Category: economics

Little Things Mean A Lot

This essay was inspired by a man named Nassim Nicholas Taleb, author of a very famous book, “The Black Swan”.  This is not about the Natalie Portman movie, it is a very interesting book on where our financial experts went wrong leading up to the economic disasters in the last few decades. It is a bit mathematical, and certainly covers some philosophical points. It may be boring for some people, but for those who want to know how some things work, it is well worth the effort.

The term Black Swan  comes from the fact that for centuries, nobody knew there was such a thing as a black swan. All swans in the known world were white. One day, people went to Australia and lo-and-behold, what did they find but black swans. No longer were all swans assumed to be white.  The discovery of black swans was a totally unexpected event.

Nassim Nicholas Taleb took that idea, and describes the 9/11 terrorist attacks, hurricane Katrina, the US financial system disasters in the 1980’s, 1990’s, and the 2000’s as black swans. They were all big, life changing events, not predicted, and most people believe they should have been predictable if only we had connected the dots. That’s a black swan.

How do you make yourself ready for an unpredicted, really big, life-changing event? Think like a boxer. These guys work out extensively every day by doing calisthenics, getting punched on the body and the face, and by keeping to a training diet. When the big fight comes, their body is in condition, and they are ready for the big punches their opponent is certain to deal them.

Being able to handle all the little punches, adversities, and problems in everyday life is one way to be ready for the “Big One”. There are obviously many dimensions to this idea, and many are sound. Allergy shots are given everyday to inoculate the body from the really big shock of a heavy, Atlanta Georgia allergy season. Infants and toddlers should be allowed to crawl on floors, go to those pre-schools which are germ incubators, and to generally let their little bodies learn to cope with the little attacks of daily life so they can grow up prepared to handle the tough, and germ infested world.

Is there any connection with the economic world, i.e., government and other institutions?

Socialism, communism, and fascism try to insulate people from the economic travails of life, i.e., joblessness, bankruptcies, natural calamities, fraud, and greed. Instead of letting people learn to deal with joblessness and their own economic problems, the state tries to protect them. Inevitably, the government is going to screw up big time (lowering credit standards for home buyers), and a VERY BIG catastrophe will ensue. It is the big government-caused disaster that hurts people, not the little ones they have accustomed themselves to handle.

It is endemic to big government and big corporations that are “too big to fail” that really bad things will happen, on huge scales. If the government is limiting depositor risk in the banking system by bailing out big banks, all they are doing is transferring the bank’s risk of doing business to taxpayers. This should be considered criminal, it is certainly illogical, and in many cases, stupid.

We have heard all our lives, “Don’t sweat the small stuff.” I have extended it to, “Don’t let the little people get you down”. Now, the watchword is changing to, “Watch out for Big Brother”. He is here, he is malicious, and he is unrelenting. Look for more big problems, bank failures. crony-capitalism, and downright corruption in our government.

Corruption goes hand-in-hand with big government.

Shoes Are Important

When I was growing up in the poverty ridden southern United States, I only had one pair of shoes at a time. My dad had sired a relatively large family, and he couldn’t afford much. Mom did not work, but kept house, cooked and washed for the rest of us. She was also the spiritual leader in the family.

In my early teen years, I got jobs delivering newspapers and working at grocery stores, making money enough to buy my own clothes and shoes.  It was some time before I could afford more than one pair of shoes at a time, and then it was one pair for everyday, and one pair of dress shoes for church on Sundays. As I grew older, I worked full-time as a broadcast engineer at a local AM/FM/TV station while going to engineering school. By that time I was rich enough to have several pair of decent shoes.

Once a lady told me that you can tell a lot about a man just from his shoes and watch. I think she was right. The problem is that even this indicator of personal worth is going by the wayside. You see, it is getting harder and harder to tell much about a person in the last several years because of a decrease in personal dress standards. It’s a tough sell today to convince young people it is not appropriate to wear jeans and tee-shirts on every occasion. There are lots of young people who do not have a decent suit or dress to wear to weddings and funerals. Maybe these occasions are not important, anymore.

Of course, shopping for clothes and shoes is not the experience it was. In particular shopping for shoes is a disappointing affair, especially if you are looking for quality merchandise. You see, there are virtually no shoes made in the United States, anymore. Most seem to be made in China, or in South America and Eastern Europe.

