Simple may be the best!

Daniel Gross I might consider an Optimist, while he would likely view me as an Conspiracy theorist; if he thought of me at all. Here is the thing! He looks at some Hires, and think that the economy must be getting better; while I know such Hires were being done even in the midst of the worst of the Great Depression, and some percentage were even successful. A lot of economists are relatively the same as Daniel, placing great Stock in these new businesses and new Hires. I, on the other hand, know that it is the established businesses with their pessimism which cause the Unemployment. It is one of the reasons Why I dislike Government economic policy so rigorously because of the way it works. Established business, and most especially Corporations, develop a Pavlovian impulse to Unemployment, which is downright disagreeable. They have previously been granted easy Credit and vast Government Spending whenever economic conditions have turned adverse; an environment which makes Profits relatively easy to access. The Pavlovian impulse on their part consists of an raptorial slashing of Jobs whenever Profits-taking becomes hard; they knowing this is the swiftest manner to engage the easy Credit and vast Government Spending. The problem comes in the fact that restoration of Jobs is such a more difficult and longer process, than is the retention of those Jobs; there first needing to exist prime production conditions for Hiring–making the Training Costs and lower Production viable. There are many reasons to detest Government interference in the economy, and I have listed probably the worst of all.

This Post by Robert has some degree of unworkability to it, but has a direction which is outright decent in appeal. Simple outright Commands are much simpler than complex valuation systems. We would simply need a federal law which set the total full Workweek per Employee, rising under Good Times, and lowering under Bad Times. The Command must be limited in force, though, so the law should take that Businesses could simply not deduct the Wages over the stated Hours–considered as Overtime. The later reason being there are certain personnel and Job functions which are absolutely necessary to work long hours. This Plan would work much better than Tax Credits or Subsidies, and We do not even have to call it Pigovian taxation.

Paul Krugman has much better ideation with the Problem, as one should expect from a Nobel Laureate. He, though, still expresses the Concept of granting American industry Tax advantages to start re-Hiring once more, which simply reinforces the Pavlovian reflex which I mentioned in the first paragraph. What We need is a group of economists to get together to study World Labor market history, and inform which of the Solutions present the highest viability. I think mine does, simply because of its simplicity, and the ability to quickly adapt; even on a monthly basis. You can even gear it to sensible economic data, and enjoin the Governing Board regulating the Work hours to prove the necessary increase or decrease of the Workweek. lgl

A new Path

I think Mark Perry ignores a prime aspect on the current health care debate–which is the silence of the Insurers in Public. I would advance a very workable Solution, One that will somewhat define whether the Public Option is necessary to supply universal health care, or whether We can rest on Private options. It requires only the passage of a short federal law. You ask what simple law could solve such a complex problem? This gets me back into the law-writing mode, which Everyone detests because I come up with disturbing details; but here it is anyway.
All Health Care Providers must answer the following Questions in order that the American Public can understand the Problems. All Answers must be listed and published upon a Government-run Website accessible to the Public at all times. These Answer must be updated every Six months, until the Government decision to close the Website; an element which can only effected after the passage of legislation deemed as proper solution to the health care problem. Failure to Answer these Questions periodically will withdraw health care providers from license to sell health insurance until compliance with the law, where they are criminally liable if they sell Insurance or do not turn over their Accounts to a licensed health care provider within One year. The Questions will be very simple but direct, and are listed here:

1) What health care provision will you Underwrite for a $60 per month premium?
2) What health care provision will you Underwrite for a $100 per month premium?
3) What health care provision will you Underwrite for a $150 per month premium?
4) What health care provision will you Underwrite for a $200 per month premium?
5) What health care provision will you Underwrite for a $300 per month premium?
6) What health care provision will you Underwrite for a $500 per month premium?
7) What is the health care provision you will Underwrite for a family of 5 under the above premium limits?

The law should stipulate that the Answers are specific for the purpose of writing general policies which Government mandate might regulate; that all Questions must list the registration of financial limit for the services offered to the Insured; and the Policy structure must be outlined without small Print additions; the Whole without any previous health conditions provisions–meaning it is an Open offering to All without restriction. The law will also state that, to ensure honesty of Statement, health care providers will be held to each fulfillment of the Questionnaire for the following 3 years potentially. The law also stipulates that the Government can ask for the same Answers up to a $3000 per month level in increments of $500 per month if deemed necessary. All information derived must be presented at the Government-run Website, completely Open to the Public.

