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ccp
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« Reply #1050 on: August 26, 2011, 04:08:19 PM »

 Bill Flax, Contributor

I write about the intersection of economics and culture.

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Op/Ed|8/25/2011 @ 3:28PM |10,059 views
No, Paul Krugman, WWII Did Not End The Great Depression
Bill Flax, ContributorMr. Delosangeles,4 comments, 1 called-out + Comment now
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 Bill Flax
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+ show moreI am a Christian, a patriot and a defender of individual liberties who tries to keep a sense of humor through the madness. I live in Cincinnati, Ohio and work in the banking industry. I'm blessed with a beautiful wife who homeschools our three children. It has become evident Washington now embodies the gravest threat to liberty. We must restore the vision of the founders before it is too late. This prompted me to begin writing. My new book, The Courage to do Nothing, will hopefully be the most politically incorrect book you'll ever read on economics. Please contact at billflax2@yahoo.com.

The author is a Forbes contributor. The opinions expressed are those of the writer.

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 Mr. Delosangeles, Thank you for the date correction. Production peaked in the summer [...]

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 18 9 3 3 2 Page 2 of 3

After campaigning on fiscal discipline, FDR promptly accelerated Hoover’s initiatives, devising new economic experiments almost daily. As FDR’s economist Rexford Tugwell conceded, “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.” Despite ridiculing Hoover’s “extravagance,” FDR increased spending another 83% in his first three years.

The best unemployment result prior to WWII was 14% in 1937. European unemployment was far lower. By 1939, unemployment was back at 19% as FDR increased taxes and cut spending in preparation for war. As the government reined in its make-work projects, rather than weaning a sustainable recovery off the Keynesian incubator, the recovery reversed. The New Deal clearly failed to prime the private pump.

On the surface, wartime spending finally propelled America from the Depression’s pits. As war production expanded from roughly 2% of GDP to almost 40%, statistically, America rebounded. In 1940 dollars, GDP shot from $101.4 billion to $120.7 billion in 1941 up to $174.8 billion by 1945 while unemployment fell below 2%.

America didn’t officially enter the fray until December 1941. FDR had by then rescinded most New Deal regulations, scuttled the WPA and similar agencies and ceased his incessant public bickering with private business. Some surmise he stopped attacking industry recognizing he needed their help attacking fascism.

The pre Pearl Harbor boost stems from three factors: wartime spending by others, which does not reflect stimulus on Washington’s part; Lend-Lease, but giving away munitions abroad promotes no prosperity here, and the demise of the New Deal.

After netting out federal spending, GDP surged 17% from $91.9 billion in 1940 to $107.7 billion in 1941. Once engaged, our non-federal output trickled down to $101.4 billion by WWII’s conclusion in 1945. The private economy reflected little improvement, partly because private consumption was curbed. Living standards didn’t regain 1929 levels until America restored a market based economy in the aftermath of victory.

FDR dreaded the recession’s return as Keynesian theory suggested severe trouble when ten million plus soldiers returned home unemployed. The president proposed a “Bill of Economic Rights” predicated on aggregate demand maintenance. Congress thankfully repudiated it. Tax rates were slashed while war time rationing, price controls and regulations receded.

America was one of few industrial nations with its productive infrastructure intact. Despite federal spending falling from $93 billion in 1945 to under $30 billion by 1948 (in 1945 dollars), unemployment stabilized around 4% as Americans, free of New Deal shackles, launched an economic boom.

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ccp
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« Reply #1051 on: August 26, 2011, 04:09:50 PM »

Page 3 of 3

Portraying WWII as bounteous economically because statistical measures bettered is like confusing a high batting average with winning championships. You can hit well and still lose. Normally, hitting safely and decreased joblessness reflect success, but war is different. Unemployment lessened because the draft sent men into combat. Increasing production because women were forced into factories building bombs is deceptive.

Economics studies the transformation of scarce resources into that which best fulfills our unlimited desires. How does blowing up Germany boost American living standards? How is making men sleep in frigid fox holes under enemy fire enriching? How did rationing everything from the enjoyment of luxuries to our clothing and diets lift anyone’s material standing?

The military doesn’t jumpstart the economy, it protects producers. This represents patriotic sacrifice, not prosperity.

Production is the progenitor of wealth, but making things unvalued by markets doesn’t improve life. Neither does working harder to achieve the same result. Repairing damage caused by war or natural calamity through debt encumbrance does nothing to support sustainable growth. Once said project completes, we’re back where we started with debts to boot.

During the postwar era, both parties believed spending was stimulating and thought government intervention essential during downturns. But we almost invariably recovered before the spending packages even passed Congress. Unfortunately, rather than conclude that intervention is unnecessary, now, we rush spending bills through as if racing a deadline to preempt the natural ricochet so politicians can take credit.

Stimulus spending doesn’t augment aggregate demand unleashing our “animal spirits” towards growth. It invites crony capitalism, patronage and dependency. As funds flow through Washington, producers reorient from satisfying customers to lobbying politicians. War spending leads to the dreaded Military-Industrial Complex Republicans like Ike feared, but Neo-Cons today relish.

If resources were unlimited or little effort was necessary to extract value, we could consume at will. Instead, markets prioritize output by channeling resources via price signals. Government spending fails because politicians lack the vital feedback mechanism of profits and losses. It’s not their money. Military outlays exemplify this faulty prioritization. Once Congress gets involved, we can’t even cut defense projects the military finds redundant. What the military does demand is often exorbitantly overpriced.

Stimulus efforts allow politicians to dispense dollars in patronage schemes conferring power upon themselves at taxpayer expense. Congress buys votes with your money. Even if public spending did stimulate, such corruption is too repugnant to condone.

As government grows, it becomes increasingly self serving. Bureaucracy inevitably seeks its own expansion. Businesses succeed by producing efficiently and pleasing customers. Bureaucracies thrive via inefficiency. Exceeding one’s budget makes it easier to ask for more. Failure allows sinecures to grovel before Congress that greater funding can achieve what lower funding merely wasted.

Deficit spending has never once successfully stimulated recovery. Like our failed war on poverty or public education, interventionists consistently claim we haven’t spent sufficiently. Mimicking the New Deal’s failure, Keynesians today decry that the Bush and Obama stimulus bills were half-hearted.

Dr. Krugman so desperately seeks more spending that he wishes Congress would pretend aliens are invading. Washington could then control the economy – for our good, not theirs, he’d have us assume. Krugman assures us liberals have a conscience.

Whether they have any common sense is less certain.

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Crafty_Dog
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« Reply #1052 on: August 26, 2011, 04:55:59 PM »

CCP:

This is the thread which I meant:  http://dogbrothers.com/phpBB2/index.php?topic=1023.150

The reason is that this thread tends to deal with more transient matters, whereas you bring up matters of more lasting substance.  (If you do decide to post there as well, trimming the trash out of the post would be appreciated, , , I know, I know, I can be a pushy bastard , , , grin )
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ccp
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« Reply #1053 on: August 27, 2011, 11:33:06 AM »

July/August 2011

Václav Klaus
President,
Czech Republic
The Crisis of the European Union: Causes and Significance
Václav Klaus, the president of the Czech Republic, spoke to friends of Hillsdale College in Berlin during Hillsdale’s 2011 cruise in the Baltic Sea. The speech was delivered at Berlin’s Hotel Adlon on June 11, 2011.

As some of you may know, this is not my first contact with Hillsdale College. I vividly remember my visit to Hillsdale more than ten years ago, in March 2000. The winter temperatures the evening I arrived, the sudden spring the next morning, and the summer the following day can’t be forgotten, at least for a Central European who lives—together with Antonio Vivaldi—in le quattro stagioni. My more important and long-lasting connection with Hillsdale is my regular and careful reading of Imprimis. I have always considered the texts published there very stimulating and persuasive.

The title of my previous speech at Hillsdale was “The Problems of Liberty in a Newly-Born Democracy and Market Economy.” At that time, we were only ten years after the fall of communism, and the topic was relevant. It is different now. Not only is communism over, our radical transition from communism to a free society is over, too. We face different challenges and see new dangers on the horizon. So let me say a few words about the continent of Europe today, which you’ve been visiting on your cruise.

You may like the old Europe—full of history, full of culture, full of decadence, full of fading beauty—and I do as well. But the political, social and economic developments here bother me. Unlike you, I am neither a visitor to Europe nor an uninvolved observer of it. I live here, and I do not see any reason to describe the current Europe in a propagandistic way, using rosy colors or glasses. Many of us in Europe are aware of the fact that it faces a serious problem, which is not a short- or medium-term business cycle-like phenomenon. Nor is it a consequence of the recent financial and economic crisis. This crisis only made it more visible. As an economist, I would call it a structural problem, which will not, by itself, wither away. We will not simply outgrow it, as some hope or believe.

It used to look quite different here. The question is when things started to change. The post-World War II reconstruction of Europe was a success because the war eliminated, or at least weakened, all kinds of special-interest coalitions and pressure groups. In the following decades, Europe was growing, peaceful, stable and relevant. Why is Europe less successful and less relevant today?

I see it basically as a result of two interrelated phenomena—the European integration process on the one hand, and the evolution of the European economic and social system on the other—both of which have been undergoing a fundamental change in the context of the “brave new world” of our permissive, anti-market, redistributive society, a society that has forgotten the ideas on which the greatness of Europe was built.

I will start with the first issue, because I repeatedly see that people on other continents do not have a proper understanding of the European integration process—of its effects and consequences. It is partly because they do not care—which is quite rational—and partly because they accept a priori the idea that a regional integration is—regardless of its form, style, methods and ambitions—an exclusively positive, progressive and politically correct project. They also very often accept the conventional wisdom that the weakening of nation-states, and the strengthening of supranational institutions, is a movement in the right direction. I know there are many opponents of such a view in your country—at such places as Hillsdale—but it has many supporters as well.

A positive evaluation of developments in Europe over the past 50 years can be explained only as an underestimation of what has been going on recently. In the 1950s, the leading idea behind the European integration was to liberalize, to open up, to remove all kinds of barriers which existed at the borders of individual countries, to enable the free movement of goods, services, people and ideas across the European continent. This was undisputedly a step forward, and it helped Europe significantly.

But European integration took a different course during the 1980s, and the decisive breakthrough came with the Maastricht Treaty in December 1991. Political interests that sought to unify and create a new superpower out of Europe started to dominate. Integration had turned into unification, and liberalization had turned into centralization of decision making, the harmonization of rules and legislation, the strengthening of European institutions at the expense of institutions in the member states, and what can even be called post-democracy. Since then, Europe’s constituting elements—the states—have been consistently and systematically undermined. It was forgotten that states are the only institutions where real democracy is possible.

