How We Pay is as important as Who We pay for.

I decided I might copycat Mark Thoma today, only do a worse Job. We have a great number of people to ensure. We have multiple medical procedures per person to pay for, and which are increasing in number per person; but which will have to level off somewhere, as neither Doctor or Patient can waste the Time. We must then get some concept of the number of medical procedures which must be paid. It is at this point where some degree of Reason must enter the entire analysis. Let Us hope I can introduce some interesting facets which should be explored.

One can look at the Problem, and notice certain aspects which are important to holding down Costs. The first thing which can be found is the entire issue of Proscriptions. We cannot withstand the Cost of Doctors acting as advocates for the Pharma industry. Doctors should be enjoined to proscribe at least 3 Drugs for any Condition, one of which should be free of Patent royalties. This will not be such a hazard or burden for Doctors, as they are generally Specialists, and deal with the same ailments over and over; even the General Practitioners. This can be aided by removal of many Drugs from the mandatory Proscription list; the procedure here should be based upon a Drug’s adverse interaction with other Drugs, or imposition of an addiction. Mexico and other Latino Countries do quite well without any mandatory Proscriptions at all. There will be some misuse of Drugs because of a loosened policy, but there is this misuse now, and the emphasis should be placed on only licensed pharmacists being allowed to actually sell Drugs; heavy prison terms associated with unlicensed sellers providing Drugs.

The second element of Drug Care which shouts out to myself is the need to provide uniformity of Cost to medical procedures. Two factors are apparent here; the first being that Specialization should have a preference, but not the extreme preference shown by the Private Sector. I would devise some appropriate level of payment per Doctor Hour of Treatment, plus a 5% increase per year of additional medical training past medical school and Internship. Doctors will immediately protest that it is impossible to turn their labor into an hourly Wage system, but if the law insists that Doctors list their scheduled Work retinue by Time spent, then Accountants can charge the appropriate Cost to each individual Patient. Ths is eased by a system which bills every Patient quarterly per year. The later would also help Governments to control the amount of Time and Service which every Patient receives, while billing segments of Patients at different times, though Quarterly, will provide a steady Income and appropriate use of billing labor.

I could go on with an number of alterations in medical practice which could present great advantage, but am running out of Time and Incentive; knowing that the Doctors are already mad at me. lgl

What is a Recession?

Give a man a couple of bucks, and he thinks he has a right to an opinion. Consider this Guy! Here he sits in an office, and studies the markets for like half a century. Now I am not trying to put down a fellow Nebraskan, and he is right about the fact that there is about an actual Two trillion of U.S. Dollars too much out in the World; he actually mentioned just One trillion, though this Problem has been with Us longer than the financial crisis. People sometimes forget the basic nature of Recessions, which is a market evaluation that Stock and Product within an economy are overvalued, and market values fall as a result of that realization. These people go on to believe that recessionary conditions can be forestalled simply by inciting inflation–a base degradation of the Currency involved. Anyone who recognizes this is not a perfect Solution can make a few extra bucks by writing something for the NY Times.

What is wrong with using inflation to stop a Recession? Well, one has to look at the problem from the position of your average Investor, which the Guy discussed above may not quite understand. There are two basic forms of investment capital in any economy–Static and Variable. Static Capital depends on Contracts of various forms to gain them a stipulated level of Income. Variable Capital rests upon the profitability of business enterprise, rising with extended business performance, falling with contracted business performance. I put this discussion in these terms to possibly help Understand of the problem. Pumping inflationary Cash into the economy has the basic root definition of artificially lowering the real reward of the Static Capital to maintain the reward of the Variable Capital. It is akin to Mommy playing favorites among her children.

We have found the underlying hazard of inflationary pumping of Cash to forestall a Recession. Government, Economist, and Businessman see such effort as excellent, because it immediately sets into motion a consumption cycle which grants them all an increased Reward. It has a real hazard over the long-term. The possessors of Static Capital attain the same nominal reward, but much less real reward; such situation causing much deterioration of the overall level of consumption, especially as Static Capital makes up over 60% of all Capital. This means that the Inflation has injected a permanent downscale in Consumption into the economy; which when considering the models, cannot be replaced by the new reward system for around 11 years. What I am trying to present is the fact that inflationary pumping into the economy only extends the Recession, and therefore, makes it milder by stretching. Recovery is actually fanciful under these conditions, and a Boom will only come with technological advancement or instrumental economic construction. What is really needed is Government funding of new technology. lgl

There's gotta be a better way!

Jeff Cornwall raises his Sight above Small Business every once in a while, and gives Us some really good stuff. This Piece on health care reform stands as a excellent Case in Point. The number of registered Lobbyists on any aspect of legislation is directly proportional to the amount of money involved, but registered health care lobbyists informs Us what magnitude of Economic Profits are at risk in health care; remember that Economic Profits are in excess to Normal Profits of an industry, based upon some protected monopoly position of some type–be it Patent, locale saturation, manufacturing capacity, etcetera. The probable greatest source of economic Profits is Government Sunshine, where Government provides legislative format capacity to free-wheel Pricing. It is all about Windfall Profits-taking, like the Golf Tournament where my friend did not play well enough to make the Money he did last year; he needed a 12-Point advantage like Businesses often get legislators to enact. This is what all those lobbyists are all about.

