June 23, 2011
Of course, I’ve got horses in this race since I’m a McKinsey alum …
When dufass Henry Waxman started attacking McKinsey for lack of credentials and poor methodology, I just had to laugh.
* * * * *
From the WSJ: Shutting Up McKinsey
The White House routinely tries to intimidate its health-care critics, but the campaign against McKinsey & Co. is something else.
The management consultants attempted to find out how U.S. business will respond to ObamaCare,
Democrats don’t like the results, and so McKinsey must pay with its reputation.
The firm’s sin was to canvass some 1,300 companies and report that nearly a third will “definitely” or “probably” stop offering insurance to employees after 2014, dumping them instead into ObamaCare’s subsidized exchanges.
Democrats immediately blasted the results, attacked McKinsey’s integrity and demanded that it release its methodology and full responses.
So this week McKinsey opened its books, and what do you know, the survey was rigorous.
Respondents were a representative cross-section of businesses of many sizes and across industries and regions, and the questions were impartial.
* * * * *
The White House shills declared that the study was not a “predictive economic analysis.”
For truth, they point to the ever-dutiful Congressional Budget Office which – after the CBO got an all expenses paid trip to meet with Obama in the oval office — thinks the law will have little effect on employer coverage.
* * * * *
Viva McKinsey.
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June 22, 2011
One thing college does do is to keep 25 million students off the unemployment rolls.
That’s according to Bill Gross, co-CEO of PIMCO Bond Funds, on his most recent newsletter: School Daze, School Daze Good Old Golden Rule Days
Gross has jumped on the’ college is worthless’ bandwagon.
He says:
A mind is a precious thing to waste, so why are millions of America’s students wasting theirs by going to college?
- All of us who have been there know an undergraduate education is primarily a four year vacation interrupted by periodic bouts of cramming or Google plagiarizing,
- It used to serve a purpose. It weeded out underachievers and proved at a minimum that you could score on an SAT test. Now, it proves that your parents had enough money to hire SAT tutors to increase your score by 500 points.
Now, however, a growing number of skeptics wonder whether it’s worth the time or the cost.
College now is stultifying and outdated – overpriced and mismanaged – with very little value created.
Fact: College tuition is now 4 times as expensive relative to other goods and services as it was in 1985.
Fact: The average college graduate now leaves school with $24,000 of debt and total student loans now exceed this nation’s credit card debt at $1.0 trillion.
Subjective explanation: Universities are run for the benefit of the adult establishment, both politically and financially, not students.
Conclusion: Students, however, can no longer assume that a four year degree will be the golden ticket to a good job in a global economy that cares little for their social networking skills and more about what their labor is worth on the global marketplace. Our penchant for focusing on liberal arts and high tech value-added jobs should be modified and redirected.
Solution: Focus on retraining existing unemployed workers and redirecting our future students. Instead of liberal arts, focus on technical education, technical institutes and polytechnics as well as apprenticeship programs.
Allow people with good technical skills but limited college education to earn a decent living.
Read the full newsletter
* * * * *
Ken’s Take: I’ve been doing mucho reading on the subject this summer. None of it is very encouraging, The education system is a huge national issue. More to come.
Your thoughts?
* * * * *
Thanks to Tags for feeding this lead
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June 22, 2011
The last time that gas prices soared, hybrid cars were selling above their sticker prices.
Not so much this time.
According to USA Today, hybrid sales fell to only 1.6% of total auto sales – down from their 3.6% peak in 2009.
Why?
“Even with the fuel savings, it doesn’t make sense to buy a hybrid” for many buyers.”
Sure, gas prices hit $4, creating “economic value” versus conventional gas-engine cars … but the fuel savings has narrowed with the introduction of compacts that get 40 mpg and sell for considerably less than hybrids.
Sales of high-gas-mileage, conventional compacts such as the Hyundai Elantra, Ford Focus and Chevrolet Cruze are hot.
The new conventionally powered cars use various strategies to boost gas mileage to near hybrid levels — without the batteries and electric motors that can add $6,000 on average to a vehicle’s cost.
* * * * *
Volt update: Chevy sold 481 Volts in May … pushing it’s total since January up to a whopping 2,184.
* * * * *
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June 21, 2011
Now that the “Bush’s fault” excuse is getting a bit dated, liberal economists are starting to push alternative alibis.
For example, journalist-economist Robert Sameulson says there’s a Great Jobs Mismatch causing “structural unemployment”:
In any dynamic economy, constant changes in technologies, products and companies naturally create gaps between skills available and skills wanted.
A survey for the National Association of Manufacturers … found that companies still faced shortages … for engineers and scientists and among aerospace, defense and biotechnology firms.
For skilled blue-collar jobs, high schools have de-emphasized vocational training, community colleges often aren’t well-connected to local job markets, and union apprenticeship programs have withered
“The number one cause for difficulty in filling positions (cited by 45 percent of companies) is lack of sufficient experience.” So it’s a Catch-22: You can’t get hired unless you have experience; but you can’t get experience unless you’re hired.
Americans are less willing to move to take jobs. The McKinsey study reports that, in the 1950s, one in five Americans moved every year; now it’s one in 10. “Work is more mobile than workers,”
* * * * *
Ken Asks:
If it’s a matter of workers being underskilled, why are there “now hiring” signs in box retailers and fast-food joints?
Why aren’t there more pick-up trucks in the parking lot of Anne Arundel Community College – which offers a deep catalog of vocational courses?
Why aren’t construction sites operated 7 X 24 – using multiple crews working around the clock? Would get jobs done fater and emplyee more people …
Why won’t people fish where the fish are – e.g. move from, say, Detroit to Texas?
Does anybody really believe that no American citizens would take the jobs currently occupied by illegals?
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Posted in Employment - Jobs | 2 Comments »
June 21, 2011
Recent studies have projected that many employers will drop their health insurance plans when ObamaCare goes live.
Why?
Simple economics.
According to the Kaiser Family Foundation’—reported in the WSJ –, the annual premium for an average policy last year was $5,049 for a single worker, with the company picking up roughly $4,150 (83%) and the employee the rest.