After the fall of communism, the Czech Republic wanted to reassume its place among European democracies. We did not want to sit aside—as we were forced to do throughout the communist era—and European Union membership was the only alternative. Nothing else legitimizes a country in Europe these days. Therefore we joined the EU in May 2004. However, for those of us who spent most of our lives in the authoritative, oppressive, and non-functioning communist regime, the ongoing weakening of democracy and of free markets on the European continent represents something we did not expect and did not wish for in the moment of the fall of communism.

The most visible European problem today is the European monetary union, which was presented as the most important unification achievement following the Maastricht Treaty. The realization of this monetary union has not delivered the positive effects that—rightly or wrongly—had been expected from it. It was intended to accelerate economic growth, reduce inflation, and protect member states against external economic disruptions or so-called exogenous shocks. It has not worked. After the establishment of the euro zone, the economic growth of its member states slowed down relative to previous decades, thus increasing the gap between the rate of growth in the euro zone countries and that in other major economies. The internal disequilibria—such as trade imbalances and state budget imbalances—became larger, not smaller. And there is no indicator pointing towards a growing convergence in the euro zone countries. During its first decade of existence, a common currency has not led to any measurable homogenization of the member states’ economies.

It should have been clear to all, as it was to me, that the idea of a single European currency was essentially wrong—that it would create huge economic problems and lead inevitably to an undemocratic centralization of Europe. To my great regret, this is exactly what has been happening. The euro zone, which comprises 17 countries, is not an “optimum currency area” as defined by economic theory. In a currency or monetary union—which amounts to an extreme form of fixed exchange rates—it is inevitable that the costs of establishing and especially maintaining it exceed its benefits. Most economic commentators were satisfied by the ease and apparent inexpensiveness of the establishment of Europe’s common monetary area. In recent years, however, the negative effects of the straightjacket of a single currency have become more and more evident. When good economic weather prevailed, no visible problems arose. But when bad economic weather set in, the lack of homogeneity manifested itself quite strongly.

It is difficult to speculate about the future of the euro. I suppose that it will not collapse, because a huge amount of political capital was invested in its existence. It will continue to exist, but at a very high price in terms of large-scale fiscal transfers—the shuffling around of problems between countries, which amounts to a non-solution—and of low economic growth rates.

The second reason for European economic problems—not specifically European, but worse in Europe than elsewhere—has to do with the quality, productivity and efficiency of its economic and social system. Europe is characterized by a seemingly people-friendly, non-demanding, paternalistic and—in consequence—insufficiently productive economic and social system called die soziale Markwirtschaft, or social democracy. This system, with its generous social benefits, weakened motivation, shortened working hours, prolonged years of study, lowered retirement ages, diminished the supply of labor—both at the macro level and structurally—and led to very slow economic growth.

In Europe, we have witnessed a gradual shift away from liberalizing and removing barriers and towards a massive introduction of regulation from above, an ever-expanding welfare system, new and more sophisticated forms of protectionism, and continuously growing legal and regulatory burdens on business. All of these weaken and restrain freedom, democracy and democratic accountability, not to mention economic efficiency, entrepreneurship and competitiveness.

Europeans today prefer leisure to performance, security to risk-taking, paternalism to free markets, collectivism and group entitlements to individualism. They have always been more risk-averse than Americans, but the difference continues to grow. Economic freedom has a very low priority here. It seems that Europeans are not interested in capitalism and free markets and do not understand that their current behavior undermines the very institutions that made their past success possible. They are eager to defend their non-economic freedoms—the easiness, looseness, laxity and permissiveness of modern or post-modern European society—but when it comes to their economic freedoms, they are quite indifferent.

The critical situation in Europe today is visible to everybody. It is not possible to hide it. I had believed that this spectacle would be a help to the cause of political and economic freedom in Europe, but this is not proving to be the case. Of course, with the way your American government has been going, you might be able to catch up with us—in terms of our problems—very soon. But you are not as far along yet. So maybe seeing Europe’s crisis today will at least help you in America turn back toward freedom.
__________________________________________________________________________________
On Václav Klaus

Larry P. Arnn
President, Hillsdale College

The following remarks were made in introducing Václav Klaus to Hillsdale College cruisers at the Hotel Adlon in Berlin on June 11, 2011.

We will have lived fortunate lives if we meet more people than we can count on our fingers who have studied the art of politics and the principles of economics, and who have done high and courageous service in that art. Today we meet and hear from such a man.

Václav Klaus is the president of the Czech Republic, and has served twice as its prime minister. He was born in Prague in 1941, and holds his doctorate in economics from the University of Economics in Prague, where he still teaches. He also studied in Italy in 1966 and in the United States in 1969.

In 1989, large events began to unfold in the world, including events right outside this hotel where the Berlin Wall stood. These events were terribly significant in the native country of our speaker, who had begun his career as an academic, worked for a long time in a state bank, and eventually returned to the academy. In the month in which the prospect of freedom came in the Czech Republic—or Czechoslovakia as it was then—he was immediately appointed its finance minister, in which role he set out to restructure his nation’s economy.

Our speaker is a believer in the free market and a member of the Mont Pelerin Society, a society dedicated to freedom that was founded in 1947 by people like Friedrich Hayek and Milton Friedman. Lately he has been something incredible and unique in the context of European politics—a person in high authority who is critical of the steady advance of centralized power in the European Union, and of the absence of accountability in its government to the peoples who are ruled by it.

Our speaker is part of one of the greatest stories in modern times. The people of Czechoslovakia and the Czech Republic are among the handful of peoples who had the disaster strike them of being ruled first by the German Nazis and then by the Soviet Communists. Nothing could be more abusive than to have either of those things happen, except to have both of them happen. And there is something about the Czech Republic that it has always stood up against such rule. Churchill thought that one of the worst tragedies of the 1930s was to abandon that brave place to Hitler. When the Iron Curtain fell, it would be one of the first places to rally.

Today we meet a man who came forward to show the alternative to collectivist rule, based on a distinction that Churchill loved. It had been a government where the government owned the people. How then could it become a government where the people own the government? I think it is no exaggeration to say that one of the most clear-sighted, deeply learned, and steadily courageous of all of the servants of human freedom in our age is the president of the Czech Republic, Václav Klaus.

--------------------------------------------------------------------------------

Copyright © 2011 Hillsdale College. The opinions expressed in Imprimis are not necessarily the views of Hillsdale College. Permission to reprint in whole or in part is hereby granted, provided the following credit line is used: “Reprinted by permission from Imprimis, a publication of Hillsdale College.” SUBSCRIPTION FREE UPON REQUEST. ISSN 0277-8432. Imprimis trademark registered in U.S. Patent and Trade Office #1563325.33 East College St. Hillsdale, MI 49242 • Tel: +1 517 437-7341 • Fax: +1 517 437-3923
© 2007-09 Hillsdale College. All rights reserved.
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DougMacG
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« Reply #1054 on: August 29, 2011, 11:19:11 AM »

In our famous people reading the forum series, Hugh Hewitt in the Washington Examiner finally runs with my allegation that the 2007-2008 years were under 'their' watch as well:
--------------
"The hope and change hangover the country is experiencing is 100 percent the consequence of the policies adopted in 2007 and 2008 by President Obama in concert with Nancy Pelosi and Harry Reid."  (Short piece, read it all.)

http://washingtonexaminer.com/opinion/columnists/2011/08/hope-and-change-hangover#ixzz1WQzBhzIV
--------------
100% blame is an overstatement and not all the destructive policies were adopted, but the fact that they have been looming over investors for all this time has been enormously destructive. 

From an economic point of view, the inflection point on the curve coincides exactly with the elevation of the Pelosi-Reid-Obama-Biden-Hillary-Ellison group to the majority in congress promising to inflict specific, anti-growth policies against an economy experiencing 50 consecutive months of job growth.  Taking the Presidency was just icing on their cake.  Assuming it ends, this was a 6 year, not a 4 year, experiment.

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Crafty_Dog
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« Reply #1055 on: August 29, 2011, 03:36:49 PM »

--------------------------------------------------------------------------------
Personal income increased 0.3% in July To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 8/29/2011


Personal income increased 0.3% in July, matching consensus expectations. Personal consumption rose 0.8%, easily beating the consensus expected gain of 0.5%. In the past year, personal income is up 5.3% while spending is up 5.1%.

Disposable personal income (income after taxes) was up 0.3% in July and is up 4.0% versus a year ago. The gain in July was led by private-sector wages and salaries as well as dividends.
 
The overall PCE deflator (consumer inflation) increased 0.4% in July and is up 2.8% versus a year ago. The “core” PCE deflator, which excludes food and energy, was up 0.2% in July and is up 1.6% since last year.
 
After adjusting for inflation, “real” consumption was up 0.5% in July and is up 2.3% versus a year ago.
 
Implications:  Income and spending were doing well in July, before recent financial volatility, and revisions to prior months show more momentum for the economy. Personal income grew 0.3% in July, as the consensus expected, but a stronger 0.7% including upward revisions to prior months. Spending was up 0.8% in July, beating consensus expectations, and grew 1% including upward revisions to prior months. Spending on durable goods, such as autos, increased 1.9%, showing that supply-chain disruptions from Japan are abating.  Overall consumption prices rose 0.4% in July and are up 2.8% in the past year. Meanwhile, “core” consumption prices, which exclude food and energy, continue to accelerate, up a tame 1.6% in the past year, but up at a 2.2% annual rate in the past six months and a 2.5% rate in the past three months. Higher core inflation makes it difficult for the Federal Reserve to justify doing any additional quantitative easing. In our view, it makes it tough to justify committing to short-term interest rates near zero for the next two years. The Fed must be confused about how core inflation could be rising when the unemployment rate is above 9% and capacity utilization in the industrial sector is below 80%. In their worldview, core inflation should only be rising when resources are constrained, and we’re not even close to that environment in their thinking. In other news this morning, pending home sales, which are contracts on existing homes, declined 1.3% in July. However, given the 2.4% increase in June we still expect an increase in existing home sales (which are counted at closing) in August.
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JDN
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« Reply #1056 on: September 04, 2011, 08:20:46 PM »

I happen to like and do photography in my spare time; it gives me pleasure and I make a few extra dollars.  However I only shoot film;
not digital.  I don't like digital, albeit it's easy and cheap; I prefer film, especially in black and white.  The quality is superior and distinct. 