Stan Collender gives some Insight into the effect produced by all those lobbyists interacting with Congress. Rules of Reconciliation seem necessary to myself only when no one is actually advancing the real reasons Why they support or oppose some legislation. Such Rules are a lobbyist dream, as they limit How the legislators may discuss an issue, stopping any definition of an overview of the issue, or alternate resolution to many problems connected to the issue. This style of handcuffing the Debate ensures that 11th Hour elements cannot interrupt the suppression of popular sentiment on the issue. Stan wants to know what constitutes a provision; I would ask what exactly defines the periphery of the budget, legislators willing to spend outrageously anywhere, except on defined issues. My problem rests in that those defined issues are always the brainchild of lobbyists.

It may outline a statistical anomaly, but female economists think differently than the male members of the profession. The men look for causation, while the ladies look for serenity. It is within this light that I forward this Piece, something which all might use for Suggestions. Health care could be handled by a finessed taxing system, though liberals would soon be tying themselves in knots about What and Where to provide sanctions. I have always be Old School, cursing all Taxation, and supporting only those taxes which cannot be evaded. The best Government interference in the lives of the Citizenry is None; which fits in with my ideation that all ex-Presidents and ex-Governors should be imprisoned for life upon leaving Office, they being sufficiently Guilty. Some fools actually think their Guilt need be proven, when statistically such a Rule is as effective as the Byrd Rule–about 80%. The 20% losers should be punished anyway, for being Power-Hungry. Life could be so simple, if Everyone thought like economists. lgl

The Twilight Zone

Is Bruce Bueno de Mesquita right or just lucky? Read this article, and hazard your own opinion. It all revolves around rational actor game theory. My only complaint about this theory consists in everyone’s refusal to turn the analysis upon itself. To wit: How often will rational actor game theory prove to be right under a spread of diffuse predictions? One cannot understand the accuracy of a predictive system without some grasp in numeral terms of its success. The real devil in the mixture is the unknown factor which the potential to skew Outcomes. Unknown factors have in themselves a predictability, and generally range over 20% of likelihood. Dark Horse politicians have a probability of over 40%; they wouldn’t be Dark Horses, if people could watch their development. They generally capture some sentiment among the Body Politic which was previously suppressed, to which they give Voice. It is this refusal to allow new factors play within rational actor game theory that which may defeat it?

Read and Study this Post, and ask Why Part-Time Employment has grown so high this Recession. There can only be one Answer in my estimation, and this consists of a Statement Business has switched to shortened Production schedules, while maintaining as much Employment of trained labor as possible. Some 8.8 million Jobs have switched from full to Part-time employment in the Main, and this appeared more generally in previous full-time employment venues. I have not found much data on the Summer season on the Internet, but estimate that Tourism is unreported basically for reasons that it does not really exist. I might have to go to the trouble of finding the level of air fares taken, the Fill-ratio of Bus tours, and the volume of Gas sold along the Interstates. I probably won’t, though, as I am as adverse to bad News as Anyone.

Here is an article where the industrialized West is damned either way. The decoupling of Asia will always mean some level of disaster for the West, as Asia leaves the realm of markets, and enters the world economic system as Competitors. This will require our source of Resources, a rejection of our Currencies, and Scalpers of our markets. Continued reliance on the West will not extend our markets, where Marketing efforts will always be more costly than Profitable. The whole Scenario brings Us more Pollution, lower-quality Products, and fewer access sources. It is sad that We always expect personal gain from development of the East, when there is so little evidence of any Profits at all to be obtained. lgl

That Tricky Math

Are you hounded by Rounding Errors? Eric Keetch must be! I only provide this Statement to ease the minds of Readers who could be confused. The transfer of the mathematical system to geometry is always assumed to be an exact Science, but it can occasionally drift off to infinity. The real culprit is the width of lines which in Math does not exist, but in geometry must exist if there is to be a separation. In this it is like Economics. The later insists that all economic behavior can be placed within a model, even erratic choice. Here again We are back to Rounding Errors. Can you track economic choice to infinity, and be sure to have correctly placed all calculations? Every Mathematician includes some Margin of Error; only the rest of Us are stupid enough to believe that there is such a thing as Exact Science.

One will wonder Why I would put this Post subsequent to the Above. People like to hold all sorts of impressions about the Housing market, producing an amazing lot of reactions to the information coming from it. I think of the Housing market as a Poker Game, with Realtors being the professional Card Mechanics. Buyers and Sellers both are bombarded by this information, and Realtors work hard to enhance the positions held by the Seller, even if this slows the actual Transaction period; it is all a question of Money for the Realtor, as he gets a percentage of the Sale. It becomes a question of Advertising past this Point, with the Realtor convincing the Buyer of the strength of the Housing prices; and the Seller of the weakness of the market if need be. The only difference from a Poker Game is the fact that the Realtor must remain Bright, Cheerful, and adamant about the Price. Readers may notice that it becomes a question of how skillful the Realtor does his work, and can have a major variance from general Housing prices. This is a position where Realtors exploit the Rounding Errors in the Housing market.

