There is no real recovery. Normally at this stage of a recession as the economy begins to chug upward, the rate of growth is between six and eight percent. Not this one. Instead we're looking at 3.2 for the first quarter of 2010.
That is a disaster. You can't make any progress on unemployment with these kind of numbers. What is the Administration's reaction? Start bullying Wall Street!
The stock market can read all of this and, since the announcement of the government's war on Goldman Sach, has been dicey at best and down in direction. The markets will probably, from here, get much worse. The problems in the Eurozone are simply a precursor of problems that will, in time, cross the Atlantic.
There is no Obama Adminstration economic strategy. They've run out of bullets. And they are rapidly running out of scapegoats. Demonizing American business is not a recovery strategy.
Hunker down. Things are not going to get much better unless good things happen in November.
Jumat, 30 April 2010
Anyone Interested in Economic Recovery?
The Obama Administration seems not to understand that there is a recession going on.
To repeat the obvious: employers do the hiring in the private sector. If employers aren't enthusiastic about the future, they are not going to be hiring. Does the Obama crowd understand this?
Instead, the "war on business" continues. The media suggests that, in an effort to bail out their woeful November prospects, this Administration has decided to further demonize Wall Street and the business community. Maybe that will get them a few more votes. It might. But, it will continue to have a depressing effect on our economic prospects.
Job number one is jobs. That is where the Administration should have its focus. Unemployment is the single most important problem the country faces.
I guess since the Obama folks have jobs they don't care about the rest of the country. It sure looks that way.
To repeat the obvious: employers do the hiring in the private sector. If employers aren't enthusiastic about the future, they are not going to be hiring. Does the Obama crowd understand this?
Instead, the "war on business" continues. The media suggests that, in an effort to bail out their woeful November prospects, this Administration has decided to further demonize Wall Street and the business community. Maybe that will get them a few more votes. It might. But, it will continue to have a depressing effect on our economic prospects.
Job number one is jobs. That is where the Administration should have its focus. Unemployment is the single most important problem the country faces.
I guess since the Obama folks have jobs they don't care about the rest of the country. It sure looks that way.
Rabu, 28 April 2010
"You Shouldn't Be Selling Junk"
Senator Levin's oft-stated remark yesterday that Goldman "shouldn't be selling junk, shouldn't be selling crap" to its customers suggests that when a stock or bond gets downgraded or falls on hard times, that it should cease to trade. There is currently a huge market in "junk" or "crap," as Levin so artfully describes it, sold daily by investment banks, broker dealers and banks. High yield debt is perhaps the most prominent example. Levin, judging from his comments, would eliminate these markets.
This is in keeping with the Democrats plans to deny funding to weaker firms and start-ups. Only well-heeled, successful companies would be eligible to sell securities in the Levin world. If your company has a "BB" rating, then, since it is junk, it should not be able to raise capital at any price.
That logic should be extended to the used car market. Only new cars should be sold by car dealers. There should be a Levin ban on the sale of all "junk" cars and "crap" cars.
Once again, this policy means favoring well heeled companies at the expense of smaller, growing companies. Employment, it is worth noting, grows most rapidly at companies that Levin would describe as "junk" or "crap." By denying these companies access to the capital markets, Levin would deny millions of American workers the opportunity to have jobs. Levin has his job. What does he care if 10 percent of American workers don't have jobs?
Levin is a pretty callous individual, to put it mildly.
This is in keeping with the Democrats plans to deny funding to weaker firms and start-ups. Only well-heeled, successful companies would be eligible to sell securities in the Levin world. If your company has a "BB" rating, then, since it is junk, it should not be able to raise capital at any price.
That logic should be extended to the used car market. Only new cars should be sold by car dealers. There should be a Levin ban on the sale of all "junk" cars and "crap" cars.
Once again, this policy means favoring well heeled companies at the expense of smaller, growing companies. Employment, it is worth noting, grows most rapidly at companies that Levin would describe as "junk" or "crap." By denying these companies access to the capital markets, Levin would deny millions of American workers the opportunity to have jobs. Levin has his job. What does he care if 10 percent of American workers don't have jobs?
Levin is a pretty callous individual, to put it mildly.
Selasa, 27 April 2010
Goldman in the Dock
Strange...I never thought that I would find myself a defender of Goldman. But, here I am.
The Senate hearings today proved beyond a shadow of doubt that not one single member of the Senate committee has the remotest inkling of how capital markets work. It was an embarrassing spectacle. The only intelligent participants in this debacle were the present and former employees of Goldman Sachs. Our elected representatives revealed themselves as complete idiots -- bi-partisan idiots at that. Perhaps, the worst questioner of all was John McCain. He has no idea what he is talking about. But, in his defense, none of the other Senators had a clue either.
The end of all of this will be the permanent shift of the world's financial capital from New York and London to Hong Kong and Singapore. The Chinese understand how capitalism works; the US Senate does not.
The Senate hearings today proved beyond a shadow of doubt that not one single member of the Senate committee has the remotest inkling of how capital markets work. It was an embarrassing spectacle. The only intelligent participants in this debacle were the present and former employees of Goldman Sachs. Our elected representatives revealed themselves as complete idiots -- bi-partisan idiots at that. Perhaps, the worst questioner of all was John McCain. He has no idea what he is talking about. But, in his defense, none of the other Senators had a clue either.
The end of all of this will be the permanent shift of the world's financial capital from New York and London to Hong Kong and Singapore. The Chinese understand how capitalism works; the US Senate does not.
FinReg Is a One More Nail in the Coffin
The Financial Regulation package heading through the Senate will, no doubt, be passed. It is a terrible piece of legislation that virtually guarantees another round of serious financial instability for the United States. In every way, FinReg is misguided. It is punitive in spirit and language, and will have a corrosive effect on the financial standing of Wall Street.