I came across this quote today; I thought those on this forum would appreciate it.   smiley

"Digital’s like socialism – it flattens everything out and makes everything the same.”
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Crafty_Dog
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« Reply #1057 on: September 09, 2011, 11:42:19 AM »



http://www.theblaze.com/stories/ap-fact-check-obamas-jobs-plan-paid-for-seems-not/
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G M
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« Reply #1058 on: September 09, 2011, 02:15:14 PM »



Hopefully, Obooba joins the unemployed soon.
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G M
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« Reply #1059 on: September 09, 2011, 02:19:14 PM »


http://www.reuters.com/article/2011/09/09/us-obama-jobs-georgia-idUSTRE7880LV20110909

Georgia jobs program cited by Obama has big flaws
By Matthew Bigg

ATLANTA | Fri Sep 9, 2011 7:46am EDT

ATLANTA (Reuters) - A jobs program in the Southern state of Georgia, cited in President Barack Obama's plan to fight unemployment, needs big fixes and would not work as a federal initiative, says the official who runs it.

Obama told Congress on Thursday in a major speech on jobs that the state-run Georgia Work$ initiative, along with other measures, would help people unemployed for more than six months and he stressed that Republican leaders in Congress supported it.

"We have to do more to help the long-term unemployed in their search for work," Obama said. Fear the U.S. economy could slip back into recession is hurting the Democratic president's chances of re-election in 2012.

"This jobs plan builds on a program in Georgia that several Republican leaders have highlighted where people who collect unemployment insurance participate in temporary work as a way to build their skills while they look for a permanent job," Obama told Congress.

But Georgia Work$ is being restructured to overcome significant flaws. Even within the state, it is seen as "not a marquee program," said state Labor Commissioner Mark Butler, the Republican elected official who oversees it.

More than 30,000 people benefited from the program in the past, but in its current form, Georgia Work$ is tiny. Only 12 unemployed people signed up in August and 92 have done so since February, according to state Department of Labor statistics.

The voluntary program places unemployed people with firms for eight weeks of job training similar to an internship. Participants receive unemployment insurance plus a small stipend and have the chance of a job at the end of it.

Butler said the program he inherited in January was virtually bankrupt and "fraught with problems," so he is surprised it has attracted so much national attention.

Obama gave no details of how the program would be applied at a national level and Butler said his office had had no contact with the White House.
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JDN
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« Reply #1060 on: September 13, 2011, 10:34:13 AM »

As Doug, perhaps correctly has pointed out, I seem (maybe many Americans?) to be in the political middle.

One of my pet peeves is the repeated extension of unemployment benefits.  I personally know quite a few people
who are collecting unemployment; "Why go back to work they say?  I'm being paid nearly as much as before
and I don't have to work."  Etc.....

That's terrible.  It was suppose to be a short term bridge.  Like state mandated short term disability.  If you want Long Term
Protection, buy a Long Term Disability Policy, or i.e. put your own money away for a rainy day.

This seemingly "lifetime" "unemployment" benefit is a disincentive to return to work.  Surely there is a better way....

I would vote against another extension.
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Crafty_Dog
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« Reply #1061 on: September 13, 2011, 10:49:26 AM »

An uncommon event, we agree grin

The Long Run is Now To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 9/12/2011


President Obama delivered his long-awaited economic address Thursday night and Friday’s reaction in equities was a major Bronx cheer. Obviously the news from Greece, with that country teetering on the edge of a default, was also a big negative.

But we believe the lion’s share of the problem is that, once again, a president is proposing policies that are both primarily oriented toward the short-run and unlikely to succeed at lifting the pace of economic growth.
 
Back in 2008, under President Bush, we got a relatively small short-term “stimulus” bill. Then, in early 2009, President Obama got exactly the “stimulus” bill he wanted, in both grand size and scope. He had the votes and no compromise was necessary. Then, late last year, the president and the outgoing Congress agreed to yet another stimulus bill.
 
Each of these policies has mostly failed, yet the president is pushing for another set of proposals cut from the same cloth, with temporary payroll tax breaks, a temporary extension of full tax-expensing for plant and equipment, and more (politically-driven) infrastructure spending.
 
The Administration is also asking for an extension of the 99-week program of unemployment benefits, so it can cover workers who lost their jobs back in late 2009 thru 2010. Without any sense of irony, he wants the program to cover workers who lost their jobs during periods that his past stimulus efforts failed to stimulate.
 
Lord Keynes famously said that “in the long run we are all dead.” But with year after year of round after round of policies focused on the short-term, it’s about time to realize we are all living in the long-term now. What we need is for our lawmakers to get off the treadmill of short-termism and start focusing on where we want our country’s policies to be for the next generation.
 
The biggest opportunity is on the tax treatment of business purchases of plant and equipment, where the president is asking for just one more year of 100% full expensing. We think, given the priority he’s putting on this bill, that lawmakers who know better should demand to make this policy permanent.
 
We do not believe the US is doomed to become another (larger) version of Greece. But with each proposal that has put a priority on the short run, we have taken a step in that direction. Now it’s time for policymakers to show they have learned something over the past few years. A thorough rejection of the president’s recent proposals would be a great start.
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« Reply #1062 on: September 13, 2011, 10:52:25 AM »

Wow. Wesbury is starting to get tired digging for the pony.
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« Reply #1063 on: September 13, 2011, 10:55:49 AM »

For our non-native English speakers, the reference is to a story that Ronald Reagan used to tell about his positive outlook.

Something to the effect of a boy who when he saw a pile of horse excrement was happy because it meant there was a pony somewhere nearby.
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« Reply #1064 on: September 13, 2011, 11:32:41 AM »

Thank you JDN for that.  Of course it is a political conundrum.  Extend the benefits and you extend unemployment.  Refuse to extend and you get painted as heartless etc.  The tough love measures need to be accompanied with real pro-growth policies.

Unemployment is another one of those poorly defined and measured terms.  We just know there is too much of it.
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« Reply #1065 on: September 13, 2011, 11:38:19 AM »

Hey, I've got a great idea! Let's not drill for oil and develop green jobs instead!

Let's pump 500 million into Solyndra and just watch unemployment disappear!


What?
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« Reply #1066 on: September 13, 2011, 12:26:23 PM »

WASHINGTON (AP) — The ranks of U.S. poor swelled to nearly 1 in 6 people last year, reaching a new high as long-term unemployment woes left millions of Americans struggling and out of work. The number of uninsured edged up to 49.9 million, the biggest in over two decades.

The Census Bureau's annual report released Tuesday offers a snapshot of the economic well-being of U.S. households for 2010, when joblessness hovered above 9 percent for a second year. It comes at a politically sensitive time for President Barack Obama, who has acknowledged in the midst of his re-election fight that the unemployment rate could persist at high levels through next year.

The overall poverty rate climbed to 15.1 percent, or 46.2 million, up from 14.3 percent in 2009.

Reflecting the lingering impact of the recession, the U.S. poverty rate from 2007-2010 has now risen faster than any three-year period since the early 1980s, when a crippling energy crisis amid government cutbacks contributed to inflation, spiraling interest rates and unemployment.

Measured by total numbers, the 46 million now living in poverty is the largest on record dating back to when the census began tracking poverty in 1959. Based on percentages, it tied the poverty level in 1993 and was the highest since 1983.

The share of Americans without health coverage rose from 16.1 percent to 16.3 percent — or 49.9 million people — after the Census Bureau made revisions to numbers of the uninsured. That is due mostly because of continued losses of employer-provided health insurance in the weakened economy.

Good thing the rest of the country isn't creating jobs like those stupid Texans!
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« Reply #1067 on: September 13, 2011, 12:50:50 PM »

"Wow. Wesbury is starting to get tired digging for the pony."

Wesbury has his politics right from my point of view.  What is in question is his optimism that things can improve anyway, without the policy corrections.  I believe he posts honest views, but because he is employed by an investment house he selects from all his observations mostly positive things to say. 
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« Reply #1068 on: September 13, 2011, 01:28:56 PM »

....The poor would get even poorer.

They were right!



Why does Obama hate poor people?
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« Reply #1069 on: September 13, 2011, 09:35:05 PM »

Once again the WSJ a day behind the forum but I still appreciate them reporting what most won't.  A side effect of robust economic growth is that the people most invested tend to gain soonest and most.  The obvious corollary is that when growth is negative and unemployment soars and stays, disparity may lessen, the rich are still rich but less rich, but people who relied on each and every paycheck are screwed.

http://online.wsj.com/article/SB10001424053111904265504576568973957080358.html?mod=WSJ_Opinion_AboveLEFTTop

The Wall Street Journal
 REVIEW & OUTLOOK
 SEPTEMBER 14, 2011

Growth and Inequality: 2010
The latest news on spreading the wealth.

An abiding—make that the primary—goal of the Obama Administration has been to reduce income inequality. When the Affordable Care Act finally passed, White House economists and liberal pundits did a victory dance in their favorite publications boasting about how the bill would spread the wealth. So how's that inequality project working out?

One answer came yesterday with the Census Bureau's annual snapshot on living standards. The official poverty rate—defined as a family of four earning less than $22,314—rose to 15.1%. That's up from 14.3% in 2009 and 12.5% in 2007. The official rate significantly overstates poverty by missing government income transfers, but this increase is faster than during any three-year period since the early 1980s.

Meanwhile, the share of Americans without health insurance rose to 49.9 million, or 16.3%, from 48.99 million, or 16.1% in 2009. The share of Americans on private insurance continued to decline while those on Medicare and Medicaid rose. ObamaCare doesn't fully kick in until 2014, but we already know that it isn't reducing the cost of health insurance.

President Obama inherited a recession, and some increase in poverty was inevitable on his watch. But the magnitude of the increase underscores how feeble the current economic recovery has been, and how essential rapid economic growth is to lifting incomes for lower-income Americans in particular.

The lesson we draw is that politicians who support policies that make economic growth their top priority raise everybody's incomes even if some incomes rise more rapidly than others. Politicians who put income redistribution above overall economic growth do worse by everybody, especially the poor.
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« Reply #1070 on: September 14, 2011, 10:39:53 AM »

Besides that the Keynesian Stimulus doesn't work in the first place, these failed Obamanomic attempts weren't Keynesian anyway.
-------
http://www.washingtontimes.com/news/2011/sep/5/and-now-a-word-from-a-job-creator/

Mike Whalen, The Washington Times,Mon 9/5/2011  
And now a word from a job creator …

As a job-creating entrepreneur out here in the hinterlands, I am amazed at the Keynesian priests in Washington calling for more stimulus fueled by debt.