I am quite sure this is not what was desired of a Market-based solution, but I am quite sure that it will provide the information to both the Public and the Legislator to determine what is necessary. It might even help to reduce the amount of GDP which American devote to health care. I just know I will be loved by all Participants in the discussion. lgl

The Mother of all Debts!

Menzie Chinn expends some energy in defending the value numbers of the Stimulus package, which I do not doubt are as accurate as can be. The problem I have with those numbers lies in the construct of the models utilized. My Point states that these economic models make two assumptions which I find appalling: the first being the Concept that the American economy works in a vacuum where the US Dollar does not lose Value and new technology is considered mute; the Second ignores the factual reality that the Government itself must be Downsized in the face of insufficient taxation and rising debt. No economic model I know of considers a Government labor force which is 30% smaller, a position which I envision as highly likely. New technology must be introduced, as another Generation of School Graduates will find Us with insufficient land to supply Housing of the current quality, to say nothing of furnishing such Households with Power and Consumer Goods. Someone somewhere has failed to notice this Outfitting of the newest Generation will be much harder with the decline in the value of the Dollar. The final note I would outline is the fact that the economy would have produced a high increase in Employment even without the Stimulus in all later years, to the point that Stimulus has become nothing but Inflation.

Daniel Gross would not agree with my analysis. He still has to present some statistical data which should raise Warning Signs. He has to mention that the Treasury is looking for more debt raised in 2009Q4 than all of 2006, a difference of three years–Recession on Not. The Apologists for the Debt never mention the over 400% increase in debt in three years, when the Government has never repaid any Debt at a faster rate than about 1% per year since the 19th Century. I am not great at Math, but know that 1% of the current Debt is much higher in total amount than when We last achieved such payment. There remains the question of what We are going to do for Stimulus in the next Recession, and even possibly what We are going to do for Government revenue at that time; Suggestion: turn the White House into a Bed and Breakfast.

The MAOA Gene is alive and well, and mostly resides in our Politicians, read the article and understand the incomprehensible. I wonder when they will find the Gene which makes it easier to spend other peoples’ money, rather than your own–it might only be held by Criminals and Politicians; if those two terms are not the same. I do not like the rise of Consumer Debt, but know that it can never reach the level of economic threat to the stability of the system. Government debt, on the other hand, is an animal which destroys the health of everything it touches. It is like health care–which should be Public and universal–or totally left to the Consumer. Anything else leads to lack of care and inflationary pricing in the sector. I watched a comparison of different health care systems in the World on PBS, and realize that these halfway measures covering only part of the problem is what led to the highest percentage of GDP expended on health care. It is time for Change, but there are so many elements which must be worked on, One cannot say any of it will make a difference. lgl

The little Recession that Couldn't!

I will provide this link to give some history to my Readers, but it is relatively unimportant in the face of Congressional reluctance to actually impose realistic regulation upon a economic sector who fills the role of Paymaster within the scope of political campaign contributions. Here is a more detailed survey without being too Wonkish, though it only approaches a specific area of intent. My major problem with central bank policy may be the destruction of Consumption Demand in the time of Recession. Low Interest rates seem like an obvious solution to an economic downturn, but it carries hazard as well. People who have little experience and generally possess lower annual Incomes put their extra funds in Banks on Interest. This is a pattern which will not change very much, no matter what invective sounds from the investment bankers. The Problem lies in the fact that such Investors curtail their Consumption patterns far more rigorously than do normal Investors; highly expectant that they cannot recoup any funds removed from their accounts. This means they enter a strained Consumption pattern exactly when Business will curtail operations if Consumer Demand does not reappear. I have no numbers, and do not intend to look for them, but estimate that the lost Interest for these Individuals equal about 20-30% of the potential Consumption Cash (remember this is not Credit) which is available in the economy. Business and Bank will not admit it, but what We need today is Cash Customers, who do not extend the Credit bubble We are in.