It is interesting that as the Asian economies are headed toward world dominance, the US is busy shooting itself in the foot. This mirrors the pattern that occurred as Western Europe slipped into the mire of war, confusion and fascism that ultimately led to the US assuming world dominance. Asia need only continue doing what they are doing as the US passes law after law that will consign the US economy to the dustbin of history.
It is interesting that as the Asian economies are headed toward world dominance, the US is busy shooting itself in the foot. This mirrors the pattern that occurred as Western Europe slipped into the mire of war, confusion and fascism that ultimately led to the US assuming world dominance. Asia need only continue doing what they are doing as the US passes law after law that will consign the US economy to the dustbin of history.
Government Policy Matters
Politics matters. What governments do or don't will determine the future course of economic growth.
Expanding government led to the economic stagnation of the 1970s (and, interestingly, the decline of the US as a world power). The rollback of government (and tax rates) ushered in by the Reagan administration in the early 1980s began the greatest peacetime boom in American history (and a return of America's pre-eminence in world affairs ultimately resulting in the collapse of the Soviet Union).
Inevitably, the economy stumbled. Booms always come to an end. That doesn't mean that a bunch of bad guys did it. It just means that long period of prosperity eventually hit speed bumps. The normal and natural reaction is to let those who have overextended themselves pay the price. When that policy is followed, the economy bounces back, usually rather quickly, and within a short time, the recession is over and the economy is humming once again.
The Bush-Obama administrations decided they could control the economy and they proceeded to do that with bailouts, expanded government, and, curiously in the case of Obama, new restrictions on business hiring and consumer lending. (This was a repeat of the mistakes made by FDR that prolonged the economic crisis of the 1930s into a decade of economic misery).
This means that the next generation's economy will be characterized by stagnation (perhaps stagflation, meaning a depressing economy with skyrocketing inflation rates). Folks like Obama think they are creating a "fairer" America. In a certain sense, they are. All Americans will be poorer as a result of their policies. Ultimately, we could force the country into a general destitution like the 1930s, which, I suppose, meets the "fairness" criteria of Barrack Obama. If no one has a job, then, in some sense, we are all being treated fairly, according to the Obama doctrine.
There is no "compromise" or "commission" way to curb the national debt. It can't be done. Sooner or later there will be an "effective" default of the debt and a breaking of the promises of social security, medicare and medicaid. That process began with Obamacare stripping $ 600 billion our of medicare reimbursements, which means old folks, promised care under medicare, will not get it thanks to Obama.
So, governments matter and the current regime will lead the US into stagnation and ultimately decline as a nation and as a national power. Sometimes, not always, one gets the impression from the President that this is an outcome that he prefers.
If there is a sweeping national reaction to the nationalization of much of America's private sector that has taken place under Bush and Obama, then perhaps another Reagan revolution will be possible and the US can, once again, be the "shining city on the hill," to borrow a phrase from Ronald Reagan. But, it will be tougher this time because the footprint of government is much, much bigger than it was when Reagan took office.
Expanding government led to the economic stagnation of the 1970s (and, interestingly, the decline of the US as a world power). The rollback of government (and tax rates) ushered in by the Reagan administration in the early 1980s began the greatest peacetime boom in American history (and a return of America's pre-eminence in world affairs ultimately resulting in the collapse of the Soviet Union).
Inevitably, the economy stumbled. Booms always come to an end. That doesn't mean that a bunch of bad guys did it. It just means that long period of prosperity eventually hit speed bumps. The normal and natural reaction is to let those who have overextended themselves pay the price. When that policy is followed, the economy bounces back, usually rather quickly, and within a short time, the recession is over and the economy is humming once again.
The Bush-Obama administrations decided they could control the economy and they proceeded to do that with bailouts, expanded government, and, curiously in the case of Obama, new restrictions on business hiring and consumer lending. (This was a repeat of the mistakes made by FDR that prolonged the economic crisis of the 1930s into a decade of economic misery).
This means that the next generation's economy will be characterized by stagnation (perhaps stagflation, meaning a depressing economy with skyrocketing inflation rates). Folks like Obama think they are creating a "fairer" America. In a certain sense, they are. All Americans will be poorer as a result of their policies. Ultimately, we could force the country into a general destitution like the 1930s, which, I suppose, meets the "fairness" criteria of Barrack Obama. If no one has a job, then, in some sense, we are all being treated fairly, according to the Obama doctrine.
There is no "compromise" or "commission" way to curb the national debt. It can't be done. Sooner or later there will be an "effective" default of the debt and a breaking of the promises of social security, medicare and medicaid. That process began with Obamacare stripping $ 600 billion our of medicare reimbursements, which means old folks, promised care under medicare, will not get it thanks to Obama.
So, governments matter and the current regime will lead the US into stagnation and ultimately decline as a nation and as a national power. Sometimes, not always, one gets the impression from the President that this is an outcome that he prefers.
If there is a sweeping national reaction to the nationalization of much of America's private sector that has taken place under Bush and Obama, then perhaps another Reagan revolution will be possible and the US can, once again, be the "shining city on the hill," to borrow a phrase from Ronald Reagan. But, it will be tougher this time because the footprint of government is much, much bigger than it was when Reagan took office.
Senin, 26 April 2010
Obama Does The Nation a Favor
The President's moving tribute to the miners who lost their lives in the Massey mining disaster was a model of what the President's role should be in a great tragedy. The President avoided placing blame and naming scapegoats. Instead, the President extolled the miners as family members who were attempting to live the American dream and improve the lives of their families. Three cheers for President Obama. This was a warm and welcome message to families who have suffered great losses.
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