For a family of four, the total cost was $13,770, with the company picking up $9,773 (71%).
ObamaCare, businesses can stop providing health-care coverage, paying a $2,000 per-worker fine instead.
For small businesses, the trade-off is even more attractive: They are given a pass on the first 50 workers.
So what?
The employees formerly covered by employer-subsidized plans will swell. Increasing the costs of ObamaCare.
That is, until the Feds raise the fine (tax?) on employers to cover the shortfall.
Bad estimating or clever foxes?
Think about it.
An induced move into a 1-payer system.
Pretty clever. Especially if funded by a headcount tax (oops, fine) on employers.
Hmmm.
Is that likely to create jobs?
I’m betting the under.
* * * * *
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June 20, 2011
According to Business Week: Tyler Cowen is America’s Hottest Economist.
* * * * *
Cowen says that most economists don’t read, at least not widely.
Robert Frank, who teaches economics at Cornell University, agrees.
He says the ascent to tenure leads young economists toward math and small questions.
Universities hold on to only the leading figures in each academic sub-specialty.
“You want to climb to the top of a hill,” says Frank, “and it’s a lot easier to climb to the top of a small hill than a big broad one.”
There’s an idea among academic economists that the privilege of writing a narrative argument must be earned through the hard work of modeling and econometrics.
“There is a view that what can’t be disproven isn’t science.”
* * * * *
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June 20, 2011
According to Gallup’s most recent polling, a “generic” GOP candidate would beat President Obama by 5 points – 44% to 39%.
Ken’s Take: The GOP debate strategy – pick on Obama’s policies rather than each other – might just take a toll on the President.
If the candidates stay committed to somebody beating Obama rather than “me” winning, the President will be facing a 18 months of substantial drip-drip-drip.
But, I doubt the candidates will stay on message. Eventually, some of the candidates will revert to an “elect me” strategy.
* * * * *
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June 17, 2011
Recent bad economic news has been reported as “surprising” and “unexpected” by the mainstream media.
That causes two problems:
- Since the news is bad, it understandably breeds low consumer confidence.
- More nuanced, since the news is “unexpected”, it breeds low confidence in the folks who are in charge: “do they know what they’re doing?”
While politicos need to maintain an optimistic façade, how much damage has been done by “we’ll hold unemployment under 8%” and “this is recovery summer”?
* * * * *
Excerpted from RDP: Hunkered-Down America by Robert Samuelson
Economists suffer from what one of them (Ricardo Caballero of the Massachusetts Institute of Technology) calls “the pretense-of-knowledge syndrome.”
They act as if they understand more than they do and presume that their policies, whether of the left or right, have benefits more predictable than they actually are.
For example, economic models, based on past relationships and assumptions, don’t capture shifts, which embody new assumptions and beliefs.
So modern economics has been oversold, and the public is now disbelieving.
The disillusion feeds stubbornly low confidence.
Because psychology is so important, the good news is that if the economy surprises on the upside, the boost to confidence could accelerate the recovery.
[The bad news is that if the economy surprises on the downside, the hit to confidence could slow the recovery.]
* * * * *
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June 17, 2011
According to Business Week:
Tyler Cowen is America’s Hottest Economist.
* * * * *
Cowen’s menu searching advice:
Order the strangest thing on the menu.
Chances are the chef put the most work into it.
And, Cowen says the best ethnic food is prepared at strip malls.
Caveat diner.
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June 17, 2011
Recent bad economic news has been reported as “surprising” and “unexpected” by the mainstream media.
That causes two problems:
- Since the news is bad, it understandably breeds low consumer confidence.
- More nuanced, since the news is “unexpected”, it breeds low confidence in the folks who are in charge: “do they know what they’re doing?”
While politicos need to maintain an optimistic façade, how much damage has been done by “we’ll hold unemployment under 8%” and “this is recovery summer”?
* * * * *
Excerpted from RDP: Hunkered-Down America by Robert Samuelson
Economists suffer from what one of them (Ricardo Caballero of the Massachusetts Institute of Technology) calls “the pretense-of-knowledge syndrome.”
They act as if they understand more than they do and presume that their policies, whether of the left or right, have benefits more predictable than they actually are.
For example, economic models, based on past relationships and assumptions, don’t capture shifts, which embody new assumptions and beliefs.
So modern economics has been oversold, and the public is now disbelieving.
The disillusion feeds stubbornly low confidence.
Because psychology is so important, the good news is that if the economy surprises on the upside, the boost to confidence could accelerate the recovery.
[The bad news is that if the economy surprises on the downside, the hit to confidence could slow the recovery.]
* * * * *
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June 16, 2011
According to Business Week:
Tyler Cowen is America’s Hottest Economist.
The George Mason University professor has written a bestseller, The Great Stagnation, keeps an influential blog, and reads way too many books.
Cowen’s first rule of reading: You need not finish.
He takes up books with great hope and no mercy, and when he is done—sometimes after five minutes—he abandons them in public, an act he calls a “liberation.”
* * * * *
His best seller, The Great Stagnation, runs through three centuries’ worth of what Cowen calls the “low-hanging fruit” of economic growth: free land, technological breakthroughs, and smart kids waiting to be educated. For developed economies.
He argues, none of these remains to be plucked.
Yet America has built political and social institutions on the assumption of endless growth.
Cowen thinks that now that America has used up the frontier, educated all of the farm kids, and built a couple of cars for every family, we might be done growing for awhile.
* * * * *
Cowen is still best known for his blog: Marginal Revolution.
It’s the second-most popular blog on economics.
Greg Mankiw’s eponymous blog at Harvard just edged it out; both picked up far more votes than Paul Krugman’s New York Times blog Conscience of a Liberal, which ranked third, or Freakonomics, at fifth.
* * * * *
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June 16, 2011
… you’re more likely than average to have lost your job in the past year.
Last week’s CNN-Opinion Research Poll, asked folks if they lost their job in the past 12 months.
Overall,18% of the sample said they lost their job in the past 12 months.