I went shopping for shoes this afternoon at a local “shoe warehouse”. The mom and pop shoe store is a thing of the past. Everything is now sold in a warehouse, and the prices aren’t necessarily discounted, either. I had a twenty percent off coupon that applied to everything, and bought two pair totaling over $220, paying around $180 after discount. It sounds like a pretty good deal, and it may have been.

However, one pair was made in Brazil, and one in China. You cannot get away from brands made in China. Most of the Ecco and Sketchers brand shoes are made there, and my new pair of Johnston Murphy shoes was made in Brazil. The shoes are casual in style, and are of the slip-on variety. I don’t know how long they will last, but I keep several pair in rotation to keep them in good shape.

If you want to know what brands are made in the USA, this link is a good place to start: I have had a pair of Allen Edmonds dress shoes for almost ten years, and they still fit and look great. Since I paid almost $300 for them then, the annual cost of ownership is pretty low. Of course, I would rotate wearing them with other dress shoes.

Shoes are important for several reasons. First of all, we need decent shoes to keep our feet warm, safe, and properly supported. Then we need to consider the fit and style. Do they look good? Looks are important for people in most professions. No matter what your profession, people will look at how you are dressed and make certain judgements. That’s just the way the world works.

American manufacturers in the shoe business cannot compete in the everyday shoe market. Their markets are more higher-end. I was willing to pay $135 for a pair of Brazilian casual shoes today. Maybe I could have paid a little more for some Allen Edmonds  shoes at $175 for a similar style. The difference is significant in light of the discounts available at the shoe warehouses. For those on tighter budgets, American shoes seem to be out of reach.

Shoe manufacturing having moved overseas is not something we can reverse. Basic economics force that situation, and any labor intensive business will tend to drift to areas where labor is cheap. However, when processes are automated, we can compete. You see, there’s not much difference in price between a machine in China or the United States. The more automated manufacturing becomes, the more manufacturing will be done in the United States.

Given greater investments in automation, US manufacturing will increase, and the more manufacturing will return to this country. Don’t hold you breath. Remember, US companies have to make the investment, first, and the brain-dead current Administration doesn’t get it. Tax incentives to automate should be an absolute priority.

When the manufacturing of clothes and shoes moved from the United State to countries overseas, it was an indication that other industries would follow. By the same token, when you see clothes and shoe manufacturing moving back to the USA, you can believe that things are turning around. It will be because of automation.

It will be a long process. At any rate you can see that shoes are pretty important things from comfort to style, to economic indicator.

Time To Pay The Parasites

The unthinkable has happened. We are now, officially, a nation of parasites, takers, sponges, and welfare cheats.

The task now is to pay the parasites that have won the election. It is not pleasant, nor is it cheap. The greediest people in the country now run it. Forget freedoms and forget expecting the United States of America to be a strong country. The cowards and slackers are in control.

Starting in January, 2013, income taxes for most people will go up. The Bush tax cuts that saved the economy will be taken away. The economic damage to the economy will be incalculable.

Get ready for the nation to go off the financial cliff. Don’t expect a budget out of the White House, either. There is no plan to reduce the spending or the national debt. Correcting the financial shape of the nation is not in Barack Obama’s plans. He plans on more of the same tax and spend agenda.

Why does he do this? He is a big thinker pushing a small-minded agenda. The guy is a Marxist. Period. Socialism is the cornerstone of his vision for our nation. We may never dig our way out of this hole.

The stock market crashed, today, down a full two percent. Investors do not respect Obama’s ideas or policies. The stock market’s outlook for the nation’s economy is heralding a disaster.

Higher gasoline prices.

Higher food prices.

Higher taxes.

Higher health care prices.

Fewer jobs for qualified people.

Fewer companies being formed.

Buy stock in health insurance companies, food companies, and oil companies. All the rising prices mean higher profits for the sectors Obama was supposed to heal.

By all means, go on a diet. Get used to eating less. You won’t be able to afford much food, anymore.

Welcome to Obama’s World.


Has Obama Lied About Romney?

Barack Obama likes to start his debate segments with the words, “What the governor just said is not true”. If I were Governor Romney, I would call the little snot out, and put him under immediate trial. I would not let the jerk call me a liar and get away with it.

Romney has gone to great lengths to keep his cool in the presence of the President. It goes to his credit that he is paying some deference to the office. Well, it is time the gloves came off and somebody beat our worthless President into a verbal pulp.

