The news services are abuzz this morning with the "news" that Europe has finally turned the corner with an economic rebound in the 2nd quarter of this year. Underneath the headline is the dismal number of an annualized 0.3 percent estimated growth rate for the 2nd quarter. Whoop-to-doo! This is a recovery. This number is not significantly different from a negative number, given the pattern of revisions. Meanwhile, unemployment in Europe remains above 12 percent and sovereign debt is soaring on to new highs.
There are further stories that Greece is on the road to recovery. What are their current statistics? GDP only dropped an annualized four percent in the first half of this year. Wow! That's really something to write home about. Combined with almost 28 percent unemployment overall and nearly 70 percent unemployment among youth, it sure sounds like Greece is just humming along.
Wonder what the statistics would show if Europe was doing poorly?
Wednesday, 14 August 2013
Monday, 12 August 2013
Some Good News for the US
Steve Moore's column today in the Wall Street Journal is worth a read. The sequester, according to Moore, has worked. Total federal spending has been slowed, even reversed, in the past two years, according to Moore. This is, indeed, good news. Let's hope it continues.
Moore notes that all it takes to continue to hold federal spending in line is to not undo the budget deal that led to the sequester in the first place. It will be interesting to see if politicians can stick with the plan by doing nothing.
Moore notes that all it takes to continue to hold federal spending in line is to not undo the budget deal that led to the sequester in the first place. It will be interesting to see if politicians can stick with the plan by doing nothing.
Update on Greece
Now, after five years of European Union policies, how do things look in Greece. The headline today on Yahoo looks encouraging: "Greece Beats January-July Budget Target." In fact, Greece did not do any such thing. More bailout funds from the EU, though, made it look that way.
Here is what the EU has done for Greece: GDP today is 20 percent lower than it was in 2008, when the EU bailouts began. Unemployment is at a record pace, pushing toward 30 percent. These numbers are not very different from where the US was in 1933 at the lowest point of the Great Depression.
Meanwhile, civil order is breaking down in Greece. Crime is rife and the only things growing are the nation's indebtedness and the black market. Political discourse is moving to the extremes as the center breaks down.
Finally the debt to GDP ratio is rapidly climbing to 200 percent. The EU has made a small problem into a large problem and has obligated the entire European continent to back a bailout that has absolutely no hope of success. Politicians hard at work again!
Here is what the EU has done for Greece: GDP today is 20 percent lower than it was in 2008, when the EU bailouts began. Unemployment is at a record pace, pushing toward 30 percent. These numbers are not very different from where the US was in 1933 at the lowest point of the Great Depression.
Meanwhile, civil order is breaking down in Greece. Crime is rife and the only things growing are the nation's indebtedness and the black market. Political discourse is moving to the extremes as the center breaks down.
Finally the debt to GDP ratio is rapidly climbing to 200 percent. The EU has made a small problem into a large problem and has obligated the entire European continent to back a bailout that has absolutely no hope of success. Politicians hard at work again!
Sunday, 11 August 2013
The Changing Face of the American Workplace
The US economy was once the envy of the world. From 1865 to 1965, the US economy grew faster than any large economy in the world. The great American middle class came into prominence during this period and American income and wealth had no rivals anywhere in the world. For most of these years, there was no Federal Reserve or central bank in the United States, though central banks had a long history in every other large country in the world. For most of these years, there was little business regulation and no income tax. The Federal Reserve and the Federal income tax came into existence in 1913, coming on the heels of the best 60 years of economic growth in the history of the US.
Not that everything was rosy. Financial panics and the great depression occurred during this 100 year span. Unemployment rose and fell. Markets rose and fell. The dynamics of American growth were chaotic, though powerful. But, with all of the chaos and panic, the American pie grew at an unprecedented rate, matched, in world history, only by modern China. The standard of living of the average American grew at the fastest pace ever. Unemployment levels above 6 percent were considered a sign of a 'recession.' The current 7.6 percent unemployment rate would have been seen as an extreme economic slowdown (not an economic recovery).
Since 1965, the American economy has grown at a dramatically slower pace. The American middle class has consistently struggled, except for the 20 year period that followed the inauguration of Ronald Reagan. The financial position of the average American is today untenable, if proper account is taken of the federal, state and local government debt. America is headed for financial disaster and the American middle class is sitting in the passenger seat.
In the driver's seat is the new political class. The fastest growing demographic in America is the American government or quasi-government employee. On the defensive is the American private economy. Besieged by so much regulation that most companies are not even aware of most of the regulatory burden that they face, small business is no longer the engine of American economic progress -- government is where the real growth is taking place. Government employment has been the largest source of employment growth in the US economy since 1965.
