Tuesday, June 29, 2010

Poor, off-the-cuff Attempt

I would suggest everyone read this Piece, though I don’t agree with it at all. The Solution to economic recovery lies not in flooding the Markets with Cash, but with actually putting people back to Work. I get static all the time for the simple demand that Someone provide a coherent outline for economic recovery. No one wants to put their Name and Reputation on the line with a definite list of objectives. The hidden rationale behind this lack of effort consists of a lack of belief by everyone that anything will make any economic difference. At this conjuncture I perceive that I must take the first Step, and be laughed at; the trick here being that economists must come up with alternate options to criticize myself. So here goes:

1) Let all Tax Cuts expire–go back to the Tax Codes of the mid-1990s.
2) Bring back normal Interest rates, and stop lending banks money; a creature obviously deformed and wrong.
3) Reinstate a Draft with a Statement foreign deployment will be totally Voluntary, unless Congress goes to the trouble to actually declare War on somebody. The Enactment will expressly proclaim that the Draft will last only 8 months–the period necessary for Basic and Specialty Training, and will be paid only Training rates of Pay. The goal will be to train some 40% of the graduating High School classes.
4) Pass a Pavement Resurface Act which stipulates that the federal government will pay Minimum Wage rates to States and Localities for all labor employed in resurfacing Streets and Highways, irregardless of actual Pay given. This ensures that Employers will maintain a labor intensive program of Road improvement.
5) Like Acts will also be passed for employment for the Forest Service and Firefighting agencies who need to clear brush and establish Firebreaks. The Forest Service and lumber industries should be encouraged to enter into an expanded Tree replanting activities by this same federal payment of Minimum Wage rate per hours worked.
6) Pass a Business Failures Act where failed Business and Industry become the property of the federal government, until such time that all unpaid taxes have been paid–through the Sale of Capital or Property, or payment by the bankrupted Business Owners.
7) Pass the Accounting Tax Act where Corporation and Business pay a per-Hour tax on all hours of labor devoted to Tax Accounting or Litigation services above 25 hours per $1 million Dollars of Income per year. The Tax should be 25% of the claimed labor deduction. The federal government will not pay for finding Tax loopholes.
8) Corporate seminars, Meetings, or Recreation activity will not be tax-funded. Tax law will be altered to refuse Tax deductions for Rental fees for conference centers, Motel and Hotel room rates, Travel expenses, or Meal allowances.
9) Passage of the Hazard Duty Act where hazardous duty as submitted by Superior petition will obtain a 2-Week paid Vacation for the Individual firefighter, policeman, or military personnel for himself and his family to an established number of American Resorts–paying for all Transportation, Housing and Meal Costs.
10) A budgetary Act will be passed stating that all Civil Service positions at the federal level will be assigned an operating budget, and that the Civil Service personnel will get 25% of all saved funds coming in under budget. This will lead to both extreme effort on the part of such personnel, and more accurate Accounting budgets. lgl

Sunday, June 27, 2010

Statement on Economic Theory

I am going clear into the ozone here with the current Post, but so lays the state of the nation. I will discuss the possibility of closed containment of the economy. This is simply a Statement that natural Production will produce its own finance and resultant Consumption. Any artificial infusion of Production factors–cheaper materials, cheaper or greater finance, lower or higher Transport Costs, greater or lesser taxation, or excess advertising–will lead to artificial levels of Production and Pricing of Product. There are several generative factors which negate any potential deflation of Product Pricing, as all Supply Costs have risen to adjust for the previous maladjustment in Production and Pricing. This means that the only form for deflation to take is consistent over-Production, which can only come into being by a suppression of the labor Costs of Production; where the natural Consumption levels are threatened.

Many may not understand What I am talking about, but it basically states that Stimulus is actually counterproductive. It ruins the repayment system of Production, creating false centers of Profitability within a Production decline. The entire sentiment states that the false centers of Profitability are over-financed, leading to misplaced investment and Production. The higher Pricing for all Product generated leads to suppressed Production in other sectors because of the reduced Consumption due to Pricing. Stimulus, especially Tax Cuts for Business, carries exactly the wrong message and effect on the economy. Those Sectors most cautioned to restrict their Production by natural Pricing mechanism are granted false finance, while Those who have maintained their natural Production are penalized or bribed to undertake over-production activities. Inflation naturally arrives as soon as Consumption shows any sign of recovery.

