State after state is in the process of increasing the minimum wage and there is now a renewed call to raise the federal minimum wage.
What is a minimum wage law? It is a law that makes it illegal to offer a prospective employee a job. The idea is that outlawing job creation creates jobs. That seems to be how Governor Cuomo sees it in his push for a minimum wage hike.
If this is such a great job creation idea, why not go whole hog. Raise the minimum wage to $ 500 per hour. Then, no job will pay less than the amount necessary to live in luxury. Gone will be poverty at this wage rate.
Even some economists have argued that increasing the minimum wage creates jobs. If that is so, why don't we subject them to a minimum wage? Why not say that no one can be an economist unless he is paid $ 10,000 per hour? That should solve their problem.
Maybe there are other ways we can dream up to lock up employers who offer people jobs. That should get the economy going.
Jumat, 11 Januari 2013
Sabtu, 05 Januari 2013
"Can't Afford More Protracted Slowdowns..."
So says the President. According to the President: "We still need to do more...." Praising what is the most abysmal job creation record in a recovery in American history, Obama cited 2 million new jobs last year. Reagan had more than 1 million new jobs in a single month during the much deeper recession in 1981-1982. But, Reagan was touting tax cuts while Obama is touting tax increases.
As the US debt spirals out of control -- it may already be unfixable -- the President pushes for more spending and more debt. He seems to have a plan. Bankrupting the US seems to be where the President would like to take us. It is far too late to believe that he is unaware of the level of the debt and the level of the deficits. He knows that we are on track to reach $ 22 trillion in debt before he leaves office with an economy stuck in the mud. He is aware of all of that. Our debt to GDP ratio will equal that of Greece when Obama leaves office.
Obama is also aware that within less than a dozen years, medicare and social security will run out of money. What is the plan? To ignore it. The "Ostrich" plan Extend and pretend. The only thing Obama seems to have learned from the housing collapse is how to repeat the experience with a sovereign debt collapse.
You will know when the game is over when rates begin to rise. That process has begun. Watch the ten year treasury, already up 50 basis points in just the last few weeks. Unanticipated inflation is on the way and higher rates are ahead. This will make the debt situation hopeless without some method of repudiating the debt, social security promises, medicare promises or all of the above.
The hypocrisy of the Obama Administration is without historical precedent in the US. The country is going bankrupt and quickly. We are not that far away from Greece. States like California and Illinois are already on the "Greek Cliff." The country as a whole is not far behind.
The recently agreed "compromise" on the fiscal cliff only moves the country closer to the day of reckoning. There is no stomach in either political party for facing the looming disaster that faces the US.
As the US debt spirals out of control -- it may already be unfixable -- the President pushes for more spending and more debt. He seems to have a plan. Bankrupting the US seems to be where the President would like to take us. It is far too late to believe that he is unaware of the level of the debt and the level of the deficits. He knows that we are on track to reach $ 22 trillion in debt before he leaves office with an economy stuck in the mud. He is aware of all of that. Our debt to GDP ratio will equal that of Greece when Obama leaves office.
Obama is also aware that within less than a dozen years, medicare and social security will run out of money. What is the plan? To ignore it. The "Ostrich" plan Extend and pretend. The only thing Obama seems to have learned from the housing collapse is how to repeat the experience with a sovereign debt collapse.
You will know when the game is over when rates begin to rise. That process has begun. Watch the ten year treasury, already up 50 basis points in just the last few weeks. Unanticipated inflation is on the way and higher rates are ahead. This will make the debt situation hopeless without some method of repudiating the debt, social security promises, medicare promises or all of the above.
The hypocrisy of the Obama Administration is without historical precedent in the US. The country is going bankrupt and quickly. We are not that far away from Greece. States like California and Illinois are already on the "Greek Cliff." The country as a whole is not far behind.
The recently agreed "compromise" on the fiscal cliff only moves the country closer to the day of reckoning. There is no stomach in either political party for facing the looming disaster that faces the US.
Kamis, 03 Januari 2013
Forecasts for 2013
Welcome to 2013. Where are we headed?
1) Stagnation in the US economy and in the Eurozone. Western Europe will remain in recession territory in 2013. There is no reason for much improvement. The picture in the US will deteriorate. Improving housing and growth in the energy sector will not be enough to keep the American economic engine going. Unfriendly government policy in the US -- higher taxes, increased regulation, implementation of Obamacare, demonizing rhetoric from the Obama White House -- mean the economy is most likely to slip back into recession territory.
2) Markets -- stock markets, ending in the negative (but not disastrous), and terrible bond markets (disastrous) should be the pattern for 2013. Improving housing markets and home prices during most of 2013. Pattern should be similar to the economic trajectory of the US in the 1970s and for pretty much the same reasons.