James Hamilton researched the subject of Oil price. The truly important point is that the percentage of Household Income which must be distributed to energy has been growing, and in a Period when Consumption in physical terms has been shrinking. The price of Oil is now about $80/barrel. A lot of economists believe it must rise above $100/barrel to have an impact on the economy–Wrong! Food Distribution stands as a very energy intensive industry–with both heavy Transport and Refrigeration Costs. Moms have been both filling the SUV, and checking out at the supermarket counter. They are beginning to notice that they are paying about 20% more at both places. Business and Economist both hope they will forget this fact in Christmas-Buying season, but the Moms are unlikely to do so. Understand that they make up a good Half of the Trade. I think that We are in far more trouble than Retail would wish.

We find Bank and Business totally devoted to their success again, though it almost guarantees that a good Christmas Buying season will be the most expensive in history over the repayment cycle, and almost a physical impossibility under the aura of rising Household Expenses. I do not understand How this Country’s economic leadership fails to grasp the need to open the flow of Cash to Consumers. Governments–Local, State, and federal–continue to raise tax rates and approve expensive programs which require further funding. My problem is that I cannot keep my Poker face on, when telling the less-Enlightened that Times are getting better. lgl

If Only the Taxman were unemployed!

There are Those who would claim that children are not direct participants in the economy, but then there is always a Study like the one here. Even if the effects of the Student disassociation remains only temporary, and doesn’t maintain a one-year loss of labor per lifetime; it still cost the Educational system an added year of Cost per Student involved. I have not estimate of the number of children retaking a Class year, but can evaluate a per-Student Cost of anywhere from $11-18k for local School systems. I am in a School District where it is estimated that expansion of the new middle school will add $40 to the bill of the average Taxpayer in the district. It is a minor charge within a Property tax which is raising about 8% per year, yet it is exactly the way in which We are getting the rise in Taxes. This is the arena on which Congress should be working, not an immense increase in taxation due to health care. We are rapidly working to a position where our tax structure will become unviable, though We cannot get Politicians to recognize the fact.

This short Piece highlights the previous Statement. The outflow of Taxpayers from New York is probably unavoidable as is mentioned, but new entrants into New York are 3.4 times as likely to be initially unemployed, with around 6 times the likelihood to add to the Welfare Costs of the system. New York may be able to handle the higher unemployment while the average Tax paid per Hour worked has gone down, but what is upper level of Welfare Costs which can be paid? We have to estimate that the proposed reductions in Medicare is only the tip of the Iceberg, and that a uniformity of Welfare benefits must be the first element on the political agenda. I would call for a convocation of State representatives in D.C. to discuss the regulation of Taxes, but it will not happen as Politicians fear it could too easily turn into a Constitutional Convention.

People still dance as Nero fiddles! This Post outlines the confusion at the Fed. Beware of any institutional leadership which will not talk about the real problems being confronted. The most noteworthy problem for the Treasury is the growth of federal debt–nothing else; but where is the policy position to oppose this Problem. Everyone has Lobbyists in Congress, except the Treasury and Federal Reserve. We live in a Time where all Applicants for the Oval Office must come from the most bloated Spending organization in the World. I might love to see a constitutional amendment stating that all Candidates for President, Vice-President, and/or positions like Fed Chairman and Secretary of the Treasury must have successfully completed some term of Office as State Governor or Head of a federal agency; all simply to be deemed qualified for running a much larger organization. The Constitution already has too many attachments, though, and both Populace and Court ignore any part of the document which is out of favor. I don’t know if anything will save Us from Ourselves. lgl

Baby, the Rain must fall!

This Opinion from Paul Krugman may tell Us more than We wish to Know. Politics today reminds me far more of the Times under the old Roman republic than ever before. The Oratory becomes more theatrical with every Speech, with Speakers more concerned with ratings than the effect of their words. The Crowds want Entertainment and Food, with little concentration on Content. Fox Channel outright advances Lies, but all other News outlets do is try to compete in the misinterpretations. What is killing the Newspapers in this Country is their disinclination to follow the Pack. Slander has become the common fare which no one can do without, and any viability of an Opponent’s position must be denied. All Sides of any Issue associate their Opposition with the Atrocities and Mass Murderers of the Past, never granting the other Side of any growth of Thought or Consideration. The end-result will probably bring Us the same society as those societies which produced the horrors which We use as Conversational allegations. Why do We do this to Ourselves?

