Questions and Observations

Free Markets, Free People

Economic Statistics for 10 Jan 14

Wholesale inventories rose by 0.5% in November, while a 1.0% rise in sales lowered the stock to sales ratio to 1.17, the first decline in 3 months.

A disappointing Employment Situation report shows only 74,000 new jobs were created in December. The average workweek declined a tick to 34.4 hours, while average hourly earnings rose 0.1%. The unemployment rate declined to 6.7%, though this was due to a decline in labor force participation. The labor force participation rate, at 62.8, is the lowest since March, 1978. While the civilian non-institutional population rose by 178,000 during the month, the labor force declined by 347,000. The real unemployment rate stands at 11.48%. The following chart of the employment-to-population ratio tells us everything we need to know about the labor market in this "recovery":

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Trust, leadership and politics

Well you all saw the new job numbers – 74,000 new jobs, 525,000 more workers drop out of the workforce and magically, the U3 unemployment rate dropped to 6.7% (“and the underpants gnomes … SCORE!”)

Trust … why wouldn’t you trust the BLS’s numbers when you continually see this formula add up to “less” unemployment? /sarc

In more ways than one, trust in government is being squandered by those in government.

For instance have you ever seen “leaders” who seem to know less about what their “minions” are doing than this latest bunch?  Barack Obama is clueless as is, to a lesser extent, Chris Christie. And so we are witness to abuses of power on a regular basis. Most of those abuses can be linked to politics in general. But let’s face it, whatever the reason, we are seeing more and more abuse of power to the point that one might suggest that our government has become too powerful (“suggest” hell, it IS too powerful).

There’s another point that bothers me. I don’t know about you, but the way I’ve always been taught – in fact what I learned as a leader – is a leader is responsible for everything that does or doesn’t happen on his watch.

And while we may apply that in our lives and jobs, “we the people” seem content with swallowing the “gee, I didn’t know that was going on” nonsense from politicians. I’ve never seen an occupation where they are given so many passes on things that in the normal business world – or any other “world” – would be the end of their career.

In terms of leadership, It really doesn’t matter what happened, it’s his or her problem and responsibility. Good leaders don’t let those sorts of problems crop up very often. That’s because it is the leader’s job to set the ethical and moral boundaries of his administration and to relentlessly patrol those boundaries and punish those who cross them.

But that doesn’t happen today in politics. Instead we just leave ’em be when they say “uh, gee, I didn’t know a thing about this.”

Ignorance isn’t an acceptable excuse. It’s the 7 year-old’s defense, one we don’t accept from our own kids, and yet we let politicians who claim to be leaders pull it every single day.

Trust? How can you trust anyone you let lie to you daily? How can you trust anyone who has no apparent moral or ethical boundaries and are only sorry to be caught? How can you believe anything they say? More importantly, how can you let these people have any say over your life at all?

Just wondering …

~McQ

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Economic Statistics for 9 Jan 14

The Challenger Job-Cut Report shows layoffs in December hit a recovery low of 30,623.

Gallup’s US Payroll to Population index for December fell to 42.9% from 43.7% in November.

Initial jobless claims fell 15,000 last week, to 330,000. The 4-week moving average fell 9,750 to 349,000. Continuing claims rose 50,000 to 2.865 million.

The Bloomberg Consumer Comfort Index rose 0.3 points to -28.4.

The Fed’s balance sheet rose $4.6 billion last week, with total assets of $4.028 trillion. Reserve Bank credit increased $1.2 billion.

The Fed reports that M2 Money Supply fell by $-10.2 billion last week.


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Sometimes I wonder …

I wonder just how intelligent the bulk of Americans are.  From a Quinnipiac poll:

American voters support 71 – 27 percent raising the minimum wage. Republican support is 52 – 45 percent. Given several options:

  • 33 percent of voters say increase the minimum wage to $10.10 per hour;
  • 18 percent say increase it from the current $7.25 per hour to something less than $10.10;
  • 18 percent say increase it to more than $10.10 per hour;
  • 27 percent say don’t increase the minimum wage.

Raising the minimum wage will lead businesses to cut jobs, voters say 50 – 45 percent, with Republicans seeing job cuts 68 – 29 percent and Democrats saying no 65 – 29 percent. Independent voters expect job cuts 51 – 45 percent.

We’re faced with the lowest job participation numbers in a long, long time, our economy is just starting to recover, a majority of Americans know that raising the minimum wage will lead “business to cut jobs” and yet, the majority also want to raise it anyway (to include 52% of “Republicans”).

It makes you just want to throw up your ands and say “screw it”.

~McQ

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The law with the Orwellian name continues to lose support

The Affordable Care Act, the monstrosity of Democratic legislation with the Orwellian name, continues to lose supporters.   And, as an added special feature, people in employer based programs are now paying more out-of-pocket for their medical expenses than before ObamaCare.  Very “affordable”, no?

Support for the Affordable Care Act has plummeted since late last summer, and people with employer-based health insurance say they increasingly are paying more for out-of-pocket medical expenses, a new Bankrate.com survey released Wednesday revealed.

