knowledge. I simply do not like the crass self-interest which might have been present in the Nobel Committee. One has to ask Why even research must surrender to Politics. lgl

Life, Liberty, and the pursuit of Cash

I found this Post among Mark Thoma’s improbable spread; I simply do not know How he finds the time. I am like The Economist article cited and believe in the ‘new normal’,though I expect for a much different reason. There is a group of capital accumulators, which I call the Plungers, who believe that Wealth resides in the construction of the better mousetrap. They are traditionally dedicated to finding and funding new ideas, as they rightfully believe they can make a fortune with the ideas which are successful. They operate on the real concept that a small initial amount of capital will generate a Sale price much greater. The real element behind this concept lies in expected capital construction. This is not to say that they have no ordinary investments, yet these investments are likely managed by trusts or other such style groupings, where the Investor has little input though it generates a high Income. The end-result is that these Investors always search for new capital opportunity, and therefore, never return to investments where the capital formation has already been achieved. They simply continually search for a source of capital themselves, which is not managed. They will never return after a Recession to the area, simply because of the accomplished capital formation, even though their own base of capitalization has not been significantly damaged.

What I noticed in this article must be the lack of disincentives placed in the road of Credit-Card holders. There is something definitively wrong about Credit extenders who make money by extending Credit to poor Risk requests. Everyone knows that they make money from this extension, even with the rate of failure associated, and that these failures are not connected with their own performance for which they receive Bonus awards. The new law is supposed to affect the bad effects upon Credit-Card holders, but no one will do anything which will have any impact at the Retail counter. Here is where Change has to be made, and traditional bull about the insecurity of youthful financial decisions has nothing to do with it.

I have been asked by a couple of people to myself outline a sufficient law to regulate Credit Cards. Here is what I would do:

1) Credit Cards could not be utilized for purchases less than $100 of total accumulation of Products. Only Debit Cards or Cash can be utilized for less than the above total amount.
2) Credit Cards must electronically notify the Card holder of his balance before he can make a further purchase.
3) Credit expansions on any Card can only be made with prior record of 12 successful payments on the previous balance. Credit limits are to establish at $1000, $10,000, and $20,000; no accumulations larger than that amount.
4) All Credit Card Issuers must bill through one Agency, who must notify Card Issuers of any excess over the previous Credit limits. Additional agencies must at least coordinate their financial information.
5) An administrative Bankruptcy procedure must be created specifically for Credit Cards, based solely on filed Paperwork, where binding payment is enforced upon both Card Holder and Issuer, and further Credit cannot be extended until a required Payment level is paid in entirety. This is to be an automatic procedure which must be undergone with failure of Six payments of sufficient payment.
lgl

Only the Lonely

I know little about the minutiae of Trade, but I do know that the United States will never export their way out of our financial difficulties. The NYTimes reports that the Trade imbalance is shrinking, though Business Week reports the non-oil Trade deficit widened in August. The fact outstanding in the data consists of a lack of Manufacturing capacity in the United States, which is a factor that must not continue for any length of time. The lessening of the value of the Dollar is not the method to curtail American dependence on foreign products. I think the economic community may be witnessing the horrors of elimination of tariffs.

I cannot decide whether I believe in the toxicity of Nobel Prize awards, yet it simply reflects common desires to honor Those who advocate what the majority wants to do anyway. Hayek himself failed to outline the hazards and limitations of Information, all of which in one way or another is Gated. That Gating process always has a model signature, eliminating real comparison value. Pablio Triana may have the right idea, but it is only a theory after all. I would not crucify individuals, models, and fancy words solely because some unknown quantity known as economic participants did not respond in the manner proscribed. One has to forgive the Fool for his sins, and Economists work with gross totals.

I would be the last to call Tyler Cowen’s logic faulty, though I see some potential holes in it. Unless the Stimulus had created a series of new Jobs, the length of unemployment will not change in either scenario, no matter the length of actual unemployment. This is because in either case there has been no Job Creation, only Job prolongation. Unemployment insists that there is more than one Candidate for any specific Job, and the conquest on the Job by one Candidate means continuing unemployment for the losers. Stimulus without Job Creation only delays the day of reckoning. Recalculation seemingly always must include increases in efficiency, and I wonder How such efficiency can possibly result in Job Creation, without a profound increase in Productivity. The later will not occur without an increase in Demand; yet it is the loss of Demand which has called forth the Recalculation. I speak perhaps little Truth, but am great about presenting facts which are hopefully true. I do not find Recalculation a panacea for our troubles. lgl

I have no real bias against Barack Obama, but I almost feel insulted by this award. I know that the Nobel Commission felt that they had to award Obama as the first black American President as a sort of fashion statement. I know that they must have felt that they needed to get the Award in his hands, before Obama himself blew it, and became another antisocial character on the World stage. This, though, was too fast and too early, and cheapens the entire process. I know of no better way to nominate or award Candidates, but it is like the old song, "You may be here to Sing and Play, But you ain’t doing it thataway!"

