U.S. Government Practices Restrict Jobs Growth

It’s popular to pick a letter of the alphabet to describe the likely course of the economy. The letter I would choose doesn’t exist in our alphabet, but if I were to describe it, it would look something like an “L” with a gradual upward tilt of the base. With such a slow rebound, unemployment could well stay high for several years to come. In other words, our recovery is likely to feel like something well short of good times.

- San Francisco Fed President Janet Yellen, 10 November 2009

I am enjoying the last week of my holiday aboard Princess Cruises Tahitian Princess where I have been lecturing. This past week while in India, I was able to spend a day with UTVi / Bloomberg kicking around economic conditions. Also, I am surrounded by former heads of industry who can now have the time to take a month for a holiday.

I am truly on a bus driver's holiday. Hat tip to Princess Cruises for the internet time required for research and posting articles.

This was a slow week for economic releases.

Retail Sales Comparison to Past Recessions

With a hat tip to The Big Picture, a simple graphic was presented which puts into perspective the Great Recession retail sales compared to the recessions of 1973, 1980, 1990, and 2001.

The coincident economic data definitely is indicating the recession is over – the economy is no longer contracting. On the other hand - as the American economy is driven by retail sales, there is no evidence of real expansion yet.

Jobs are the Key to Recovery

The slow road to economic expansion is still running through employment which is acting as the barometer of economic health. Painfully slowly, the quantity of initial unemployment claims reduces week by week.

The rate of initial unemployment claims when adjusted for population differences shows the Great Recession's initial unemployment claims were fairly mild when compared to the recessions of the 70's and 80's.

The problem is not the amount of people who have lost their jobs, but the inability of the economy to replace the lost jobs. The chart below which has been kicking around the internet for some time shows the obvious – America has added no jobs for the last 10 years. This is an unbelievable statistic for a country which considers itself a world economic power.

The above graph is a 10 year moving average of jobs growth in America. We are in a negative job's growth cycle over the last 10 years while the population has grown 10%.

The sad reality is that most of those losing a job right now do not have a big chance of finding another. And I will ignore the current 10.2% headline unemployment rate, which is an affront to my intelligence.

This week the Conference Board released their Employment Trends Index (ETI) for October 2009. This index aggregates 8 labor related indices.

Historically, the ETI is an imperfect leading indicator for non-farm employment – once the ETI changes direction so does non-farm payroll several months later. Gad Levanon, Senior Economist at The Conference Board said:

The Employment Trends Index has likely turned a corner in September, and the historical relationship between the index and employment suggests that job losses will end in early 2010. While layoffs have certainly declined in recent months, we still expect to see employers adding hours to their existing workforce before hiring will strongly increase.

Even if The Conference Board's ETI is correct, we are so deep in the hole right now in terms of job-growth that employment issues are finally gaining political center-stage.

Obama now wants to have a jobs summit in December as jobs are a problem..... duh. The Fed has been unable to create jobs for the last 10 years. Economists recommendations from the left and the right have a similar track record.

I have had the opportunity to kick around solutions using the former captains of industry who are on the Tahitian Princess. Here are our solutions:

• The objective is to lower the cost of employment to American companies. Lowering business taxes, eliminating mandated employment benefits (yeah, like health care), and reducing regulation are the areas to begin. Higher taxes must be borne by the masses if the government deems taxation necessary. Taxing industry is killing the proverbial goose that lays the golden eggs. And a great many types of production have low shipping costs (relative to product value) and are not confined to production in the USA.
• States and local councils must reduce taxation levels on business which operates in America. Business always figures out a way to reduce costs, and it may involve relocating jobs and facilities (either out of the city, or out of the country) to maximize profits.
• The Fed's ZIRP (zero interest rate) is ensuring jobs are exported and financing that job-loss. Multinationals have access to this low cost financing which they will use to expand production operations in countries which will make them the most competitive. As we live in a globalized world without duties, what would drive a company to expand its USA production capacity when foreign capacity is more competitive? ZIRP is funding the export of jobs.
• While ZIRP remains in force and until the Fed resumes a realistic interest rate policy, export of dollars should be taxed where they are in excess of the flow of imported dollars (sale of assets excepted) for each taxable entity. This is to try to counter-balance the job destroying aspects of ZIRP and try to prevent the use of the dollar for carry trade. Carry trade uses American money to fund growth outside of America.