Unfortunately, government doesn't produce anything but problems for the private sector. Most government employees (including public school teachers, university professors, and bureaucrats of all stripes) view the private sector with suspicion. They see private businesses as quasi-criminal enterprises bent on polluting the environment and exploiting their employees. This culture dominates the media characterizations, not only in the daily news, but in television series and movies.
So what does all of this mean for the workplace in modern America? Private businesses realize that they are the target of the political classes and they make adjustments. They know that if they hire full time employees, their regulatory burden goes up. They know if they hire 50 employees or more, they fall into certain categories that must face significantly higher costs of complying with the modern legal environment that has been imposed upon them.
So, what happens? Small business reacts by hiring as few full time employees as possible. Part time workers are easier to fire and are not subject to Obamacare and other regulatory burdens. Many companies keep their companies deliberately smaller to avoid certain employment trigger levels that put companies under a much more severe regulatory regime. Employees that are 'protected' under current laws -- minorities, women, persons over the age of 55 -- involve far greater expense to a private business than other employees. So, fewer of them are hired. Protecting an employee with legislation simply means making that employee more expensive to the employer. Employers aren't stupid (a common assumption of the political class that supports these 'protections).'
So, today, the workplace is a very rigid bureaucratic environment. The blizzard of paperwork that employees face is nothing compared to the blizzard of paperwork that companies face. There is more concern with what might be said at the water cooler than what the work output might be. Private email communications are now perused for politically incorrect comments. Free speech doesn't apply to the workplace. In financial service companies, mistakes or errors are seen as criminal (the 'whale' episode at JP Morgan is a modern instance). Gone are the old processes of free people making free decisions in free markets. Now you have to worry about whether Barney Frank or Elizabeth Warren is looking over your shoulder.
All of this means that America is in a period of relative economic decline. The middle class will remain an endangered species as the political class bent on the destruction of the middle class continues to claim that all they care about is the middle class. Gradually, less and less of America is based upon free market economics and more and more is driven by un-elected elites, who have spent most of their lives either in politics or academia. The workplace is now a bureaucratic environment with rigid rules and little or no room for initiative and energy. The dull and the routine is more and more a description of the modern American workplace.
The workplace is also becoming more and more a land of part-timers. Businesses in America, like their European counterparts, are increasingly reluctant to hire people that, by law, they cannot fire. Workers now have protections and guarantees that mean, even if workers received no wages at all, they are still very, very costly to business. Increasingly, wages are a smaller and smaller fraction of the costs to an employer of hiring an employee. The result is a much reduced take home pay and more and more of worker income is siphoned off to worthy causes, favored by elite bureacrats in the Elizabeth Warren mold -- bureacrats with virtually no life experiences similar to that of ordinary American workers.
A hundred years ago, a young employee could take a job at a reduced wage or no wage at all as a way of entering the work force and learning a trade. Minimum wage laws, promoted by big unions, are designed to block such work force entrants and preserve a monopoly for existing workers. These laws are effective and help destroy a large part of the Horatio Alger culture that once was. The elite that make these rules don't face such problems since they, by and large, go to elite colleges and universities and find that entry into the work force doesn't involve wage and salaries anywhere near the minimum wage.
It is no accident that college students are in the forefront of the call for a "living wage." A living wage virtually guarantees that the college students will not face future competition from folks whose start in life is not as pampered as their own. The poor simply can't get through the front door, since their skill set rarely justifies a "living wage." Meanwhile, those who support the "living wage' think of themselves as bastions of morality, while crushing the hopes of folks who would simply like to have an opportunity to move up in the world through their own work efforts.
Great wealth creates idle time for the wealthy. It is no accident that the wealthiest US politicians are also those who most vociferously support the agenda of ever bigger government. Why not? It will never effect them. As fewer and fewer Americans derive their living from the free market, the free market has fewer and fewer defenders. The wealthy and the new bureacrats are the power brokers in modern America. Their contempt for the American middle class and for free enterprise is on display every day in our media and in their political program. It has changed the face of America and the American workplace. Meanwhile, folks like Obama ponder why part-time workers are replacing full time workers in America. He blames that on greedy businesses. But, the reality is that Obama policies are one of the key reasons that full time workers are becoming an endangered species.
Not that everything was rosy. Financial panics and the great depression occurred during this 100 year span. Unemployment rose and fell. Markets rose and fell. The dynamics of American growth were chaotic, though powerful. But, with all of the chaos and panic, the American pie grew at an unprecedented rate, matched, in world history, only by modern China. The standard of living of the average American grew at the fastest pace ever. Unemployment levels above 6 percent were considered a sign of a 'recession.' The current 7.6 percent unemployment rate would have been seen as an extreme economic slowdown (not an economic recovery).