Otherwise, I have found my link to my favorite source of material broken this morning. I will have to reestablish a viable context, but will wait until tomorrow, as today is my birthday; and I do not wish the level of frustration. I cannot even get a sensible Google formation to that which I desire, so I may upgrading soon; except I have done so already recently, which may in itself be the reason I have lost some of my sources. All I know is that it is too much for me today, especially on top of Obama’s Nobel prize. I applaud All who believe that I am simply getting too old for all This; maybe they make the most Sense. lgl

Honor and Contempt

I hope that my Readers can get more out of this Post from Mish than I have myself, as it is a relative good overview of the economic models; he confusing me somewhat with his length of Post in consideration of his central theme. I do agree that Inflation has arrived for the leading economic indicators much before it has reached the Money. The Recovery seems to be the last man in the race, and I think it is stopping for a Coffee Break. It brings up a Concept which has not been considered by Others: Is there a point where Stimulus is actually counterproductive? What I am implying is the question of whether there are adverse tendencies to Stimulus which overpower the effect of Stimulus; Mike Shedlock presents material suggesting that the impact of Stimulus alters in force quite regularly, dependent upon the amount of Stimulus and exact placement. All I know for sure can be summed up as that the traditional economic models are expressing wayward properties not seemingly tied to actual performance of the economy.

There is always much interest in exactly who will receive the Nobel Prize for Economics, and Greg Mankiw has presented the odds as calculated by Ladbrokes. One may ask what this has to do with the previous paragraph, but the Nobel Commission is as worried about the equity of the economic models as the rest of Us. This being the Case, they are under extreme pressure not to nominate an individual, whose effort will receive future malignment. It reflects the uncertainty of the Times, that there is no clear leader for the accolades. One can ask Why there has to be an annual award, instead of a reward whenever Someone has provided a clear advance to Economics based upon the research. I will state before I am asked that I have no favorite, and think that William Nordhaus or Paul Romer will be the major Contenders.

I ran across this Post after I had written the previous comment, and am somewhat gratified that Others may agree with me to some degree. It is known that the Commission is unlikely to make a controversial choice in this era of exploding economic concepts. I trust in the fortunes of War as well as Economics, and believe there will be more of destruction than actual gain from any choice here, and do not relish any candidate chosen. Reversion to the first paragraph will inform that the Words will always come back to haunt All of Us, and no one can determine the exact point of attack. lgl

The schizophrenia of Economics

Melinda Pitts defines the problem quite well, though still not citing the base causation of a lack of Consumer Demand for Product. Small Business will not survive if the Public corrals its discretionary Income as Savings for sudden surges in Price from Necessities. Small Businesses rarely provide Necessity Product, though it presents considerable Service industry; they having somewhat of an advantage in the later, with lower Overhead Costs and short Carry Credit. It is still not an environment where added labor would seem rapidly necessary, as Consumers put off even basic Maintenance Costs. The decline in real physical Sales means no Hiring will be done in the immediate future, and if the Christmas Season is poor, will likely mean the end of the Small Business engine for Employment. The decaying dollar will not even begin to bring the Export Sales necessary to counteract the decline in domestic Sales, a great share of which have already been processed.

This Movement has all the creepiness of those economic adventures originally designed in the 1970s. It is a Tax Credit which will not even be considered in an atmosphere of shortening Store hours, and switching full-time Help to Part-Time; all due to lack of presence of Customers. The first comment made must be that there will be absolutely no effect until it is passed. This means it will do nothing for the current Quarter. The new year presents almost no Production or Construction contracts for new Work, probably only about 40% of normal years. The Tax Credit will not take effect until the next Boom starts in real truth; then it will be impossible to get rid off–exactly like nonentity Interest rates. We are getting close to paying Business to not produce, as they have to pay less and less, the more and more that they do less.