Any Economist will tell you that the only true way to clear over-production remains a fall in Product prices. Business Tax Cuts of any type forestall such a drop in Prices; instead insisting on a maintenance of Pricing, which can only reduce Consumption and employed labor. Stimulus only pays for long-term minimization of both Production and labor Costs. One has to make the Call at times; it is actually very rare that benefit to Business is actually benefit to the economy, and where there is divergence, someone must speak. Business Profits maximization stands as a very poor indicator of good economic policy. lgl

Friday, June 25, 2010

View from the Outside

Can We actually do anything about Oil? Everyone wants it, no one wants the aftereffects of it. What ended the Roman Empire–almost All would say Conquest by barbarians. The actual fact was not War, but banditry; the real physical loss of cargo Transport safety. One could not travel anywhere, or send Goods anywhere. Today, We ship Fuel thousands of miles to provide the energy to ship Goods thousands of miles. It is particularly serious as We insist that the Goods must be produced far from home; a double whammy of cheap Wages, and the heavy environmental Costs of close Production. We are several degrees away from au naturale living, and very few alternatives mainly owing to the press of population increase. The question becomes How do We return to a safe livelihood.

I enjoy this imaginative piece, and would share some comments. The Austerians are mostly Right, but believe in Tax Cuts for business; a real trap which will not produce greater Production, only artificial Profits which must eventually be translated into inflation–exactly as the Inflationsitas insist. The New Jack Keynesians call for more Bread and Circuses, they being actually Double Dippers in drag. The One-Percenters are right in intent, but wrong in percentage; the Fed Overnight rate should be immediately returned to 4% in one disastrous blow, propelling death to the new financial instruments like Credit Default Swaps. I know that We are still in the first Dip, but disagree with new Normalers; knowing that the Recession will only be broken by higher Taxation and constant Regulation. I myself must join the Nihlists, though I possess no belief in Gold. We are at the twilight of empires, and will be replaced by ruder, wilder lifestyle as no one believes in communal effort any longer.

We can find signs of the coming barbarism. No one will touch the esteemed Tax Cuts, even when they are recognized as basically nihilist; causing huge reduction of tax revenues when those revenues are essential, while only repaying business for a fall in Consumption–the least Recession affected of Us all. The tendency found is to further deprive Those least able to protest. This reaction will lead to long-term political violence, though the well-fed plutocrats in the Congress will not recognize this until too late. The upshot of the delay will be worsening economic conditions, and less benefit for everyone. I did not mean to make this Post sound so downbeat, but there is little optimism in the view from the Outside. lgl

Thursday, June 24, 2010

With an evil gleam in his eye!

A man should not have to agree with Someone when he is One of Those being criticized. I am not a Blue Dog Democrat, but I am also not a Conservative Republican, and will even round out the Statement to state I am not even a liberal Democrat. What I be is a less-than-Concerned citizen. A moment of Truth here: no matter what Congress does, it will not affect the Job Market seriously. Any Stimulus added will go to a small cadre industry of Government Contract Providers, who are only looking to keep their slimmed labor force employed; not actually seeking to add new Jobs at all. Most people would say this is for the Good, but it may be Bad; let me explain.

Today, there stands a massive two-tier Consumption Market, consisting of Those who still have Jobs, and Those who don’t still retain their old high-Wage Jobs. The former can only buy so much, though they have not altered their purchase structure very much. The later cannot buy at all at the level of previous expenditure. It is the old shell game of the Haves and the Have-Nots! We will not get any Government swarm labor projects as Stimulus, as long as Consumption remains as high as it is; this because Conservatives will claim it is too radical. We cannot expect Consumption to lessen from its current level, as long as nominally conservative Government stimulus projects are funded. Future Stimulus should not be expected, and would not help even if provided. The trouble arises in that current Stimulus is no help, and really an impediment to real Government intervention.

I thereby call for a specific funding venture on the part of Congress, which will be an intervention of some potential success. It will simply state that Congress will pay Minimum Wage to Anyone with a difficult Credit balance, who shows up at any federal, State, or Local Maintenance facility where they will be employed in Clean-Up or Restoration activity as defined by local Maintenance supervision; this ability to Work lasting as long as their Credit balances. Local Maintenance supervisors will retain the right to Hire or Fire based upon performance, while said earned Income will not count towards Income establishing eligibility for other Government programs. Such Workers will have to maintain a Credit balance to retain the right to labor, and must present suitable Work performance to retain their obtained employment. It will insist on some level of Consumption necessary to maintain a Credit balance, and could be our only option to increase Consumption. Should I spoil everyone’s day by suggesting the Cost should be cancelled by an increased real rate of Taxation? lgl

Wednesday, June 23, 2010

All Things going Wrong

I can truly find a boring Read, but the astute Student may want to examine this described process. Boosting Rates to pay for taxes may seem minor, though not to the recipients of the benefit. The Cost to the Consumer continues to go up, while his ability to Pay has been decreasing; often at a rapid pace. Business outlines a double taxation which does not take place in the first place, then claims the right to charge the Consumer for it. Public distribution networks should only be allowed a Cost + some percentage profit on their rates. Granting them the right to assess Taxes as a Cost to be charged to the Consumer is both wrong, and leads to imaginary Tax claims which are not paid initially. At least the Regulation should be paid stipulating that Rates can only be altered to pay for the previous year’s actual taxation.