When Bankrate.com first polled people in September—right before the launch of Obamacare insurance exchanges, there was an even split between those who said they would repeal the Affordable Care Act if given the power to do so and those who would keep it: 46 percent each. (The rest either had no opinion or didn’t know how they felt.)

But three months later, after the botched launch of those government-run exchanges, the number of people who said they would gut Obamacare had risen to 48 percent, while the number of respondents who said they would keep it as law had plunged to 38 percent.

While the “botched launch” may have had some effect on that “plunge”, my guess is that hitting people’s wallet has pushed it down even more.  Health care insurance isn’t some esoteric policy argument.  It’s something that is important to everyone.  It is about their family and trying to afford the best for their family’s health. When policy negatively effects real people, they react just as negatively (and I do hope that Democrats double down on their support of the law, since it is all theirs anyway) :

The survey also found that people, by a 2-to-1 margin, felt Obamacare had had a more negative than positive impact on their own, individual health care. The poll questioned 1,005 adults, and had a margin of error of 3.6 percentage points.

[…]

His company’s survey also found that a total of 44 percent of people with employer-provided insurance said they are shelling out more dollars in deductibles and copayments than they were a year ago. And 47 percent of that group of people reported having more money deducted from their paycheck to pay the cost of those insurance plans than in 2012.

People earning between $50,000 and $75,000 annually were the most affected group: with 64 percent of them reporting a bigger hit on their paychecks from health insurance. Just 38 percent of the people earning less than $30,000 reported paying more for insurance in payroll deductions as of 2013.

The great leveling.  Apparently you’re “rich” if you earn between $50 and $75k, so it’s okay that you’re paying more – and besides, those “Cadillac plans” just aren’t fair (well, except for the exempt unions, of course … and Congress, and ….).  Don’t forget the tsunami of cancellations that will hit employer based programs hasn’t yet happened.

Obviously it doesn’t take great powers of perception to realize that this is just going to get worse and worse as the months pass.  And as those months pass, those supporting the legislation will become fewer and fewer.  It will be a grand issue on which Congressional Republicans can run (if they actually can figure out how to do that successfully without the usual idiocy).  Unfortunately, politics aside, it is going to be a building disaster for the American people.

Repeal is the best remedy.

~McQ

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Economic Statistics for 7 Jan 14

Gallup’s Economic Confidence Index rose to -19 in December from -25 in November.

In weekly retail sales, Redbook reports a 4.1% increase from the previous year. ICSC-Goldman reports a steep weekly sales drop of -5.4%, and a 1.7% increase on a year-over-year basis.

Exports rose and imports fell, lowering the trade deficit to $-34.3 billion in November.


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Sometimes you just have to shake your head and laugh ruefully

Mostly because you get tired of saying “I told you so”.  Focus – Germany:

With Greenpeace successfully forcing the shutdown of nuclear power, and keeping out fracking for gas, what’s left? A boom in coal. In fact, over the next two years Germany will build 10 new power plants for hard coal.  Europe is in a coal frenzy, building power plants and opening up new mines, practically every month. It might sound odd that a boom in German coal is the result of Greenpeace’s political success.

Yes, this is the sort of thing that happens when governments try to set priorities in a market for political reasons and it blows up in their face:

Europe’s appetite for cheaper electricity is reviving mines that produce the dirtiest Across the continent’s mining belt, from Germany to Poland and the Czech Republic, utilities are expanding open-pit mines that produce lignite. The projects go against the grain of European Union rules limiting emissions and pushing cleaner energy. Alarmed at power prices about double U.S. levels, policy makers are allowing the expansion of coal mines that were scaled back in the past two decades. Lignite demand worldwide is forecast to rise as much as 5.4 percent by 2020, according to the International Energy Agency.

And the preferred energy sources just don’t deliver:

Germany’s wind and solar power production came to an almost complete standstill in early December. More than 23,000 wind turbines stood still. One million photovoltaic systems stopped work nearly completely. For a whole week coal, nuclear and gas power plants had to generate an estimated 95 percent of Germany’s electricity supply.

But if you ask them, these same folks will tell you how much smarter they are than you, how their priorities make more sense than yours and why they should be able to use force to make you live with their choices.

The irony is simply hilarious:

Coal remains the biggest source of fuel for generating electricity in the U.S. and coal exports are growing fast. Demand is being stoked by the rise of power-hungry middle classes in emerging economies, led by China and India. By the end of this decade, coal is expected to surpass oil as the world’s dominant fuel source, according to a recent study by consultant Wood Mackenzie.

And that brings us to the paradox created by government:

Germany’s energy transition has also been a transition to coal: Despite multi-billion subsidies for renewable energy sources, power generation from brown coal (lignite) has climbed to its highest level in Germany since 1990. It is especially coal-fired power plants that are replacing the eight nuclear power plants that were shut down, while less CO2-intensive, but more expensive gas-fired power plants are currently barely competitive. Energy expert Patrick Graichen speaks of Germany’s “energy transition paradox”: the development of solar and wind farms, yet rising carbon dioxide-emissions.

Brilliant!

Oh … and we told you so.

~McQ

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