There is a serious element of economic thought which wonders whether there is any rational expectations connected to markets. Every burst bubble ending most Booms are always established by irrational expectations. Every Investment advisor suggests that Investors adopt a long-term program of Investment, and the average time it takes for Stocks to return to previous Price after a Recession is something over 3 years; yet, there are always cries of great calamity with every Recession. Economists tear their hair out, trying to find some model to restart the economy, though Recovery almost invariably takes the Ageing of Intermediate necessary Product–somewhere around 3 years. The trouble with the economy may be that We invest with a Trader’s mentality, when worthwhile Investments generally reach real fruition only after about 5 years. I may possibly be in the irrational expectations camp. lgl

How to explain Stimulus

One needs to read all the links to this link, before an understanding of the argument can be made; so be sure to follow all sourcing. Arnold Kling’s Recalculation theory is relatively simple to follow, as is the Schumpeter Quote provided by Krugman. Tyler Cowen gives some history as to previous development behind Arnold’s theory. It is here from which I will depart, outraging everyone with a modification of Arnold’s theory to be called the Recalculation Drain theory. I simply have to find some Point to start from in this quest for perfect theory, which may have literally nothing to do with Reality; nothing really works in economic theory except that which has been proven to work.

I guess the place to start would be that Statement that every Boom has some number of sectors that are particularly more successful than the greatest majority of sectors. This is the source of bubbles, with the outrageous growth of Price in the Products produced. Everyone talks about the bubbles which burst, but no one talks about what doesn’t burst. This consists of the Labor and Capital which has been devoted to production in the previously rising sector; the burst bubble insists on the plug being pulled on this concentration of economic assets. This is not your basic Recalculation, but a very real drain of assets from a sector. The Recalculation preforms whether the previous described drain has started as yet. The process uses new Labor and Capital if the described drain has not been accomplished. Here is the difficulty, and where Government Stimulus can be very harmful to the Employment and Production picture. The greater delay which is introduced into the draining process, the greater will be the underemployment of previous gainful economic assets, who have been sidelined by Recalculation effects ignoring these elements.

Government Stimulus can be harmful if the Recalculation to other sectors has utilized substandard Labor and/or Capital reserves, because the drain has been resisted by the Stimulus. The recalculated sectors not only do not utilize drained economic assets, but may be subjected to the employment of substandard performers in the production process. It is especially bad under consideration that the previous employment in the bubble sector had employed the most superior of economic elements–now left in limbo because of Stimulus efforts. The drain of the bubble sector must be accomplished before or keep pace with the Recalculation effort, or the economy will suffer from substandard employment, poor production performance, and a repayment schedule for the Stimulus effort which is very unreliable. I hope I have adequately confused everyone; I will not call Stimulus bad, simply piss-poor! lgl

Truth in Borrowing as well as Lending

I found this Post by way of Jeff Cornwall, both should be read carefully as they state fundamental business belief in the country today; I particularly like the commentary in the first Post. My trouble lies in my disbelief in the assessments reached. I have rarely found Producer types impeded by any level of business or tax bias. The fact of the matter that these types organize simply to make their own pile, and little can be done to stop their operation. Government policy mostly has nothing to do with their success or failure, they far more dependent on provision of desired service or product to the Consumers at an effective Price. I will join the Producer types in complaints about regulation levels, but would condemn them to live a couple years in the 1940s or 1950s when they complain about taxation; those proved to be very productive decades. I also find it hard to listen to Producer complaints about health care Cost, when they have major elements in their personal Portfolios invested in the health care industry, all because of the high Profits in the area.

The first blog criticizes the American tax system on business, which may appear ludicrous if examined carefully. The American Corporate tax system is so full of holes that real taxation practically disappears, and there has been previous Stimulus awards which have turned that taxation into a reverse Income tax system for businessmen; a factor no economist has ever shed Light upon. The real tax impact on business and Corporation may be among the lowest in the World, especially as Property taxes from State and Community has been shifted greatly to the Homeowner through efforts to promote business in the Community. It is genteel to define normal taxation as prosecution of industry, though you can even convince people that Day is equal to Night if you have enough shine; ask any Eskimo about that.