This Post should explain Why there is little talk of the Exhaustion Rate. It is basically due to the fact that all traditional methods to reduce Employment have been utilized, and no one noticed any change in the Unemployment rates. It would have helped to compare all charts to the same data for the Great Depression. The Question becomes whether Congress or Administration will attempt any unusual methods to increase Employment, and I will respond that they are not yet on the scope, and there is much reason to estimate that None will appear soon. Economists never speak on it, but Many seem to hold the attitude that the high Employment leading to the last two booms was the aberration; and that a significant Unemployed class is the Norm.

I will finish Today with this totally unrelated article, basically because the Oil companies are just asking for trouble. The real problem stands as deep water pressures are indeterminate. There is incredible weight associated with a cubic mile of water, and the circular posture of the ocean over a deep water wellhead a cross-directional additional weight. Even a shift in ocean currents of short duration can shift the vector alignment of a wellhead, with the immense weight presenting the shearing capacity. There is no optimum Centering capacity at present to prevent cross-stress, and no current wellhead capacity to forestall such shearing motion. Both problems will need to be solved before We can breath easy about such deep sea drilling. lgl

Monday, June 21, 2010

The Two-Tier System

Sometimes Robert Reich is very right, and sometime somewhat wrong; this being one of those wrong times. First Republicans lambasted Bill Clinton’s agenda, now it is the Democrats’ turn. Bill Clinton raised Taxes and brought forth a Boom, lowered Taxes and achieved a Tech Bubble for Us. Democrats want to praise Clinton for the later, I wish to acclaim the former trend. The Tax increases led to a return to high employment, while the Tech Bubble led to eventual Bust. Democrats have a simplistic view of just spending Money which the Government does not have and refuses to take. The Republicans have an even more simplistic view of simply cutting Taxes wherever and whenever possible, ignoring the fact that the Profits of Production and Retail are drained into debt; most of which can never be repaid. Give me an old-time Socialist any day, who only wanted to Soak the Rich, to give the Poor a Minimum Wage insufficient to even pay the Milkman. More intuitive reasoning might be called forth!

I personally dislike Business Tax Breaks of any kind. I am not a wide-eyed Revolutionary; though almost everyone would employ such derogatory labeling. My way of thinking suggests that the best way to generate Growth in the economy would be to take away a significant portion of the Business wealth to pay for Social services, inducing them to work harder to maintain the Income which they desire. This would also have the added benefit of eliminating a non-Risk style of Paper investment in excessive Government financial paper, forcing investment into riskier ventures of increased employment. I personally like this avenue, of course it means higher Taxes; a bane for true Conservatives.

I would further suggest a program of two-level Government Spending. It might be hard to explain, but I will of course try. All Government Spending should be classified as Restoration or New Construction. All New Construction on the part of Government should be suspended anytime Construction Costs have risen more than 6% in the previous 3 years. Restoration Spending would include Welfare Costs as well as Construction, but both are of immediate Need. My plan would stipulate that Government Spending could not be reduced from the previous Year, even though all funds are devoted to Restorative projects. Restorative projects require about 40% more labor than does New Construction, whether it be for Social services or Construction in nature. This aids the Conservative desire for less Government Spending, impels Democratic appeals for greater Social Welfare Spending, and allows for higher, better channeled Taxation. All Sides can start to Curse now! lgl

Wednesday, June 16, 2010

The dubious nature of Money

We have another proclamation that Keynesian policies are dead. My difficulty with that claim consists of the fact that there has not been a burial as yet, and Keynesian policy has always been a rotting corpse. Even Lord Keynes had great doubts about Keynesian policy. The delayed Death scene is basically caused by the allowance Keynesian policies give Politicians to spend other peoples’ money, all without taxing anyone for anything. One has to kill that Skunk every day, and everyone gets tired of the repetitive labor. I once advocated a plan where legislators had to pay a percentage of any deficit aroused from their own Salaries, but legislative passage proved impractical.