The policy decisions of the USA government run contrary to the recommendations. I expect the government to put forth a set of stimulus packages to create jobs in green industries. If it is good for the environment, it must be good for the economy.

The road to hell is paved with good intentions.

Additional Economic Data this Week

The trade balance worsened in September 2009 with half of the widening gap due to crude oil. Both exports and imports expanded on a wide basis.

The Exim price index for October 2009 continued its trend towards YoY price increases. This BLS index tracks export and import prices, and until mid-2009 have been contracting YoY.

The Department of the Treasury released their monthly statement for the period ending October 2009.

The weekly Mortgage Bankers Association mortgage application data continues to show a downward trend in new mortgage applications and further declined from last week's lowest level since April 2009. And, just to demonstrate the effect of the government and the Fed's interference in the mortgage market, the 30 year fixed mortgage rate decreased 7 basis points to 4.90% while the 30 year treasury sits at 4.4%.

This decline in new mortgage originations is significant and will reflect in home sales volumes in 4Q2009.

Bankruptcies this week: Advanta, Teton Energy, Temecula Valley Bancorp, NutraCea, Altus Pharmaceuticals

Failed Banks This Week:

Economic Forecasts Published this Past Week

The Economic Cycle Research Institute (ECRI) released their Weekly Leading Index which slipped to a short term low. Lakshman Achuthan, Managing Director at ECRI added:

For four straight weeks WLI growth has eased from a record high, but still remains consistent with a further near-term acceleration in U.S. economic growth

Hat tip to Steve at MEMETICS & MARKETING™ for editing support.

Disclosures: long MMF's, GLD, short S&P, IOO, PIN, UUP, Physical Gold - as well as numerous puts and calls which comprise less than 3% of my portfolio.

Comments

[Old Trader:]

Steve,

I enjoy and value your in-depth analysis and measured conclusions. I just posted some specific suggestions, vis a vis unemployment, as an instablog post. If you should have the time and inclination upon your return, I appreciate your thoughts on it.

Nov 15 12:20 PM

[Wildebeest:]

I agree with ain't no fortunate son about corporate taxes. Forget about whatever the nominal rates are, the % actually being paid is much lower.

If you ask a surgeon about a solution to a problem he'll want to operate, if you ask a businessman he'll want to lower taxes, if you ask a politician he'll want to find out what his campaign donors want and then legislate and increase the size of the bureaucracy.

The country is broken because the political system is fundamentally broken.

One of the reasons that the system is broken is an ongoing election cycle. This plays into the hands of the plutocrats. While elections themselves are just window dressing, they allow plutocrats to exert themselves over spineless politicians. A politicians goals are 1. get re-elected, then 2. daylight, then 3. maybe do something useful. A constant election cycle allows the peoples elected representatives to become corporate pawns.

On one hand I think anyone should have the right to donate as much as they want to a campaign as long as it s fully disclosed. This is a freedom of speech issue. However I think corporations and their lobbyists should be banned from contributing to campaign with large jail time for breaches (fines would be useless). If their shareholders want to contribute then they are, or should be, free to contribute. Inacting a law to ban campaign contributions from all but private individual registered voters would go a long way to removing the disease that is infecting the political system and preventing measures to fix the economy (now and going forward).

Nov 15 12:52 PM

[Old Trader:]

One thing that would help the employment situation would be a return to some form of "stability". If there's one thing that will dampen any business person's spirits, regardless of whether they're "big" or "small", is uncertainty. Even if the business environment is poor, business, by and large, is adaptable and will figure out a way to navigate through such a period. Its when things are unknown, as to what what might happen, from one month to the next, that things grind to a halt.

Nov 15 01:34 PM

[apppro:]

Thank you Old Trader, finally someone who gets it. However, "stability" doesn't work for the short-term traders/traitors that have taken over our markets. Actually, it's their enemy! The VIX just proves that - the fact that we even talk about the VIX as if it was some long standing institution exemplifies the problem.