Since 1965, the American economy has grown at a dramatically slower pace. The American middle class has consistently struggled, except for the 20 year period that followed the inauguration of Ronald Reagan. The financial position of the average American is today untenable, if proper account is taken of the federal, state and local government debt. America is headed for financial disaster and the American middle class is sitting in the passenger seat.
In the driver's seat is the new political class. The fastest growing demographic in America is the American government or quasi-government employee. On the defensive is the American private economy. Besieged by so much regulation that most companies are not even aware of most of the regulatory burden that they face, small business is no longer the engine of American economic progress -- government is where the real growth is taking place. Government employment has been the largest source of employment growth in the US economy since 1965.
Unfortunately, government doesn't produce anything but problems for the private sector. Most government employees (including public school teachers, university professors, and bureaucrats of all stripes) view the private sector with suspicion. They see private businesses as quasi-criminal enterprises bent on polluting the environment and exploiting their employees. This culture dominates the media characterizations, not only in the daily news, but in television series and movies.
So what does all of this mean for the workplace in modern America? Private businesses realize that they are the target of the political classes and they make adjustments. They know that if they hire full time employees, their regulatory burden goes up. They know if they hire 50 employees or more, they fall into certain categories that must face significantly higher costs of complying with the modern legal environment that has been imposed upon them.
So, what happens? Small business reacts by hiring as few full time employees as possible. Part time workers are easier to fire and are not subject to Obamacare and other regulatory burdens. Many companies keep their companies deliberately smaller to avoid certain employment trigger levels that put companies under a much more severe regulatory regime. Employees that are 'protected' under current laws -- minorities, women, persons over the age of 55 -- involve far greater expense to a private business than other employees. So, fewer of them are hired. Protecting an employee with legislation simply means making that employee more expensive to the employer. Employers aren't stupid (a common assumption of the political class that supports these 'protections).'
So, today, the workplace is a very rigid bureaucratic environment. The blizzard of paperwork that employees face is nothing compared to the blizzard of paperwork that companies face. There is more concern with what might be said at the water cooler than what the work output might be. Private email communications are now perused for politically incorrect comments. Free speech doesn't apply to the workplace. In financial service companies, mistakes or errors are seen as criminal (the 'whale' episode at JP Morgan is a modern instance). Gone are the old processes of free people making free decisions in free markets. Now you have to worry about whether Barney Frank or Elizabeth Warren is looking over your shoulder.
All of this means that America is in a period of relative economic decline. The middle class will remain an endangered species as the political class bent on the destruction of the middle class continues to claim that all they care about is the middle class. Gradually, less and less of America is based upon free market economics and more and more is driven by un-elected elites, who have spent most of their lives either in politics or academia. The workplace is now a bureaucratic environment with rigid rules and little or no room for initiative and energy. The dull and the routine is more and more a description of the modern American workplace.
The workplace is also becoming more and more a land of part-timers. Businesses in America, like their European counterparts, are increasingly reluctant to hire people that, by law, they cannot fire. Workers now have protections and guarantees that mean, even if workers received no wages at all, they are still very, very costly to business. Increasingly, wages are a smaller and smaller fraction of the costs to an employer of hiring an employee. The result is a much reduced take home pay and more and more of worker income is siphoned off to worthy causes, favored by elite bureacrats in the Elizabeth Warren mold -- bureacrats with virtually no life experiences similar to that of ordinary American workers.
A hundred years ago, a young employee could take a job at a reduced wage or no wage at all as a way of entering the work force and learning a trade. Minimum wage laws, promoted by big unions, are designed to block such work force entrants and preserve a monopoly for existing workers. These laws are effective and help destroy a large part of the Horatio Alger culture that once was. The elite that make these rules don't face such problems since they, by and large, go to elite colleges and universities and find that entry into the work force doesn't involve wage and salaries anywhere near the minimum wage.
It is no accident that college students are in the forefront of the call for a "living wage." A living wage virtually guarantees that the college students will not face future competition from folks whose start in life is not as pampered as their own. The poor simply can't get through the front door, since their skill set rarely justifies a "living wage." Meanwhile, those who support the "living wage' think of themselves as bastions of morality, while crushing the hopes of folks who would simply like to have an opportunity to move up in the world through their own work efforts.
Great wealth creates idle time for the wealthy. It is no accident that the wealthiest US politicians are also those who most vociferously support the agenda of ever bigger government. Why not? It will never effect them. As fewer and fewer Americans derive their living from the free market, the free market has fewer and fewer defenders. The wealthy and the new bureacrats are the power brokers in modern America. Their contempt for the American middle class and for free enterprise is on display every day in our media and in their political program. It has changed the face of America and the American workplace. Meanwhile, folks like Obama ponder why part-time workers are replacing full time workers in America. He blames that on greedy businesses. But, the reality is that Obama policies are one of the key reasons that full time workers are becoming an endangered species.