“The Rev.” Paul Krugman, “the Rev.” Robert Reich and their many cohorts argue that the stimulus was too small to offset falling aggregate demand and that the prescription for our laggard economy is another, bigger stimulus.

Those who talk about Keynesian economic theory think economic contractions are worsened and prolonged because consumers and businesses hunker down in caution, causing aggregate demand to fall. We can all agree this has happened.

According to the Keynesians, the remedy for today’s economic problem is for the federal government, as the single biggest actor, to “prime the pump.” As government money starts to ripple through the economy, consumers and businesses will be encouraged and cautiously respond with limited increases of their own. Vroom! The economic engine steadily revs up in billions of responsive steps until happy days are here again. This pump-priming reaction is termed the “multiplier effect.”

I think John Maynard Keynes would be horrified at the slavish adherence to this simplistic strategy by so many policymakers and economic thinkers, as his theory was much more complex. This thinking might be correct under circumstances other than those in which we find ourselves. If the ratio of our national debt to gross domestic product was low - say 25 percent - and the federal government had run surpluses before the downturn, this college freshman-level Keynesian analysis would have great weight. Put another way, if Uncle Sam were a rock-solid financial entity with low debt to value and he had judiciously used debt for capital improvements that were accretive in value, as the biggest dog on the porch, a stimulus might work.

But with a national debt of more than $14 trillion and unfunded, future “off the books” debt of Social Security and Medicare combined at $104 trillion in present value, according to the Dallas Federal Reserve, Uncle Sam ain’t the man he used to be. This in turn makes American businesses that are sitting on a pile of cash focus on deleveraging. The American consumer is doing the same. In fact, from where I sit, it appears as though everyone except Uncle Sam is working like mad to strengthen his balance sheets. The legitimate fear across the country is that Washington’s refusal to join our common-sense parade will result in higher taxes, more regulations, more inflation and Japanese-style stagflation. In other words, Washington’s attempts at stimulus through spending are having the opposite effect. Businesses and consumers stay hunkered down.

I know this is counterintuitive to the college-freshman Keynesian analysis from above, but as a business owner, I can tell you an additional stimulus would create more fear and further dampen demand in the private sector. Keynes was correct in focusing on aggregate demand as critical, but the confidence context and potential behavior responses have to be considered, and that requires real-world, Main Street knowledge - not just textbook theory. In this environment, if the federal government announced a real road map to fiscal soundness, the impact would be truly stimulating. If American businesses and consumers saw that Washington was really cutting, not just reducing future increases, there would be tremendous relief and an increase in confidence across the country. Job creators would sing “hallelujah”; they would get off their wallets, start hiring, and then you’d see that Keynesian multiplier kick in.

Modern Keynesians suffer from the misguided notion that government is the great engine that will restore our economy to prosperity. In fact, the great engine is a diverse system of private citizens anxious to go to work to provide for their families and build their businesses.
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« Reply #1071 on: September 19, 2011, 01:14:16 PM »


http://hotair.com/archives/2011/09/19/a-real-hockey-stick-graph/

A Real Hockey-Stick Graph

posted at 2:05 pm on September 19, 2011 by Karl

 
From The Economist (via AoSHQ and Dr. Mark J. Perry), a population-weighted history of the past two millennia:





Measured in years lived, the present century, which is only ten years old, is already “longer” than the whole of the 17th century. This century has made an even bigger contribution to economic history. Over 23% of all the goods and services made since 1AD were produced from 2001 to 2010 ***.
 
For century after century, the human race remained mired in poverty. Life was nasty, brutish and short. Then an incredible explosion of prosperity. How did it happen?
 
In Civilization: The West and the Rest, Niall Ferguson argues that, beginning around 1500, the West came to dominate the rest of the world because it adopted a system including competition, science, property rights, medicine, the consumer society, and the work ethic. Yet the explosion comes centuries later. In Bourgeois Dignity, Deirdre N. McCloskey argues the explosion was ignited by a new attitude toward wealth and its creation — one that respected innovation and entrepreneurial drive.
 
In his column on McCloskey’s book, Rich Lowry notes:
 

Unfortunately, we have a president of the United States who has been a member his entire adult life of what McCloskey — borrowing from Samuel Taylor Coleridge — calls “the clerisy.” These are the intellectualoids who never lost their instinctual scorn for commercial activity. Can you imagine Barack or Michelle Obama routinely urging college students to contribute to hope and change by entering the innovative economy’s great swirl of creative destruction?
 
Unfortunately, special interests will always pursue anti-innovation trade and regulatory policies to protect their fiefdoms.
 
Unfortunately, it’s easier to prop up what’s old than foster what’s new. A few years ago, the Federal Reserve handed out billions upon billions of dollars to practically every large, established firm in America.
 
The problem may be larger than the clerisy’s antipathy to competition. They want to stifle scientific debate when it suits their politics. They have little regard for property rights. They will stifle medical innovation. They indiscriminately bemoan materialism. They never wanted welfare reform and have been busying themselves rolling it back. All of it done in the name of “progress,” of course.
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« Reply #1072 on: September 19, 2011, 05:20:55 PM »

A simply OUTSTANDING performance yesterday by Paul Ryan in his interview by Chris Wallace yesterday!!!  Would someone please find and post here the URL?

This is one of the very best and clearest expositions I have seen.  The man is fg formidable in his grasp of the facts, the logic of the facts, and his ability to communicate about them.

Good interviewing by Wallace too.
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« Reply #1073 on: September 19, 2011, 05:30:49 PM »

A simply OUTSTANDING performance yesterday by Paul Ryan in his interview by Chris Wallace yesterday!!!  Would someone please find and post here the URL?

This is one of the very best and clearest expositions I have seen.  The man is fg formidable in his grasp of the facts, the logic of the facts, and his ability to communicate about them.

Good interviewing by Wallace too.
http://www.youtube.com/user/RepPaulRyan#p/a/u/1/ufsAMqBO5l0

This is Ryan's youtube channel. It doesn't appear the most recent Wallace interview has been uploaded yet.
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« Reply #1074 on: September 19, 2011, 06:18:32 PM »

But isn't there somewhere on youtube that would have it?
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« Reply #1075 on: September 19, 2011, 06:28:58 PM »



http://www.youtube.com/watch?v=lsTyHU65AUI
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« Reply #1076 on: September 21, 2011, 07:43:48 AM »

http://www.propublica.org/article/our-sputtering-economy-by-the-numbers-poverty-edition

Our Sputtering Economy by the Numbers: Poverty Edition



 by Braden Goyette
 ProPublica, Sep. 20, 2011, 12:39 p.m.
People pick up lunch in the soup kitchen of St. Francis Center on Sept. 13, 2011, in Los Angeles, Calif. (Kevork Djansezian/Getty Images)


Last month, we detailed the dismal state of the nation's economy. Now that the Census Bureau has released new poverty figures, we wanted to give you another snapshot of how Americans are faring more than two years after the recession.
 
Americans below the poverty line in 2010: 46.2 million
 




Official U.S. poverty rate in 2007, before the recession: 12.5 percent
 
Poverty rate in 2009: 14.3 percent
 
Poverty rate in 2010: 15.1 percent
 
Last time the poverty level was this high: 1993
 
Poverty line in 2010: $22,314 for a family of four, or $11,139 for an individual
 
Rough amount the poor are living on per week: $200 or less
 
Poverty rate in American suburbs: 11.8 percent, the highest since 1967
 
Percentage of the population making less than half the poverty line in 2010: 6.7 percent
 
Percentage of the population making less than half the poverty line in 2007, before the recession: 5.2 percent
 
Poverty rate for white Americans in 2010: 13 percent
 
Poverty rate for African-Americans in 2010: 27.4 percent
 
Real median household income in 2010: $49,445
 
Decline in median household income since 2009: 2.3 percent
 
Decline in median household income since before the recession: 6.4 percent
 
The last time median household incomes have been this low: 1996
 
Real median household income in 1999, in 2010 dollars: $53,252
 
Median income for full-time male workers in 2010: $47,715
 
Median income for full-time male workers in 1973, in 2010 dollars: $49,065
 
Official unemployment rate in August 2011: 9.1 percent
 
Total unemployed people in August: 14 million
 
People who were employed part-time for economic reasons in August 2011: 8.8 million
 
People not counted in the labor force who wanted work: 2.6 million
 
Net jobs created in August 2011: 0
 
Long-term unemployed people as of August 2011: 6 million
 
Unemployed workers per job opening as of July 2011: 4.34 (3.2 million openings and 13.9 million unemployed people)
 
Uninsured Americans in 2010: 49.9 million
 
Percentage of Americans without health insurance in 2010: 16.3 percent
 
Percentage of Americans without health insurance in 2007, before the recession: 15.3 percent
 
Percentage of children who were uninsured in 2010: 9.8 percent
 
Percentage of children in poverty who were uninsured in 2010: 15.4 percent
 
Percentage of American households that had enough to eat throughout the year in 2007: 88.9 percent
 
Percentage of American households that had enough to eat throughout the year in 2010: 85.5 percent
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« Reply #1077 on: September 21, 2011, 08:27:27 AM »

Whoops GM, I see I missed acknowledging and thanking you for the clip of Ryan.  The first couple of minutes are not there, but it is most of it.  Thank you.
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« Reply #1078 on: September 21, 2011, 08:30:22 AM »

De nada.
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« Reply #1079 on: September 23, 2011, 07:08:14 AM »


http://www.investors.com/NewsAndAnalysis/Article/585780/201109221859/Small-Wonder-Were-Sinking.aspx?src=IBDDAE

Editorial: We're Sinking Under Obama's Policies

  Posted 09/22/2011 06:59 PM ET




Economy: The head-scratching continues as stocks take another leg down. Why, they ask, must the market be so negative? With an economy buckling under leftist incompetence, what, we ask, is there to be positive about?
 
Funny, because it's been going on for almost three years now, but hardly a day goes by without some bit of bad news the media calls "unexpected." But investors have noticed.
 
After selling off 2.9% on Wednesday, the S&P 500 dived another 3.2% Thursday. The Dow industrial average is testing a 52-week low.
 
Wednesday's drop came after the Fed unveiled its new plan for reviving the economy and as President Obama hit the road to sell his new but unimproved $447 billion stimulus.
 
Thursday's "unexpected" news was that the four-week moving average for jobless claims — a labor-market bellwether — rose to 421,000. Any number north of 400,000 is considered recession territory.
 
But should anyone really be surprised?
 