Some interesting numbers from the ‘internals’:
- 21% of men lost their jobs, 15% of women
- 26% of non-whites lost their jobs, 14% of whites
- 21% who didn’t attend college lost their jobs, 16% who attended college
- 25% of self-identified Liberals lost their jobs, 17% of Conservatives, 14% of Moderates
- 25% of folks living in the West lost their jobs, 19% of Southerners, 14% of Northeasters, 11% of Midwesterners
Draw your own conclusions …
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June 15, 2011
Can you imagine the collective angst of the mainstream media this past week?
First, after trying to ignore Weinergate, the story became too wild and salacious to ignore, So, the MSM had no choice but to air the lib loudmouth’s dirty linen.
Ouch.
Then, the MSM had to send reps to Juneau, Alaska to pick-up hard copies of 24,000 Palin emails.
Surely there has to be a mega-gotcha in the stack.
Nope.
Double ouch.
Then, a gaggle of GOP presidential hopefuls take the debate stage in New Hampshire for a circular firing squad.
But, wait ,,, instead of attacking each other, they pivot and aim at President Obama’s record on foreign affairs and jobs.
Come on GOP … fight fair.
Then, the NLRB hauls Boeing into court to try to stop the company from opening a manufacturing plant in South Carolina — a right-to-work state.
Now, how to convince the lemmings that the Administration is all for free enterprise and job creation?
What an awful week for news …
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June 15, 2011
Punch line: The Wisc Supreme Court ruled that Gov. Walker can implement rules diminishing public employee unions.
Now, unions will have to collect dues from members themselves if they want to buy politicos with campaign contributions.
And, public employees will have to contribute towards their health care insurance and pensions.
Score one for rationality.
* * * * *
Reported in the Milwaukee Journal Sentinel:
Acting with unusual speed, the Wisconsin state Supreme Court reinstated Gov. Scott Walker’s plan to all but end collective bargaining for tens of thousands of public workers.
In its decision, the state’s high court concluded that “choices about what laws represent wise public policy for the state of Wisconsin are not within the constitutional purview of the courts.”
In its ruling, the Supreme Court said it took up the case because the lower court had “usurped the legislative power which the Wisconsin Constitution grants exclusively to the Legislature.”
So what?
Biggest change ids that union dues won’t be automatically deducted from all public employees paychecks – the unions will have to collect the dues – meaning, that some (many ?) employees will tell the unions to pound sand.
If the unions can’t bank on the dues, then they can’t contribute as much to Democratic campaigns.
Oh well …
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June 14, 2011
No, not the HomaFiles (but we’re trying) … It’s the Khan Academy.
Punch line: This is worth checking out for 2 reasons:
- Innovative educational “delivery system”
- Lots of 10-minute subject modules that are relevant to MBAs – e.g. finance, econ, stats.
Links follow the excerpt …
* * * * *
Excerpted from Business Week:
Salman Khan: The Messiah of Math
Salman Khan has become a quasi-religious figure in a country desperate for an educational Moses.
His free website, dubbed the Khan Academy, may well be the most popular educational site in the world.
“If you’re teaching math in this country right now, then there’s pretty much no way you haven’t heard of Salman Khan.”
Kahn started by taking math material — both basic and advanced — and broking it down into little 12-minute lectures – created on a Wacom tablet using an electronic pen — feature blackboard-style diagrams and explanatory voice-overs .
Khan groups the concepts into “modules” … all linked to a “knowledge map” that shows how the modules relate to one another, so a math student can pick a path from addition to derivatives.
Some teachers are using the Kahn videos to supplement the classroom..
Teachers using the Khan Academy flip the traditional curriculum; students listen to the lectures at home, on their own time, and work through assignments in class, So, teachers are able to address student issues individually.
From its math roots, Kahn Academy has branched out to a broad array of subject matter, including statistics, finance, economics, and the sciences.
* * * * *
Links to explore the Kahn Academy:
Kahn Academy: Home Page
Kahn Academy Topics Index
Lecture Example: Present Value
Lecture Example Algebra: Worked Problems
* * * * *
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June 14, 2011
Punchline: Obama’s solicitor general, defending the national health care law, told a federal appeals court that Americans who didn’t like the individual mandate could always avoid it by choosing to earn less money.
“If you don’t like the mandate, just earn less money>”
Apparently, there’s a provision in the health care law that allows people to avoid the mandate: the minimum coverage provision only kicks in after people have earned a minimum amount of income.
… and, people can choose to earn less and, thus, avoid the mandate.
It’s a matter of choice.
The judge’s response: “That wasn’t in a single speech given in Congress about this…the idea that the solution if you don’t like it is make a little less money.”
Ken’s Take: You just can’t make this stuff up …
* * * * *
Source: Washington Examiner
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June 13, 2011
According to the WSJ:
U.S. cellphone users sent and received more than 1 trillion texts in the second half of 2010 … but, the rate of growth has subsided.
Text traffic will come under more pressure in the months ahead.
Why?
More folks are messaging thru Facebook and IPad owners can use WiFi connections to bypass carriers and send messages over the Internet.
”It’s not cool anymore to SMS.”
Dutch telecommunications company Royal KPN … reported its youth-oriented brand, Hi, saw an 8% decline in outgoing SMS or text messages per customer in the first three months of this year compared with the first quarter of 2010.
So what?
For carriers such as Verizon, the texting business has low costs and high margins.
A dollar of texting revenue produces at least 80 cents of profit compared with about 35 cents of profit from $1 in wireless data or voice services
* * * * *
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June 13, 2011
Punch line: Obama inherited a bad situation and made it worse.
* * * * *
Excerpted from Forbes:
President Obama’s Economic Recovery That Isn’t
At the end of this month, President Obama’s economic recovery will be two years old.
In terms of employment the Obama recovery has been catastrophic
- Total employment (BLS household survey) will be 0.3 million lower than it was at the start of Obama’s “recovery”, two years earlier.
- The unemployment rate will have fallen from 9.5% to 9.1%, but only because 3.6 million people became discouraged and stopped looking for work.
- If the rate of labor force participation in June 2011 were the same as it was in June 2009 (65.7%), the reported unemployment rate would be 11.2% rather than 9.1%.
While employment the Obama recovery has been catastrophic, economic growth has been merely disastrous.