Want a solution? - Here's 2:

1. To create jobs > GIVE the excess and repaid TARP to our SBA and let them give out extra low interest loans to people starting actual green INFRASTRUCTURE JOBS. Not to people wanting to write 'apps' for the iPhone.
2. And of course to help give long-term "stability" to our system:

Revised Tax Rules:
1. Capital gains under <6 months - 55% tax on capital gains
2. Capital gains 6 > 12 months - 45% tax on capital gains
3. Capital gains 1 > 2 years - 35% tax on capital gains
4. Capital gains 2 > 5 years - 18% tax on capital gains
5. Capital gains 5+ years - 5% tax on capital gains
6. Most critical of all — Institute a capital gains tax of 55% on ALL short sales not directly tied to a long buy by a licensed hedge fund. I'm tired of paying for the pure shorts 3rd vacation home.


On Nov 15 01:34 PM Old Trader wrote:

> One thing that would help the employment situation would be a return
> to some form of "stability". If there's one thing that will dampen
> any business person's spirits, regardless of whether they're "big"
> or "small", is uncertainty. Even if the business environment is poor,
> business, by and large, is adaptable and will figure out a way to
> navigate through such a period. Its when things are unknown, as to
> what what might happen, from one month to the next, that things grind
> to a halt.

Nov 15 03:55 PM

[amusedobserver:]

The mind-boggling ignorance of some of these readers is truly incredible to behold.

When are people going to realize that COMPANIES DON'T PAY TAXES, THEY COLLECT THEM. And they have to pay a lot of accountants a lot of money to track them. And they charge their customers more to cover their tax bill as well as the pay for these otherwise useless accountants. Clearly, there is no "rightful share" of taxation for businesses because they collect all their taxes from the consumers, who have to also pay their own "rightful share" of taxes--except they can't turn around and stick someone else with their tax bill. Taxes consumers pay come out of their consumption, which means they have a lower standard of living. Thank you, big spending, mandating Democrats, "friend" of the little guy.....

Nov 15 04:45 PM

[Steven Hansen:]

the issue is not tax fairness or letting the corporate fat cats off the hook.

where are the taxes on the imported goods when the country of export refunds the taxes paid in that country (or produces the item in a duty free zone)?

without duties, domestic production has a competitive headwind against imported goods as many imported items sold in the USA are not taxed in the country of export or in the USA.

Corporate profits are taxed twice - once by the corporation and once when distributed.

and most small business are incorporated.

so let us ask a politician to diagnose a kidney failure.

Nov 15 06:40 PM

[John Lounsbury:]

Steve - - -

The graphic from The Big Picture is ominous. The current recession started like the 1973 recession. It has now morphed to look more like the 1980 recession. The 1980 plot actually covers two recessions - a double dip.

So consumer sales started out behaving like the sharp, deep recession in the mid 70s, but is now looking like the double dip recessions of the early 80s. This is one of the clearest patterns of comparison with the two earlier "big" recessions that I have seen.

Good job, as always, with a complete review. You may be summarizing what has happened but I always learn some new things.

Nov 15 06:51 PM

[Old Trader:]

appropo,

Thanks...I've been self-employed for the majority of my adult life. I like your 2 suggestions, although I'm a bit leery of the tag end of #2, re; short sellers, because I suspect they're more of a "symptom", rather than a "cause".


On Nov 15 03:55 PM apppro wrote:

> Thank you Old Trader, finally someone who gets it. However, "stability"
> doesn't work for the short-term traders/traitors that have taken
> over our markets. Actually, it's their enemy! The VIX just proves
> that - the fact that we even talk about the VIX as if it was some
> long standing institution exemplifies the problem.
>
> Want a solution? - Here's 2:
>
> 1. To create jobs > GIVE the excess and repaid TARP to our SBA and
> let them give out extra low interest loans to people starting actual
> green INFRASTRUCTURE JOBS. Not to people wanting to write 'apps'
> for the iPhone.
> 2. And of course to help give long-term "stability" to our system:
>
>
> Revised Tax Rules:
> 1. Capital gains under <6 months - 55% tax on capital gains
> 2. Capital gains 6 > 12 months - 45% tax on capital gains
> 3. Capital gains 1 > 2 years - 35% tax on capital gains
> 4. Capital gains 2 > 5 years - 18% tax on capital gains
> 5. Capital gains 5+ years - 5% tax on capital gains
> 6. Most critical of all — Institute a capital gains tax of 55% on
> ALL short sales not directly tied to a long buy by a licensed hedge
> fund. I'm tired of paying for the pure shorts 3rd vacation home.
>