We need a real increase in the real Tax impact upon Business, which will not materially affect the Business desires, or the resultant Job Hiring practices of those desires. They want their own business, and they need the labor to achieve that business. Their being taxed is not the Problem, as We live in one of the most business-friendly countries in the World. What We need is funded Consumer Demand, which no one is proposing to create. Here is where the Problem resides, and none except myself accepts the notion that this Demand must also be fueled occasionally. It is the Consumer who needs a Tax break, not some mythical business which will not occur until it has an operating list of Consumers. lgl

Where did it go? The good Lord only knows!

Tyler Cowen possesses a intuitive grasp of economic concepts which may sometimes elude the rest of Us. He has a series of Posts which take some translation for those of Us who must endure with less education and brilliance. Here is a Post on general substitutability of Product, where people has alternate levels of desire for Product. Prices are set by this competition of desires for Product, which in aggregate should make the process simple. It is far from that! People have different patterns of desires, have different levels of Product fulfillment, and their own desires for Product differ from factors of their own Income, level of previous gratification, their channeled buying patterns of purchase and repurchase, and their own level of debt. Traditional economic theory has always suggested that aggregate purchase patterns cancel out these effects, as there is always alternate Product desire. We are finding this not to be the case, and find little example where it has ever proven true.

The above discussion becomes pertinent when discussing the methodology of handling the current financial and economic crises. The first has incited the second, though Tyler thinks it is a continuing shock propelling the economic crisis, while I have some doubts that it is still the problem. The initial financial shock was the inability to get continuing funds from failing financial institutions, not exactly the levels of debt; something which had an impact on the later economic crisis and on the financial crisis, but in varying level and scope. The real drive behind the economic crisis remains the altered desire of Consumers for Product, faced as they are with both huge debt and lack of viable Credit. The fact which is reality, though most economists would deny it, consists of the reduction of desire for all and any Product not necessarily committed to the maintenance of their current lifestyle. Here is the real drive behind the economic crisis today, and the one which economists find most hard to amend.

Scott Sumner’s easy money will not be the Solution, what with Tyler’s statement that there was a profound loss of money velocity. Neither deal with the real lack of desire for Product, which is the underlying force behind the economic crisis. This is why I called for a serious reduction of the levels of personal Income tax yesterday; an attempt to get unfettered funds into the hands of the Consumer. The reason I use the term ‘unfettered’ is simply to say that there is already too much Consumption debt, and too much financial paper out there; the basic reason for the alteration of Consumer preference which We face. I called for the increase in business taxes to start to eliminate all those Middleman Paper Profits which have inflicted huge Product Costs, and all of the snarl of the financial crisis. Readers can find huge numbers of Business and Economic critics of this position, but it may well prove the only real Solution to both crises. lgl

Why my rich Peers hate me!

I typed a whole lot of numbers to link this piece, so the Readers can understand that the basic function of Stimulus proves a failure. Milton Friedman and Franco Modigliani were wrong about their ‘life cycle’ consumption, but only by length; there is a definite decade cycle which can be discerned–all based up expected Earnings from point of Income increase. Robert Barro gives additional material as to the lack of Gain from Stimulus. One has to understand that the current economic policies are costing an extreme amount of public funds, and retrieving little in terms of economic gain.

A degree of honesty must prevail at this time. All Economists and Business pin their hopes upon Investment, and I cannot understand Why. There is a remarked loss of Consumer Demand–both total Consumption and in sector consumption, especially that which is dependent on Name branding. Truth would say that is already too many vested businesses, with too much Production capacity, with too few Sales. The vested businesses are building up too much debt, and additional Start-ups would only increase the competition for Consumer dollars. Investment will only worsen these effects. We have whipped that horse to death!

I propose an alternate approach, where We re-introduce the concept of real business taxation. You hear uproar from Word one on this proposal, yet it was the traditional form of taxation back before there was even an personal Income tax. It has certain benefits which should be re-examined. The Consumer will not be censured for Consumption in money terms for his Expenditures, while business has to pay nothing without accumulating Profits. State and Local Sales taxation presents sufficient criticism of Consumer Spending, and We need Consumers to feel affluent. I will suggest that personal Income taxes be reduced by 10%, Capital Gains taxation returned to 22% for Now, and business taxes permanently increased by 10% across the board. It is bound to anger all sorts of officialdom–Private Sector, Government, and Academia. Still, it may be the way to restart the economy. lgl

The reality of modern life

I sit here this morning utterly frustrated by the factor that my cable server moves like some of my friends in a local Rest home. It takes forever to access anything, and it reminds me of the horror of relying on small pieces of metal flying around in a Space populated by debris and Solar flares. I imagine that the difficulty is much more local and closer to home, but cannot tell as there is failue in attaining my news sources. I do know there is a lack of backup systems in Technology throughout the World, and that someday We will pay for that lack. Difficult will become Disaster Someday, bloody Someday. My only Hope consists of the desire that it really not be bloody.