You can find the other major aspect of disaster for American society, the Food rather than the Circuses, which afflict our nation. This Piece outlines the provision of Health Care, and would lay full blame on the initial practice; but this is not the real deviant, with the progress of legislation being hidden. Provision of the original Plans would never have cost the huge Expenses which We see today. The first thing which should be recognized is that it is rarely the covered Patients who demand the expanded provision of health care. Special Interests drive the expansion of Coverage for Patients, this expansion always in the direction of expandable rising Costs, which assure healthy Profits to the health care Providers. Corporate entities are covered by health care; rarely is Anyone else! Mark would condemn Democrats for creation of this vast system; I would charge the Ones truly responsible, those who make the Profits from the system as it is.

The most improbable element of Our society rests on a very regressive taxation. Business Interests, who make the real Money, are lightly taxed; the rationale is that they create economic opportunity for Others. I would like to see what Jobs could be found which were created by Business getting a Pass on taxation. Business and economist say they are out there, but I find none which do not make the Business personnel more Money than the Labor elements. Clearing the way for Business leadership to make more Money may be of value to the economy, but Why does their advantage have to be so much larger than the amounts devoted to expansion of the economy? I am not being a Socialist here, but Why give any segment of Society a tax advantage, especially those which benefit the Recipients far more than Anyone else? Forbes proposed a flat tax at one time; I propose a progressive tax system without any tax advantages, Taxpayers paying the rate listed unless Income loss can be proven. What is Right, What is Wrong, and Why should We care in the first place? Booms only become Bubbles, Recessions always follow Bubbles, and Labor always has to pay the Price. lgl

I try Again

I myself dislike the concept of a Transaction tax, simply in and of itself. The idea of a gradualist tax does titillate, though, due to my belief that most of the growth in Consumer Credit originally comes from the need to aggregate funds for the disastrous Personal Income Tax. It is the Tax which insists that Taxpayers periodically find overlarge amounts of Cash to satisfy a Debt which they did not incur in the first place. I think it is Time to again break out my old idea of a Bank Transaction tax of 2% per transaction of the total amount. First, it will tax all economic activities–even the Cash markets–as Retailers have to turn to other services not provided by Cash markets; a real Critique of the program which I have heard before. Second, it will raise a huge amount of tax revenues, so much so that it can eliminate the Personal Income Tax, and possibly Property taxes with a justifiable split of Tax receipts. Third, such a Tax would be cheaper for the average American, especially with the removal of Accounting Costs, and automatic notation by the Bank of the funds removed; this allowing Americans to keep track of their Tax Costs while the Government can clear the amounts of Tax owed.

I could make the Argument that such a Bank Transaction Tax would actually tax higher volatility Trading naturally, because of the frequency of the applied Tax. I could fill in the blanks with the Concept that retaining Business taxes at the same time not only suppresses bad economic production, but acts as a Suppressant of inflationary Consumer pricing. I could bring forth the idea that such a Tax would contain low Profit trading, while not affecting low-Gain trading because of natural growth factors. I could apply the belief that such a Tax will cancel excess Consumer Credit extension as the Tax would fall on such extensions; leading both Lender and Consumer to reevaluate their positions carefully, in light of the fact that each has paid a 2% tax on the Transaction. The creation of financial instruments will shrink with greater stability in those elements, as Everyone realizes they must take a 2% loss up-front. The final Concept is the realization that the Tax is immutable, and has no relationship to the viability of the transaction, literally making all Participants study their potential Profit margins with great care.

There is, of course, the hazard that organized Lobbyists will immediately push for elimination of Business taxes in the presence of this new Tax. It is an idea which should be solidly resisted. Business taxes possess many advantages: they hold down Consumer price increases, they lessen the resistance to Wage increases for employees, they impact paid Stock dividends little if any, and (my belief) actually induce better business performance with control of Production Costs with active control of Management. It is far greater security of economic performance, when Business managers do not see immense wealth in individual deals; the Tax insisting on long-term, continuous performance for construction of wealth for managers. Critics of my program will call for precise data to prove the Above, but there is little material which can be found; all because no one has tried to alter the Tax structure in this way. I think it is Time that We tried. lgl

Real Aid--Is that like Farm Aid?