I will finish this Tract with this missive. Why?? It is a Marketing debacle, on the part of both Democrats and Republicans. The major position of Democrats is that the Public Option will stop the interjection of economic Profits into health care; subjecting the health care industry to the same Profit ratios as other sectors of the economy. Republicans are not so worried that Private health care will be crowded from the market, but that the economic Profits may be crowded from the Market; sincerely reducing some of their most profitable elements of their own portfolios. Neither has any real belief that any agency, Private or Public, will be subjected to any loss of entrepreneurial Profits. The Democrats think they can get a Club with which to threaten the Private health care sector, and hold down medical cost–probably a forlorn Hope, considering the record of public agencies (the cited U.S. Postal Service cannot limit its labor force, number of service centers, or its business hours). The Republican fear that the Private health sector will lose Patients and monopoly pricing; they totally unconvinced that there is more Profit to be made by expanding the ensured base. Are WE back at Rounding Errors? lgl

The Pretensions of the Ages

There is small hope of economic improvement through Government action or activity, but Jeffery Sachs still has the faith. He does not understand that personal corruption and Privileged Interests will corrupt all government programs for their own personal benefit, so that economic gain will not be attained; the basic Result being only further wealth for the upper classes. This preservation of the social strata stands as a powerful impediment to any foreign aid to advance the living conditions of native societies, especially where it calls for a sharp improvement in the fate of the lower classes; any Proposal which would alter the native class system remains very vulnerable to personal corruption or outright Theft.

People are trying to rewrite Keynes one more time. This time, though, they might have got it right. Keynes was an old school Tie type, and could never understand the message carved into the base of the Statue of Liberty. He did not care much for the Underprivileged, and reacted much as do the Special Interests of the previous Paragraph. There is little ill will in any of This per sec, just adamant refusal to surrender traditional privileges and forms of respect. One of the great evils of economics stands as the ability to turn Classes against each other, all because of Everyone’s addiction to pretensions. All lose because of unwillingness to freely distribute the Profits of undertaken enterprise in a manner which will ensure further pursuit of Profits.

David Merkel lists 10 of the current Problems with the Global economy. The Reader of this blog should ask How each of the 10 Problems have been affected with this thirst for the preservation of Privilege. China wants to retain its reputation of a fast-growing economy. Eastern Europe, still controlled by its upper classes though now non-Communist, want the same prestige of the developed western European nations, even though the later have had an additional half-century of intense development. The Fed is actually trying to hide the real Cost of incurring federal debt by buying Treasuries to keep the Interest rates low, and thereby distorting the entire Reward system of the financial world. Corporations are overbuilding, and Banks underwrite bad paper, just to insist that they were not hurt by previous losses and prior practice was not delinquent. Business and Advertising cannot admit that American Consumers must cut back their consumption, so are launching a full-scale campaign to incite Consumers to go back to unsound debt growth. Ask How Long such farce can be maintained? lgl

Propaganda

Paul Krugman makes the same mistake that all liberals have made since the Nazi propaganda machine was first designed; I would advise them to read the book "Propaganda" written by Jaques Ellul after World War II. Liberals actually believe that propaganda has to have some relationship to the Truth, in order to be effective. Propaganda has nothing to do with the Truth. It is a process where emotions are invoked, not Thought. It is sickly humorous that liberals were among the first to devise campaign slogans, which are the base line propagandist instruments. The Nazis, followed by later reactionary Conservatives of all stripes, were the first to realize that there need be no relationship at all to the truth. Today’s Conservatives have introduced the Concepts of Death Panels, rationed health care, and loss of preferred health care Providers to the American lexicon, even though no rational being could possibly believe in the actuality of such Events.

It should be understood that propaganda is first of all an emotional compulsion to utilize a specific formulation of Speech. It is introduced by popular figures repeating the same formula over and over. Ellul proved in his work that the effectiveness of propaganda does not rely upon belief at all, but on introduction of the labels into social concourse. Propaganda actually depends on the fact that liberals do not feel the need to debunk the material chosen, as it is so transparent in it’s falsehood. People tire of raising the same attack necessary to deny the allegations, while the propaganda is so simple in content that it will be often repeated. The sheer awareness of the propagandist effort can actually be turned into an aid to it, as Opponents of such reduce their efforts to suppress the propaganda, simply because it is widely recognized as a slogan channelization.

The only real effective resistence to propaganda is counter-propaganda; a medium which is offensive to most people opposed to the practice. The is Why most opposition to propaganda is haphazard and ineffectual. I would advise Obama to hire an advertising agency to counter conservative propaganda initiatives, instructing them to develop ripoff response jingles as second lines to exposure to the slogans, such as ‘Death Panels–the Pan that can, approved by Everyone except Patients’. This establishes the universality of Opposition, eliminating the segmenting of partisanship, and making the propagation of the original Slogan counterproductive. One has to understand the process of propaganda before One can defeat the practice. When one can recognize the process of segmentation behind propaganda, one can fight it! lgl

Bad Programs for the future

Great Minds think alike, or a couple of individuals went to the hard labor of compiling some hard research on the labor market. They agree with me on the sluggishness of the future labor market. I, being myself a member of the Baby Boom, almost wish they had found alternate information. They conclude that Unemployment will stay around 10% through 2011, and might stay above 6% for a decade. I forecast that the labor market would stay poor until the Baby Boomers retired, about the same thing, with the same period of Time. The only thing which might save Us could be a regeneration of American manufacturing. This is not really a foolish expectation, if and when the American Dollar tanks because of the huge debt being created by American Consumer and Government. The decline of the Dollar might insist that Americans produce their own Products. All aspects are up in the Air, and I wish We had a major economic study on the difficulties of bringing manufacturing back to this Country.