Nov 15 07:13 PM

[ain't no fo...:]

Trader, there are a number of people (not you) who are pretty clueless about who the real traitors are. They go ranting about the evil shorts and yet they don't have a clue on earth what the difference is between legal shorts (who have been around for over a century, and who serve a VITAL ROLE in preserving the health and liquidity of the capital markets) and the illegal NAKED shorts who are the hedge funds spawned by, supported by, financed by a certain few Too Big To Fails who set them loose against their biggest competitors last year and brought the world to its knees.

Those same few TBTF's now award themselves monstrous bonuses in the tens of billions of dollars for their work in nearly destroying the system through their naked shorting, sending hundreds of millions of illegal naked short sales in a day against this or that competitor through their HFT's (high frequency trading conduits) that overwhelmed the system, never once having the required share "borrow" to do a legal short sale, and the SEC knows exactly who they were but won't do anything because these are the biggest of the biggest... anybody who seriously follows the markets knows who they are, and knows that they have won a virtual monopoly and vast profits in the markets now as a result of their malicious trades last year.

And the sad thing is they got away with it, and they will again whenever it suits their purpose, because they OWN the markets the regulators, the politicians. And its they who are the traitors, for they have destroyed American capitalism, the concept of free and open markets, the essence of competition.

Legal shorts must have BORROWABLE shares available in order to conduct a short sale... you and I can't just call our broker and ask him to sell 50,000 shares short that we can't "borrow"... but the hedge fund naked shorts got around that critical requirement by being in cahoots with the trading desks of the TBTF's who gladly looked the other way because they had the means, motive, opportunity and trading platforms to pull off these trades in the hidden and opaque dark pools and HFT's that concealed their purpose.

And their biggest win may be in the fact that the legal shorts are getting tarred with the same brush as the illegals are by the clueless and the misinformed.

Legal shorts add liquidity to the markets, perform significant homework and due diligence, and open up a pro-con dialogue that is essential to true price discovery and the education of investors on both sides of the trade. They are the canaries in the coal mine.

Naked shorts? Well, they should all be hanging from the tallest tree... but they have too many friends in too many high places, and even some unwitting and uneducated allies.


On Nov 15 07:13 PM Old Trader wrote:

> appropo,
>
> Thanks...I've been self-employed for the majority of my adult life.
> I like your 2 suggestions, although I'm a bit leery of the tag end
> of #2, re; short sellers, because I suspect they're more of a "symptom",
> rather than a "cause".

Nov 15 08:50 PM

[Steven Hansen:]

apppro...
i am confused on what your point really is as you are confusing stock evaluation (shorting and trading) with ability to create jobs.

i have one of your textile compatriots with me, and i have been advised the issues in the textile industry were significantly wider than wages.

if wages were the only issue, there would be no goods production in America.

America is not creating jobs with the same employment multipliers as the lost manufacturing jobs. i have seen few green technologies with high job multipliers.

as technologies mature, you will always have an erosion of jobs in that technology into the developing world. therefore new technologies must always be evolving. it should scare the poop out of you when new technologies evolve out of china or korea.

the economic formula right now in America must change to create and foster jobs creation without the need for incentives.

Nov 15 09:40 PM

[Steven Hansen:]

old trader..
re: your instablog link: seekingalpha.com/insta...

we have two issues - one is to stop the jobs bleed, and second to create jobs. my recommendations were an attempt to create a tax level environment for domestic goods to compete against imported products.

i find your point on valves specifically humorous as this situation has existed since the 70's - and is not a function of NAFTA. castings have been non-competitive in America for many years. no nuclear submarine in America does not carry Canadian valves (with Chinese castings or forgings).

you are correct in targeting small business - but i would use a university / business partnership where universities would have senior projects and grants to provide low or zero cost labor and research to get business off the ground. this would not involve loans - and there would be no burden for taxpayers.

the win for universities is that their graduates would have real world experience.

