Ben Bernanke's main concern in life is getting himself reappointed as Federal Reserve chairman. Nothing else really matters to Bernanke.
Yesterday, Jamie Dimon, CEO of JP Morgan Chase, questioned Bernanke on the effect of Dodd-Frank, Credit Card Reform, the new mortgage lending rules. It is worth noting that Jamie Dimon is a Democrat, contributed personally to the Obama presidential campaign in 2008, and has long spoken favorably about the president. Looks like he doesn't like the president's economic policies.
Dimon argued forcibly yesterday that Obama's economic policies, especially regulatory policies, are thwarting any real chance of a recovery. He's right. Bernanke, on the other hand, praised the so-called "reforms." This is the same Bernanke who was quoted in 2007: "..the sub-prime lending problems are contained." Bernanke stood by while the American economy bubbled and collapsed and he did nothing until it was far, far too late to do any good. Now, Bernanke's policies do harm.
Bernanke is a disgrace. He is the easily the worst Fed Chairman in US history, which is quite an accomplishment.
Rabu, 08 Juni 2011
Selasa, 07 Juni 2011
Obama on Greece
"...other countries are going to have to provide them a backstop and support....it would be disastrous for us to see an uncontrolled spiral and default in Europe, because that could trigger a whole range of other events..." so said President Obama today while visiting with German Chancellor Angela Merkel.
Maybe Obama should take some notes here. The Greeks are interested in two things: 1) more bond sales backed by the Eurozone; 2) no austerity. Unfortunately, these two are incompatible and will not happen. German and French citizens are fed up with bankrolling the sick Greek economy and the absurd work ethic of most of the Greek citizenry. If "disastrous" is the right name, then it is on its way. Ultimately, no one has the resources to bail out Greece indefinitely.
Obama should look at the situation in his own country, which is on a path to the same outcome that lies ahead for Greece....bankruptcy.
Maybe Obama should take some notes here. The Greeks are interested in two things: 1) more bond sales backed by the Eurozone; 2) no austerity. Unfortunately, these two are incompatible and will not happen. German and French citizens are fed up with bankrolling the sick Greek economy and the absurd work ethic of most of the Greek citizenry. If "disastrous" is the right name, then it is on its way. Ultimately, no one has the resources to bail out Greece indefinitely.
Obama should look at the situation in his own country, which is on a path to the same outcome that lies ahead for Greece....bankruptcy.
NY Times Shows Its Ignorance Once More
Dig the New York Times story today about Walmart. According to the story by Lisa Lee, the Walton family has creeped over the 50 percent stock ownership line by arranging for the company to do stock buybacks. This article exposes, for all to see, the incompetence of the NY Times business team. Since when is 50% a significant goal line for "control" of a public company. Is there anyone out there who thinks that if the Walton family owned only 48.5 %, for example, that they would have some big difficulty lining up another 1.6 % of non-family members to exercise 50 % plus one voting majority?
Owning as little as 10 percent of a company is often sufficient to dominate the policy in most public corporations. The only practical difference between more than 50 percent and less than 50 percent that Lee can cite in her article is the fact that NYSE rules do not require a majority of outside directors. Wow! Owning only 49 percent puts the Waltons in the difficult position, according to Ms. Lee, of not controlling the board's directors. Is she kidding?
It is worth noting that there are no director changes announced or contemplated at Walmart as a result of the family crossing the magic 50 percent line. Once again, the Times does its readers a disservice by highlighting an irrelevancy as a matter of substance.
Owning as little as 10 percent of a company is often sufficient to dominate the policy in most public corporations. The only practical difference between more than 50 percent and less than 50 percent that Lee can cite in her article is the fact that NYSE rules do not require a majority of outside directors. Wow! Owning only 49 percent puts the Waltons in the difficult position, according to Ms. Lee, of not controlling the board's directors. Is she kidding?
It is worth noting that there are no director changes announced or contemplated at Walmart as a result of the family crossing the magic 50 percent line. Once again, the Times does its readers a disservice by highlighting an irrelevancy as a matter of substance.
Senin, 06 Juni 2011
"Extend and Pretend" Comes to Greece
Members of the European Union are moving closer to a plan that will extend the debt maturities of Greek private debt (that is, debt owed to the private sector, mainly banks). This is more wishful thinking. Extending the debt in a package that involves more austerity is a prescription for more pain and no gain. Long run, this cannot work.
The Greeks are way overextended. Short of some kind of substantial default, Greece has no hope. Extending maturities is a "mild" default. Greece needs a real default. They need to offer bondholders 15 cents on the dollar for their outstanding debt -- take it or leave it. Merely extending debt maturities is too little too late.
The reason that the EU is not moving forward with true restructuring (meaning a much more drastic default than mere debt extension) is that they have orchestrated earlier bailouts using the private sector and the EU is reluctant to turn around a year later and demand that the buyers take an immediate haircut. So, they temporize.
The outcome for Greece is going to be a major default at some point. It is far better to do it now, not later. It is better for creditors, it is better for Greece.