Obama has profaned his office with his lies and manipulations of what actually happened in Libya in the murders of our Ambassador and his guards, all American citizens. A President has no higher calling than to protect citizens, where ever they are. Where was President Obama when the embassy was refused the security assets it needed to protect American diplomatic personnel and citizens? All we get are deflections, misleading statements, and downright lies.

Obama says Romney lied about tax cuts. The proof of the pudding is that Romney has not personally made any statement about the level of any taxes in his administration, and therefore the Obama people have no proof in terms of film clips, written accounts, or any other material. Obama just lies about this stuff, and the press lets him do it.

Obama has also lied about his jobs performance. He claims over 4 million jobs have been created in his administration, but that is what we scientists call cherry picking, and humorists call, “lying through his teeth”. Those jobs would have been generated, anyway, but the fact remains that more people are out of work now, than when Obama took office. Obama has created zero net new jobs.

The recession bottomed out about four months after Obama took office. That means that the recovery started at that moment. The problem has been that Obama’s policies from “Cash for Clunkers”, to his Trillion Dollar Stimulus which created almost no jobs at all, and his unwise health care program, Obama-Care, have halted the recovery that should have been after the recession.

Obama continues to lie about pretty much everything. He has to lie. He has accomplished nothing in his almost four years in office, and his policies are a serious hindrance to economic recovery. It is time Mitt Romney hammered that message home, and call Obama the real liar he is.

Florida Turns Education On Its Racial Head

The Florida State Board of Education thinks they are taking the easy way out with their latest set of goals for students. They have arrived at a race based set of goals that sound sort-of racist. Or are they?

This is it in a nutshell:

By the year 2018 the goals for the state of Florida are for students in the following racial groups to achieve as follows. There are other goals, but these are the salient ones related to race:

In percent at or above grade level:

Asian students: 90%  reading:/92% in math.

White students: 88% reading/86% math. Current reading -> 69% 

Hispanic students: 81%reading/80% math. Current reading -> 53%

Black students: 74% reading/74% math. Current reading -> 38%

It is pretty obvious that nobody thinks the Asian community is in trouble. From what I have seen of these hard-working people, they make fine American citizens, assume individual responsibility, and become leaders in our communities.

The current figures made available in the article let us know the degree to which the students in the Florida public schools are getting the shaft. Those numbers are awful for every group for which I have data.

The problem is not a lack of effort or money to educate those kids. The problem is not the teachers, or the Florida State Board of Education. The problem is the culture of the kids and their families. The kids are capable of learning, but get no help at home, or worse, their cultures, i.e., gangsta & prison wannabes, are anti-education. Sometimes it is not cool to be educated if you are in certain sub-cultures.

As a matter of fact, the Florida educators have set goals that may be impossible to achieve with their five-year plan. Given the state of things, today, I would say that there’s not much hope for the Florida public schools simply because of the education-scoffers and anti-education attitude prevalent in many cultural sub-groups.

Now we know why so many people in Florida vote Democratic. They are not educated enough to understand the real issues, but they do understand liberal and socialistic handouts.

Hat tip to Instapundit & Small Dead Animals

Mellow Out, Lay Back, Remember The Good Times

Yep. Remember the good times because you won’t see anymore for a long time. Barack Obama has guaranteed that we will be less prosperous, less employed, less healthy, and less secure than at any time in the last century. Barack Obama is the Force of Ruin.

So here we are, standing at a crossroads in American history with more people getting money from the Federal Government than those who pay into the system.  We are crossing the Great Divide. We have a choice of becoming a nation of welfare sponges like the United Kingdom, or remaining the towering vision of freedom and wealth that our founding fathers envisioned.

Because of Barack Obama, our future is in doubt.

Obama can be called Hooverian, or Carteresque. Like Herbert Hoover, Barack Obama inherited a bad situation, mostly from his party’s policies. Whatever actions he has taken since have been wrong. He was dead wrong, and we are the ones strapped to the guillotine to pay for his sins.

Economically, his stimulus program produced almost no measurable jobs. A little investigation tells you why. Huge sums of money were used to clean up debt from various city balance sheets, union controlled transit companies, and just plain ignorant state and local government projects. Nobody will remember, but I said a long time ago that there was no such thing as “shovel ready jobs”. The shovels were for the mountains of money being thrown about to the politically favored.

As an example, the City of Philadelphia received one billion dollars in stimulus funds. Of that, most of the money was used to pay down the debt of local transit companies (SEPTA and City of Philadelphia Transit). Of course, this didn’t produce one job, but it did keep those inefficient companies from going bankrupt. Instead, we paid off over five hundred billion dollars in debt, and kept those over paid union workers on the job. How about that for a cool payoff?