- Real annual GDP growth during the first two years of the Obama recovery should average 2.69% … about half of what is normal for the start of an economic recovery.
- During the first two years of the Reagan recovery, the dollar rose by 12% against other major currencies and by 34% in terms of gold.
* * * * *
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June 10, 2011
I was cross-haired by two relatively hot political issues last week: voter IDs and proof of legal citizenship.
I was suspected of crossing a border to illegally access government-provided services.
Yes, your mild mannered (usually) man of the classroom … stood up on suspicion of unlawful conduct.
An intimidating officer of the state demanded to see an ID and proof of citizenship.
Really !
OK, it wasn’t the U.S.- Mexico border … it was the Maryland-Virginia border.
The services that I was allegedly attempting to use illegally: use of the “Anne Arundel County landfill and recycling center” (a.k.a. the local dump).
That’s right. In order to throw a mattress and springs into the landfill dumpster, I had to show my driver’s license and to produce proof of Anne Arundel County, Maryland residency. Fortunately, I may be the only person in Maryland driving around with paid real estate tax bills in my glove compartment.
Think about it.
Maryland is a state that – for example – reportedly looks the other way when it comes to admitting illegal immigrants into public schools and allows them to pay in-state tuitions at colleges. No harm, no foul.
But, the line gets drawn in the sand at the local dump.
I didn’t really mind showing my ID docs, but the situation certainly did make me scratch my head …
* * * * *
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June 10, 2011
Excerpted from the WSJ:
Big U.S. employers, worried about replacing retiring baby boomers, are … growing bolder about telling educators how to run their business.
Several initiatives have focused on manufacturing and engineering, fields where technical know-how and math and science skills are needed and where companies worry about recruiting new talent.
The National Association of Manufacturers is leading a drive, partly funded by the Bill & Melinda Gates Foundation, to establish standardized curricula at community colleges across the U.S. with the goal of preparing students to qualify for certification in industrial skills ranging from welding to cutting metal and plastics.
The association … said bright students should be encouraged to consider alternatives that lead directly to jobs.
“We need to move aggressively to competency-based education” based on mastery of skills … rather than on an accumulation of credit hours.
Much of the emphasis is on community colleges and vocational schools because they are affordable and can quickly turn out job candidates.
Employers increasingly are asking community colleges to create custom training programs for specific jobs.
* * * * *
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June 10, 2011
A majority of them disapprove of the job President Obama is doing.
Based on the most recent CNN-Opinion Research Poll, 48% approve of Obama’s job performance.
Some interesting numbers from the ‘internals’:
- 51% of women approve, 51% of men disapprove
- 61% of non-whites approve, 63% of whites disapprove
- 52% of folks making more than $50K approve, 50% making less than $50k disapprove
- 82% of Democrats approve, 83% of Republicans disapprove
- 57% of urbanitess approve, 52% of suburbanitess and rurals disapprove
In marketing, it’s called segmented appeal.
Draw your own conclusions …
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June 9, 2011
Everybody knows that college tuition is going thru the roof … pushing college out of reach for many and burdening most of the rest with near-lifelong debt.
USA Today reported recent studies by Rutgers University, Northeastern University professor Andrew Sum and Pew Research found that:
- The median student loan for graduates from 2006 through 2010 is $20,000
- Only about three-quarters of college grads younger than 25 were employed …
- … with over a quarter of those employed working jobs that didn’t require a college degree.
- 57% of Americans have decided that the value-to-cost ratio for college is lousy.
Ken’s Take: Anybody see a parallel between the Fed gov’t and higher education? High prices, high debt, low value-to-cost.
Just like peas in a pod …
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June 9, 2011
In the 1960s and 1970s, consumer debt as a percentage of after-tax income averaged a bit over 60%.
Starting in the Clinton years – and gaining steam through the Bush years – the ratio doubled – as consumers took out easy money mortgages and credit cards.
The 2009 financial scare prompted a wave of debt-reduction, but it looks like the austerity wave is becoming passé.
* * * * *
According to the WSJ:
The economy is likely to be stuck with at best subpar growth until the private sector’s deleveraging, or debt-shedding, process is complete.
Households have made some progress lately, but this still looks to be in its early stages.
While debt as a percentage of after-tax income has fallen from its peak, it remains about 120% — well above the 89% it averaged in the 1990s.
And, there are signs that consumers are even starting to borrow again:
- Consumer credit outstanding rose by $5.5 billion in April after a $6 billion increase in March.
- Student-loan debt is at record-high levels
- There has been an uptick in credit-card borrowing by cash-strapped consumers.
P.S. In Japan, deleveraging took the better part of 15 years.
![[AOT]](https://i0.wp.com/si.wsj.net/public/resources/images/MI-BJ849_AOT_NS_20110606183004.jpg)
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June 9, 2011
That’s the question that JP Morgan CEO posed – in public – to Fed chair Bernanke.
Bernanke’s answer: “No”.
* * * * *
It’s widely reported that:
Dimon rattled off a couple of the more than 300 new regs that Dodd-Frank will impose on banks.
Then, he popped the question, adding
“I have a great fear that somebody will write a book that the things we did in the crisis will slow down the recovery”.
Bernanke quipped that he thought the Fed and Administration were doing pretty good, then bluntly answered the question: “No”.
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June 8, 2011
According to that bastion of right-wing thinking – the Washington Post – President Obama’s Bin Laden bounce is gone, his approval is ‘upside down’, and 6 of 10 people think things are on the wrong track …
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June 8, 2011
Punch line: ObamaCare will lead to a dramatic decline in employer-provided health insurance—with as many as 78 million Americans forced to find other sources of coverage.
* * * * *
Currently, 156 million non-elderly Americans get their coverage at work.
Before ObamaCare passed, the CBO estimated that only 9 million to 10 million people, or about 7% of employees who currently get health insurance at work, would switch to government-subsidized insurance.
A new study by McKinsey – reported in the WSJ — suggests that ObamaCare will lead to a “radical restructuring” of job-based health coverage with as many as 78 million Americans could lose employer health coverage.
The McKinsey study, “How US health care reform will affect employee benefits,” predicts that employers will either drop coverage altogether, offer defined contributions for insurance, or offer coverage only to certain employees.