Ever wonder if you and your collaborator were on the same page? It is not an unusual occurrence. There is the old Saying that British and Americans were separated by a common language. You will here find another one of those used terms which no one can define. Can anything be accomplished if there is profound misinterpretation? The later concept is also open for definition. How far off the mark does a phrase have to be to fulfill the term? The World is filled with ethereal elements, almost all composed of language difficulties. Academics should attempt precision, but how can it be done without a syllabus? I don’t want to harp on this topic, but the Reader will be confronted by this difficulty as he entered into the real world of productive activity.

Unemployment is another term which has serious need of definition. David Leonhardt explores the differences in Unemployment in this Recession from earlier Times. The real Culprit this time consists of the lack of Re-Hires. Average Hourly Wage still advances at the same approximate rate as nominal Inflation–another term very much in need of definition. Those with Jobs possess a relative high degree of Job security, at least until their specific Job projects come to an end. There is much discussion of chronic unemployment in the article, though there is a obvious hole in lack of discussion of specific sector losses; it is my belief that Raw Materials employment, Construction, and Middleman clerical positions has made up the bulk of chronic Unemployment. This does not bode well for Recovery, as here much employment depends upon previous relationship between Supervisor and Worker traveling together to the new Project. A discontinuance of this relationship over a sustained Period leads to new formed relationships based upon the Workers being new entrants into the labor force, with high capacity for Training. Employment here will probably require retraining into new positions, with competition with younger, hardier Labor–always a Strike against Labor when experience is discounted.

Obama will attempt to spur Employment with the traditional means of Business Tax credits and spending on federal infrastructure. I wonder when Someone will notice this has led to 3.5 million having lost their Jobs since he took Office, even after all the previous incentives to Hire labor. The Great Plan has lost Us 7 million Jobs since the Recession started. I propose instead the Pothole Law, which simply authorizes all City Maintenance Departments to hire Minimum Wage labor to resurface City Streets; all to be done with Shovel spread and Machine compaction. Top end of labor employed–a potential 7 million Employed working on every City street in the Country; all continued until We have a Boom again, or no more Potholes. Direct, forceful, and Cheap; the City Maintenance to act as Supervision and Timekeepers; and it is a open source of Income for the Unemployed. Everyone will be given ample opportunity to seek alternate Employment, and the state of life in America improves. Don’t overwrite the process, simply get Aid to the suffering Employment rolls. I estimate the Cost will be no more than a $100 billion per year with a guarantee that the Treasury will pay the Cities promptly without extensive paperwork, and all will surely be directly devoted to Consumption Dollars. It seems a lot better than some Corporation getting another Tax Credit. lgl

The Way We Were

I would ordinarily not utilize this Post, which hardly any of my Readers will understand (do not make the comment that it would include myself). What it says to me is that there has been much less variation in Exports over the Period graphed (Hint: always adopt the Graph with least Variation, as extension is not a good thing in economic Graphing unless proven). GDP studies often show extreme elements, or effectively hide those constituents, due to Price variations driven by uneven Inflation; all without any valid equalizing program. This lack of uniformity in activity is common to GDP series, and rarely evaluated. It becomes humorous that Inflation reduction tends to generate similarity, while Deflation reduction should exhibit greater variation; the later being only a Guess, as Few have actually witnessed a valid Deflationary economy.

Paul Krugman brings up a fundamental point here, in stating that neoconservatives have been rewriting history to great extent. We, out in the Heartland, remains starved for Cash for the first Two of the Reagan years, then lived with unrealized Job Expectations until Bill Clinton. This is the Period when the Rich started to become the Super Rich. There was a great Shift out of domestic Production capitalization, with massive funds sliding to Realty under unrealizable prospectuses, bringing on the S&L Bailout of the mid-1980s. Past that debacle, what followed was Ph.D. waiters. Menzie Chinn might have come up with his filters somewhere during this Period, where We truly needed them.