After all, we were promised in 2009 that $840 billion in stimulus would guarantee unemployment would not top 8%. Today, it's 9.1%, and has stayed above 9% for 26 of the last 31 months.
 
Since this president took office, U.S. businesses have shed 3.3 million jobs. We are still 6.9 million below our peak employment reached in January 2008. Ordinarily, more than two years after a recession has ended, well over a million jobs have been added to payrolls.
 
By any meaningful measure, then, our president has followed the least-successful economic policies of any U.S. leader since World War II. As recession seems ever more possible, the IMF warns of a U.S. "lost decade."
 
Whether it's jobs, economic growth, energy prices, incomes, regulation, weak foreign policy, or the quality of our lives and the nation's social fabric, America's current course looks questionable at best.
 
No wonder the markets are so volatile. They discount not the present, but the future. And the future for investors is murky at best and downright dark at worst.
 
So what's wrong? Here's a quick review of some of the federal policies launched in the name of "stimulus."
 
• Failed Fed policy. For three years, we've kept interest rates at record lows, undergone two rounds of quantitative easing and created $2 trillion in new money. On Wednesday the Fed announced its next move: the $400 billion "Operation Twist" — modeled on a failed Fed bond-buying program from the '60s to push down long-term interest rates. With so much Fed meddling, the markets can't help but be confused.
 
• Growing federal debt. In the European Union, debt-to-GDP ratios have hit an economy-crippling 140%. Greece, Italy, Ireland, Portugal and Spain all verge on default. But we have nothing to be smug about.
 
U.S. debt of $14.5 trillion already tops 100% of GDP, a level economists believe saps a nation's economic vitality. At the rate we're racking up deficits — $4 trillion in just three years — we'll soon join the EU in perpetual economic stagnation.
 
• Unstimulating stimulus. Faced with the clear failure of his previous stimulus, which wasted $840 billion, the president's new plan spends another $457 billion and imposes massive new taxes on the middle class, small businesses and entrepreneurs. Some 1.9 million new jobs will be created, the president reckons. In fact, jobs will be destroyed.

• Class warfare. The president relentlessly attacks "millionaires and billionaires," aided by the mainstream media's penchant for repeating his factually challenged assertions about who pays our taxes. In pushing the new "Buffett Rule" to raise taxes on the rich, the president absurdly claims that millionaires pay less in taxes than their secretaries.
 
But as blogger Noel Sheppard notes, IRS data disprove this canard: 99.6% of those earning above $1 million pay taxes at a higher tax rate than secretaries. And just over 200,000 wealthy taxpayers pay 20% of all federal income taxes. These are the very people who create new businesses and jobs.

• Anti-business bias. The president's war on small business and entrepreneurs has devastated American job creation, once the envy of the world. A House committee estimates more than half the taxes under the new "stimulus" will be paid by small businesses.
 
Refusing to sign an already negotiated free-trade bill, proposing onerous new taxes and regulations, and pursuing a money-wasting and corrupt "green jobs" strategy are leaving a wake of economic destruction.
 
• Regulatory siege. Federal regulation costs America $1.8 trillion a year — or roughly 13% of all our output. Whether it's the Environmental Protection Agency requiring power plants to shut down and others to be retrofitted with costly new equipment, or the National Labor Relations Board telling companies like Boeing where they can and cannot locate new facilities, or a moratorium on oil drilling in the Gulf of Mexico, or foot-dragging on the construction of a new pipeline from Canada that could boost U.S. energy security and lower prices, the government is a barrier to growth.
 
• ObamaCare. An estimated 4% of the U.S. chronically lacks health insurance — a serious, but manageable problem. Rather than address the real problem, the president and his allies in the Democrat-controlled Congress took over 17% of our economy. Now we're stuck with a health care program that studies show will provide lower-quality care at a cost of as much as $1 trillion over the next decade.
 
Health care reformers promised to "bend the cost curve down" and let Americans keep their current doctor if they wish. But a new study asserts that Obama-Care will raise premiums by 55% to 85%, while small-business surveys show that 30% or more will drop health coverage entirely — forcing employees into government-run health insurance "exchanges."
 
Such warmed-over leftist thinking, taken straight from the progressive playbook, is why markets are melting down. Not in 70 years have we had to deal with policies so ill-considered and poorly designed.
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« Reply #1080 on: September 28, 2011, 08:59:02 AM »

"What we can do—and absolutely must—is knock down all hurdles that create disincentives for investment in business.  Private enterprise works."

http://online.wsj.com/article/SB10001424052970204422404576596681526254692.html?mod=WSJ_Opinion_LEADTop

Every Job Requires an Entrepreneur
Someone took risks to start every business—whether Ford, Google or your local dry cleaner.

By CHARLES R. SCHWAB

In his speech before a joint session of Congress on Sept. 8, President Obama said, "Ultimately, our recovery will be driven not by Washington, but by our businesses and our workers."

He is right. We can spark an economic recovery by unleashing the job-creating power of business, especially small entrepreneurial businesses, which fuel economic and job growth quickly and efficiently. Indeed, it is the only way to pull ourselves out of this economic funk.

But doing so will require a consistent voice about confidence in businesses—small, large and in between. We cannot spend our way out of this. We cannot tax our way out of this. We cannot artificially stimulate our way out of this. We cannot regulate our way out of this. Shaming the successful or redistributing income won't get us out of this. We cannot fund our government coffers by following the "Buffett Rule," i.e., raising taxes on Americans earning more than $1 million a year.

What we can do—and absolutely must—is knock down all hurdles that create disincentives for investment in business.

Private enterprise works. I founded Charles Schwab in 1974, when America was confronting a crisis of confidence similar to today's. We had rapidly rising inflation and unemployment, economic growth grinding into negative territory, and paralyzed markets. The future looked pretty bleak.

Sound familiar?

Yet I had faith that our economy would recover. My vision was simple: Investors deserve something better than the status quo. I launched the company with four employees, a personal loan on my home, and an audacious dream. I didn't know exactly how we were going to do it, nor could I foresee that over the decades we would end up building a business that serves over 10 million accounts. But we went for it.

Enlarge Image
schwab
Close
schwab
Bloomberg

What's the potential power of the entrepreneur's simple leap of faith? The success of a single business has a significant payoff for the economy. Looking back over the 25 years since our company went public, Schwab has collectively generated $68 billion in revenue and $11 billion in earnings. We've paid $28 billion in compensation and benefits, created more than 50,000 jobs, and paid more than $6 billion in aggregate taxes. In addition to the current value of our company, we've returned billions of dollars in the form of dividends and stock buybacks to shareholders, including unions, pension funds and mom-and-pop investors.

The wealth created for our shareholders—a great many of them average Schwab employees—has been used to reinvest in existing and new businesses and has funded a myriad of philanthropic activities. We've also spent billions buying services and products from other companies in a diverse set of industries, from technology to communications to real estate to professional services, thereby helping our suppliers create businesses and jobs.

That's the story of one company. There are thousands more like it, and a consistent supportive voice from Washington could enable thousands more ahead.

The simple fact is that every business in America was started by an entrepreneur, whether it is Ford Motor Co., Google or your local dry cleaner. Every single job that entrepreneur creates requires an investment. And at its core, investing requires confidence that despite the risks, despite the hard work that will certainly ensue, the basic rules of the game are clear and stable. Today's uncertainty on these issues—stemming from a barrage of new complex regulations and legislation—is a roadblock to investment. We have to clear that uncertainty away.

As we did after 1974, our country can and will thrive again. But the leaders of both parties, Republicans and Democrats alike, must lend their voices to encourage and support private enterprise, both for what it can do to turn our economy around and for the spirit of opportunity it represents.

They need to review every piece of existing legislation and regulation with a clear eye to what impact it will have on business and growth. If something is a job killer, put a moratorium on it. Stop adding to the litany of new laws and regulations until we've had time to digest those in place and regain some certainty about the future. Proposed laws and regulations should be put to a simple test: What will this do to encourage businesses and entrepreneurs to invest? What will it do for jobs?
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« Reply #1081 on: September 28, 2011, 10:54:26 AM »

I know we banter a bit about Wesbury's relentless bullishness, but it cannot be said the man lacks the courage of his convictions.  By the way, some of the data he is citing are not without persuasive power , , , If he turns out to be right GM should be first in line for the humble pie  cheesy

New orders for durable goods slipped 0.1% in August To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 9/28/2011
New orders for durable goods slipped 0.1% in August, slightly better than the consensus expected decline of 0.2%. Orders excluding transportation also slipped 0.1% versus a consensus expected -0.2%.  Overall new orders are up 12.3% from a year ago, while orders excluding transportation are up 7.8%.
The drop in orders was led by motor vehicles. Aircraft and related parts were the largest gainer while other categories of orders showed little change.
 
The government calculates business investment for GDP purposes by using shipments of non-defense capital goods excluding aircraft.  That measure rose 2.8% in August (3.3% including upward revisions to July) and even if unchanged in September will be up at a 17.7% annual rate in Q3 versus the Q2 average.
 
Unfilled orders rose 0.9% in August and are up 8.1% from last year.
 
Implications:  This is not what a recession looks like. New orders for durable goods slipped a tiny 0.1% in August, both with and without transportation. But shipments of “core” capital goods, which exclude aircraft and defense and which the government uses to calculate the business investment part of GDP, increased a robust 3.3% (including upward revisions for July). This is the fourth straight monthly gain for core shipments, which are now at a new all-time record high.   They are up 10.8% in the past year and are accelerating, up at a 19.6% annual rate over the past six months and an even faster 22.6% rate in the past three months. Increases in core shipments should continue: unfilled orders are up about 15% versus a year ago. In addition, non-financial corporate balance sheets are strong and loaded with cash earning nearly zero percent interest. Meanwhile, corporate profits are at a record high. As a result, the odds are stacked in favor of a substantial increase in business investment over the next few years. In other recent news, the Richmond Fed index, a measure of manufacturing activity in the mid-Atlantic, increased to -6 in September from -10 in August.  Chain store sales were up 4.2% versus a year ago according to Redbook Research and 2.7% according to the International Council of Shopping Centers.  On the housing front, the Case-Shiller index, a measure of home prices in the 20 largest metro areas, was unchanged in July (seasonally-adjusted) and down 4.2% versus a year ago.  However, prices were up in nine of the twenty areas.  The biggest losses in July and the prior three months were where many would expect: Phoenix, San Diego, San Francisco, Las Vegas, and Los Angeles.
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G M
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« Reply #1082 on: September 28, 2011, 12:32:17 PM »


I'll happily step up for my serving. I'd much prefer things get better rather than live through "The greatest depression".