Up to 50% of employers say they will definitely or probably pursue alternatives to their current health-insurance plan when ObamaCare takes effect in 2014.
And, “something in the range of 80 million to 100 million individuals are going to change coverage categories in the two years” after the insurance mandates take effect in 2014.
* * * * *
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Posted in Health Care / Medical Insurance, ObamaCare | 1 Comment »
June 7, 2011
If Floridians want welfare, they’ve got to ditch drug use.
Florida Gov. Rick Scott signed a bill last week that would require welfare recipients to take a mandatory drug test.
Applicants for the federal Temporary Assistance for Needy Families program who test positive for illicit substances won’t be eligible for the funds for a year, or until they undergo treatment.
Those who fail a second time would be banned from receiving the funds for three years.
The logic: It will make sure taxpayers aren’t subsidizing drug use.
The legislation instantly came under a barrage of criticism from the American Civil Liberties Union and several of the Sunshine State’s Democrats.
Their shout-outs: “unfair”, “invasion of privacy, “unconstitutional”.
* * * * *
Great debate on the topic on one of the news talk shows:
Person A: We don’t want to subsidize drug use.
Person B: You got no right to tell me how to spend my money.
Person A; It isn’t YOUR money.
Person B: Yes it is !
Person A: Many employers require drug-testing
Person B: Welfare ain’t no job.
That debate pretty well sums up the issue …
Source article: Daily News
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Posted in Drug testing, Welfare | 2 Comments »
June 7, 2011
According to Politico …
Austan Goolsbee, chairman of the White House Council of Economic Advisers – and one of the crafters of the administration’s Trillion Dollar-Stimulus plan — plans to resign this summer and return to teaching economics at the University of Chicago.
This past weekend, Goolsbee was pitching the administration’s “bump in the road” response to May’s dismal jobs report.
Sommers, gone.
Romer, gone
Bernstein, gone.
Goolsbee, gone.
Obama says: His economic program saved us from catastrophe. and is working just fine, thank you.
Yeah, right.
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June 6, 2011
Two of Friday’s press reports put Pres. Obama on the horns of a dilemma.
On one hand, First Lady Obama was visible stumping for “My Plate” … the iconic replacement for the “Food Pyramid” …. part of her program to put a dent in childhood obesity and get kids eating healthier.
Obviously, there’s no room for McDonald’s on the First Lady’s plate.
On the other hand, a measly 54,000 jobs were created in May … and, it turns out that half of the jobs came from a single employer — McDonald’s.
McDonald’s ran a big hiring day on April 19 — after the Labor Department’s April survey for the payrolls report was conducted. Reportedly, McDonald’s swelled its workforce by more than 30,000 … more than half of May’s total gain.
So, while Michelle is trying to shut McDonald’s down, Barack is counting on the company for recovery summer deux.
What a dilemma …
* * * * *
P.S. You may remember that McDonald’s got an ObamaCare waiver.
Coincidence?
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June 3, 2011
The dismal jobs picture isn’t really very mysterious: CEOs are dismayed by Team Obama’s economic, regulatory and pro-union policies and won’t do any serious hiring while Obama is in power.
For the record, the Homa Files pitched this case almost 2 years ago in a post titled: “Why private sector jobs won’t be coming back any time soon … Hint: it’s called passive aggressive resistance” … the punch lines:
Given the Administration’s anti-corporate rhetoric, actions, and proposed game-changing rules, I doubt that many CEOs will be taking on added costs and risks to boost the administration.
More likely, they will let unemployment continue to creep along, and will slow roll the process of rehiring.
Corporate chieftains will sit back and watch the President squirm and spin his “4 million jobs – saved or created”. As Rev. Wright would say “the chickens will have come home to roost”. Passively aggressive resistance at its very best.
Unfortunately, that means we’ll be seeing high unemployment for some time – at least through the 2012 Presidential elections.
The full original post is worth another read !
* * * * *
Ken’s current take:
Certainly there won’t be any meaningful hiring until the 2012. elections are in the book.
CEO heels are dug in. I’ve heard cocktail party chatter like “Each job added is a vote for Obama … Fool me once, shame on you … fool me twice, shame on me”
CEOs started to relent a bit when the Congress tilted GOP and Obama extended the Bush tax cuts. (Whatever happened to Immelt’s job creation task force?)
But, recent moves – e.g. stopping Boeing’s move to South Carolina, stumping again for higher taxes, especially on off-shore profits – have more than offset any momentum.
We’ll be stuck with unemployment in the 9s until 2012 … or until there’s a substantial policy roll-back – e.g. repealing ObamaCare.
And, the latter just ain’t gonna happen …
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June 2, 2011
Sorry, but my sophomoric side is relishing the Weiner-roast.
The headlines are hilarious: e.g. “Is that your weiner?”
Now, Congressman Weiner is telling people to forget about his weiner so he can get back to his serious Congressional business, e.g. his self-claim of sending out 300 to 400 tweets per day … which, incidentally, is about a tweet-a-minute.
The ”forget about it” strategy won’t work.
Here’s why, explained by Human Events
At this point, telling people not to think about Weinergate is like telling them not to think about a platypus.
As soon as the command is issued, a giant platypus begins crashing through the imagination of the listener.
(To clarify, that’s what happens when you tell people not to think about a platypus.
When you tell them not to think about Weinergate, an entirely different image is conjured.)
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June 2, 2011
Punch line: In a series of adios speeches, Defense Secretary Gates speaks a consistent refrain: America can be a superpower or a welfare state, but not both..
* * * * *
Excerpted from WSJ:
“The reality is that the entitlement state is crowding out national defense.
What’s really happening now is “entitlement overstretch”.
The American entitlement state was born with the New Deal, got fat with the Great Society of the 1960s and hit another growth spurt in the first two years of the Obama era.
The big three entitlements — Social Security, Medicaid and Medicare, plus other retirement and disability expenses — accounted for 4.9% of GDP by 1970, eclipsed defense spending in 1976 and stood at 9.8% as of last year.