We might find some relationship to the later 1980s in this Job Report, which reminds of the activity of the previous Period. Economists then proclaimed success because the Job losses were decreasing month over month. The Workweek was also set artificially low at least in the Midwest; I am thinking it somewhere reached less than 30 hrs per Week in the great Reagan Period after the Tax upscale; before it was an absolute lack of Jobs in the early Reagan years. Remember that I have the most faulty Memory in the blogging community. The difference was the desire for additional Tax Credits, which Congress tacked to the Reagan Tax revision. This helped to assure that the new Taxes did not fall upon Business, but solely on the poor Working Class. I believe I am getting too bitter in my senility, and should not advance those unpleasant aspects of Our youth. lgl

Truth in Something

One of the most aggravating aspects of the different economic schools of thought lies in the fact your primary positions are sometimes challenged. Such is the content of this piece from David Beckworth. I cannot truly evaluate the first Graph without an overlay on Government Spending in the same Period (including federal, State, and Local); this to ascertain that the Spending came from the Private consumer, and not the Government. My thinking holds that Private Spending has actually moderated since 1970, except for the insanity of Home purchasing of the last Boom. The later destruction has caused sharp reduction of Spending by the Private consumer, all in order to return their equity to a firmer foundation. I would also enjoy having an overlay of central banking expansion of the Money Supply during the same interval, thinking that the central banks kept the Inflation rate constant, so that member banks remained profitable. I believe that it was Government policies which have caused this Inflation, and refuses to allow it to be vented. This refusal to allow the worth of the Dollar to rise brings most of the Problems We now face.

I do not think the Boehner amendment to H.R. 3962 will provide greater injury than aid, but the CBO makes a relatively good case for it. The basic trouble comes in that the amendment assists the piecemeal retention of private health insurers, where the health care Problem needs a universal application. One of the great elements which need be addressed is the complexity of health insurance, and its separate offerings; no individual Subscriber to such insurance has any notion of exactly what they are protected against. I would like to see federal law which dictates a simple base policy which has two guaranteed medical consultations paid per year, and with a $10,000 limit of payment liability per year. Premium rates would be set up for these policies, and individuals would be allowed to purchase any number of such policies; Employer polices would be allowed to purchase 5 of these polices per individual. Any individual would be granted access to such policies without restriction, and all medical procedures would be covered; with reduction of medical coverage allowed only for cosmetic surgeries. The entire structure of health care coverage would be amended to eliminate Government responsibility for health care to the point of Government-ordered minimum health care by garnishment of Wages, when and if individuals do not pay for Government-sponsored medical service like Emergency Room care. The primary element of my program would be throwing responsibility back upon the individual, but within a context that the individual can understand what is achieved.

I am getting somewhat tired of listening to the threats to Business caused by taxation. A short history study: All economic Booms are incited by Consumers (mostly Labor) feeling like they can afford to spend a bit more; all economic Recessions are caused by excessive Profits charged over the long-term by Business. Almost all economists would assert that is too rude a Statement, though true. I do not know exactly when Business taxes got such an evil onus in American society, nor why they receive such labeling as a Job killer. Business taxation might forestall new Job Hires, but reduces current Job Rolls at only about a twelfth of the speed as a economic downturn. There is even some thought that effective Business taxes could curb the excesses of the Booms, and cushion the effects of the Recessions; but what do I know? lgl

Where do We come from, and where do We go?

I would first tell the kids that economists really do try to get it right, a real effort is involved. Here is a Post which gives some indication of How well those aspirations are treated by the cruel, cruel world. I have ventured into the mythical land of forecasts often, mostly to the sound of laughter. I think it was Henny Youngman (I know you kids have never heard of him) who said it was better to be paid for the laughter generated when you were trying to be serious, than to be humorous at a funeral. I agree with Calculated Risk that We are a long way from normal, but do so with less expectation that normality will return. The only sustained growth We may expect is in the arena of Population, which I am even suspecting will decrease sharply within a decade. The Age of Affluence has ended, and we are headed back to the Age of Utility. I seriously expect that the next Step may be the revitalization of the decayed City centers, as industry comes to realize that they need those packed, dense neighborhoods to maintain competitive advantage against foreign Imports, which are doomed by their increasing Cost. My one real prediction on which I await the laughter is that inner cities will regain about 30% of their previous Populations within the decade; don’t ask for specific rationale which is hard to raise above vague dreams.

This Post will tell my younger Readers that economists are somewhat freaky people. It stands consistent with a group of individuals who try to build system out of chaos. Anyone who attempts to accumulate precise data to make generalist observations cannot be all there, but they do indeed work hard at it; I would not advise Youth that it is a profession where you have to do little, as the simple level of Reading required goes far beyond simple tired eyes. The one good thing about economics is its relationship to history: no one can call an economist absolutely wrong until at least a century has passed, and society has transformed to a totally different mode of production. The vindication of the economist comes only with examination of the Corpse. It does hold the benefit that you can be proven wrong almost constantly, and yet still command respect from some obscure college or university. This could possibly be utilized, though, from any system of Mentors.