James Galbraith presents another side to the argument. His entire contention states that the elements which are functioning well should not be distorted in the balanced budget debate; a factor on which I could agree. It is not the fault of the Poor and the Elderly that Congress spent the Social Security Fund. Taxpayers paid the taxes in good faith, while legislators only used the circumstance to further their own agenda, without resort to actually funding a sound tax system. They now want to reduce or destroy the programs, because there is the necessity of repaying the Fund. The only thing Politicians resist more than raising Taxes to pay for their excesses is raising Taxes to fund the expenditures of others. The one thing Politicians cannot do is attack popular programs, so the outcome of this current battle remains unknown.

Here is a man who can skirt the major issue: whether Government debt should be utilized as Collateral in the first place. Government debt consists of unfunded expenditure without methodology for repayment; remember, Governments are highly adverse to establishing a Tax base to actually repay debt. Securitization of such debt does not Collateral make, only a system of Gambling where Bettors place money on the stability of political motivations. It is not like a Mortgage or Business debt of set duration and Interest rate. Government debt will only be replaced by future debt of indeterminate duration and Interest rate, never with a refunding cycle where it is actually paid; politicians totally incapable of paying for their own Expenditures through taxation, let alone the Expenditures of their predecessors. Securitization of such debt only completes the process of running the Printing Presses to print a different form of Currency. The underlying context foretells nothing but Inflation. lgl

Tuesday, June 15, 2010

Front-Loading the Tax System

I will introduce my theme by first directing my Readers to this Post from Tyler Cowen. It must be remembered that economic policy of necessity impacts social policy, and that often, social changes must be implemented before any desired economic motivation will be achieved. One would do well remind that other ideals can be treasured, besides the social set which We did adopt. Many of these social systems have developed from basic Concepts of the Tribe, where no one figuratively eats until the Poorest of the Tribe have eaten. One of the American problems may have been that We left the trappings of the Tribe behind Us in our migration to American soil, along with the concept of the Extended Family. Consider Tyler’s Post on the basis of needed cultural changes introduced into American society to match its European counterparts.

My major theme of the day, though, is to answer the question asked: What does Front-Loading the Tax system mean? It is an economic policy where legislation is passed demanding that nominal rates of Taxes be paid when earned, and all Tax remissions granted only after filing a Tax Return for the Tax year in a Rebate system. Almost all of such systems also provide a mechanism to reduce Tax remissions in the face of budgetary deficits. The later mechanism basically grades and outlines types of Tax remissions, and defines the order in which those Tax remissions are reduced, and by what amounts. Here is a potential list going from the safest Tax remissions to the Most in Danger:
1) Personal Exemptions---------------------cut by at most 5%
2) Senior Citizen Tax remissions-----------cut by at most 5%
3) Investment Tax remission---------------cut by at most 20%
4) Business Tax remissions-----------------cut by at most 20%
5) Corporate Tax remissions---------------cut by at most 20%
Most legislation would recount such Tax remission reductions could take place only to replace a certain percentage of budgetary imbalance, requiring legislative action if the budget deficit exceeds a certain percentage of the budget–say 30%; otherwise, The Tax Authority is charged with reducing the Tax remissions on an equal basis following the guidelines.

It must first be stated that such a Tax system has not been attempted on this World to my knowledge. The second element states that such a Tax system could well trash any of the standard economic policies–particularly Keynesian policy. Deficit Spending is dropped from the economic policy basket. It forces a rational yearly attempt to balance a Spending package, or face a Public who rightfully believe they are confronted by higher taxation. It provides a constraint on Public Spending not now present, while allowing Government to operate on the Taxpayers’ money if Interest is not paid on the funds withheld during the Tax year; granting a reduction in necessary Securities which must be issued to fund Government operations. Notice that any attempt to introduce such a Tax policy will arouse extreme Opposition. lgl

Sunday, June 13, 2010

New Product

What is the endgame as far as Employment? That is the essence of this article. History works against Us, for no economic system ever devised has ever failed to produce more hands than Occupations for those hands. Production will always produce the Knowledgeable who can cut employment to the absolute bottom-line minimum necessary. The only Salvation from has been the expansion of the series of Goods utilized by the economy in question. I will say to Those who cannot understand my poor phrasing that We need new industry to expand the economy by additional Consumer desires. Here We get back to the traditional question: What do you get for Someone who has everything?–our current Consumer.

Technology is trying to do its part in generating new desire, but the Consumer seems somewhat sufficed in electronic equipment; at least where a healthy dose of expenditure is required. We are always faced with the constraint of what the Consumer will purchase. A common venue has always been to incite the Public to pay the Cost, though there is continual complaint from Taxpayers; this often leading to imaginary payment systems–leading to long-run financial failures. The entire context limited by total Consumer Demand which must pay for both desire and Tax; said Demand limited by original Production in the first place.