Under current projections, entitlements will eat up 10.8% of GDP by 2020, while defense spending goes down to 2.7%.”
* * * * *
Ken’s Take: Note the “secret” to how Clinton was able to balance the budget – simply cut defense & intelligence spending and hope for sustained peace.
Oops.
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May 31, 2011
Two somewhat related articles caught my eye:
The first — Crime is falling, still – reports that the number of violent crimes in the United States dropped significantly last year, to .. the lowest rate in nearly 40 years
In all regions, the country appears to be safer. The odds of being murdered or robbed are now less than half of what they were in the early 1990s, when violent crime peaked in the United States.
The trend is a bit puzzling since it runs counter to the prevailing expectation that crime would increase during a recession.
That’s good news.
The bad news:
Baltimore Ravens linebacker Ray Lewis said that one of the consequences of an owners’ lockout and a lost NFL season will be an increase in crime,
Lewis says:
“Do this research if we don’t have a season — watch how much evil, which we call crime, watch how much crime picks up, if you take away our game. “
“There’s too many people that live through us, people live through us,” he said. “Yeah, walk in the streets, the way I walk the streets, and I’m not talking about the people you see all the time.”
When asked why he thought crime would increase if the NFL doesn’t play games this year, Lewis said: “There’s nothing else to do on Sundays”.
If anybody knows crime, it should be Ray Lewis …
* * * * *
P.S. In a family chat on the topic, the overwelming sntiment was that Ray Lewis is right … crime will rise is the NFL doesn’t play.
Aren’t there any recreational options between watching football and mugging somebody?
Imagine the c
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May 27, 2011
Several years ago I asked a colleague “What do you need to retire?”
His answer: “$5 million and playmates.”
Playmates?
What he meant was having enough leisure-time folks to hang out with during the day.
Related to his “magic number” … the WSJ asked some millionaires the question: “At what magic number did you consider yourself wealthy?”
- 25% of the respondents said it was $1 million to $2 million saved
- Another 25% said it said it was $2 to $4 million.
- 15% said they needed $5 million to $10 million.
- 4% (probably all New Yorkers) said they needed more than $10 million.
Are we there yet?
* * * * *
The Point:
Unlike the President, the millionaires don’t confuse “stocks & flows” … they calibrate their “wealth” by savings (a balance sheet item) not by income (obviously, an income statement item).
Also note some simple arithmetic: if a guy makes $250,000 annually and saves / invests 10% each year … and makes 10% after tax on his investments … it’s takes almost 20 years to reach the million-dollar wealth threshold.
Would somebody please mention that to the President?
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May 26, 2011
That’s the question that authors Richard Arum and Josipa Roksa ask and answer in their book Academically Adrift.
They report:
- Forty-five percent of students barely tick upward in critical thinking, complex reasoning, and writing after two years of college, and 36 percent don’t budge in those skills after four years.
- Four-year institutions only graduate about a third of their students in four years, and two-thirds of them in six.
- Student debt just surpassed the country’s credit-card debt for the first time. It is projected to top $1 trillion this year … For the class of 2011, the mean student-debt burden is nearly $23,000, up 8 percent from a year ago.
- In the early 1960s, college students spent 40 hours per week on academic work; now they spend only 27 hours per week. In 1961, 67 percent of students said they studied more than 20 hours per week; now only one in five study that much.
- Miraculously, grades haven’t dropped, despite less study … students have mastered “the art of college management,” whereby they succeed at “controlling college by shaping schedules, taming professors and limiting workload.”
- “Faculty spend approximately 11 hours per week on advisement and instructional preparation and delivery.” The rest is devoted to research and sundry other professional and administrative tasks.
- Campus hiring has been devoted to “managerial professionals” specializing in sundry student services. What kind of learning environment is it, after all, without a director of sustainability initiatives?
If increasingly students don’t study, teachers don’t teach, and college employees aren’t primarily concerned with either, it raises the question of what the hell happens on campus.
Well, many students have a grand time during a years-long vacation from real life.
They enjoy state-of-the-art facilities, socialize, and figure how to come away with the credential of a degree in exchange for minimal effort.
Not exactly a formula for efficiency or success.
Source: RCP
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May 25, 2011
Yesterday, HomaFIles summarized a study done by economists Talia Bar (Cornell) and Asaf Zussman (Hebrew University) that concluded in the words of economist Mark Perry: “ … highly motivated, high-achieving students should prefer classes from Republican professors because it’s more likely they’ll be rewarded with a really high grade.
That’s good news for highly motivated, high achieving students — all they need to do is take classes from Republican profs.
Here’s the bad news: the aren’t many Republican profs around.
From the same study done by Bar and Zussman:
- There are virtually no Republican profs in the “softer” (i.e. more qualitative) disciplines such as the humanities and social studies
- Even in “harder” (i.e. more scientific and quantitative) disciplines such as the natural sciences, less than 1 in 5 profs are Republicans.
Ken’s Bet: Republican profs’ representation in business schools isn’t much higher that it is the natural sciences … go figure.
* * * * *
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May 25, 2011
Punch line: Orangutans and Thin Mints don’t mix
* * * * *
Girl Scouts have been selling cookies since 1917.
Last year, troops sold 198 million boxes of cookies.
That’s $714 million worth of cookies, most of which goes to the nonprofit councils under which troops are organized.
But now the “franchise” is under pressure.
Scouts and leaders have criticized their nonprofit organization … and some do not want to sell cookies next year.
Why?
Until 2006, the cookies contained partially hydrogenated vegetable oil, but the scouts switched to palm oil so the cookies would be free of trans fat.
Today, all 16 varieties of GS cookies contain palm oil.
Some rain forests have been cleared for palm oil plantations.
Some endangered orangutans live in rain forests.
There’s the rub.
The Girl Scouts organization says its bakers have told them there isn’t a good alternative to palm oil that would ensure the same taste, texture and shelf life.
The choice: save orangutans or save Thin Mints, Trefoils and Samoas?
Source: WSJ
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May 24, 2011
Economists Talia Bar (Cornell) and Asaf Zussman (Hebrew University) studied grading tendencies of Republican and Democratic college professors..