Bankers are a group of people who might find the economic profession more forgiving, and might invade the ranks of economists. Consider this article. The Witch Hunt is on! The Joke of it remains that State supervision of Banking practice may be the only reliable supervision of Banks, as federal regulation has little a priori supervision of Banking activities. There is no federal ombudsman system at the level where these instruments are made and sold, and federal regulators are functionally unreachable unless one possesses massive assets. Federal regulators talk only with Those who they regulate, and regulation is geared to promote the interests of the Regulated. States can break the chain of incestuous movement between Banking and Regulation, a process where Labor flows back and forth between Private and federal employment as the Labor market warrants; especially evil when the movement from regulation to Private employment in the industry is such a Pay boost. States often reflect the rage of its citizens, as the Politicians are not insulated from the Public. lgl

Formulation of the Problem

Jens Christensen may express the hubris of very talented people, who believe that Someone must be tuned into the economy. The analysis is high-quality and great in the context of its accounting, the missed sleight-of-hand being the evaluated relationship between Investors and real market forces. Remember these guys are the Ones who fell in love with Credit Default Swaps. The longer one studies the Street, the more one determines that Shamans must come from the Indian tribes, and only focus on Nature; everyone else must expect to lose Cash every once in a while. Inflation or Deflation will never be determined by prescient scholars, as it is a complex summation of widely disparate transactions absorbed in mass; I get mixed math results adding a finite set of Numbers usually, and sometimes have to accept the best in breed. Do not expect a great level of Insight from such Studies, though they are important for studying the history of events.

Here is a piece from John Quiggin which might further my earlier point. The relationship between human economic activity and climate change has not be actively rated, though everyone knows there is some relationship not particularly helpful. I would like to know the tonnage of Carbon particulate spewed into the air by humanity every year. I would like to know How this amount relates to recent volcanic activity and carbon production. What I am trying to get at here is the real potential damage humanity might be inflicting upon the environment, and How much of that Damage will be which We can curb. John simply critiques the approach of the Austrians and Libertarians to the scientific data, while I condemn the real collection process of that data accumulation. It is really sad, as John makes some real points in his argument, which are defeated by the undefined quality of the scientific data.

I present this debate for my Readers, so they can more clearly understand my logic this morning; now, if I only had such additional Crib-Notes. Four different eminent economists have four different takes on the economy, all basically utilizing the same data. We are all agreed about how much has been spent on Stimulus, but the evaluative content on that expenditure has multiple interpretations depending on one’s own emphasis. Here are a few ideas the Reader might want to explore: 1) Stimulus dependent upon active Business organization does not hire labor at the same rate as Start-Ups; 2) Start-Ups need financial backing which requires collateral, and the money is necessary to generate the legal Costs necessary to apply for Government contracts; 3) scaled-down existent Business organization cannot often acquire laid-off labor; 4) only Government can afford and sustain the formation Costs of creating a new labor pool for any endeavor under Recessionary conditions. What I am trying to get at is the fact that without Government’s willingness to organize their own Manpower needs, Government must endure quite slow Stimulation of the economy. One has to ask if Government Stimulus activity is faster or slower than Private recovery efforts; or, if Government Stimulus is always too much too late, and fails to solve any problem; though it does incite high levels of Inflation. lgl

Life as We know it

There are really some people who have the wrong idea about the public option. The fact remains that if We are talking about universal health care, with no one can be denied Coverage. Study that comment for a moment, and One can decide that refusal of Coverage should be limited only to Cosmetic Care; and then only if it is truly not debilitating. I have a Suggestion which no one will like: Refuse the Public Option to All, except Those who have previously been turned down by a private health provider, while the Public Option must determine that the medical procedures denied were not Cosmetic in nature. Now We have a straight out Public welfare, with a huge bill attached to it. We can now set a Dunning process where individuals have to pay a post-procedure premium of set size for a set length of time, even with possible garnishment of Wages. There will still be huge Costs with the program, and eventually the Public Option will grow; yet, the initial fight over health care provision is basically avoided, and the system will be set up to transfer to a clearer program as the Costs mount.