Greg Mankiw takes an unholy joy is finding that Thomas Crocker has reservations about implementation of Cap-n-Trade. He feels this way because Crocker originally suggested the Concept of Cap-n-Trade. I, as a side issue, would state that I agree with them in almost every particular where they find Cap-n-Trade a failure. An emissions tax is the only vehicle where Carbon emission can be minimized without a maze of contradictory regulation, based upon need to track illusive market transactions. Choosing to give away Carbon Permits starts the program down the road of Injustice, and loss of taxation, from which the program will never recover; especially if the Giveaways are periodic every year, as now envisioned.

Both of my Paragraphs have a relationship, as both are concerned about the obstructions to new Start-Ups, which are utterly necessary for any major improvement in the American economy. We will eventually have to bring manufacturing Home to save our own economy. We cannot achieve any higher percentage of native production, if compelling government regulation and tax forestalls the creation of new American industry. Current Corporate structure would reduce Americans to simple Consumers because of lower Production Costs in foreign manufacture. The fact of the Case, though, is that the American Dollar will not sustain itself in the long-run, if manufacturing is not re-introduced into the American economy; a Concept opposed by Corporations, who are totally alienated from the basic maneuvers of competitive Start-Up production. Corporate scheduling cannot handle the rapid Shifts of Price in competitive marketing; it defeating their entire system of personal reward in the Corporate structure, where achievement must be defended by some methodology. The American economy is thereby in a battle with the Corporate world to produce an effective American production structure. The solution will be family-originated Corporate systems based upon best technology; a system which cannot survive the suppression of any Cap-n-Trade system where Start-Ups are penalized by previous usage allotments. lgl

How to make Enemies and anger People

I reserve my position among those economists who believe that the Recession will not end without consumer spending growth. I differ from economists in the main with the belief that any expanded consumer spending comes solely from Inflation. What this entails is an actual drop in physical product, though with a higher Price Tag placed upon that product. This Condition does not bode well for higher Business Profits or higher Employment. It also foretells a real reduction in the standard of living, as static Incomes are forced from the consumption markets. It is also a bad Sign for the Commodities markets, though this is the arena where One will find most of the Inflation produced; as entrenched rich industries can conjointly refuse to produce without collusion of obvious notice. The later will be an additional distortion of market forces to save their own Profits, but will result in much greater losses for Consumer Product markets.

Special Interests remain firmly in control of government policy, and will cancel any attempts to bring fiscal responsibility into the matrix. This will lead to the next financial crisis, where Treasuries will find no market except for the Federal Reserve, whose balance sheets are already deeply in the Red, and which will not recover in any sensible period of time; a condition which is essentially equivalent to printing currency to pay for government operations. Bernanke, Congress, and economists believe that this is accomplished fiscal policy which is sustainable for long periods. I am afraid it is not. Only Time will tell Us if the new super Accounting will be effective.

Two Scenarios seem possible to myself. The first Scene will witness a revolving 10-14% Inflation rate annually for a long period, the other will see a complete collapse of the Bond markets where the Treasury will go to actually printing Currency rather than pay Interest rates on Treasuries in the high Teens. I could be having Nightmares, though, which are starting to appear in the daylight. The only thing which really bothers me is the potentiality for the federal government to continue the increase in deficit spending; that increase periodically shifting upwards simply due the inflationary nature of the growth in the numbers of Treasuries. We are in a Time where there is a looming Shift in the nature of the Game; One where all the Rules are altered by the current action in Play. I cannot see the consequences, and I know that economists, politicians, and administrators are more short-sighted than I. It reminds of the Roman Republic of old, and without the replacement of the current fiscal leadership, We will have the Imperial Guard again nominating their own Emperors. lgl

Perfect Knowledge--Old School

Mike Shedlock has put together a good Post on Consumer Credit contraction. Banks are lending less, down some 12% year over year. Consumer Credit itself has shrunk in June by about 5.5% at the year over year rate. I, like Mish, would like to thank Dave Rosenberg for the series of graphs, which should be studied by the Reader. A major element in Consumer Credit contraction consists of the way being led by the Banking community, who has been spooked about massive increases in bad paper. This hyper nervousness on their part has probably did more to generate the Savings cycle among Consumers than any other factor. It is like unto a Poker Game, where Consumers do not pay much attention to the News media, but keep an Eye on their local Banker; when they begin to see him Sweat, they decide it is time to build up some ready Cash. FDR declared a Bank Holiday at the bottom of the Depression; if Obama did the same, We would be back at that bottom of a Depression–Consumers thinking it was time to go to spending Cash. Federal policies across the board should be worried about alarming the Consumers, who will determine whether We go Up or Down through the Christmas Season. We go Down, and We will be Down there another Two years.

Tim Worstall has found a Cuban Toilet Paper shortage, and manages to effectively translate the shortage into a good argument for Hayekian destruction of central planning. A lot of people will think the Story somewhat amusing and Stupid. I would like to remind that the Military throughout history has had major problems with this very issue, with Troops suffering lack of Toilet Paper on almost every continent, and most islands, in the history of this nation–all centrally planned. There have almost been generated military mutinies because of shortages of liquor, Cigarettes, and Coca Cola for our Troops–grown in the Consumer necessities of consumption. Military officers can tell you that the dangers of ‘fragging incidents’ go up if there is a loss of Beer for the Troops. One does not need to turn to foreigners to highlight the limitations of central planning.