Their results are reported in a forthcoming American Economic Journal article titled “Partisan Grading“.
The highlights:
The evidence suggests that student grades are linked to the political orientation of professors: relative to their Democratic colleagues, Republican professors are associated with a less egalitarian distribution of grades.
That is, the variance of grades is higher in courses taught by Republicans than in courses taught by Democrats. Moreover, in additional analysis we find that relative to their Democratic colleagues, Republican professors tend to assign more very low and very high grades
The differences are highly statistically significant.
The observed pattern is consistent with the hypothesis that Republican professors are associated with … higher returns to student ability.
The results suggest that the allocation of grades is associated with the worldview or ideology of professors.
* * * * *
Economist Mark Perry observes: One conclusion here might be that highly motivated, high-achieving students should prefer classes from Republican professors because it’s more likely they’ll be rewarded with a really high grade
… and less motivated, lower-achieving students should prefer classes from Democratic professors, because it’s less likely that they’ll receive a really low grade.
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May 24, 2011
Economist Alan Blinder’s WSJ op-ed put the debt ceiling issue into perspective:
Consider inflows and outflows of cash to and from the Treasury … at average fiscal 2011 rates, receipts cover only about 60% of expenditures.
So if we hit the borrowing wall traveling at full speed, the U.S. government’s total outlays — a complex amalgam that includes everything from Social Security benefits to soldiers’ pay to interest on the national debt — will have to drop by about 40% immediately.
A 40% shortfall translates to over $4 billion a day, including Saturdays and Sundays.
For openers, suppose the federal government actually does reduce its expenditures by 40% overnight.
That translates to roughly $1.5 trillion at annual rates, or about 10% of GDP.
That’s an enormous fiscal contraction for any economy to withstand, never mind one in a sluggish recovery with 9% unemployment.
Of course, Blinder insinuates that the risk is too great.
My view: gotta face the issue some day, why not now?
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May 23, 2011
Last week the President caused quite a stir with his Mideast speech.
The specific topic aside, I was struck by his lack of basic courtesy to the Israeli Prime Minister..
Obama often scolds Congress and right-leaning activists to start acting more like adults … more civil.
That’s the same Obama who …
- In an unprecedented act, called out the Supreme Court justices during a State of the Union address,
- During the televised “Healthcare Summit”, called the Senators and Congressmen by their first names, They honorably called him “Mr. President” in return (not Barack or Barry).
- Invited Rep. Paul Ryan to sit in the front row for his deficit speech, and then rhetorically attacked him.
So, it is shouldn’t be surprising that the President would disrespect a foreign leader by blindsiding him with an inflammatory speech – the day before a state visit.
Sure-shot prediction: We’ll all be getting a scolding from the President this week re: acting more like grown-ups and adopting a more civil tone.
When he does, go ahead and scream.
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May 23, 2011
This was the second of 2 VERY funny virals posted last Friday on the HomaFiles … some folks didn’t scroll down below the “Dog Tease” and missed it, so here it is again .. be sure that audio is turned on.
* * * * *
http://sorisomail.com/email/74298/como-se-danca-o-merengue.html
* * * * *
Reprise: Dog Tease
http://www.youtube.com/watch?v=nGeKSiCQkPw
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May 20, 2011
These two virals are VERY funny .. be sure that audio is turned on.
http://www.youtube.com/watch?v=nGeKSiCQkPw
* * * * *
http://sorisomail.com/email/74298/como-se-danca-o-merengue.html
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May 20, 2011
Punch line: McDonald’s is standing by its clown … still another job ‘saved’ or created. But now, image consultants are dissing him.
* * * * *
Excerpted from WSJ: No Pink Slip for Ronald McDonald, May 20, 2011
The 48-year-old, red-haired mascot has come under fire from health-care professionals and consumer groups who, in recent days, have asked the fast-food chain to retire Ronald McDonald.
But McDonald’s CEO says, “Ronald McDonald is going nowhere.”
“Ronald McDonald is an ambassador for McDonald’s, and he is an ambassador for good.”
There’s no doubt that Ronald McDonald is well known. He ranks fourth in consumer awareness out of 2,800 celebrities.
“Ronald is recognized by more than 99% of U.S. consumers. Of course, just because consumers know someone doesn’t mean they like them or trust them.”
* * * * *
Some image consultants are beginning to question how relevant Ronald McDonald even is to kids anymore — and whether he has kept pace with McDonald’s own reinvention.
McDonald’s has modernized its image in recent years by remodeling restaurants … by selling frappes and fruit smoothies and by offering free wi-fi to customers.
“Mascots were heavily used in the mid part of the last century, but not so much anymore unless you’re an insurance company and you have a duck or a gecko or a caveman,”
“I’m not so sure Ronald is keeping up with where the brand is going. I question whether he’s still meaningful or a throwback to the last century.”
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May 19, 2011
Well, to be technically correct, Jared Bernstein was Biden’s chief economist and one of the crafters of the administration’s Trillion Dollar-Stimulus plan. He fronted for the 3 million jobs saved or created.
Adios, Jared.
Just announced: “Jared Bernstein, the former top economic adviser to Vice President Biden, joined the Center on Budget and Policy Priorities on Monday, May 16, as a Senior Fellow”.
Sommers, gone.
Romer, gone
Bernstein, gone.
Obama says: His economic program saved us from catastrophe. and is working just fine, thank you.
Yeah, right.
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May 19, 2011
Headline in the WSJ: McDonald’s Under Pressure to Fire Ronald
More than 550 health professionals and organizations have signed a letter to McDonald’s. asking the maker of Happy Meals to stop marketing junk food to kids and fire Ronald McDonald.
The campaign is organized by the nonprofit watchdog group Corporate Accountability International, which has also targeted tobacco companies and beverage makers like Coca-Cola and PepsiCo for the environmental impact of plastic bottles.
The letter from the health providers urges McDonald’s to cease marketing food high in salt, fat, sugar and calories to kids, from the use of Ronald McDonald to Happy Meal toys.
Some of the comments to the WSJ article:
- Unemployment among clowns will increase by one
- Toucan Sam & Captain Crunch better watch their backs
- Col. Sanders is probably rolling over in his grave.