3) Continued economic growth in the Asian periphery that surrounds China. The only blight on an overall good record will be Japan, which is afflicted by the same set of diseases that plague the US and Western Europe. Asian economic growth will be hurt by stagnation in the West, but should still be the strongest economic area in the world.
On the political front, the Democrats will strengthen their hold on government and on economic policy. The Republicans no longer have a platform to run on and will increasingly retreat to narrow social issues, having totally abandoned the low tax, free market agenda. More debt, more government, more regulation, weaker economy -- that is the pattern for 2013 and for the next five or six years.
1) Stagnation in the US economy and in the Eurozone. Western Europe will remain in recession territory in 2013. There is no reason for much improvement. The picture in the US will deteriorate. Improving housing and growth in the energy sector will not be enough to keep the American economic engine going. Unfriendly government policy in the US -- higher taxes, increased regulation, implementation of Obamacare, demonizing rhetoric from the Obama White House -- mean the economy is most likely to slip back into recession territory.
2) Markets -- stock markets, ending in the negative (but not disastrous), and terrible bond markets (disastrous) should be the pattern for 2013. Improving housing markets and home prices during most of 2013. Pattern should be similar to the economic trajectory of the US in the 1970s and for pretty much the same reasons.
3) Continued economic growth in the Asian periphery that surrounds China. The only blight on an overall good record will be Japan, which is afflicted by the same set of diseases that plague the US and Western Europe. Asian economic growth will be hurt by stagnation in the West, but should still be the strongest economic area in the world.
On the political front, the Democrats will strengthen their hold on government and on economic policy. The Republicans no longer have a platform to run on and will increasingly retreat to narrow social issues, having totally abandoned the low tax, free market agenda. More debt, more government, more regulation, weaker economy -- that is the pattern for 2013 and for the next five or six years.
Rabu, 02 Januari 2013
A Test of the Perfect Foresight Assumption
Economists typically assume that individuals and business have "perfect foresight." What this means is that people "optimally" forecast the future based upon what they know now. Of course, there are many random events that one cannot know now. But, one thing everyone knows now is that the average US taxpayer is on the hook for nearly $ 60,000 in sovereign US debt. That number will climb to over $ 100,000 by Obama's last year in office.
What this means is that the average American is under-water financially and the situation is rapidly getting much worse. Under perfect foresight, Americans will perceive their weakened financial position brought on by the Obama excesses and will dramatically curtail their spending. Businesses, likewise, will pull in their horns. This is the prediction of "perfect foresight" economics, an assumption typically used in economic modeling.
The "crowding out" of investment spending by massive government deficits is the immediate reality that helps inform future forecasts. There is only so much savings to go around. The US saves very little. The US imports its savings from other countries (that is the driving cause of the balance of payments problems). Even these imported savings will not be enough to both : 1) fund the US national debt; and 2) provide investment funds for US economic growth. The latter will be shortchanged.
The war on US financial institutions codified by the Dodd-Frank legislation prohibits US financial institutions from funding an economic recovery and the war on business led by an aggressive EPA and the new Obamacare regulations means that the economy is headed nowhere.
Obama seems to be winning his war against the US economy on every front. Don't expect much from the US economy over the next four years. If the national debt passes the $ 20 trillion mark by 2015, which it is on track to do, don't expect much after the next four years.
What this means is that the average American is under-water financially and the situation is rapidly getting much worse. Under perfect foresight, Americans will perceive their weakened financial position brought on by the Obama excesses and will dramatically curtail their spending. Businesses, likewise, will pull in their horns. This is the prediction of "perfect foresight" economics, an assumption typically used in economic modeling.
The "crowding out" of investment spending by massive government deficits is the immediate reality that helps inform future forecasts. There is only so much savings to go around. The US saves very little. The US imports its savings from other countries (that is the driving cause of the balance of payments problems). Even these imported savings will not be enough to both : 1) fund the US national debt; and 2) provide investment funds for US economic growth. The latter will be shortchanged.
The war on US financial institutions codified by the Dodd-Frank legislation prohibits US financial institutions from funding an economic recovery and the war on business led by an aggressive EPA and the new Obamacare regulations means that the economy is headed nowhere.
Obama seems to be winning his war against the US economy on every front. Don't expect much from the US economy over the next four years. If the national debt passes the $ 20 trillion mark by 2015, which it is on track to do, don't expect much after the next four years.
Obama Wins; USA Loses
As the Wall Street Journal spells out in some detail this morning, all Americans face major tax increases in 2013, including the middle class. These tax increases don't include substantial increases in health care insurance costs for both employers and employees. Funding the Obama agenda is expensive. Republicans have given them a blank check by permitting Speaker Boehner to schedule a vote on the McConnell-Biden compromise.
Results are what matter and the truth is the Republicans did not have the courage of their convictions. Once again, they let the country down. Boehner should be removed as Speaker, but he won't be. Maybe the only answer is to vote the Democrats back into control of the House, so that there can be a loyal opposition instead of a "me-too" Republican leadership.