I cast around for material to write about where there is no news source, and think I should turn to something about economic theory. My thought processes turn to consideration of the mandatory conditions necessary to establish a Market. The traditional theory holds that you need only Buyers and Sellers, along with some common medium of exchange. The altered perception states there must be sufficient Sellers, and/or Buyers, that not one Buyer or Seller can alter the flow pattern of competition for each Good. The altered, altered perception states that every Buyer and Seller must effect the Market, in order for there to be a market; this means that anytime the desires of Buyers or Sellers are nullified, then there is no market, only a Price schedule set by forces outside a normal market structure. Then there is the philosophically dire belief that such constraints are actually normal market behavior (I pray for their poor Souls).

An unknown philosopher once stated his doubt as to the morality of morals; he unknown because of everyone’s inability to comprehend such drivel. It might have some bearing in the case of markets, because every market position stands reflective of the economic power of the Participant. Inflicting model behavior on the market consists of a monopoly position in itself, denying the economic sway of some of the Participants. Readers can understand the difficulty of establishing the moral high ground for markets; and all this is before consideration the successful operation of the market. This later success remains mandatory to accurately establish the Reward system which the market is supposed to establish in a proper allocation. Well, I have composed a Note for my Readers, while answering no Questions and offering no Solutions; a relative Good Day, all things considered. lgl

Real Belief

Study this Release and ask if We could possibly be an the correct path? No one considers the real implications of the material as they read. Debt equivalent to 300% of GDP would lead to the Dollar being as valuable as the Japanese Yen is today. The Process will lower real American Wages until We are even with Indian labor, below European and China labor, but equal to basic South American and African Wages. The sorrow of the situation resides in the absolute idiocy of the impulse behind the trend. Simple reversion to the Tax scales of pre-Bush Tax Cuts would probably reverse the Trend over the century. American output is massive, and normalized Tax rates should handle most of the problem, with restraint of Congress and Legislative Spending canceling the rest of the Effect. This is accomplishable Now, and will probably be available for another decade, though there is a Point where normal correctives will fail; solely due to the actual magnitude of the Debt itself.

Educated people like to blame the debacle upon Medicare and Medicaid, and their creation of huge Costs which cannot be paid. I will not enter into a tirade about the artificiality of those listed Costs, except to mention that the interaction of Medicine and Corporate style of business has led to vast inflation within the health sector. Drug and medical equipment royalties are extremely outsized in relationship to the provable benefit. The Production Cost of the average Drug is less than $.50 per pill, and less than $2 per vial. Rarely does the Production Cost of any Injection exceed $4. The average qualified medical technician can give around 80 Injections per day under pressure, and normally average about 3 Injections per Day. Education must be considered prime, but there is existent threat of monopoly pricing in Medicine. It is a real element of the total problem, but not the generative cause.

The real problem causes come from the Business world. Business personnel hate to pay Taxes or Interest on their Credit. They support policies which reduce their Taxes, and incite Inflation to levels where they do not have to pay real Interest on their debt. This is very advantageous to themselves, as they can retain all Profits from their industry in-house. The trouble with this venue lies in their switching these Costs onto the greater economy by the Inflation, which impacts their Income far less than Labor; it is all a question of the greater ease in raising their own Prices in comparison to Labor’s ability to demand Wage increases. The actuality exists that the Business world insulates themselves from Cost payment, by the destruction of the stability of Everyone else–Stable Incomes, the Elderly who lose the value of their previous labor, and Workers who cannot realistically organize to gain Wage advantage.

The stressed inequality of such Taxation cannot be long maintained, without long-term injury to the economy. The most obvious Sign of this damage is the huge debt ratios–by both Government and the Private Sector. The second, hidden Sign must be the loss of Consumer Demand for Product; something which can be marked not by compilation of total Dollar Sales, but by quantities of actual Product sold. Am I simply a Scare-Monger who does not understand the modern economic forces in play? I doubt it! I am an old man who is likely to be dead in a decade by statistical measure. The kids should be told, even if they will not believe. lgl