- Wonder if there would be such a ruckus if the clown possessed union representation ?
- Clowns are increasingly creepy
- I urge more health care professionals to shut the h#ll up and wash their hands more!
- The “Eat Healthy” Obama White House Super Bowl Party menu: Bratwurst, Kielbasa, Cheeseburgers, Deep Dish Pizza, Buffalo Wings, Twice Baked Potatoes, Potato Chips, Ice Cream
- Michael Moore will make a movie “How to eat healthy foods” and will earn another $ 100.000.000 slamming the greedy capitalists.
Add your comments … best one wins a free Happy Meal.
Thanks to SMH for feeding the lead.
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May 18, 2011
Two economists — Timothy Conley (Western Ontario University) and Bill Dupor (Ohio State University) – just completed a rigorous analysis of Obama’s Trillion-Dollar-Stimulus programs.
Their conclusions:
- “We found, surprisingly, either negligible or negative effects of the Act on total employment.
- Specifically, we estimate the Act created/saved 450 thousand government-sector jobs and destroyed/forestalled one million private sector jobs.
- State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment.
- The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.”
Seems a bit at odds with Obama’s 3 million jobs saved or created.
Hmmm.
* * * * *
Source: The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled
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May 17, 2011
Punch line: The jobs numbers (job growth and unemployment rate) that create so much anticipation from the business press …. do not give a clear picture of the labor market’s health.
A better understanding requires an examination of hires and separations, or what the Bureau of Labor Statistics calls Job Openings and Labor Turnover Survey (JOLTS) data.
* * * * *
Excerpted from WSJ: Why the Job Market Feels So Dismal, May 16, 2011
At any point in the business cycle, even during a recession, American firms still hire a huge number of workers.
That’s because most of the action in the labor market reflects “churn,” the continual process of replacing workers, not net expansion or contraction of employment.
The lowest number hired in any month of the current recession was 3.6 million workers. Even during the dismal year of 2009 there were more than 45 million hires.
Bear in mind that the U.S. labor force has more than 150 million workers or job seekers.
In a typical year, about one-third or more of the work force turns over, leaving their old jobs to take new ones.
When the labor market creates 200,000 jobs, it is because five million are hired and 4.8 million are separated, not because there were 200,000 hires and no job losses.
When we’re talking about numbers as large as five million, the net of 200,000 is small and may reflect minor, month-to-month variations in the number of hires or separations.
* * * * *
Total Non-Farm Hires
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May 16, 2011
Big week in oil …
On Tuesday, the U.S. Interior Department issued a permit for Exxon Mobil to drill in the deep waters of the Gulf of Mexico. That’s only the fourth deepwater permit issued since the BP oil spill.
On Thursday, the CEO’s were guests at a kangaroo court conducted by some press-preening Senators who seemed to think that raising taxes on oil companies would cut the price of gasoline at the pump. Apparently Econ 101 isn’t a prerequisite for the Senatorial junket.
Then, the best of the week came in Obama’s radio address when he reiterated his long-standing support for domestic oil drilling.
Say what?
To be more specific, the president, in his address, said he supported increased domestic oil and gas development, if done safely and responsibly.
English translation: not while he and rapster Common are hangin’ at the White House.
He further clarified his position: “(Let me be clear) … Under the plan, the coastline from New Jersey northward would remain closed to all oil and gas activity. So would the Pacific Coast, from Mexico to the Canadian border. Further, The environmentally sensitive Bristol Bay in southwestern Alaska would be protected and no drilling would be allowed under the plan.“
As Mavis Johnson* would say: “Anything between the radio and the bicentennial mugs … not including the erasers or the Chiclets … everything in the 3” area right here.”
My bet: no noticeable change in the rate of deepwater licenses granted.
Even the mass media didn’t go for this head fake. Coverage ranged from slim to none.
Which raises another question: why does the President give a Saturday morning radio address?
Does anybody ever listen to it?
* * * * *
* Just in case you forgot, Mavis Johnson was Steve Martin’s character in “The Jerk”.
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May 13, 2011
The sealed college transcripts flap got ratcheted up a level.
Historian Michael Beschloss claimed on Don Imus’ radio show that President Obama’s IQ is off the charts and that he is the smartest president we have ever had.
Hmmm.
Imus followed up with the logical question: “Well, what is his IQ?”
The answer: “Uh. I would say it’s probably – he’s probably the smartest guy ever to become President.”
Pretty convincing stuff, huh?
Just say it and it’s true.
For the record I don’t care what Obama’s IQ is.
But, if he’s going to dispatch his shills to hype it, he should feel comfortable showing some evidence.
Tell me again, why did Bush have to show his transcripts and why does Obama get a pass?
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May 12, 2011
An editorial by former Congressman Harold Ford aroused my curiosity …
The subject was President Obama’s opposition to domestic oil drilling.
The part that caught my eye had to do with the “tax loopholes” that Obama was repealed because oil company profits – and gas prices — are rising.
Ford says:
“Why, when gas prices are climbing, would any elected official call for new taxes on energy? And characterizing legitimate tax credits as “subsidies” or “loopholes” only distracts from substantive treatment of these issues.
Lawmakers misrepresent the facts when they call the manufacturing deduction known as Section 199—passed by Congress in 2004 to spur domestic job growth—a “subsidy” for oil and gas firms.
The truth is that all U.S. manufacturers, from software producers to filmmakers and coffee roasters, are eligible for this deduction.
WSJ, Washington vs. Energy Security, MAY 11, 2011
What’s the loophole”?
Sec. 199 is officially the Domestic Production Activities Deduction.
It says that a business engaged in a qualifying production activity is eligible to take a tax deduction of 9%.
What’s a qualifying production activity?
Qualified domestic production activities include: “the production of electricity, natural gas or potable water in the U.S. and the manufacture, production, growth or extraction of tangible personal property, computer software,, including the development of video games, or sound recordings or qualified films “
Hmmm.
Why isn’t the President talking about the tax loopholes for CDs, films and video games?
Take the tax advantage away from oil companies, but preserve it for video game makers.
You just can’t make this stuff up …
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The Homa Files 