The same story was repeated over and over across the nation. Corrupt city officials got a big payday. That is Democrat politics for you. It is called, “screw you, citizens”.

Then we have the Obama care debacle. Here we have a plan, and subsequent set of laws, that gives every citizen healthcare, whether they want it or not. Every rating agency comes up with the following analysis. The program will deliver healthcare to more people, who will pay significantly more for that care, get less care than before, and at a lower quality. This is just more of Obamanomics, “screw you , citizens”.

With all this economic disruption going on, you would think there was some planning involved.  Well, the first part of the Democrat plan is to NOT HAVE A BUDGET! If  there were a budget the Democrats would have to explain why they cannot stick to the plan.

How about Quantitative Easing by the Federal Reserve? Here is another Obama “watch the pea under the shell” game. All this means that Obama’s Administration will buy bad mortgages and other non-performing assets from the books of the big banks. Doing this should make more money available to loan. Sorry, I don’t think it will happen to much extent.

I hate to tell you this, but the real interest rates for banks are at zero, now. Banks do not have to pay for the money they borrow. There is lots of money to loan. The problem is that the economy sucks. It’s jobs, stupid!

Guess who will wind up paying off those mortgages?

Screw you, citizens.

The Infrastructure Myth

MARTA rail system map.
MARTA – The rail system to nowhere. Blue lines are highways and freeways.

Infrastructure, infrastructure
Where are you?
Pave a road, fix a bridge
Dig a hole, too

The Man says it’s all the same
One job like another
But they won’t generate money
Like tax-cutting all over

OK. It’s bad poetry, but I am trying to make a point. Let’s see if I can do this another way.

  • All infrastructure spending does not give the same economic results. Fixing old infrastructure does not generate new jobs or other economic activity. All you are doing with most of the infrastructure  projects is fixing something that should have been fixed long ago.
  • New infrastructure spending may or may not generate jobs or additional economic activity. Just because somebody in government thinks a new road or bridge is needed, the project will probably be more political payoff than business oriented like most of the recent federal stimulus package.
  • Just because you are spending lots of money buying concrete, asphalt, and foreign steel does not mean that you are creating permanent jobs. The recent stimulus spending on infrastructure funneled money to construction unions, and unionized companies.

Someone on Fox News the other day relayed some words from Massachusetts Senatorial Candidate and claimed Native American tribe member, Elizabeth Warren. Our American Indian Harvard Professor wants us to be  more like China, who is spending more on infrastructure as a percentage of GDP than the US.

Here is another Harvard professor that doesn’t understand basic economics. What a surprise. The one thing this brilliant college professor didn’t mention is that China is perhaps a century behind on building roads, bridges, power plants, and water control infrastructure.

The US infrastructure is mature, and just adding more does not guarantee more business activity. Let the electorate decide where it is needed. A government is usually not very good at the job.

As an example, a recent series of tax initiatives for transportation infrastructure projects for different areas in Georgia were soundly defeated yesterday. The state was divided into T-SPLOST regions with the ten county Atlanta Metro Area being Region 3. A look at the project list is interesting.

Hundreds of millions of dollars in MARTA projects were proposed. Approximately $354,000,000 was proposed in rail and electric system refurbishing. This sounds like maintenance to me. Residents of Fulton County and Dekalb County have been paying a one cent sales tax for MARTA since the early 1970’s and this work should have been done under the current funding.

Fifty percent of the one cent tax revenue was supposed to go to capital projects, of which few have happened. Instead, MARTA operates at a  perpetual deficit. Many of the more than 4,000 employees are represented by the Amalgamated Transportation Union.

The only people for the initiative were people currently living in the city of Atlanta. There were all sorts of bike paths and niceties for those residents. The NAACP called it racist because some white people would benefit. Suburbanites voted against it because there was little to help with their traffic. Rural residents voted against it because they don’t care about the city of Atlanta, anyway.

The T-SPLOST proposal would have added an additional one cent sales tax, causing Fulton and Dekalb residents to pay a two percent transportation sales tax. Most people thought this was BS. About 63 percent of the voters statewide opposed the initiatives, and that should be a strong message that we are on to their bankrupting management of the public’s largess.

So, the benefits of infrastructure spending are fleeting in the USA, especially given the bleak performance by the federal, state, and local governments. It is obvious that the best way to stimulate the economy is an all around tax cut to all taxpayers.