Free Markets, Free People

Monthly Archives: April 2010


Corporations sitting on money and not hiring despite better March unemployment numbers

It certainly wouldn’t surprise me given the unsettled business climate.  And, in fact, that’s what the Bureau of Economic Analysis is reporting – a record 1.6 trillion is being held while companies sort out what is happening in the business and financial sectors.  That, of course, means it isn’t being spent on hiring.  But there’s another reason, other than the unsettled business climate that is keeping corporations from hiring:

“Companies slashed their work forces and now find that they could function far more resourcefully than they ever realized possible,” Bianco said. “If anything, we could start to see some of the money being used to expand overseas or to acquire other companies. In either case, that does not bode well for job creation. In fact, mergers lead to job reductions unfortunately.”

A nice way of saying, it may get worse. Companies have become more efficient and productive.  Because of that, most experts I’ve read expect the national unemployment rate – the U3 – to remain in the 9% area throughout the year.  Government efforts to spur hiring haven’t amounted to much:

Alan Krueger, assistant secretary for economic policy at the US Department of the Treasury, points out that President Obama recently signed a jobs creation act known as HIRE which includes a variety of incentives. HIRE, for example, exempts companies from paying social security payroll tax if they hire someone who has been out of work for more than two months, and offers them a $1000 cash bonus if they retain the worker for a full year.

That’s not going to tip the scales and cause a company to hire if solid business reasons don’t dictate such action.  And, as pointed out in the first cite, there’s a very good reason, at least at this point, not to hire – companies have learned to live and, in some cases, prosper without the employees they slashed.

One of the great surprises of the economic downturn that began 27 months ago is this: Businesses are producing only 3 percent fewer goods and services than they were at the end of 2007, yet Americans are working nearly 10 percent fewer hours because of a mix of layoffs and cutbacks in the workweek.

That means high-level gains in productivity — which in the long run is the key to a higher standard of living but in the short run contributes to sky-high unemployment. So long as employers can squeeze dramatically higher output from every worker, they won’t need to hire again despite the growing economy.

And right now, employers are indeed doing more with less and are not going to be inclined to hire more employees until it is clear that demand for their product is up, will continue to grow and requires more employees to produce their product and fulfill the consumer’s demand.

That all brings us to today’s March unemployment numbers:

The Employment report has shown good numbers throughout March today release but not as good as expected by market. NFP data has posted 162.000 new jobs in march, with a revision in the previous data to -14.000 from -36.000 in February. Market expectations were 187.000 new jobs in March. Unemployment rate remains at 9.7% in March, the same February number.

What that report doesn’t break out is the fact that the numbers are most likely inflated by the temporary hiring of census workers (and that will continue through June).  The Bureau of Labor Statistics did note it in its release:

Temporary help services and health care continued to add jobs over the month. Employment in federal government also rose, reflecting the hiring of temporary workers for Census 2010. Employment continued to decline in financial activities and in information.

So while +162,000 is obviously better than -162,000, the numbers aren’t really all that solid.  Also remember that our economy requires about 120,000 to 140,000 new jobs a month just to offset job loses elsewhere and maintain a static unemployment percentage.  And that’s pretty much what this month’s numbers show us and is the reason the unemployment percentage has remained static.  What would give us a truer picture of the rate is to remove the census hiring from the numbers. My guess is we’d still be well below the 120,000 to 140,000 threshold necessary to drop that rate.  But what the last three months may indicate is the labor market is finally bottoming out.

The point, of course, is that corporations are still in a position, driven by increases in productivity and lack of demand as well as an unsettled business environment, not to increase hiring any time soon.  The money corporations are sitting on, as noted, is going to go somewhere – most likely to increased dividends or mergers. And mergers actually mean fewer jobs, not more. Until companies see increased, well-defined and sustainable growth in demand to the point they can’t handle it with their present level of employees, they’re not going to hire no matter how many “jobs” bills Congress passes and Obama signs.

~McQ


Honduras: An update

Unfortunately, it hasn’t gotten any better. The Obama administration continues to let relations worsen in order to demand reinstatement for a man the country clearly doesn’t want and it is become quite vindictive in its action.  Mary Anastasia O’Grady, who has been following the situation from the first provides the update:

Four months after a presidential election, reports from Honduras suggest the Obama administration remains obsessed with repairing its foreign-policy image by regaining the upper hand. The display of raw colonialist hubris is so pronounced that locals now refer to U.S. ambassador Hugo Llorens as “the proconsul.”