Nov 15 10:19 PM

[untrusting ...:]

Hmmmm, so what are you suggesting? Are you saying that corporations and business don't use for example: roads, airports, seaports, interstate highways, courts and the judical system, protection from the US military, state department and passports, banks and banking regulators, or hundreds/thousands of other services/products provided by governments? Are you suggesting that business and corporations should just get a free ride and get to use whatever services/products that a society provides and not have to pay some of the cost of providing those services/products?
Or what about the tens of thousands of foreign corporations and business working in the US that repatriate their profits back home-should they get a free ride on US infrastructure and services funded by US consumers? Or what about corporations and business that export much of what they produce to other countries-should they get free use of US infrastructure and services?

If so, don't think you will get much agreement from most of the average American population. While it may well be true that all business pass on their costs including taxes ... it is far more logical to have all users including business pay for the services/products they use. That way consumers get to choose which products or services they are willing to purchase, including the taxes that are included in the cost of those products or services.


On Nov 15 04:45 PM amusedobserver wrote:

> The mind-boggling ignorance of some of these readers is truly incredible
> to behold.
>
> When are people going to realize that COMPANIES DON'T PAY TAXES,
> THEY COLLECT THEM. And they have to pay a lot of accountants a lot
> of money to track them. And they charge their customers more to cover
> their tax bill as well as the pay for these otherwise useless accountants.
> Clearly, there is no "rightful share" of taxation for businesses
> because they collect all their taxes from the consumers, who have
> to also pay their own "rightful share" of taxes--except they can't
> turn around and stick someone else with their tax bill. Taxes consumers
> pay come out of their consumption, which means they have a lower
> standard of living. Thank you, big spending, mandating Democrats,
> "friend" of the little guy.....

Nov 16 01:28 AM

[untrusting ...:]

Great comments. Could not agree more. Just don't see how the US is ever going to break out of the the political, lobbyist, big business trioka as they control most of the wealth and power. Would certainly agree that corporate and business donations are a large part of the problem.


On Nov 15 12:52 PM Wildebeest wrote:

> I agree with ain't no fortunate son about corporate taxes. Forget
> about whatever the nominal rates are, the % actually being paid is
> much lower.
>
> If you ask a surgeon about a solution to a problem he'll want to
> operate, if you ask a businessman he'll want to lower taxes, if you
> ask a politician he'll want to find out what his campaign donors
> want and then legislate and increase the size of the bureaucracy.
>
>
> The country is broken because the political system is fundamentally
> broken.
>
> One of the reasons that the system is broken is an ongoing election
> cycle. This plays into the hands of the plutocrats. While elections
> themselves are just window dressing, they allow plutocrats to exert
> themselves over spineless politicians. A politicians goals are 1.
> get re-elected, then 2. daylight, then 3. maybe do something useful.
> A constant election cycle allows the peoples elected representatives
> to become corporate pawns.
>
> On one hand I think anyone should have the right to donate as much
> as they want to a campaign as long as it s fully disclosed. This
> is a freedom of speech issue. However I think corporations and their
> lobbyists should be banned from contributing to campaign with large
> jail time for breaches (fines would be useless). If their shareholders
> want to contribute then they are, or should be, free to contribute.
> Inacting a law to ban campaign contributions from all but private
> individual registered voters would go a long way to removing the
> disease that is infecting the political system and preventing measures
> to fix the economy (now and going forward).

Nov 16 01:35 AM

[untrusting ...:]

Steve,
As always your articles are very well written and informative, so thanks for writing and posting them.

As we have posted before, we believe the simplest solution to US employment growth is to provide the incentive to private business to reward US employment and to use US content. Then let them decide whether it is worth it or not and let them calculate the trade-offs with other cost saving measures such as offshoring, import of foreign parts, import decisions, etc.

Our suggestion is to permit a Special US Corporation, taxed at ultra low rates, such as 5%. To qualify such special corps, would have to have be predominately US employees, perhaps 95%, and have goods/services composed primarily of US content, again perhaps 95%. Such low taxed corps could have annual certification requirements to ensure they qualified for low taxes. Our belief is that if you want certain outcomes, then the best way to attempt to achieve those outcome is to provide incentives that achieve those outcomes and let the private business decide if it is cost effective to achieve them. If the goal is US employment and US production (which we believe it should be), then put in place incentives that
directly reward those objectives.

