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Rob Viglione  

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  • Adding Up the White House Pay Freeze [View article]
    Paul, you're absolutely right. Public employees earn compensation far out of line with market factors. Their unions-at the local, state, and federal levels-have hijacked our country and are robbing the private sector. This cannot go on, as evidenced by California's pending bankruptcy. My prediction is that 2009 will witness a wave of municipal bankruptcies. Of course the federal government will bail them all out, but the result will only bring us all closer to the abyss.

    On Jan 24 08:28 AM Paul Price wrote:

    > It's a good thing to declare a wage freeze as it sets the tone for
    > all overpaid union government workers.
    > Civil service is now among the paid total compensation jobs in all
    > of America when you consider wages, benefits and pensions. Almost
    > no private sector employees earn what government workers now get
    > paid.
    > This will eventually bankrupt the nation.
    Jan 24, 2009. 02:16 PM | 3 Likes Like |Link to Comment
  • Protectionism by Any Other Name [View article]
    We lose jobs and industry overseas because of decades of bad policies, and government intervention in the economy. America was once the most competitive country in the world, but has since suffered from expensive labor laws, unions holding us all hostage, complex accounting requirements, and a hostile tax regimen. Businesses leave for a reason. This is the root cause of the decline in American production. The other side of the trade equation can be explained by rampant consumerism rotting our culture.

    On Jan 24 01:03 PM biomedlives wrote:

    > I ask James Kwak, Robert Weinstein, and other free trade advocates
    > if they believe our long-running trade deficit is a problem and,
    > if they do, how they propose to fix it. I'm not a fan of protectionism,
    > but I speculate that NAFTA and every other trade agreement the U.
    > S. has signed in recent years has made our trade deficit worse.
    > If the people whose in manufacturing and software programming went
    > oversease still had those jobs instead of lower-paying positions
    > with poor benefits, they might not have to borrow to pay for their
    > lifestyles.
    Jan 24, 2009. 02:11 PM | 3 Likes Like |Link to Comment
  • Protectionism by Any Other Name [View article]
    Mass currency devaluation is NOT the best solution. The result will be inflation for consumer goods and commodities, which ultimately bears its greatest impact upon the poor and middle class. Wages will not keep pace with such rampant inflation, with living standards for most will decline precipitously.

    This kind of sick monetary "stimulus" policy is the reason we now find ourselves in this mess. it is the reason for the big bubbles of our time and for the squeeze on the low and middle class. The soundness of our currency should not be degraded in these perverse social experimentations.

    On Jan 24 12:03 AM Tradememe wrote:

    > If all other major economies are devaluing their currencies, the
    > EU will also devalue. There should be no doubt about that. Even Trichet,
    > the inflation hawk, is changing his tune. Perhaps that's the best
    > solution. For as you say it's a zero-sum game. The exchange rate
    > will remain the same and the economies of the world will have their
    > stimulus.
    Jan 24, 2009. 02:06 PM | 1 Like Like |Link to Comment
  • Protectionism by Any Other Name [View article]
    The Chinese will not have a choice when it comes to "protecting their dollar investments" by propping up our currency. They have been able to do this through long periods of trade surpluses, in which they have accumulated USD and deferred domestic investment. The trade surpluses are shrinking and China has more internal issues to which they must apply reserves.

    In absence of a conscious decision to dump US assets, we can at least expect with high certainty that the pace at which they purchase our paper will decline. This, alone, will significantly impact our currency and debt since we are in process of embarking on unprecedented deficit spending and dollar creation.

    On Jan 24 11:16 AM Dave Wrixon wrote:

    > The problem is that the dollar is appreciating due to capital inflows.
    > The inflows come both from proceeds of liquidated overseas investments
    > and foreign borrowings all of which are being used to help stem the
    > flow of red ink. Viable investments are being closed out to protect
    > the interests of fat cats at home, making the US increasingly less
    > competitive. This as we see has a negative impact on the US trade
    > position by artificially inflating the dollar.
    > The true value of the total dollar on the Feds balance sheet or Government
    > IOUs is determined by the ratio of the Government's tax base divided
    > by its debt. Of course the more you put in circulation the less each
    > one is worth. But also as debt increases exponentially and the tax
    > base shrinks at an alarming rate, then the total worth also decreases
    > alarmingly.
    > A collapse of the dollar is inevitable, which is what the Chinese
    > fear, as they have a huge amount of money to the US. If they accept
    > a big increase in the value of that debt then they have to accept
    > a big write down on their investments. China is trying to protect
    > its investment. The US is trying to default by stealth. However,
    > for the value of the dollar to drop, China must stop lending. If
    > they stop propping up the dollar then it will rapidly deflate, and
    > the Americans will have their the competitive exchange rate they
    > seek, and much of their debt will disappear. But their stimulus would
    > then have to be financed according to the Zimbabwe model.
    Jan 24, 2009. 01:59 PM | 1 Like Like |Link to Comment
  • How the Federal Government will Lose in 2009 [View article]
    Right on about adding taxes during good times to offset losses in the bad. I'm not a Keynesian in the sense that I like bureaucrats trying to manage our economy, but this is at least the prescription Keynes advocated. Politicians have latched onto the first part, i.e. borrow, spend, lower taxes during bad times, but they do not put the breaks on things when times are good.