Washington’s bullying is two-pronged. First is a maniacal determination to punish those involved in removing Mr. Zelaya. Second is an attempt to force Honduras to allow Mr. Zelaya, who now lives in the Dominican Republic, to return without facing any repercussions for the illegal actions that provoked his removal. Both goals are damaging the bilateral relationship, polarizing the nation and raising the risk of a resurgence of political violence.

The U.S., as represented by Mr. Llorens, has been at the center of the Zelaya crisis all along. People familiar with events leading up to Mr. Zelaya’s arrest on June 28 say that had the U.S. ambassador not worked behind the scenes to block a congressional vote to remove the president a few days earlier, the dramatic deportation would never have happened.
The State Department denies this allegation. But numerous sources maintain that Mr. Llorens’ interference allowed Mr. Zelaya to push ahead with an unconstitutional referendum. Fearing he would use violence—as he had before—to trample the rule of law, the Supreme Court took action. Mr. Zelaya was arrested, shipped off to San José, and removed from power by a vote of Congress the same day.

Honduras had defied Uncle Sam and the U.S., led by Mr. Llorens, decided that it had to be taught a lesson. It took out the brass knuckles and tried hard to unseat interim president Roberto Micheletti in the interest of restoring Mr. Zelaya to the office.

Honduras wouldn’t budge. That’s when Mr. Restrepo traveled to the capital with a U.S. delegation. The agreement reached included U.S. recognition of the November election. For a time it seemed things might return to normal.

But the Americans had scores to settle. The U.S had already yanked dozens of visas from officials and the business community as punishment for noncompliance with its pro-Zelaya policy. Then, just days before President Porfirio Lobo’s inauguration in January, Hondurans estimate it pulled at least 50 more from Micheletti supporters. The visas have not been returned, and locals say Mr. Llorens continues to foster a climate of intimidation with his visa-pulling power.

He hasn’t stopped there. In early March he organized a meeting of Liberal Party Zelaya supporters and the party’s former presidential candidate, Elvin Santos, at the U.S. Embassy. Some 48 hours later the party’s zelayistas and its Santos faction voted to remove Mr. Micheletti as party head. Rigoberto Espinal Irías, a legal adviser to the independent public prosecutor’s office, complained that the “meeting generated much bad feeling in Honduran civil society” because it was “perceived to have the purpose of intervening in Honduran national politics.”

Now more trouble is brewing: Salvadoran President Mauricio Funes, according to press reports, has said that Mr. Lobo made a promise, in front of Secretary of State Hillary Clinton and Mr. Funes, that Mr. Zelaya could return “without fear of political persecution.” Mr. Lobo subsequently announced that Mr. Zelaya is free to enter the country. In exchange, it is expected that foreign aid flows to Honduras will resume. But the minister of security maintains that if Mr. Zelaya returns he will be arrested.

What ever happened to self-determination? What ever happened to “the will of the people”. No one argues that the recent elections were fraudulent or don’t reflect that will. And, as any number have pointed out, Zelaya violated the Honduran constitution with his actions and other than the exile, Zelaya’s removal was perfectly legal under their law. Now we have an activist US ambassador trying to influence internal Honduran politics and going so far as to host opposition party meetings? One wonders if Mr. Obama’s State Department would try that in Venezuela and, if so, how Hugo Chavez would characterize it.

Honduras is an ally. It is a democracy. It actually had a good relationship, until recently. And it was a bulwark against the Bolivarian socialism that Hugo Chavez is trying to spread. Instead of undermining its present government, we should be working hand in hand to strengthen it. Instead, it seems, our new foreign policy is to try and antagonize and alienate as many allies as we can.

~McQ


BREAKING: Obama’s Birth Certificate Found?

I just received this via email, as I assume many others have or will, and I’m not quite sure what to make of it. I did receive it from someone who’s sent me reliable info before, but this is awfully explosive (if in fact real).

Personally, while I’ve always found it suspicious that Obama went to such great pains to hide his birth certificate, I just figured it was for some personal reasons (e.g. parents weren’t married) rather than any eligibility issues. But now I have to question that.

If this discovery turns out to be the real thing, does that mean we’ll be singing “Hail to the Chief” to … President Biden? (Gulp)

(click to enlarge)

Obama's long-form birth certificate?