I have never been a devotee of graphs in economic analysis, yet find that Any who want to advance their knowledge of economics must attain a capacity to studying these things. The major element of my bias is probably my having never taken the time to learn PowerPoint. Still, I must give the Students access to this Post, which tells Us by graph that the United States ranks low in the utilization of Small Business employment. One has to ask Why, and they can generally determine there exists a Bias among the financial community, which refuses to acknowledge Small Businessmen as actual Businesses. The Bankers treat these individuals as simply self-employed, and refuse to give them the time and attention which they shower on other enterprise. American banks have ceased being a venue for detailed business advice, and spend more time trying to sell dubious financial instruments than in providing business advise. lgl

The Sadness

All you didn’t really want to know about Economics, but can be found here anyway. Tim Duy may be right; I hope so. Gary Becker and Nate Silver might also be right, though I don’t believe Nate can hold back the Unemployment Bear; there are just too many being Laid-Off, and too many joining the Job markets because of Investment losses. All Mortgages are shakey, as James Hamilton mentions, no less because Job change often leads to lack of optimum Transit Costs. This later may seem ridiculous in consideration of overall Household performance, yet there is often added Mileage, longer commute times, and lower Wages scales which have dropped about 5% since last November (insecure data, but I believe accurate). Consumer Credit is becoming more expensive, and loan renegotiation have been reeved up by Bankers to be as simple as filling out your own Tax Return. Climate Change will always be with Us, because Special Interests will destroy all legislation; Cap-n-Trade will resemble the European debacle in the same area. Everyone will make a Corporate Profit on the Deal, except the Consumers of such Energy.

Mark Perry thinks that the natural healing forces are bringing the Recession to an end. I don’t see sounder loans being made, better financial instruments being written, or financial institutions taking more of a Risk in their loan procedures. I see no one except the individuals who brought on this financial crisis allowed to maintain their previous Wage scales. I have not been confronted with any of the traditional healing processes; in truth, I have only seen Fed and Treasury forestalling those healing powers. The people who made the mistakes get Pay Raises, while Everyone else only face higher financial charges to pay for those Raises. A real anomaly I perceive consists of financial institutions mounting great screams over losses, simply to cut even Investors out of Windfall; overall considering entire institutional portfolios, these financial entities must be about 10% ahead in sheer Profitability year over year.

Arnold Kling, as usual, presents a very cogent Argument that neither financial or monetary policy errors could account for the total trouble of the Recession. I have always stated my belief that the sheer size of the economy alters the impact of monetary policy. Economic expansion always decreases the power of government intervention, while the size of the Labor Market will always intensify the amount and degree of Employment under Recessionary conditions. Governments have already overspent their Stimulus power, and Arnold’s planning errors develop greater sudden impact. The Recession is not over, and I am afraid the Christmas season will confirm the loss. lgl

The Limits which should be set

I will probably catch Hell from Dean Baker over this, but I am going to utilize his Post on further discussion of yesterday’s theme. Dean takes on this Washington Post article with the contentions that the WP does not accurately reflect Populist opinion, ignores some of the actual Concerns of Populists, and that the Earnings on which the Bonuses are based are actually subtracted from the Incomes of Consumers and Businesses. It is actually a good article based upon sound research, and Dean’s critique is also well-written and brought up real elements of the Problem which should be evaluated. So what do We do with these two Pieces?

The first Statement to be entered upon the Record states that these companies borrowed a lot of money from the Government, which they must repay. The Contention of the companies is that the Government should allow the companies to earn the repayment in the method to which they are accustomed, and pay their Employees the Bonuses they were assured, even though such practice leads to malfeasant behavior to raise Cash by these Employees. Dean’s analysis states that these practices cost Consumers and Businesses much more in Expense, than would the Taxes sufficient to absorb the lost funds. His basic posit would probably state that is of higher benefit to deny the Bonuses, rather than to grant them. I tend to agree with that Sentiment.

I find that We are beseeched to pay the very people who brought Us the financial crisis huge reward, simply because they possess the capacity to repay the loans. I tend to the idea that it would be better to hire all new Help if Those promised such bonuses quit because they did not get them. Many people claim there are no replacement, and if so, then the American economy is indeed in sad shape. The basic contention of these companies is that the Employees enjoy a personal relationship with their Clients, which makes their retention so valuable. I find this to be somewhat fallacious; Investors being the general type who travel to Those who present the best advantages, with no long-term friends. I do know that these financial transactions do cost the American Consumers and Businesses about 12% of their Operating Costs, with their combination of designed Interest rates and artificial support of Prices. I also know Investors get almost a 22% advantage of Profits from their Investments because of the artificial Pricing and Charges, but which is only about 40% of the excess Income generated. The Question becomes whether We need to create a new class of Wealth, simply they know how to Shortchange the Consumer and Business in the economy. I think not! lgl

The Proper View, Grasshopper

To what degree should Information be vetted? Joe Kernan has his standard, Barry Ritholtz has his own. I have always tended to the belief that ‘Let the Buyer Beware’. There is the factor, nevertheless, that I desire to teach my Readership some of the principles of analytical thinking. I decided to present my own views on vetting Information. It becomes a tad unusual, and should itself be taken with a grain of Salt.

1) There is far too much Information to read, so at best only Scan Concepts which have been previously established as relatively sound. Good Students spend far too much time reading only rehashed arguments, and the search for knowledge entailed an expansion of individual containment of Concepts with some reliable methodology entertaining intellectual priorities.