    Politicians are like kids who want everything. The bad part is that they are arrogant enough to believe they can have it all.

    On Jan 11 04:18 PM Kunst wrote:

    > "Market forces are telling the world to shed unproductive assets
    > and shrink capacity, yet central banks and governments around the
    > world, in particular the U.S., are refusing to listen. Rather than
    > allow markets to snap back to sustainable equilibrium from previously
    > artificial highs, the federal government clings to the notion that
    > forcibly shuffling resources, propping up asset prices, and diluting
    > the money supply will magically save the day."
    > -- Kind of like a druggie trying not to come down from a high. Give
    > me more!
    > Teutonic Knight: SCENARIO #1: "US$ Devaluation. This scenario is
    > unlikely because if indeed it is officially declared, countries around
    > the world would simply follow suit."
    > -- Ah, but what does this do to all our debt? Wipes it out, doesn't
    > it? So even if every country devalued together, all that debt we
    > have accumulated over the decades would be effectively defaulted.
    > Rob Viglione: "I excluded taxation since it is outside the realm
    > of political possibility during economic contraction."
    > -- Wouldn't it have made sense to add a tax surcharge during the
    > good times so we could responsibly cut taxes and increase spending
    > now that the proverbial rainy day has arrived? Most of the last
    > 25 years have been prosperous. It seems like we only use half of
    > the Keynesian prescription -- stimulate when times are bad -- and
    > skip the save more/slow the economy when it's hot part.
    Jan 19, 2009. 01:32 AM | Likes Like |Link to Comment
  • The Rise of an Epic Financial Crisis [View article]
    As the author states, the United States has been ingenious in convincing the rest of the world to subsidize our capital requirements. Unfortunately, with 70% of GDP comprised of consumer spending, it is difficult to rationalize our state of high leverage as productive. Rather, it seems as though we've duped the world into giving us lots of stuff for little in return.
    Jan 18, 2009. 07:39 PM | 1 Like Like |Link to Comment
  • Credit Where Credit Is Due [View article]
    The "smart money" usually bets against the crowd.

    On Jan 18 10:28 AM patio wrote:

    > Not at all true. Our currency is holding its value, increasing actually,
    > and T-Bills are still being purchased. The world has voted with all
    > our problems, we are still a better bet than the Euro, etc.
    > Right or wrong, the smart money is betting on the US.
    > On Jan 18 09:26 AM xerxes317 wrote:
    Jan 18, 2009. 04:43 PM | 3 Likes Like |Link to Comment
  • Credit Where Credit Is Due [View article]
    Even more importantly than producing things American want, we need to produce things of value to consumers in other countries. This is the only way to repay our debts through decades of trade deficits. Foreigners hold our paper for a reason, which is to reclaim a portion of our national output at some time in the future.

    On Jan 18 10:07 AM Crude Oil Trader wrote:

    > Peter is dead on when he says we need to produce. It is that simple
    > people. You need to produce something here in the U.S. that another
    > American needs and sell it to them. It is that simple! We have become
    > the new Europe. Europe relied on the little worker bees in the U.S.
    > and imported workers to rebuild after World war II, mostly from Turkey.
    > Now we have raised multiple generations of young people that are
    > to good or important to work. China is our worker bees and we are
    > importing our labor from the south. That is where all of our wealth
    > is headed. Throw in middle east oil, what do you expect. Maybe we
    > could start with becoming a natural gas exporter, can you just imagine!
    Jan 18, 2009. 04:40 PM | 3 Likes Like |Link to Comment
  • Credit Where Credit Is Due [View article]
    Do lenders in Zimbabwe have a higher propensity to lend? Is that why Mugabi's government is printing trillion denominated bills? Hyper inflation comes from government printing, not bank lending or velocity of money increases. Just plain and simple printing.