--------------------------------------------------------------------------------

I know we banter a bit about Wesbury's relentless bullishness, but it cannot be said the man lacks the courage of his convictions.  By the way, some of the data he is citing are not without persuasive power , , , If he turns out to be right GM should be first in line for the humble pie 
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DougMacG
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« Reply #1083 on: September 28, 2011, 02:54:05 PM »

I take that Wesbury report as a mixed bag, some measures up, some down.  What we call his relentless bullishness is really just some positive spin on a sick, but fairly stable economy.  We are lucky that there are some signs of life out there if you look closely enough.  Unemployment is not getting better or worse lately.  The future keeps getting worse in the sense that a) we are going to owe a whole hell of a lot more than we did when we finally get out of this malaise, b) our currency is being undermined, therefore our wealth will be eroding long past the beginnings of real recovery, and c) we have not done anything yet to address any of the underlying problems.

It is a matter of definitions to point to anything like 0.1% or 1.0%  growth for examples and say this is no recession.  He may be technically correct but people know that what quacks like a duck is really a duck.
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DougMacG
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« Reply #1084 on: October 06, 2011, 12:44:16 PM »

The president's jobs bills isn't a jobs bill and it isn't going to pass either chamber.  If it passed it isn't going to grow a single job.

To ALL:  The President today said that people who oppose his 'jobs bill' need to answer, what would YOU do?  Anyone and everyone, this is your shot.  Post the answer - right here.  Let's find some agreement, and start writing to Washington.  Waiting for a year from November, or really January 2013 and hoping a new group will win and do something isn't soon enough or good enough IHMO.  Let's step up the pressure to fix this right now...
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G M
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« Reply #1085 on: October 07, 2011, 07:15:49 AM »

http://www.theatlantic.com/business/archive/2011/10/the-99/246297/

The 99%
By Megan McArdle


Oct 6 2011, 11:42 AM ET708

 I spent quite a lot of time on the "We are the 99%" website last night and this morning.  There's been a considerable amount of carping about it from the conservative side, and to be sure, some of the stories strain plausibility (the percentage of people in the sample who have either taken up prostitution, or claim to have seriously considered doing so, seems rather high, for instance, and as far as I could tell, not a single person on the site had been fired for cause).  Many of the people complaining made all sorts of bad decisions about having children, getting very expensive "fun" degrees, and so forth.



But quibbling rather misses the point.  These are people who are terrified, and their terror is easy to understand.  Jobs are hard to come by, and while you might well argue that any of these individuals could find a job if they did something different, in aggregate, there are not enough job openings to absorb our legion of unemployed.



When the gap between the number of job openings and the number of people who are out of work is so large, there are going to be a hefty number of unemployed people.  Maybe these people individually could have done more to get themselves out of their situation, but at the macro level, that would just have meant that someone else was out of work and suffering.



I think it's hard to read through this list of woes without feeling both sympathy, and a healthy dose of fear.  Take all the pot shots you want at people who thought that a $100,000 BFA was supposed to guarantee them a great job--beneath the occasionally grating entitlement is the visceral terror of someone in a bad place who doesn't know what to do.  Having found myself in the same place ten years ago, I can't bring myself to sneer.  No matter how inflated your expectations may have been, it is no joke to have your confidence that you can support yourself ripped away, and replaced with the horrifying realization that you don't really understand what the rules are.  Yes, even if you have a nose ring.




I'm not sure that this constitutes the seeds of a political movement, however.   For all the admiring talk about bravery and perseverance, it's not really al that difficult to get young, unemployed people to spend a couple of weeks camping out somewhere.  They have a low cost of time, they're in no danger, and yes, I have to say it, demonstrating is fun.  No, don't tut-tut me.  I was at the ACT-UP die-ins, the pro-choice marches, the "Sleep Out for the Homeless" events and the "Take Back the Night" vigils.  It's fun, especially when you can see yourself on television.  This is not the Montgomery bus boycott we're talking about here.




So my question is, how does this coalesce into a broader platform?  Does someone have a coherent, plausible answer for someone whose pricey liberal arts degree has not equipped them for a tough job market?  And is it a coherent, plausible answer that they will believe?  I don't think those kids in Zucotti park are waiting to hear about QE3 and the American Jobs Act.

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DougMacG
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« Reply #1086 on: October 07, 2011, 10:47:03 AM »

If we measured the number unemployed now against the total of jobs considered available when Obama took office, the unemployment rate would be 11.3%.

  - James Pethokoukis, Biased Blogger at the right wing media outlets of Reuters and CNBC.  He was Economics Columnist and Business Editor at U.S.News & World Report magazine.
http://blogs.reuters.com/james-pethokoukis/2011/08/17/obama-vs-perry-on-jobs/
-----
Those results are after $6 trillion of artificial 'Keynesian Stimulus' with no plan of lessening much less pay back..  Don't tell me we aren't moving backwards.  

U6 = 16.5%  http://www.bls.gov/news.release/empsit.t15.htm

Do you know what caused all this economic carnage? ...  Government at all levels just got too small, Bush's fault, and economic liberties were too large and too widespread. People across the country, in all states and all industries, were under-taxed and under-regulated.  We must correct urgently - with a new and improved government program.
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ccp
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« Reply #1087 on: October 07, 2011, 10:54:19 AM »

Doug what is your take on this:

As noted on Drudge the payroll rate up 103K this month.  Yet 45K is simply Verizon workers going back to work after a strike!

What kind of crap is this?  Those are not 45K new jobs.
What are we all this stupid?  Why can we not have honesty if nothing else in our government?
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DougMacG
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« Reply #1088 on: October 07, 2011, 11:59:43 AM »

"Doug what is your take on this:  As noted on Drudge the payroll rate up 103K this month.  Yet 45K is simply Verizon workers going back to work after a strike!  What kind of crap is this?  Those are not 45K new jobs.  What are we all this stupid?  Why can we not have honesty if nothing else in our government?"

CCP,  Great point, thanks for that!  All economic measures are flawed so you work through it the best you can, knowing that your own lying eyes could have better accuracy than their data. If those people were getting unemployment compensation then I guess going back to work means new jobs  created???  Unbleapingbelievable, but no surprise to me.  I have posted for years that we measure the poverty rate while excluding their main sources of income and we measure oil reserves without including most known oil reserves.  The real question is why do voluntarily striking workers qualify for compensation while choosing to not work during contract negotiations?  The freedom to strike should be matched with the freedom to not get paid.  

The main news of the day I thought had to do with some positive revisions of previous months figures.  That makes just slightly better news than downward revisions, about like having Wesbury telling us that 0.3% growth is upward movement even if it is statistically identical to 0.3% in decline.  Either way this economy sucks, everyone knows it, and the inflection point on the curve happens to be not when Obama assumed the Presidency, but  exactly when Pelosi-Reid and Obama took the majority in congress and control of the domestic agenda.  The record of the Obama administration has been only to lock us in at our very lowest point

As my daughter's sports team heads into the heat of their playoff season I can say that in economics like sports, if you focus on doing the fundamentals correctly the scoreboard will take care of itself.

The fundamentals in a nutshell right now are:

Unprecedented over-regulation which includes an uncertainty and fear right now at terroristic levels when it comes to business growth and expansion.  The potential hirers do not even know if Obamacare is coming much less what it will mean to them, much less everything else to do with employment law.  They don't know what EPA carbon rules will mean or what energy will cost.  They are getting just killed with property taxation in the populated areas where workers live.  They don't know what a dollar is worth today or tomorrow and they don't know to the nearest ten percentage points what their tax rate will be tomorrow will be on an investment made today.  What they know is that we are not currently addressing ANY of our underlying problems.

Liberals and leftists actually have a stronger, blind belief in capitalism than right wing supply siders like myself do.  They believe that you can keep piling little things like family leave, layoff notification laws,escalating healthcare penalties and ongoing threats of profits surcharges  on top of OSHA and everything else already on them ini terms of state, federal and local tax, penalties and regulations and that the amazing American economy will still hit on enough cylinders to keep running.  I am amazed that under this level of incompetence, uncertainty and restraints on economic freedoms that anyone goes to work or pays a bill at all.

For every stupid and piddly little $100 million in federal beekeeping or monkey-mating studies we have taken another dollar away from every member of the current workforce.  How many more of these wealth transfers and boondoggles can we keep piling on before every worker and every investors just gets up and quits?

The less I make right now, the more that YOU will be paying for my daughter's college.  What could possibly go wrong with that?  Let me guess.  Doctors our age are taking early retirement in droves, ready to scale back their earnings and their tax contributions.
http://americasmedicalsociety.com/first-casualty-of-obamacare-the-american-physician/

I have posed this question elsewhere without a serious answer:  Please name for me, anyone, every tax and every regulation at every level of government that one must know inside and out before venturing to start a successful lemonade stand.  You can't.
« Last Edit: October 07, 2011, 12:01:40 PM by DougMacG » Logged
maija
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« Reply #1089 on: October 07, 2011, 12:06:12 PM »

Very good post from GM-- in a similar vein to what I just posted in the American Creed thread, good posts from Doug too.
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It will seem difficult at first, but everything is difficult at first.
Miyamoto Musashi.
DougMacG
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« Reply #1090 on: October 16, 2011, 04:54:44 PM »

Finally, a GOP Growth Plan
Senators John McCain and Rand Paul have drafted an economic growth blueprint that they hope to be the rallying cry of all congressional Republicans.

By STEPHEN MOORE

The White House and congressional Democrats hope to use the Senate rejection of the Obama jobs plan this week as a campaign issue against "do nothing Republicans." Senate Democrats have crowed that "Republicans have no jobs plan of their own," but that's not true any longer. Senators John McCain of Arizona and Rand Paul of Kentucky have drafted a comprehensive economic growth blueprint that they hope to be the rallying cry of all congressional Republicans in the weeks ahead. We obtained a copy of the draft document which includes tax cuts, a balanced budget amendment, ObamaCare repeal, and a regulatory freeze.

In an interview, Mr. McCain said that the two GOP senators were asked by Senator John Cornyn of Texas to stitch together a counterpoint to the Obama $447 billion proposal that lost in the Senate on Tuesday. "Can you imagine a stranger pair than me and Rand Paul," laughed Mr. McCain of his co-sponsor, who is a libertarian Republican. "We found a lot of common ground, and that started with fixing the tax code," he adds.