2) Intellectual expansion insists on Speculation, which means Arguments never before advanced to the individual’s knowledge. These should be carefully reviewed, especially in reading the Commentary, with the understanding that adverse commentary has already been erased by the original author. Search from other sites of the information will be sparse if the argument is new, but easy to find if the information is dated or already found to be erroneous. New material should always be searched on the Internet.

3) Evaluate all new information based upon your own intellectual bent. Ask yourself if the information sounds right to yourself; One can almost always find a previous intellectual bias within yourself, if the argument sounds wrong. Find out what that intellectual bias is, and compare the reason of each; it will either prove the superiority of the new information, or reinforce the old information in comparison.

4) Accept that nothing is ever totally right. There is always some area of fallacy in any argument, which may or may not invalidate the entire argument. No one ever gets anything right perfectly; still, one has to maintain some level of tolerance or forbearance. It is often hard to judge how much leeway to grant to an argument, then seek expert advise online.

5) Realize that almost all knowledge is nefarious, and will be someday supplanted by a more relevant argument. Do not get the idea that it is malicious; it is only self-serving, developed by individuals who themselves want success. Recognize, that in the final analysis, all intellectuals are like Socrates, and must sup of the hemlock. lgl

Unsealable Cracks

Everyone should know that I dislike long Posts, especially from Someone still addicted to the bendigo of Socialist Thought. Still, I sometimes read the wild musings of different stripes, from Hayekians to Trotskyites. Slavjo Zizek stands as one of those individuals whose Insight would be extremely valuable, if not counced within an unweildy Socialist construct. He discusses the recent Iranian Protests about the Election with great discernment, but does not clearly outline that it was a battle between Those who want ‘Heaven on Earth’ and a repressive regime trying to follow the dictates of Heaven. Read the Tract, and ask yourself how much error can be found in the basic formulation, and whether Admadinejad is held in place simply to forestall Fundamentalist loss of implied mandate, or that the man actually is a master Manipulator. The sadness resides in the fact that in either case, the end result is a repressive regime based upon the terror of the populace.

Read this article, and ask whether Anyone could grasp the magnitude of the Problem. The piece does not explain the fundamental contradiction of health care, which is that it is too expensive for either the designed level of Coverage, or the Wage system of the economy. There are far too many people to be covered with the extreme extent of medical care desired, and it absorbs too great a percentage of national Income now. The exact Problem consists of the need to provide universal medical coverage to All, at the equivalent Cost of the current level of expenditure. This means the current per Patient, and per Item Cost, of expenditure must be lowered. This calls for restructuring the medical industry, not for designing new valuable Cash Cows for a privatized medical industry. The debate over the quality of the medical industry is immaterial; We cannot pay for it, and We must settle that Issue.

I had another link I wanted to present, but it is getting late for scheduled events, and the Reader has sufficient material to read. The real element presented from these two links remains that there is structural failure in the basic political structure of the regimes involved; both of which having venues which could prove fatal to the economies involved, if they are not repaired. The whole resistence in both societies come from an entrenched hierarchy, who must surrender a profitable and privileged position for success. The political structure is bound to disintegrate if these issues are not resolved effectively, and neither shows any sign of minimal acceptance necessary to achieve the unified support. lgl

Top of the Morning

Mike Shedlock is one of those individuals who can really brighten your morning; can you understand why about 8% of Americans are considered Manic Depressives? A year over year drop of 4.7% in Wages and Salaries almost calls for Champagne, if it were not so early in the morning, and if Anyone could afford it. I have always liked a scale which is not even true, but suits my mood: I equate the loss of purchasing power with a Tax, so our Taxes have been raised by 4.7%. Back in the days of Sanity, such a level was the equal of the Sales Tax, though it has only become a junior partner in disaster today. Ned Phelps say that the American Consumer will only need 15 years to recover, but what does he know; he only a recent Nobel Prize Winner, almost as bad as Paul Krugman. The $13.9 trillion reduction in net American household worth sounds terrible, but Americans are saving more; they could even equal the value of the loss through Savings in about 10 years. No esteemed Economists has estimated the total of expected lost Wages from the Unemployment over the next two years, though I can assure that the previous stated amount will grow drastically with the years.

I have always roared with applause when people speak about emerging markets, ignoring the unkind thought that China has been emerging for 170 years, and still has major distance to go. It is sad that the Traders trust each other no more than they did during the Opium Wars, even sadder that they probably over-value their Trading Partners' reliability. China has promised to stop putting industrial solvent into Toothpaste, and American leadership has assured China that the Dollar will stop melting sometime soon. I await Congressional approval of the sale of the Clunkers to China, because it is a reliable market to recoup the expenditures on the Clunkers in the first place. It would rapidly increase Chinese Imports, both with the Cash for the Clunkers, and the rapid increase in Chinese Oil consumption; could we see $4/gallon Gas again? It is almost time to ask economic leadership to give appraisals of policy response to the Recession. All I have witnessed so far can be contained in the Statement: The Rich got Richer, and the Poor got Poorer.