With regard to the large multinational corporations and many other large business entities, we personally do not believe that reduced taxation is an appropriate solution. They are large users of a multitude of US provided services such as infrastructure, laws, regulation, etc and should pay a fair part of those costs. It is true that they are burdened with some unfair costs, of which employer provided healthcare is a major one. But the solution for that is to remove healthcare totally from being an employer responsibilty/cost. Personally we like the Dutch healthcare model and believe such a model in the US would be extremely benefical to both US business and US consumers.

Just a few thoughts on your comments, and how we see one aspect of the situation.


On Nov 15 06:40 PM Steven Hansen wrote:

> the issue is not tax fairness or letting the corporate fat cats off
> the hook.
>
> where are the taxes on the imported goods when the country of export
> refunds the taxes paid in that country (or produces the item in a
> duty free zone)?
>
> without duties, domestic production has a competitive headwind against
> imported goods as many imported items sold in the USA are not taxed
> in the country of export or in the USA.
>
> Corporate profits are taxed twice - once by the corporation and once
> when distributed.
>
> and most small business are incorporated.
>
> so let us ask a politician to diagnose a kidney failure.

Nov 16 02:07 AM

[Old Trader:]

Steve,

Thanks for checking out the post. I'm sorry if I was less than clear. I wasn't saying the Canadian valve thing was a result of NAFTA; merely that it is somewhat ironic that 2 different decisions/actions by the US government would yield confliciting results.


On Nov 15 10:19 PM Steven Hansen wrote:

> old trader..
> re: your instablog link: seekingalpha.com/insta...
>
>
> we have two issues - one is to stop the jobs bleed, and second to
> create jobs. my recommendations were an attempt to create a tax
> level environment for domestic goods to compete against imported
> products.
>
> i find your point on valves specifically humorous as this situation
> has existed since the 70's - and is not a function of NAFTA. castings
> have been non-competitive in America for many years. no nuclear
> submarine in America does not carry Canadian valves (with Chinese
> castings or forgings).
>
> you are correct in targeting small business - but i would use a university
> / business partnership where universities would have senior projects
> and grants to provide low or zero cost labor and research to get
> business off the ground. this would not involve loans - and there
> would be no burden for taxpayers.
>
> the win for universities is that their graduates would have real
> world experience.

Nov 16 02:18 AM

[amusedobserver:]

I have no problem with a business paying user fees and direct taxes--those are direct costs of doing business. Virtually all of those infrastructure items you listed that businesses actually use are paid for through excise taxes on gas and tires for roads and highways, and use taxes for seaports and airports. Even judicial matters have use fees (hence the term "court costs").

As for the tens of thousands of companies doing business in the US and repatriating profits back to their foreign home (which they do because their taxes are much lower), what about the tens of thousands of US companies doing business abroad and NOT repatriating profits because of the income tax hit? We already got an idea of how much money could come home to create jobs here when, just a few years ago, the repatiation tax was lowered to 5% and the gov't collected several multiples of what it expected. So we have the situation where foreign companies send their money back home, and US companies keep their money abroad. Yep, that's a really smart policy.

The corporate income tax costs a lot to calculate and has been contributing a progressively lower portion of total government tax intake anyway. It should be eliminated entirely and replaced, if at all, with a very low tax on the revenue of every company of no more than one or two percent, something low enough as to not cause any economic distortion. That would pay for this nebulous umbra of govt services you think businesses "should" pay.

My underlying point is that the individual, the end user, is the ultimate payor of all taxes levied on a business that exists to provide goods and services. Government taxes business not out of a sense of fairness but to hide the true tax burden on its citizens.

You are right, the average American probably does not agree with me. But then, the average American isn't very bright.