The plan would also promote an America-first pro-drilling policy to expand U.S. industry and reduce the country's reliance on Middle East oil. That's an issue where Mr. Obama is highly vulnerable given the tens of billions wasted on wind and solar subsidies. On the regulatory front, federal agencies would not be able to issue new rules until the unemployment rate drops to 7.7%.

The plan, which would cut corporate tax rates to 25% from 35% is partly paid for by offering a reduced 5% tax on repatriated capital to the U.S. When that approach was tried in the Bush years, revenues rose as a flood of new capital that was trapped overseas poured back into the U.S. Mr. McCain fumed that the congressional score keepers won't count this maneuver "as a revenue raiser, even though we know it increase tax payments."

The plan won't get close to the 60 votes necessary in the Senate. But it does establish a polar star for Republicans to head toward. Republicans got a nice lift for the plan when a Chamber of Commerce poll asked 1300 business owners across the country whether they support the GOP plan of "permanent tax cuts and less regulation," or the Democratic plan of temporary payroll tax cuts and public works spending. More than eight of 10 said they favor the Republican approach.

Mr. Paul told Politico that it is critical that Republicans have a response on jobs to the White House offering. Now they have one, and we will see if Republicans actually fight for it.
http://online.wsj.com/article/SB10001424052970204002304576631170682383808.html?mod=WSJ_Opinion_MIDDLESecond
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G M
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« Reply #1091 on: October 16, 2011, 04:59:13 PM »

As much as I cannot stand his dad, Rand Paul seems quite reasonable. Much of what he says resonates with me.
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G M
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« Reply #1092 on: October 21, 2011, 04:19:03 PM »

Wynn’s comments, transcribed from the audio presentation, come after the casino executive, who has donated heavily to Democrat campaigns, called the Obama administration on a prior earnings conference call “the greatest wet blanket to business, and progress and job creation in my lifetime.” He added at that time: “I'm telling you that the business community in this country is frightened to death of the weird political philosophy of the President of the United States. And until he's gone, everybody's going to be sitting on their thumbs."
 
Question: How do you see the landscape politically now? Is there any reason for optimism given the current slate of candidates to give you hope for the regulatory environment improving for your business?
 
Wynn: "We had a debate here last night and we had a focus group, that actually took place in the Tryst last night ... It's very interesting about the folks who are occupying Wall Street. That group is quite diverse. There are people in there that think the government should give them more just because they are alive. There are people there who are opposing government spending. There are people there that are opposing bailouts. That group is not homogeneous by any means.
 
"What you do have on Wall Street is a reflection, a real reflection in my opinion, of the anxiety, the insecurity and the fear that is endemic in the United States of America about the way government has gotten into the business of managing its life and the ability of the government to manage the economy intelligently by increasing the emphasis in government spending rationally ... to the point that we want ... everybody's financial security.
 
"I am watching my employees' standard of living drop because of deficits. I think that the American public is beginning to make a connection between deficits and their own loss of living standard...
 
"The net result of all of this is frustration, anxiety and anger. You're seeing that on Occupy Wall Street. You can see it taken to the next level in Greece, where people are trying to break in to a Parliament primarily controlled by the unions and the very kind of government that the people who are trying to break down the census elected. There comes a moment when the population realizes that it has to stop, and sometimes it takes a form of tax the rich people, which is a reflection more of the lack of understanding of how the economy works.
 
"Rich people are now being defined by the administration as people who make $1 million. Well, most of the businesses in America, other than giant corporations, are paying taxes under Chapter S partnerships or individual proprietorships. So somebody shows that they've made $3 million or $2 million this year and they paid personal taxes on that money. They subtract the cost of living and then what's left after, and that does not show that probably 25% or 30% of their profits are tied up in accounts receivable or inventory, stuff that they can't spend or get their hands on, but to support their business and their employment. And then they take whatever is left, these so-called millionaires, and they open up another shop or another office. And that, that is the only known engine of growth in the United States of America.
 
"And we have an administration that is fanning the fires that this is somehow undeserved, profligate millionaires, and it is worse than hypocrisy. It is totally dishonest. It represents young people who don't know the difference, simple misunderstanding and the lack of understanding of how the economy works or what's going on in America, but if it's politician that does it or union leader, then it represents something much more pernicious. It represents a deliberate misleading of the public. And I think that Americans are waking up to this.
 
"And it's taking the form of anger and dissatisfaction with the government. And I think that's probably just right because until there is a change, until this all stops, it's only going to get worse. No matter what anybody says in some fancy speech, even if it's a President, it is going to get worse. People say we're angry at the government for not compromising on both sides. Well, we don't really have a situation that lends itself to what reasonable people would call compromise. We've got a situation that requires a change.
 
"That is to say one side is right here and the other side is wrong. You cannot sustain these deficits. You cannot undercut the people that form the jobs and create the employment in this country. I'll give you an example of Las Vegas in my own industry. Across the street from me is an empty piece of property that's 34 acres. It's owned by two Israelis that are friends of mine that bought it at a very high price and are sort of in a difficult position now.
 
"They even owe money against that property. They have come to me on a monthly basis to say, go ahead, Steve, you take it, build something, connect it to Wynn and Encore ... We are willing to take a very long-term approach, and we'll turn the property over to you even if we have to pay off the loan. Well, that's a very attractive offer, especially since they're willing to pay us for management, design and supervision, as well as inviting us to invest.
 
"But I have to tell both of these men who were friends of mine, look, I can't give you a reasonable projection of what this return on investment will be even if we spend $2 billion and create 10,000 direct jobs and another 30,000 indirect jobs for a total of 40,000 jobs. That's how many jobs I could create if I broke ground on the Frontier property in the next 6 months or a year. And we would know how to do that.
 
"But I can't tell the men who are willing to sacrifice any short-term benefit in exchange for a long-term opportunity because I cannot predict what healthcare costs are going to be, what regulatory load they're going to heap on us, what new taxes or other burdens this insatiable governmental appetite for money from the citizens will take us to. Now that is simply a statement of fact. It isn't a partisan political pitch.
 
"It's simply a statement of fact from a businessman who has supported probably more Democrats than Republicans. But I say right now that the Democratic agenda of spend and bribe the public has bankrupt this country, and until it stops, the citizens of this country are in for more hard times. And fancy speeches aren't going to change that, only a fundamental realization that citizens are going to have to take real sophisticated responsibility for how we allocate the resources of this country."


Read more: http://www.foxbusiness.com/markets/2011/10/20/steve-wynn-unbound/
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G M
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« Reply #1093 on: October 22, 2011, 11:49:04 PM »



http://www.thegatewaypundit.com/2011/10/flashback-obamas-failed-stimulus-cost-more-than-9-year-iraq-war/

As the War in Iraq winds down remember…
The entire cost of the Iraq War was less than Barack Obama’s failed stimulus bill.
 Nice work, champ!
 FOX News reported:
 

As President Obama prepares to tie a bow on U.S. combat operations in Iraq, Congressional Budget Office numbers show that the total cost of the eight-year war was less than the stimulus bill passed by the Democratic-led Congress in 2009.
 
According to CBO numbers in its Budget and Economic Outlook published this month, the cost of Operation Iraqi Freedom was $709 billion for military and related activities, including training of Iraqi forces and diplomatic operations.
 
The projected cost of the stimulus, which passed in February 2009, and is expected to have a shelf life of two years, was $862 billion.

The U.S. deficit for fiscal year 2010 is expected to be $1.3 trillion, according to CBO. That compares to a 2007 deficit of $160.7 billion and a 2008 deficit of $458.6 billion, according to data provided by the U.S. Office of Management and Budget.
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G M
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« Reply #1094 on: October 23, 2011, 08:42:11 AM »

http://www.investors.com/NewsAndAnalysis/Article/588856/201110201854/Wall-Street-Did-It-.htm

http://www.investors.com/image/ISSloan_111021_345.png.cms



Wall Street Did It?

  Posted 10/20/2011 06:54 PM ET





 View Enlarged Image

Meltdown: If Republicans are to take back the White House and Senate, they need to do a better job tying Democrats and Washington to the subprime crisis. It's not hard, yet even their front-runner struggles to make the case.
 
On Wednesday night, CNN host Piers Morgan guilted Cain into allowing that banks were, as Morgan put it, "effectively preying on the most vulnerable elements of American society," and that Wall Street deserves at least partial blame for the crisis and should be held to account. "I wouldn't defend the banks," Cain said, "because I happen to think that the banks are part of the problem. Wall Street is."
 
Cain belatedly also faulted Fannie and Freddie, and the Democrats in Washington who protected them. Piers then pressed him to come up with a pie chart alloting blame — Washington vs. Wall Street—and Cain assigned neither a majority responsibility for the mess.
 
But based on the number of toxic loans in the system in 2008, the government was responsible for not just a simple majority, but more than two-thirds. It's quantifiable — 71% to be exact (see chart). And the remaining 29% of private-label junk was mostly attributable to Countrywide Financial, which was under the heel of HUD and its "fair-lending" edicts.
 
To be fair, the blame-Wall Street narrative has cemented in the public consciousness, and is hard to crack. That's because in the wake of the crisis, the Obama White House and Pelosi-Reid Congress engineered a cover-up of Washington's role in the mess through the Democrat-led Financial Crisis Inquiry Commission. The national media now defer to it as the final authority on what caused the crisis and ensuing recession.
 
"The FCIC's report put the majority of the blame squarely where it belonged: on the shoulders of the Wall Street executives," Bloomberg News opined.
 
While not blameless, Wall Street is an easy scapegoat. And investment houses that made billions slicing and dicing mortgages into CDOs, derivatives, credit default swaps and other exotic paper are easy to demonize. But the problem wasn't these financial instruments. Or even the obscene profits they generated. Mortgage-backed securities were nothing new, and we've always had speculation in the market.
 
The problem was the underlying assets: low-quality mortgages. We've never had so many junk home-loans poisoning the financial well before. And who poisoned the well? Washington and its affordable-housing policies.
 

It was Washington that declared prudent home-lending standards racist and gutted traditional underwriting rules in the name of diversity. It was government that created the risk on Main Street. Yes, Wall Street spread it, with the help of Treasury-backed Fannie and Freddie. But who's at greater fault for harming the village — the person who poisons the well or the one who distributes the water?