Friday, 2 August 2013
Another "European" Jobs Number
162,000 new jobs in July. Not only is that an absurdly low number for an economy as large as the US, the job numbers for both May and June were revised downward as well. No one is much interested in hiring anyone. That's the main message of this report.
A subtext is reflected in the unemployment rate, which fell to 7.4 %. How, if a pitifully low number of jobs are created each month, is the unemployment rate falling? When people give up looking, they aren't counted anymore and more than 6 million have given up looking. Unemployment could get down to 1 percent if almost everyone just gave up and went on public assistance. Is this the Obama plan?
The White House is succeeding in getting the economy that they have wanted -- the European economy -- no growth, no opportunity for the young and ever rising debt levels that have no conceivable way of being repaid. This is the liberal dream.
A subtext is reflected in the unemployment rate, which fell to 7.4 %. How, if a pitifully low number of jobs are created each month, is the unemployment rate falling? When people give up looking, they aren't counted anymore and more than 6 million have given up looking. Unemployment could get down to 1 percent if almost everyone just gave up and went on public assistance. Is this the Obama plan?
The White House is succeeding in getting the economy that they have wanted -- the European economy -- no growth, no opportunity for the young and ever rising debt levels that have no conceivable way of being repaid. This is the liberal dream.
Interviewing 非常好歌 Superstar - Quek Shio Yee
Learned piano and violin since young, started writing songs when in high school. This is the background of new born superstar - Quek Shio Yee. After wining the BEST SONG with Lexi Chan, Finance Malaysia blog managed to grab the opportunity to know her better.
When asked about her future direction, the UCSI undergraduate yet to plan for it. Hmmm... I guess her fans out there for sure would loved to see her on stage again. Right?
Full Interview here:
- I started my music lessons since I was 4 years old. Since then I've always been musically active. It has been important to me. My parents led me into the world of music.
- On the BEST SONG you won with Lexi, what goes into your mind when she find you to sing in the first place?I was introduced to the program by my friend and auditioned. The producer gave me a few demo songs to try, and I was chosen to sing Lexi’s Mission Incomplete. I was happy to sing it because of its sad and powerful meaning. I’m very thankful for the opportunity.
- Since then, do you feel that you're a superstar now? Any changes/funny things happen in your life?I don't feel like a superstar at all. I'm not worthy of that title, and I have a lot more to learn and improve on at the same time. Sometimes I feel self-conscious and anxious in public, especially when someone recognizes me. I am still not used to it yet, but I'm always excited when people just come and say hi and tell me they like the song, I’m sure Lexi would be very happy to hear it too.
- Will you venturing into music industry after graduates?I haven't made a final decision yet, but I'll most probably take up a career that involves music. I compose music too, so I will also be taking that into consideration.
- Between Passion and Money, which one you prefer in future?Passion is more important to me, it is what I need to pursue what I love and to maintain my determination. Money is something that I need to get by with, in life, and it is a necessity after all.
With this, Finance Malaysia would like to thanks Shio Yee once again for the interview. We are confident that she will do well in the future, judging by her excellent voice and talents. All the best!
Thursday, 1 August 2013
Big Companies More Valuable Than Small Companies
So what explains the surging stock market, when the fundaments of the economy remain weak? Again, micro-factors favor large companies with access to government. This is true for banks as well as for non-financials. Smaller companies are getting hammered by higher tax rates, more mandates, and looming ObamaCare. Large businesses, with some exceptions like coal, can deal with all the bureaucratic regulatory stuff because they have so much scale. Not true for smaller businesses.
So what you're seeing is a change in the playing field. The big guys are doing relatively well and small business is in the doldrums. That is keeping with the Obama playbook of the grand corporate-government teamwork. Obama can relate to big giant companies, because they are so much like the government and, in some ways, indistinguishable. But small business is an annoyance in the Obama scheme.
The problem is: small business produces the new jobs for the economy; big business is a stagnant employer in the aggregate. So folks looking for a job are out of luck. The Obama economy is great if you're big and rich, but not so great if you're an out of work American or a small business enterprise.
So what you're seeing is a change in the playing field. The big guys are doing relatively well and small business is in the doldrums. That is keeping with the Obama playbook of the grand corporate-government teamwork. Obama can relate to big giant companies, because they are so much like the government and, in some ways, indistinguishable. But small business is an annoyance in the Obama scheme.
The problem is: small business produces the new jobs for the economy; big business is a stagnant employer in the aggregate. So folks looking for a job are out of luck. The Obama economy is great if you're big and rich, but not so great if you're an out of work American or a small business enterprise.
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