The Greeks are way overextended. Short of some kind of substantial default, Greece has no hope. Extending maturities is a "mild" default. Greece needs a real default. They need to offer bondholders 15 cents on the dollar for their outstanding debt -- take it or leave it. Merely extending debt maturities is too little too late.
The reason that the EU is not moving forward with true restructuring (meaning a much more drastic default than mere debt extension) is that they have orchestrated earlier bailouts using the private sector and the EU is reluctant to turn around a year later and demand that the buyers take an immediate haircut. So, they temporize.
The outcome for Greece is going to be a major default at some point. It is far better to do it now, not later. It is better for creditors, it is better for Greece.
Sabtu, 04 Juni 2011
Surprise, Surprise..No Jobs
Hilda Solis, Obama's Secretary of Labor, was trotted out yesterday to make the rounds on the news shows to explain how the economy could produce a mere 54,000 new jobs in the month of May. According to Solis, all we need to do is pass Obama's plans for "investing in America" in education and alternative energy and to pass the debt ceiling increase. These people must live in a cave! How would boosting teacher salaries, providing more subsidies to Obama's friends in the alternative energy space and providing a new lease on life for deficit spending do anything for aggregate employment?
Solis, along with her boss, needs a course in economics. If you want workers hired, what should the government do? Make them more expensive? Give them additional rights to sue their employers? Solis seems to think that businesses should hire folks simply to further Obama's political future.
Back to square one. Businesses exist to make money. If they expand their businesses, they will do it in the most efficient way. If the government deliberately makes one of the factors of production much more expensive, then, when businesses do expand, they will avoid using that factor of production. That, in a nutshell, is why no wants to hire people, whether they are expanding or not. If you are trying to make money in the modern economy, the last thing you want are more employees.
High unemployment is a direct result of Obama economic policies. They are reaping what they have sown. Presumably, they must have thought that some other outcome was possible. A policy of demonizing business folks and making labor much, more expensive for business has lead to staggeringly high levels of unemployment and no serious job creation in sight. Why is that a surprise to anyone?
Solis, along with her boss, needs a course in economics. If you want workers hired, what should the government do? Make them more expensive? Give them additional rights to sue their employers? Solis seems to think that businesses should hire folks simply to further Obama's political future.
Back to square one. Businesses exist to make money. If they expand their businesses, they will do it in the most efficient way. If the government deliberately makes one of the factors of production much more expensive, then, when businesses do expand, they will avoid using that factor of production. That, in a nutshell, is why no wants to hire people, whether they are expanding or not. If you are trying to make money in the modern economy, the last thing you want are more employees.
High unemployment is a direct result of Obama economic policies. They are reaping what they have sown. Presumably, they must have thought that some other outcome was possible. A policy of demonizing business folks and making labor much, more expensive for business has lead to staggeringly high levels of unemployment and no serious job creation in sight. Why is that a surprise to anyone?
Kamis, 02 Juni 2011
If Not Now, When?
Why should Congress vote to increase the debt ceiling and simply kick the can down the road? Is there some date out there where it becomes politically easier to change the trajectory of spending? If you are really going to slow the rate of spending, it needs to begin now. Those who want a "clean debt limit increase" are also those who want to increase spending levels.
Congress should vote no on increasing the debt limit. It has to begin somewhere, sometime. Why not now?
Congress should vote no on increasing the debt limit. It has to begin somewhere, sometime. Why not now?
Economy is Dead in the Water
Now what? Having worn everyone out with a fiscal and monetary explosion for the past two years, the Administration and Congress are now faced with an economy going nowhere. While we continue to punish businesses and financial institutions, we wonder why no one is interested in hiring lots of folks and risking their capital in this brave new world.
What gets lost in all of this is the question of how people decide to risk their capital and how they decide to hire employees? They do this only to make money, which many in the Obama Administration think is un-American. Until the Obama folks begin to see some virtues in the accumulation of wealth, they will never understand why their economic policies are doomed to failure. Businesses don't just invest to be patriotic and improve Obama's election chances.
People take risk to get rich and to accumulate more wealth. The rush by the Obama folks to redistribute wealth and demonize "the rich," just means that there will continue to be a natural and rational reluctance on the part of business to do anything to help move this recovery along. Someone has to risk capital and hire employees besides the government.
The Obama folks just don't get it.
What gets lost in all of this is the question of how people decide to risk their capital and how they decide to hire employees? They do this only to make money, which many in the Obama Administration think is un-American. Until the Obama folks begin to see some virtues in the accumulation of wealth, they will never understand why their economic policies are doomed to failure. Businesses don't just invest to be patriotic and improve Obama's election chances.
People take risk to get rich and to accumulate more wealth. The rush by the Obama folks to redistribute wealth and demonize "the rich," just means that there will continue to be a natural and rational reluctance on the part of business to do anything to help move this recovery along. Someone has to risk capital and hire employees besides the government.
The Obama folks just don't get it.
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