On Nov 16 01:28 AM untrusting investor wrote:

> Hmmmm, so what are you suggesting? Are you saying that corporations
> and business don't use for example: roads, airports, seaports, interstate
> highways, courts and the judical system, protection from the US military,
> state department and passports, banks and banking regulators, or
> hundreds/thousands of other services/products provided by governments?
> Are you suggesting that business and corporations should just get
> a free ride and get to use whatever services/products that a society
> provides and not have to pay some of the cost of providing those
> services/products?
> Or what about the tens of thousands of foreign corporations and business
> working in the US that repatriate their profits back home-should
> they get a free ride on US infrastructure and services funded by
> US consumers? Or what about corporations and business that export
> much of what they produce to other countries-should they get free
> use of US infrastructure and services?
>
> If so, don't think you will get much agreement from most of the average
> American population. While it may well be true that all business
> pass on their costs including taxes ... it is far more logical to
> have all users including business pay for the services/products they
> use. That way consumers get to choose which products or services
> they are willing to purchase, including the taxes that are included
> in the cost of those products or services.

Nov 16 03:46 AM

[dondon:]

As a small business owner in Hawaii, I see daily the government attempting to raise revenue on the backs of small business. Unemployment insurance per employee is going from $200 per year to $1000 in 2010 and $1500 in 2011. The State owns all boat harbors and is going to raise rates (most boats are commercial in the harbors on Maui) on slips from $18 a foot to $70 a foot per month. Instead of cutting spending the government is all about raising taxes. As long as government raises revenue on the backs of small business we will have increased unemployment. I have a solution, cut costs, raise prices or cut payroll. Hey wait I've been doing that for almost two years now and guess what?

Nov 16 12:15 PM

[apppro:]

In reference to your textile buddy, well for some he may be right BUT for most he knows he's dead wrong. There are few in my business that will not put the demise on our apparel manufacturing directly on cheap - available labor from overseas. Some companies may have gone out of business because of poor design and sales, but the factories had the work, just not the qualified people willing to work 8 hour days for 7.25 per hour. There are things made in the USA, just not as much as should/need to be. We are still a consumer Nation. It's far easier to go on TV and make a 'Jon and Kate plus 8' then it is to build a turbine engine.

Secondly, when we allowed Einhorn to summarily take down Lehman's, we also commented the connection between Wall St. and Main St. and jobs. Before that the connection was far more abstract. The traders/traitors in this market - spurred on by their doomsday pundits - caused the uncertainty and hysteria that killed us all. Hey, just look at what that Meredith Whitless did at 3:40 yesterday!

You've read my blog and know I am a firm believer in "The Shorting of America" conspiracy, so everything I do and say now is a shoot-off of that!

"Who loves you baby!"


On Nov 15 09:40 PM Steven Hansen wrote:

> apppro...
> i am confused on what your point really is as you are confusing stock
> evaluation (shorting and trading) with ability to create jobs.<br/>
>
> i have one of your textile compatriots with me, and i have been advised
> the issues in the textile industry were significantly wider than
> wages.
>
> if wages were the only issue, there would be no goods production
> in America.
>
> America is not creating jobs with the same employment multipliers
> as the lost manufacturing jobs. i have seen few green technologies
> with high job multipliers.
>
> as technologies mature, you will always have an erosion of jobs in
> that technology into the developing world. therefore new technologies
> must always be evolving. it should scare the poop out of you when
> new technologies evolve out of china or korea.
>
> the economic formula right now in America must change to create and
> foster jobs creation without the need for incentives.

Nov 17 07:42 AM

[apppro:]

Old Trader - great - now what? We need some of you to blog the sanity blog and not the how to trade blog.

As far as the shorts issue you bring up, HELL YES they are the CAUSE!
Let's sing the short sellers theme song:
"No... no... no... it ain't me babe! It ain't me you're looking for... babe!"
BS


On Nov 15 07:13 PM Old Trader wrote:

> appropo,
>
> Thanks...I've been self-employed for the majority of my adult life.
> I like your 2 suggestions, although I'm a bit leery of the tag end
> of #2, re; short sellers, because I suspect they're more of a "symptom",
> rather than a "cause".

Nov 17 07:48 AM

[apppro:]

Remember my idea above about giving that repaid TARP to the SBA for small business loans? Well, this was out today 11/24 - pretty apropos don't you think?

SBA Runs Through Stimulus Cash
www.thestreet.com/_yah...

Nov 24 05:56 PM