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DougMacG
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« Reply #1095 on: October 23, 2011, 03:12:11 PM »

The increases in domestic spending alone since Democrats took over congress cost more than deposing Saddam, overthrowing the Taliban, killing bin Laden, deposing Khadafy, 10 years in Afghanistan, 9 in Iraq, drone strikes in Waziristan and Yemen, all combined? Wow! Makes you wonder how much unemployment came down in 6 years with all that pure Keynesian stimulus. Unemployment was 4.4% in Oct 2006 coming into the Pelosi-Reid-Obama-Biden-Hillary takeover.  It's more than double that now, but maybe they were helping minorities?  Hispanic unemployment was 4.6%, 11.3% today.  http://www.bls.gov/news.release/archives/empsit_01052007.pdf
http://www.bls.gov/news.release/pdf/empsit.pdf
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Crafty_Dog
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« Reply #1096 on: October 28, 2011, 10:00:44 AM »

By ALLAN H. MELTZER
Those who heaped high praise on Keynesian policies have grown silent as government spending has failed to bring an economic recovery. Except for a few diehards who want still more government spending, and those who make the unverifiable claim that the economy would have collapsed without it, most now recognize that more than a trillion dollars of spending by the Bush and Obama administrations has left the economy in a slump and unemployment hovering above 9%.

Why is the economic response to increased government spending so different from the response predicted by Keynesian models? What is missing from the models that makes their forecasts so inaccurate? Those should be the questions asked by both proponents and opponents of more government spending. Allow me to suggest four major omissions from Keynesian models:

First, big increases in spending and government deficits raise the prospect of future tax increases. Many people understand that increased spending must be paid for sooner or later. Meanwhile, President Obama makes certain that many more will reach that conclusion by continuing to demand permanent tax increases. His demands are a deterrent for those who do most of the saving and investing. Concern over future tax rates is one of the main reasons for heightened uncertainty and reduced confidence. Potential investors hold cash and wait.

Second, most of the government spending programs redistribute income from workers to the unemployed. This, Keynesians argue, increases the welfare of many hurt by the recession. What their models ignore, however, is the reduced productivity that follows a shift of resources toward redistribution and away from productive investment. Keynesian theory argues that each dollar of government spending has a larger effect on output than a dollar of tax reduction. But in reality the reverse has proven true. Permanent tax reduction generates more expansion than increased government spending of the same dollars. I believe that the resulting difference in productivity is a main reason for the difference in results.

Enlarge Image

CloseCorbis
 .Third, Keynesian models totally ignore the negative effects of the stream of costly new regulations that pour out of the Obama bureaucracy. Who can guess the size of the cost increases required by these programs? ObamaCare is not the only source of this uncertainty, though it makes a large contribution. We also have an excessively eager group of environmental regulators, protectors of labor unions, and financial regulators. Their decisions raise future costs and increase uncertainty. How can a corporate staff hope to estimate future return on new investment when tax rates and costs are unknowable? Holding cash and waiting for less uncertainty is the principal response. Thus, the recession drags on.

Fourth, U.S. fiscal and monetary policies are mainly directed at getting a near-term result. The estimated cost of new jobs in President Obama's latest jobs bill is at least $200,000 per job, based on administration estimates of the number of jobs and their cost. How can that appeal to the taxpayers who will pay those costs? Once the subsidies end, the jobs disappear—but the bonds that financed them remain and must be serviced. These medium and long-term effects are ignored in Keynesian models. Perhaps that's why estimates of the additional spending generated by Keynesian stimulus—the "multiplier effect"—have failed to live up to expectations.

The Federal Reserve, too, has long been overly concerned about the next quarter, never more than in the current downturn. Fears of a double-dip recession, fanned by Wall Street, have led to continued easing and seemingly endless near-zero interest rates. Here, too, uncertainty abounds. When will the Fed tell us how and when it is going to sell more than $1 trillion of mortgage-related securities? Will Fannie Mae, for example, have to buy them to hold down mortgage interest rates?

By now even the Fed should understand that we do not have a liquidity shortage. It has done more than enough by adding excess reserves beyond any reasonable amount. Instead of more short-term tinkering, it's time for a coherent program to start gradually reducing excess reserves.

Clearly, a more effective economic policy would aim at restoring the long-term growth rate by reducing uncertainty and restoring investor and consumer confidence. Here are four proposals to help get us there:

First, Congress and the administration should agree on a 10-year program of government spending cuts to reduce the deficit. The Ryan and Simpson-Bowles budget proposals are a constructive start. (Note to Republican presidential candidates: Permanent tax reduction can only be achieved by reducing government spending.)

Second, reduce corporate tax rates and expense capital investment by closing loopholes.

Third, announce a five-year moratorium on new regulations.

Fourth, adopt an enforceable 0%-2% inflation target to allay fears of future high inflation.

Now that the Keynesian euphoria has again faded, perhaps this administration—or more likely the next—will recognize the reasons for the failure and stop asking for more of the same.

Mr. Meltzer, a professor of public policy at the Tepper School, Carnegie Mellon University and a visiting scholar at Stanford University's Hoover Institution, is the author most recently of "Why Capitalism?" forthcoming from Oxford University Press.
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DougMacG
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« Reply #1097 on: October 28, 2011, 11:30:29 AM »

Came across an old read (Dec 1995), too long to post, about income disparity, well researched and still applies today.  Read it and learn it if you are so inclined.  These writers went on to start Powerline blog (biased blogger alert).  Income inequality is the ladder up and gets 'better' only in times of no growth or opportunity.

http://americanexperiment.org/publications/reports/the-truth-about-income-inequality
« Last Edit: October 28, 2011, 12:28:10 PM by Crafty_Dog » Logged
DougMacG
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« Reply #1098 on: November 01, 2011, 01:47:14 PM »

http://online.wsj.com/article/SB10001424052970204394804577009651207190754.html

A Slow-Growth America Can't Lead the World
After World War II, the U.S. promoted international economic growth through reliance on the market and the incentives it provides. Times have changed.

By JOHN B. TAYLOR

When President Obama meets with his counterparts from other G-20 countries in Cannes later this week, American economic leadership will, unfortunately, largely be absent.

At the most recent meeting a year ago in Seoul, the G-20 rejected the president's pleas for a deficit-increasing Keynesian stimulus and instead urged credible budget-deficit reduction and a return to sound fiscal policy. And on that trip he had to defend the activist monetary policy of the Federal Reserve against widespread criticism that its easy money was damaging to emerging-market countries, causing volatile capital flows and inflationary pressures.

With a weak recovery—retarded by new health-care legislation and financial regulations, an exploding debt, and threats of higher taxes—the U.S. is in no position to lead as it has in the past.

By contrast, in the years after World War II, the U.S. led the world in promoting economic growth through reliance on the market and the incentives it provides, the rule of law, limited government, and more predictable fiscal and monetary policy. It created a rules-based, open trading system by helping to found the General Agreement on Tariffs and Trade, which slashed tariffs multilaterally. The miraculous postwar European and Japanese recoveries came from greater adherence to these principles of economic freedom and direct support from the U.S.

After getting off track with interventionist policies in the 1970s, the U.S. put its economic house in order in the 1980s, adopting pro-growth policies and creating a long boom that lasted through the 1990s. Again its economic ideas were contagious, not just in Britain under Margaret Thatcher but in the developing world. Seeing the advantages of American-style economic liberty over state intervention and control, Deng Xiaoping expanded his initial and tentative market-based reforms in China and created an economic renaissance. The U.S. helped the countries in Central and Eastern Europe implement market-based reforms, and it encouraged other countries and the international financial institutions to do the same in Africa and Latin America.

As the U.S. has moved away from the principles of economic freedom—instead promoting short-term fiscal and monetary interventionism with more federal government regulations—its leadership has declined. Some, even in the U.S., may cheer the decline, but it is not good for the world or for the U.S.

Economic policies in America affect the world in ways that are often subtle. In the case of monetary policy, for example, decisions on interest rates by foreign central banks are influenced by interest-rate decisions at the Federal Reserve because of the large size of the U.S. economy. If the Fed holds its interest rate too low for too long, then central banks in other countries will have to hold rates low too, creating inflation risks. If they resist, capital flows into their countries seeking higher yields, thereby suddenly jacking up the value of their currencies and the prices of their exports.

Due to the Fed's low rates, the European Central Bank held short-term interest rates low in the euro zone in 2003-05. Economists at the Organization for Economic Cooperation and Development found that these low rates in Europe were the cause of the housing booms in Greece, Ireland and Spain. As with all unsustainable booms, these were associated with undue risk taking, bad bank loans, busts, and huge government borrowing to bail out banks or to finance spending when revenues fell during the ensuing recession. Excessive government borrowing and problem banks are the source of the current crisis in Europe, which has in turn increased economic and financial risks for the U.S.

Some countries, including Mexico and Brazil, are complaining that the Fed is exporting inflation with its near-zero interest rate and massive purchases of long-term government debt, which is rapidly growing due to U.S. fiscal deficits. And when global inflation picks up, as it has started to do in many emerging markets, it feeds back into more inflation in the U.S. through higher prices of globally traded commodities. With unemployment already high, the result would be stagflation—slow growth, high inflation, steady unemployment—as we saw in the 1970s. For the good of the world and for its own good, America needs to show some leadership and better adhere to sound monetary and fiscal policy.

American economic leadership is also essential for defining the appropriate role of government in a global economy in which China plays an increasingly important role. Despite the enormous success of Deng Xiaoping's reforms, the Chinese economic system still fails to meet some key principles of economic freedom. While relying on markets and incentives, it has a weak rule of law and still imposes many barriers to free trade. The Chinese government favors some firms over others, crony-capitalism style, in its procurement procedures, and it requires that foreign technology firms partner with government-owned Chinese firms, thereby transferring technology to potential competitors.

The U.S. government should work to prevent interventionist trade and other policies abroad. But this is hard to do if America is moving in an interventionist direction internally. And it will have less and less influence if it continues to depart from sound fiscal policy, becoming more indebted to the negotiators on the other side of the table.

The next meeting of the G-20 leaders will be in Mexico in 2012, though the exact date is undecided. In the meantime, the 2012 election in America promises to be a referendum on the role of government in the economy. If, as a result, the U.S. starts to return to the principles of economic freedom—the best route to improving its own economy—then perhaps it will be able to reassert its economic leadership, benefit the world economy, and in turn create an even more prosperous American economy in a grand virtuous circle.

Mr. Taylor, a professor of economics at Stanford and a senior fellow at the Hoover Institution, is the author of "Getting Off Track: How Government Actions and Interventions Caused, Prolonged and Worsened the Financial Crisis" (Hoover Press, 2009).
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Crafty_Dog
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« Reply #1099 on: November 01, 2011, 01:58:42 PM »

Quite right.

Separately I would offer that GM's post of McCardle on 10/7 is worth rereading.
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