The Equation so poorly stated means that new Product must be both relatively cheap towards the initial Income levels, and widely desired by all constituent elements in the Production network. A Case in Point is easily shown: the widespread use of the Computer after the development of Windows software; notice the high desire with relatively low Cost. The trouble begs issue that We need as widely a desired Product once more of equal relative Cost. Here is the Rub! I would attack the issue from the point of desirable rations. I am thinking about 1-lb. Servings of Stews and Casseroles within its own microwave plate heavy in all the food necessities for good health. It would require vastly increased Garden supplies, and should be reduced in Cost to less than $2 per plate. It should need only refrigeration, and equal in Taste properly granted to Mother’s home cooking. It is doubtful, nevertheless, that the Grocery industry will allow such free invasion of their base with communal Cooking facilities. This leaves Us with the necessity of outlining another Product of equal potential Demand and low relative Cost. lgl

Friday, June 11, 2010

The Woes of Labor

This vocalizes a real threat I have long recognized. Technology and Innovation have been eating up Mom and Pop stores for decades, went to chewing on Manufacturing, and is now posed to go totally without labor except for Maintenance Costs. Has Anyone been to a garage lately; it being a crime to leave a spot of Oil. The people who designed these Workplaces should talk to BP; but that is only an aside. The current robotic maintenance consists of Snap-On Parts, rather than Tools; eventually this Work will be mechanized, and the Clip-Together assembly will leave Employment only for the CAD systems of design. Parts design in twenty years will only be reshaping of basic type Parts, and then no one will be allowed to Work.

I like this assessment on the question of a double-dip recession. I will provide a Hint, though I am likely to be crucified: the economy is not too bad except for the Unemployment; the real sufferers being the financial sector Employees and Investors. They had been the big Winners in the previous Boom, and it is exactly this unwarranted success which had the most to unwind. The expectation that this financial sector has greater distance to go in devolving into normal Returns aligned with Pay packages in the rest of the economy does not pleasure this most vocal of employment sectors.

All of the above will make some sense with the addition of this article. Congress screwed up once more, and failed to pass the extending legislation necessary, and people suffer. Thousands of people are made to suffer, and no problem is even fixed. No one expects that a future demanding benefits extension will fail to arrive after their belated patch has been passed. Congress has to start thinking of a permanent resolution of the Unemployment problem, but they never will. The Result will be continued fear for people who did not deserve it in the first place. Readers note that Few maintain any overview of Social needs, and all fail of coordinated action. lgl

Thursday, June 10, 2010

The Way We Are

There is much debate about what to do with the economy which lacks Jobs. There are Those who want more Stimulus, and Those who understand that you cannot get blood from a Stone. Here are references to both. The Politicians are ducking for Cover, all because no Answer will gain anything but the erosion of political capital. The Jobs will not come, and business Profits will not go up with either Stimulus or Austerity. The future does await the retirement of the Baby Boomers for new Job Openings, and Consumption levels stagnate; holding out for the fabled rise in Personal Incomes. It is a Time of overfull Supply, when the Public wants Bread and Circuses.

I have thought to present some of the mantle of the FDR administration as Cure:
1) Increase the National Guard by one million personnel, even if it takes a creation of a Type B regiment promised to never leave American soil; the Trick here being that personnel could still be drafted.
2) Establishment of City Cooperatives to change lawn into Victory Gardens, with high Part-Time employment of the Jobless.
3) actual increase in Taxation, now when it will not seriously deplete the level of Consumption, and when paying off Public Debt could be the actual Stimulus of benefit.
4) finally establish an efficient Day Care system, placing it under the control of the School Boards.
5) create a Recovery Agency (National) which would assume Title to all abandoned Property (Taxes in arrears over 5 years), authorize and pay for all redevelopment projects which would accepted; all hiring the Jobless in reconstruction and maintenance labor.

Everyone should understand that these are long-range programs, and will not present Stimulus in the Short-Run. The entire purpose of the programs remains to increase stability within the economy, and create permanent Job positions; which will be maintained because of their economic benefit. It will provide permanent Job placements from School Graduates, along with On The Job experience and Job Skills. The increased taxation will not be noticed whenever and wherever no alteration of Consumption patterns occur, though the grousing about Taxes will likely increase. Behavior will be redirected towards Community service, and Job exploitation will lead to greater respect for Property. None of my Suggestions could really hurt, and should be of long-term benefit. lgl

Wednesday, June 09, 2010

The Cannibals are Starving

The Stock Market expresses a real downturn, but no one can tell whether it is a Buying opportunity, or a slide which will continue. I see no real Signs of Rally, though the percentage losses seem within the rally range. The trouble comes from the fact that We are in the doldrums of early Summer, where everyone dreams of that vacation somewhere; no one dreaming of sudden success in the markets. The only people paying any real attention are those employees of the institutional buyers who are 9 to 5. Everyone else is flitting around in Jets, or at home gardening. The people who utilize Options are using them, and those who do not are not buying. All companies say next year will be much better, but it is all next year. Institutional employees cannot use a reference of one year–far too long, and normal pattern Investors will reenter the market with a prolonged history of decline; not the best advance Scenario. This could be a harsh Summer season setting up for a bad Fall and Winter.