I decided to end such a boring morning for economic news with another tiresome Post. Donald Marron pulls out more charts from the Treasury Debt Management Office. It is clear with pursual that our political leaders have everything well in hand. I wonder what Our Trading partners will think when they hear that We are planning on two more years of the worst Debt accumulation in our History. They were so particularly enthusiastic about the last five years. It is probably too late to consider that Condo in Mexico, considering the value of the Dollar. We might think about paying more for those clunkers, as the new Autos will be major Energy savers; especially since no one will be able to put Gas in them. Of course, it could also be a good rationale for keeping the old SUV, as it isn’t going anywhere either. I think I have been sufficient lyrically cynical for such a bright morning. lgl

The Sad Story

James Hamilton expresses some doubt about what the gathered economic information tells Us; I tend to trust his graphics more than he does. We have Cash for Clunkers, and auto sales only about two-thirds normal. We are about one million Jobs away from a sustainable decreasing Unemployment rate. Disposable Income is evaporating into new Cars, still non-necessary if the program propelled them to actually purchase early. Government Spending has made the NAPM index artificial, without which We would still be at the low point of the chart. Reality might state We are still wandering in the Swamp, having not even found the few trails through the morass. We need less Spending, and more Judgement, while focusing on Job Creation. We really can’t afford a Jobless Recovery.

I present this boring tract for the Reader, though you will feel somewhat ripped off yourself, unless you are into the minutiae of banking. Bankers should not be empowered to resale your mortgage in the first place; limited to selling a Part mortgage on their own institution, based upon a combination of assets and liabilities of the borrower bank proscribed by regulation. These should be a combination of collateral–a percentage of Bank stock, a percentage value of the profitability of a list of Demand deposits, and the paying mortgages for which replacement Cash is desired. This has the desirable effect of retaining the borrower banks within the risk field throughout the length of the mortgages in question, with high desire to achieve full repayment of all mortgages. I am not a banker, though they tried to make me one once. I still am assured that my program of action will maintain the identity of all Participants throughout the trail of financial transactions. I doubt if anything else will, and one cannot achieve responsibility without accountability.

I provide this link to show the Reader that Canadians suffer about the same attrition as does the United States, and Gordon like Hamilton, has the will to actually publish hard statistical data. So Few do in this era of bad Numbers. I feel heartened by the efforts of A Few Good Men, who will tell the Internet that the few Green Shoots happen to be Weeds. I will stick to Words, as Statistics are not my forte. Words can be disbelieved, but so can Numbers; yet Wage losses are hard to deny, and We will still have plenty of them (not an advance Warning about the Unemployment report coming out). Hamilton mentions that it takes a quarter million Jobs per quarter to reduce Unemployment increase to zero. I would mention that it would take some 24 such quarters to get Employment back to previous Record. We need something which will generate 2 million new Jobs per quarter, and no one knows what that could be. Maybe Canada should declare War upon the United States to ramp up Production–like the old movie! lgl

Labor Corvee

Governments are again paying out excess Cash, while citizens are not paying any Taxes. Mish has a good Post on a jobless Recovery. Government Economists fail to understand that recoveryless Recoveries are the result of painless Depressions. Alteration of Consumer Preferences do not occur when those Preferences are protected by Government program. Cash for Clunkers is a good Case in Point: You too can continue to buy new Cars; all you have to do is continue the Debt overhang you have engaged in for years–even if your Income has dropped. Your Credit is Good, because though you will default, the Government will not–hopefully! I am reminded of those Gamblers who double down, and go for Broke. Economists would disclaim such an indecent expression of their behavior, though they might be given the email address for Gamblers Anonymous.

I am an old-time Traditionalist, and think it might be Time for the introduction of labor corvee in replacement of Taxes. Here We could leave Tax rates at the levels where it is practical: this means where Taxes will actually pay for the Government. All Taxpayers will be told that if you do not forward the Cash, then you must forward the labor; as the average Wage level at which Government employs Civil Servants. Taxpayers can actually pay their Taxes, perform the corvee, or hire Unemployed at Minimum Wage to replace their indenture. This system could remain in place forever, working fantastically well under recessionary conditions as huge Unemployment means a sticky Minimum Wage level of employment; especially if basic Welfare Benefits were not affected by such Employment. Payment of Taxes would still be the greater venue, as labor corvee is a rude method of self-employment, and Boom times generate higher-paid Employment. Actual Government employment could be minimized, while the quality of Government effort would increase; the Private Sector providing better employment performance than Government bureaucracy. Sound bizarre?–it is me people!

It is known that American Government cannot continue to Spend enormous amounts without a source of revenue. The Bond markets are already showing Signs of Cracking, overburdened by a overworked Tracking system, with Everyone being blitzed by a confusion of different issuances of various Interest return performance. Several Treasury issuances are on the verge of being ostracized because of the lack of real Returns from the instruments. It is a fact that the Bond markets will dry up immediately as boom conditions are reinstated, and Taxes will have a replacement lag of at least one year, and probably three years or more, if ever. Americans should be preparing for a Government financial crisis, which may be more savage than any crises seen before. lgl

It is all the size of the Bet

What is the value of a Power Player? Paul Krugman discusses the Issue. I know Casino Managers who actually fire Dealers who are found to be too smart, One has to follow the Play, and there is a lack of value to allowing People access to your Money when you cannot understand where it is going. It is the old axiom of tracking your Money, and if you cannot follow the trail, dump the Money Manager. I once knew a Man who was a Salesman, so fantastic that he was soon making more Money than the Man who hired him, who was totally incensed when he was fired. Can Anyone figure out Why?