The McConnell-Biden deal increases the deficit, dramatically increases taxes, and rewards Hollywood producers and the money-losing wind energy business. How could Obama not like that outcome and why would Republicans go along? Who knows?
It now gets worse for Republicans as the debt ceiling discussion gets rephrased to: "We voted to spend this money, now we have to honor our commitment." That will be the Democrats argument. Obama will propose more tax increases and, once more, Republicans will cave. Obama will get more spending, higher taxes, and more subsidies to his political allies.
Not only will he get all of this, but Republicans will vote for it, as they effectively did last night when Boehner scheduled a vote on the "fiscal cliff compromise." The fact that a majority of Republicans voted against the compromise is irrelevant. Without Boehner's support, the deal would never have gone through and he is the leader of the Republicans.
It is not surprising that Obama plans to sink the country in a sea of taxes, regulation and debt. What is surprising is that the Republicans are aiding and abetting Obama is his destructive course.
The Republicans had maximum leverage until last night. Now the Republicans have no leverage at all in the upcoming debt ceiling discussion. They also have nothing to run on in 2014. Here's an easy prediction: Democrats will retake the house in 2014. The Republicans deserve their fate.
Results are what matter and the truth is the Republicans did not have the courage of their convictions. Once again, they let the country down. Boehner should be removed as Speaker, but he won't be. Maybe the only answer is to vote the Democrats back into control of the House, so that there can be a loyal opposition instead of a "me-too" Republican leadership.
The McConnell-Biden deal increases the deficit, dramatically increases taxes, and rewards Hollywood producers and the money-losing wind energy business. How could Obama not like that outcome and why would Republicans go along? Who knows?
It now gets worse for Republicans as the debt ceiling discussion gets rephrased to: "We voted to spend this money, now we have to honor our commitment." That will be the Democrats argument. Obama will propose more tax increases and, once more, Republicans will cave. Obama will get more spending, higher taxes, and more subsidies to his political allies.
Not only will he get all of this, but Republicans will vote for it, as they effectively did last night when Boehner scheduled a vote on the "fiscal cliff compromise." The fact that a majority of Republicans voted against the compromise is irrelevant. Without Boehner's support, the deal would never have gone through and he is the leader of the Republicans.
It is not surprising that Obama plans to sink the country in a sea of taxes, regulation and debt. What is surprising is that the Republicans are aiding and abetting Obama is his destructive course.
The Republicans had maximum leverage until last night. Now the Republicans have no leverage at all in the upcoming debt ceiling discussion. They also have nothing to run on in 2014. Here's an easy prediction: Democrats will retake the house in 2014. The Republicans deserve their fate.
Selasa, 01 Januari 2013
Vote No on the McConnell-Biden Deal!
Eric Cantor has come out against the M-B deal. Three cheers.
What the House should do is what it historically always has done. Legislate. Amend this M-B deal. Put in real spending cuts. Ignore the tax rate issue for now, so that issues don't get confused. Get rid of the wind energy tax credits and all of the other nonsense that the Democrats have tossed in. Get to $ 1.6 trillion in real spending cuts or vote no.
This is the best time to conduct this fight. Democrats may regain the House and then what? They can do whatever they want.
The time to fight for the country's solvency is right now. We have the leverage now. We will not have it if we cave here.
Going over the cliff is better than the M-B deal. No question. Any Republican who votes yes on this bill, as it is, should draw a primary opponent in 2014. McConnell should definitely draw a primary opponent for agreeing to this. Every Republican Senator who voted for this should draw a primary opponent.
What the House should do is what it historically always has done. Legislate. Amend this M-B deal. Put in real spending cuts. Ignore the tax rate issue for now, so that issues don't get confused. Get rid of the wind energy tax credits and all of the other nonsense that the Democrats have tossed in. Get to $ 1.6 trillion in real spending cuts or vote no.
This is the best time to conduct this fight. Democrats may regain the House and then what? They can do whatever they want.
The time to fight for the country's solvency is right now. We have the leverage now. We will not have it if we cave here.
Going over the cliff is better than the M-B deal. No question. Any Republican who votes yes on this bill, as it is, should draw a primary opponent in 2014. McConnell should definitely draw a primary opponent for agreeing to this. Every Republican Senator who voted for this should draw a primary opponent.
All Tax Increases, No Spending Cuts
This is "balanced?" The so-called compromise to prevent going over the fiscal cliff is all about increasing taxes. There are absolutely no spending cuts in this plan. This is a pure Democratic plan. McConnell should be ashamed of himself. Boehner should not permit a vote on this.
Obama let his views be known. He said yesterday that this is just the beginning of the tax increases.
Where are the Republicans?
Obama let his views be known. He said yesterday that this is just the beginning of the tax increases.
Where are the Republicans?
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