This opinion which holds statistical water does not truly excite your average Investor. Three-quarters of all Stocks being uniform losers over Time makes Investors hesitant to advance funds, and only an oversupply of Cash combined with lack of investment opportunity elsewhere seems to propel investment. A significant number of Investors may reach the conclusion that Self-Finance shows greater Profit, than does borrowing for capitalization while using excess funds for Stock purchases. Positive identification of better Returns from Self-Finance could spell disaster for Stock investment, and most intermediate Investors can modify such payment schedules for maximum benefit; making Tax advantage for debt load the sole support for the markets–not a good thing; I imagine such skewed investment presents at least 30% of all investment in the Stock Markets.

Here is another indication of the stress placed upon the markets. It is all in How Many middleman Profits can be derived from the same investment cycle. Nine thousand Hedge funds may be a bit rich for Investors to bear, considering the Investment load each must carry simply to break even. The funds of funds are simply ridiculous, thinking to draft even more Profits from an investment cycle. There are simply too many hogs at the trough, and the hogs who eat hogs cannot enjoy great success from their cannibalism. lgl

Tuesday, June 08, 2010

The Real Eye

This is a fair argument which everyone should read. Here is the Question I would ask: Can bubbles be created during recessionary times? Some might ask Why I would ask this; my Reply being it is possible that bubbles require recessionary conditions, whether localized or Overall. It is my Thought that where there is a temporary Stall in a major industry, and Investment Cash will start looking at the most favorable alternate investment opportunity at the time. The rush of Cash into the investment opportunity sector leads to an automatic increases in Pricing and Investment schedules, both necessary conditions for a bubble to be born. Higher Pricing means higher demanded Return, while heavier Investment schedules means less share for any schedule–lower Returns. It is hard to prove this argument, but I find little information on bubble creation.

Does Anyone think that this article is Right? It is not the Public Sector employees who are responsible for Politicians having spent so much money, just as Social Security Recipients are not responsible that Politicians spent the entirety of the Social Security Trust Fund. Any examination of all that federal spending suggests it was directly in the benefit of Private Sector Corporate life that benefitted from that expenditure. The later earned high Profits while paying low Salaries in fulfilling that expenditure. Now Business would blame the labor which went into the Public Sector during this Period, without which said Business would never have made their Profits. The core responsibility for this Recession resides in the Business sector who mis-allocated Investments, many of which were criminally-inspired, and bound to fail. Labor, both Public and Private, were the Fall Guys.

I will give my Readers a chance to preview the current arguments alive in the economic and business world, though I do not agree with Tim Duy. Tim believes in shoveling more Cash into the economy, while Geithner worries about the increasing domestic Savings. It is all an attempt to force-feed Consumption, in the face of a return to normal domestic Savings rates. Americans are not going to expand Consumption as long as Personal Income does not rise to match the increased Cost of such Consumption. No one seems to understand that this trend is actually beneficial in the long-run, even if business and financial Returns fall. Europeans accept the concept of Recession; Americans do not! Sustained domestic investment in Production will have to occur to better economic conditions, but few economic policymakers see the necessity. lgl

Monday, June 07, 2010

Seawater, Oil, and the Price of the Euro

The World worrying about an Oil spout which cannot be shut off seems not enough, as We have the Banks failing rapidly; my only fear of the Mayan prediction of doom in 2012 being the long two-year wait. What is next?–possibly a Solar flare igniting the Greenhouse gases in the atmosphere? There could be an increase of Cannibalism in the inner cities, all because of a failure of the Transport systems to the city involved? What if it is a simple thing like a new Plague just shutting down Production activity for a sustained period? It might be an unseen, un-imagined Scenario, like the pollution of Seawater alters its buoyancy, and vessels ride 12-15 feet higher in the water; introducing a major instability to the ships, doubling or tripling vessel losses. I personally like the One where withdrawal of Stimulus will cause another Great Depression. We could issue a Tax credit to shoot Senior Citizens over 60 if not a personal relative to relieve health care Costs; no, wait, I am in that Class! Remember the one that said that it was better to use Robotics in Space and Deep Sea, rather than frail human bodies; that, of course, was before the Gulf Oil Spill and the failure of the Hubble telescope, also before Solar flares frying electronics.