We now have the Situation where Employers are making vastly less Money than the People which they Hire. A fundamental Question must be asked: Does it really matter that the Employees hold such Skill? As a Boss, I might call them into the Office, and explain that they had a good Run at the Market; but it was now Time to go help Someone else make Money. Aptitude has parameters like everything else, and Others should be given a chance to shine. The vaunted Skills may be overpriced, and themselves lack at real Market evaluation. I could honestly support legislation which insisted that Employees receiving over twenty times the Average Bonus inside a Company according to the Company bonus program, would be required to search for alternate Work; based on the principle that Others should be allowed equal chance of Advancement to such exalted Payscales. It is Time, anyway, that they helped other organizations to attain Success.

I, like Paul Krugman, see marked little value is much of the aggregation efforts of the top Moneymakers in the first place. There is far too much emphasis placed on the stockpiling of liquid assets at the expense of other programs, many of which is utterly essential for economic performance; to say nothing of Company success, also in need of uniform success. Somewhere, We have lost the Concept of pursuit of Profits for organizational success. The Markets are not places where the worst Scoundrels are allowed to make as much Money as they can; the Populace has already spoken in real terms to Those whose hands were caught in the Till. We need something to speak to Those not yet caught, and tell them it does not matter whether their activities were fundamentally Honest or Not; they as a Labor class are making too much Money for the People who must share the Risk with them without their own real Reward. lgl

The New Production Parameters

I will let the accomplished Student puzzle through the Taylor Rule for himself, quietly taking the position that my beliefs would outrage the Economists no end. The real thorn I would plant in their Shoe consists of demanding for a Rule to tighten Monetary policy, the opposite of loosening Monetary policy. I bring this up to disgrace business personnel at Parties, where I am generally treated as a pariah. Inflation does make life easier for them, but possibly not for the general population. I am of the persuasion which believes that a Boom can be accomplished under deflationary conditions, and the fact that Recessions are caused by deflationary pressures could be false; a substance which I have never found proven. Production would be borrowing less Money, though at higher Interest rates, while Consumers would be facing declining Prices with Sticky Wages. The only hazard is the elongation of Credit length, thereby establishing greater search for collateral and stability. I specifically appreciate the reduced Employment by the financial sector, with a corresponding increase in Employment by productive sectors (think lowered entrance Wages, and lower exit Wages, both altered by varied labor demand).

The real Stickler for Economists is the increased Cost of Money, which they universally accept as an unacceptable restraint on new Production. They insist that the new Production is mandatory for economic boom, even though loose Credit makes an overwhelming amount of new Production very transitional and of low Profitability. An even greater of Share of capital investment is lost to unutilized equipment than is lost to Interest on the Credit. Economists adopt an extremely moderate definition of gainful employment of resources–both Labor and Capital. They demand only generation of Numbers, with no Accounting of lost Wages from periods of unemployment or Capital equipment sold as Scrap materials prior to justifiable Production levels. Such adverse effects are limited by high Interest rates and heavy collateral demands for Credit.

I have never liked economic arguments developed without a converse scenario. The Taylor Rule has no counter-Taylorism. I think Economists should reevaluate their basic positions, starting from a position of potential Production saturations. The Reader must understand that each economic or financial crisis differs from prior crises, due to the difference in capitalization per Consumer or labor unit. It is my thesis that there is a Production saturation point in every endeavor, where new Production cannot fund the capitalization needs for Production from Consumer Sales. Established Production has enough difficulty in funding their own regeneration capital because of competition with the area of saturated Consumer Demand. The Reader should have the understanding that this limitation has nothing to do with the expansion coming from advancing technology to reduce Production Costs. I believe it is still the dominant factor is the modern economic world. lgl

Another Eleventh Hour

Health insurance stands as the real problem, and nothing seems to affect the outcome. According to this Slate article, somewhere around 30% of the Population is getting their health insurance from the Government now, with the Private Sector supplying about 47%. My own estimates(loosely based upon practically nothing) suggests that there would be about a 14% Savings with Single Payer negotiations, with an additional Cost Savings of 10% in labor at all ends by a limitation of detail information in the system. The interesting point from the last states that staff reductions may only constitute around 4% of that Cost, with a staff reduction of only about 20%. Doctors would devote a greater share of their labor to Patient Care, and Nurses could expand their Patient capacity; both a real component under the stress of a Ageing population. The real trouble comes in the intransigence of both current Health Care Providers and Patients, all of whom do not know How to Game the new system (which might itself possess a Cost Savings of around 7%).

Greg Mankiw might have provides this Post to hurt my feelings, though I have some doubts about that. I just finished eating a 14 oz. T-Bone Steak last Night, with Sides of Salads and Hash Browns; I was a true Trooper, though, in that I ordered only Water to drink. What is wrong with that Scenario? I would take the old Regulation route, and state that Restaurants pay a 10% Surtax collected along with Sales Tax, on any Meal served with has larger than a 8 oz. Meat portion. I would further state that Side portions, except for Salad bars, be limited to 4 oz. Portions as well. I believe that the greatest threat of obesity comes from Eating meals out of the home, where Meals are not balanced. Another simple venue might be a regulation that Restaurants charge for every item not with an overall price, but with a per ounce Price for Meat and Side. It might help if Customers could figure their Cost according to ounces consumed.

It might be time for Change, if the economy is in the midst of collapsing. Mish presents some detail. I won’t go into anything because of a Time constraint this morning, but economic Downsizing is the traditional time to search for better methods of business management. It is the time to revamp health care, it is time to reconstruct the Eatery establishments, and the time for Americans to ask How they do drastically over-spent themselves in the last decade. Something has to give, and do so fairly soon, else the mess will develop some permanent adverse elements. lgl