Here is one of those places where I tend to disagree with Menzie Chinn. We were a great distance from a serious drop in GDP, and the Fed intervention was hasty and overlarge to my thinking. There is a real problem with Employment, and perhaps an even greater hazard from Inflation. We are being distracted by a fall in Housing prices, while most of the rest of Product Pricing is going up. I would like to acquire some numbers on the actual real Cost of Housing as a percentage of real Income; remember the Housing Price reductions occurred only after the mortgages were taken out set for higher Rent Cost. One has to remember that Inflation can occur precisely where Property value falls in the face of Maintenance Costs increasing. No one talks about that Basket of Goods anymore, but I think there should be some concentration upon them. It could tell Us much about what Consumers are actually paying Today.

One can ask whether We have too many people, and I tend to believe there are too many. This Soccer Mom with an economist’s degree may be a shade off the mark, but if she wants four kids, that is her business. I tend to think in terms of provisional support for the little brats, only a percentage of which will go on to have a usable utility. There are still people who like a crowded theater or concert, rather than the ability to stretch out and hear over the breathing and snorting. I think it humorous that the greatest benefit of Education for Children is to convince them to stop breeding when they lack the material resources to support a family. This is one of the rare reasons to fear a rise in the Standard of Living–We are back at the Soccer Mom. Such is Life. lgl

May the hatred engulf me!

Greg Mankiw attempts to invoke Ronald Reagan’s name to counter the implicit Tax hike coming from a universal health care plan; the Reality being no one can establish a huge program without higher taxation somewhere. There remains some doubt to the great conservative ideation that higher marginal tax rates cause Taxpayers to work less. There is even further suggestion that any inhibition of effort by the higher taxation would induce more labor assets to enter into replacement effort, because of the economic advantage presented; Labor always filling unwedded opportunity. There stands even some indication that Business organizations utilize the unpaid added Wages to finance Training Costs, with consequent easier replacement of labor. I do not doubt Greg’s numbers, but I also have great doubts of the real economic losses entailed from such higher taxation. Greg also has a bias against forced extension of health insurance, though there is even greater doubt that Insurance companies could inflict the higher premiums in the face of individual ability to delay purchase of health insurance. Greg does encapsulate the entirety of the Insurance company argument for leaving the decayed health insurance coverage as it is, though this will force a huge debt upon States, as they must fulfil Medicaid requirements.

You can find efforts to curtail the Deficit, which are basically stymied by partisan politics. The idea of a Commission is futile, especially if one has to gain final acceptance of Congress to achieve implementation of any program. I have a more radical solution: a simple Constitutional amendment insisting that every Tax and Tax benefit must be repassed every 5 years or Sunset. Congress would have to radically reform their processes, and the effectiveness of the Tax alignment must be continually examined. Tax rates would assume the necessary proportion with much less Tax advantage for privileged interests. The long-term privileges of Special Interests must be focused on maintaining a beneficial Tax rate, and would not think to invest in devious designs in other arenas than Taxation. A similar amendment which would limit Government funding to an equal Time frame would insist that all Government expenditures would be adequately supervised. A combined Constitutional amendment including both elements, plus a Statement that previous receipt of federal support does not guarantee future federal support (that federal programs cannot be considered as a Property right), would bring honest evaluation of Government needs.

Here is one of my own personal flipfops, as I do not like to witness greater Congressional power over the Fed and central banking, though I would really like to see much of the Fed bureaucracy replaced. I, like the Congress, feel that the Fed is mal-directed; I simply do not believe that any attempt to politicize the process of Fed selection would be in any way beneficial. The decision becomes: Which is worse? I cannot really tell the Reader, as I dislike either choice, and would advise keeping the Devil which We know; though God knows Why! I differ from Economists in believing that the current Overnight rate should be around 7% currently, which would gratify member banks and loosen Credit; Congress would be outraged, though, as they would have to come up with a program to balance the Budget. Business has already shaken out, and the higher Cost of Credit would not affect GDP that greatly, though all Retail prices would naturally rise; it is a fact that the national debt is driving Us all into bankruptcy, and the higher Overnight rates would force the correct budget measures. The Reader will never see it, but it is the correct Choice. lgl

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.
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