I don’t know What I am talking about here, a not unknown case, but is likely to have something to do with systems complexity. We rely today on great systems of intensely complex and confusing parts, and few replacements for any failure; not a great Joy to the World. The Government debt problem has been building for years, and Those with any Money left do not want to loan it to Anyone. Banks solved this issue a decade ago by design of fancy paper instruments which they could sell to each other, and claim a more sound position. The Problem devolves that Government still Spend without Taxation, want more money, and Banks no longer desire to loan to each other; having downgraded the very paper instruments that they originally issued. Banks find they need about Ten years of those tax revenues which Governments refuse to Collect; everyone awaiting a financial system failure.

The Gulf Oil Spill is a much more technically complex issue. I am reaching here, trying to attain the comic laughter from Physicists. We have a direct line between a dense, heavily-pressurized Seawater and an Oil Reserve. There are no controls on that direct line. Something tells me, maybe it is Physics, that leakage will not stop until pressures equalize. Now, We know there are many gallons of high pressure Seawater here, and Oil companies have already estimated many, many gallons of Oil as well. Seawater, at higher pressure, will force itself into the Reserve, and without expandable capacity for the Oil reserve, drive Oil out through the direct line to the surface. We have no Timeline for the equalization of pressures; a computation of the relative masses of the two substances with variable T for Time. Artesian Oil wells seem like a great thing, don’t they? lgl

Saturday, June 05, 2010

The ole Snake Oil Salesman

I don’t know what these Economists think; I only believe that Government Spending which is not labor-intensive in policy are worthless, and that the real culprit is the Tax Cuts themselves. Be sure to read the Commentary on the Post. We have a problem with Private Sector lack of investment opportunities under shortened Consumption schedules, and Tax Cuts simply provide funds to invest in the rising Government securities. It remains a question of proper investment, and neither Government or Private Sector is accomplishing that reality.

I sincerely believe that a 4% rise in the real Tax rates would be an immense benefit to Government, Consumer, and Investment circles. I like that idea so much that I will advocate for a 7% real Tax rate increase, though I know I could never achieve any support. Here is the Thing: Nothing We have tried has yet to increase Private Sector movement to greater activity. We will get nowhere with Government Spending until we get that activity. We must get that performance, even if We have to reopen the CCC camps. Government Spending must reach beyond paper instruments if it wants to attain Stimulus status, and everything done to this Point has been directed towards maintaining the Status Quo.

The average Taxpayer wants to know that He or She is involved in something which is Real, even if it costs more. Business is in distinct disagreement with that assessment, but business personnel are getting tired of Returns which do not match their Bottom Line Costs. They are stymied by rising Costs matching the Inflation rate, with inability of raising their own prices without further loss of Consumer Demand. We are in a Poker Game where everyone is holding a poor hand, but have too much in the Pot to be bluffed. No one will get out if the Bets are too low, but no one will make a Bet which puts them at further risk. It is exactly the time for Government action, but Government insists on acting like just another Player. A Tax increase would jolt odd Players loose, they realizing that they will be going down if radical change is not introduced on their part. lgl

Friday, June 04, 2010

Labor Intensive Practice

Maxine Udall writes so well she almost convinces me. Still, I am afraid it does not. My problem consists of the fact she would have massive government spending, which employed relatively small numbers; it is all a question of advanced technology and capitalization. This is not the 1930s where Thousands grabbed their shovels, and went to work. We live in an Age where Bulldozers and Backhoes bucket out the dirt previously removed by Thousands, but at the cost of consumption of millions of gallons of fuel. There is a Crowding Out effect within our own Production schedule, all within that vaunted technology grasp, which no one desires to alter.

Measures to promote Employment must seek labor-intensive venues, if it would succeed to any degree. They are not easy to contemplate in our mechanized world. I have toyed with the idea of federal paying both the landfill fee, and a substantial price per bag of Garbage if the bag is evaluated as filled; landfill employees to determine the later. Garbage trucks would be little affected as working people would still produce Garbage and need it removed, unless there develops a real theft potential in stealing it. I have also thought of a CCC program to replant Trees is deforested area–both Clear Cut and disaster areas. I have thought of the same style program to save beach front from Oil Spills and erosion. I have contemplated of a Clear Cutting of my own, where the federal government purchased dilapidated urban environment, tore them down, and replaced with forested areas; urban areas needing no further stress on housing prices, and requiring Carbon absorption areas. Does some of this sound Dumb? Turning to a labor-intensive program will always seem a little stupid to modern man!