Obama's long-form birth certificate?

Stay tuned for updates …


Today’s good news

One more time for those who continue to believe all these Tea Party demonstrations are founded on the right and favor the Republicans:

A majority disapprove of both political parties, their leaders and most members of Congress, a USA TODAY/Gallup Poll finds.

Attitudes are reminiscent of those in 1994 and 2006, when control of Congress switched from one party to the other.

The favorable rating for the Democratic Party has fallen to its lowest level since Gallup began asking the question in 1992 —its standing has dropped 14 percentage points since President Obama’s election — but the Republican Party fares no better. Three of four Americans say they are dissatisfied with the country’s direction.

It isn’t just anti-incumbent fever, it is anti-party fever.  How many times do I have to say that these Tea Parties are the tip of a very big iceberg and it doesn’t necessarily represent just the right-wing?  I’d certainly say that for the most part you’ll find very few from the left in there because their nominal party of choice is in power.  But these protests probably represent the big middle more than any I’ve seen in my life time.

I know I sound like a broken record when I continue to say that what happened late in ’08 and early ’09 with the financial crisis, TARP, the bailouts and the takeovers slapped a whole bunch of people awake.  I travel – a lot.  And I’m around everyday Americans constantly.  And I hear them talk among themselves.  Normally it’s about the vacation they’re on,  something personal in their lives, sports – whatever.  But rarely if ever is it about politics, government or the like.

Until now.  Now I hear it constantly.  I hear older couples traveling together, for instance, in a small town diner in Tennessee talking about how big government is going to ruin us.  I hear people in a BBQ joint in Alabama concerned about their financial future and saying government needs to get out of the way.  I hear a hotel worker in the lobby of a Hampton Inn – a hotel worker – complain that this country is going to the dogs. I don’t know their party affiliation, if any, but I do know they’re pissed.  I never hear that stuff usually, and trust me, I’m attuned to hearing it if it is being said.  Politics is the last thing most people talk about in public.  But there is a growing grassroots dislike for all that is the federal government and those that represent it.  I’m not talking about violence, certainly not at this stage, but definitely a desire to do something about it.  While the elite like to wave off the “I want my country back” crowd as ignorant rubes (or thugs, or angry white men, or nazis, or brownshirts or terrorists) who just don’t know what what’s good for them or what they’re talking about, that sentiment simmers not that far below the surface.   People are concerned and people are getting angrier.  I use the word “angrier” because they’ve been somewhat angry about this for some time.   They’re getting angrier because they no longer just perceive their being ignored, they flat know they’re being ignored.  And that really pisses them off.

Look at the cite above – 75% of the nation thinks we’re on the wrong track.  That accounts for most Democrats (the 25% not mentioned) and Republicans probably make up another 25 to 30%).  So that leaves 45 to 50% of the country unaffiliated and not at all happy with either party. And of course, remember, Democrats assumed that the election and ascension of Obama and their assumption of power was all that was necessary reverse that (because, you know, it was all about Bush). Well it didn’t, and in fact, it has gotten worse.  That says something about the “wrong direction” with which the people are dissatisfied.  The last administration and especially this administration have vastly expanded the size, scope and cost of government and racked up record deficits and debt.  As that has happened this number has gotten worse.  It’s not hard to figure out what they’re dissatisfied with, is it?

I think it could be safely assumed that at the moment their dissatisfaction is more likely to fall most heavily on the party in power, but if Republicans assume that means they’re in the driver’s seat, they’re simply wrong.  Right now, if you look at the “my Representative deserves to be reelected” those numbers are below 50% and over 10 points lower than in ’94 when the GOP rode to victory in midterms because of dissatisfaction with Democrats. No matter how many times the GOP tries to sell it, this isn’t “just like” ’94 and they better figure that out quickly.

The rubes aren’t as dumb and certainly not as uninvolved as the political elite would like to assume they are.   How the anger they now are feeling will work itself out remains to be seen.  But, despite the assurances of the ruling class that by November this anger will all go away, especially if the economy turns around, this anger is not likely to dissipate.  So we’ll see how it goes – whether it is an anti-incumbency midterm or a dump the Democrats midterm.  While I’m sure a bunch of Democrats are going to be dumped, I also wouldn’t be surprised to see a good number of Republicans lose their job – especially if they start waffling on the repeal promise and their principles.  Their losses may put a Democrat in office, but it will be because another candidate took the Republican on and split the vote.  And, if it is because they again abandoned their principles, deservedly so.

The politicians like to talk about how corporate America needs to change its culture.  Well there is no establishment in this country more ripe for major cultural change than that in DC.  And what I hope to see in November is an aroused electorate slap the crap out of those complacent scalawags and start that cultural change rolling. A pipe dream – maybe. But it may actually be one of the last chances the people have of “taking their country back”.

~McQ


Let’s pretend “mandate” doesn’t really mean “mandate”

That seems to be the solution Andrew Sabl has concocted to temper the outrage directed at Democrats for mandating everyone must buy health insurance.  If you’re a fan of word salad, this will please you:

The phrase “individual mandate,” though it explained to wonks how we were going to achieve near-universal coverage, was always bound to make for atrocious framing.  Pairing it with a subsidy is great policy but possibly even worse framing.  Now one thing people don’t like—being told by the government what to do—is supposed to be made better by another thing they don’t like—admitting they need government help.

Here is another way of describing ACA that’s completely accurate but explains the point much better:

“If you or your family aren’t getting health insurance through your job, the government will pay to get you private insurance coverage, just as an employer would.  You’ll have to contribute something—but the law guarantees, with specific numbers, that it will be no more than you can afford. It’ll be less than three percent of your paycheck if your family makes $33,000 a year, less than ten percent if you make as much as $88,000.  Pre-existing conditions won’t matter.  The government will still pay for your insurance, with the same affordable contribution from you.”

The bill has lots more—things that make it even better.  But that, it seems to me, is the basic idea.  And if we drill it in, people (Fox News junkies aside) will stop imagining that the bill is somehow about government telling people without insurance that they have to get it because the government won’t help them.  It’s the opposite.  Under ACA, it’s the government’s job to get you insurance, and to pay for almost all of it if you can’t afford it.  Before, you were on your own.

Objections?

Well I can think of many, but first let’s start with the good Stephen Bainbridge’s characterization of this attempt at giving a word a new meaning:

“When I use a word,” Humpty Dumpty said, in a rather scornful tone, “it means just what I choose it to mean—neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many different things.”

“The question is,” said Humpty Dumpty, “which is to be master—that’s all.”

Bainbridge goes onto point out that “mandate” comes from the word “mandatory” as in you must do, obtain, be, spend, whatever is demanded. It’s not a suggestion. There’s no option.  It’s not something you can decide to ignore. In this case there’s the force of law behind it and 16,000 new IRS agents to insure you fulfill it – something Sabl seems to have somehow missed. Also apparently forgotten by Sabl is the fact that fines for not buying your mandated coverage are one of the major revenue streams with which this monstrosity is fed.

But the best irony is saved for last: Sabl entitles his blog “The Reality Based Community” with the sub “Everyone is entitled to his own opinion, but not his own facts.”

Indeed.

~McQ


GOP beginning to reject spine implant

Principles begin to yield to politics and Republicans begin to waffle and second guess themselves:

Top Republicans are increasingly worried that GOP candidates this fall might be burned by a fire that’s roaring through the conservative base: demand for the repeal of President Barack Obama’s new health care law.

It’s fine to criticize the health law and the way Democrats pushed it through Congress without a single GOP vote, these party leaders say. But focusing on its outright repeal carries two big risks.

Repeal is politically and legally unlikely, and grass-roots activists may feel disillusioned by a failed crusade. More important, say strategists from both parties, a fiercely repeal-the-bill stance might prove far less popular in a general election than in a conservative-dominated GOP primary, especially in states such as Illinois and California.

So the party that has unceasingly told us how bad this bill is (and rightfully so), cast no votes in its favor (rightfully so), make the case that it will add trillions to our deficit and our debt (rightfully so) and therefore should be repealed (rightfully so) are now getting cold feet.

Wow. What a freakin’ surprise. And they wonder why they can’t generate any sustainable grassroots excitement about their party. Politics ain’t bean bag, Republicans and it rewards those who take risks.  You either stand for something or you don’t.  7 months, the winning issue handed to them on a silver platter (it’s about the size, scope and cost of government you idiots) and these dopes begin to waffle. Amazing. Not surprising given their record and their seeming desire to be the permanent minority, but amazing that they can’t seem to figure it out none-the-less.

~McQ