I still propose old Standby of my own, where Cities are paid to start up lawn conversion programs. Here is the program: Cities will rent lawn areas for nothing, except the Produce which the Owners might pick to their benefit when ripe. The Cities guarantees to remove the lawn, plant the garden which will replace it, and ensure that the garden is properly tended with proper Scenic appearance. The federal government will guarantee Cities to pay for all labor Costs to specific amount per hour, if the Employees are also drawing Unemployment or Welfare Benefits. It will additionally pay for all Seed and Fertilizer to a set amount per acre or square feet. The Cities are obligated with Harvesting, Cleaning and Bagging the Produce, and Selling the Output; Cities expected to repay all Seed and Fertilizer Costs, if the Produce is dumped. There will be the Option to plant Orchards rather than Gardens, all with the approval of the Owners of the land. The entire direction will be towards labor intensity, and Capital equipment will be present but energy conservative, and suited to the environment; all labor to be conducted within normal Work hours so as not to disturb the neighborhood. It will work if tried! lgl

Thursday, June 03, 2010

The View from the Titanic

We are in such a Recovery that it takes my breath away!! Hell, it is almost keeping with the Inflation rate–not! I wonder at a system where Grocery items and Personal Goods skyrocket, while Corporations simply cancel their Price Schedule increases. Does this sound Good? I would not mind so much except for this! It stinks of burning Rome as Nero fiddles. We are currently at 198 days per trillion dollars of debt, and no one is constraining the national debt. Doubling the national debt per decade may not seem bad, but contemplate the national debt as it should be studied: in years of Taxation necessary simply to pay it off.

Read this Piece from Robert Reich. I ordinarily treat Robert with a grain of Salt, thinking he is slightly too liberal for my taste, but here he has hit the Target dead center. Start-Up businesses take somewhat more than half or more of an Individual’s total Capital accumulation from a lifetime, and about half of all Start-Ups will fail. All of this means about half of these individuals are already relatively bankrupt, and only delaying the announcement until their current flow accounts express that fact. Does it seem I am not very enthusiastic this morning?

We all have our worries about the Gulf Oil Spill, asking when it will be sealed. Have the Oil companies down-rated the Gulf to a Third World Country? This a serious question which I ask, as the Oil companies are expressing a Slash and Burn attitude almost everywhere. They continue to pull in high Profits everywhere, while downplaying all environmental costs. It is time for Someone to raise a Stop Sign on criminal practice in the Corporate world, even if it will be a trifle difficult considering the globe-hopping of the modern Corporate Executives. I would advise an international Treaty to enforce legal violations across national boundaries; where specific criminal penalties ensure enforcement anywhere. I think Socialist and Capitalist can agree to prosecute the Criminal. lgl

Wednesday, June 02, 2010

The credible factors of Salvation

Edward Glaeser identifies the argument, though he does not present very solid conclusions. This is not his fault; he is constrained by the fact there exists little significant data, and he wishes to maintain both his dignity and his reputation. I will try to explain the problem at Street level, having no reputation to protect. There are only a finite number of Jobs at any given level of Production; this meaning there is a maximum and minimum Work force that will naturally be employed. Stimulus pursues the dream that Employment can be held at the maximum level of employment rather than at the minimum. This is why economists and competent leadership are always talking about Jobs saved, as well as Jobs created, by Stimulus. The trouble arises in the fact that Jobs are of two forms: those creating higher Production levels, and those actually incurring Costs reducing Production levels; I like to call this natural and artificial employment.

Readers can easily understand natural employment, which is anything which pushes Product down the line. This means there is provision of Goods or Services purchased for Consumption, whether Public or Private, which advances the utility of life. Consumers find themselves with enhanced lifestyle, which accelerates their own Productivity or Leisure; here there is placed an economic value to entertainment, a provision of relaxation to readjust for greater future labor. This natural labor presents a Scenario where the benefits of their production exceed their Production Costs, rendering a higher overall Productivity. Everyone wants a higher level of maximized natural labor.

The Case for artificial labor is not clear at all. Here the Production Costs of such labor erode the profitability of all Production, often to the point where the Profits from natural labor are absorbed; the effort draining the Investment capacities deriving from natural labor through taxation, or conquest of Investment funds from public borrowing. The whole mix means that the opportunities of natural labor might be reduced as artificial labor Production Costs, while artificial employment provides no real benefit to Consumers. It is clear that We want no reduction of natural employment under any Conditions, while there is increasing evidence that attempted maximization of overall employment can adversely effect natural employment. The worst effect that can be encountered is discussed by Glaeser, where Stimulus simply replaces natural employment with artificial employment; a factor seemingly present, as little change in Employment occurs, though there has been a vast injection of funds. I now leave it to brilliant economists to explains How this could actually destroy more than it saves. lgl