    On Jan 18 09:24 AM patio wrote:

    > The great Irving Fisher agrees, George. You cannot get inflation
    > when lenders won't lend ( or at least go back to sane criteria )
    > and borrowers neither qualify nor WANT to borrow. All the inflationista's
    > have the same argument, but, but, they are printing so much money.
    > But thus far, no velocity increase- we should have seen something
    > by now, eh?
    > The other kind of "inflation", goods increase in price, would come
    > from our dollar devaluing vs. other fiat currencies. Not happening
    > either.
    > On Jan 18 08:49 AM George Kesarios wrote:
    Jan 18, 2009. 04:35 PM | 3 Likes Like |Link to Comment
  • Bond Expert: Friday Wrap [View article]
    Every dollar eaten up by government securities means a dollar less invested in the private sector to fuel real growth. The irony is that the flight to safety will further erode the economy's ability to fix itself. That is, unless you believe in Soviet-style central planning.

    If government does manage to sap up about $2 trillion a year to fund its deficits then we are in trouble. If it fails to convince enough private buyers to pick up this paper in exchange for real output then the Fed will simply seize a greater slice of the economy by printing more money. Either option is miserable for the private sector.
    Jan 17, 2009. 01:00 PM | 3 Likes Like |Link to Comment
  • Where Are We on the Roadmap? [View article]
    Our empire is suffering from the throes of its own continuous growth model. Rome's depended on plundering new provinces; our depends on borrowing and spending, pursuing a half-a$$ Keynesian inflation model.

    It would be tough to argue that the majority of America's growth over the last several decades has been attributable to sustainable expansion of output. We produce a smaller amount of real goods every year, supplanted by peddling junk financial assets and other services. This is even more true when we normalize by subtracting out war materials which we have an obsession with spreading around the world. The amount of real value America contributes to the global economy is shrinking every year.

    The root cause? Rome expanded due largely to unprecedented legal structure at the time, enabling enterprising individuals to produce value as they deemed fit, and opening new trade venues as the Republic/empire expanded. At its height, Rome acted as an enormous free trade zone that (for the time period) protected property, enforced contracts, and adhered to the basic elements of free society Capitalism that made America great. Subsequent despotic emperors eroded all of these competitive advantages. By the time of the Hun, Goth, Vandal, and other Germanic invasions the inhabitants of the empire were enslaved serfs, eager for change, or at least unwilling to risk their livelihoods to defend their masters.

    America grew for similar reasons to Rome, but we took it much further. We created rule of law that protected the individual, making him sovereign to his own life. This enabled unprecedented growth through liberation of the individual. This was the world's first and best example of Capitalistic expansion. In all aspects of American life we have and are in the process of further reversing this trend. it does not bode well for the American empire.

    On Jan 16 06:21 PM bricki wrote:

    > Comparisons to Rome and Britain are interesting. The primary reason
    > for Rome's collapse is probably that their economy relied on a continuous
    > growth model that was not scalable given the technology of the time.
    > Communications and movement just took too long so they just could
    > not manage change. There is a control theory analogy involving the
    > concept of lag and response time. Our empire is not likely to fail
    > for that reason.
    > As far as the British Empire is concerned, some would say that empire
    > is still strong - its center just moved west a bit from that puny
    > island to North America. In terms of cultural hegemony anyway the
    > Anglo North Atlantic Empire is still looking pretty good.
    > Argentina? RU joking? The US and Argentina are not comparable.
    Jan 17, 2009. 12:42 PM | 2 Likes Like |Link to Comment
  • Where Are We on the Roadmap? [View article]
    We WERE the greatest Capitalistic nation in the world. Those days are gone. Capitalism works because of natural feedback in which bad resource allocation is wiped out by bankruptcy. TARP, the Fed, and every other legislative bailout measure eradicate the healthiest aspect of Capitalism. Not to mention the lack of respect for property rights by a Congress spending trillions of our money without even asking for it in taxes (just borrowing it on our behalf for everyone to repay later) and a Federal Reserve capturing an obscenely growing % of national output simply by printing money and taking resources. This is not Capitalism, but the breakdown of rule of law.

    On Jan 16 05:42 PM abetterplace wrote:

    > To all you Doomers and Gloomers;
    > This recession is going to be history in 2010! It is quite unfortunate
    > that all of you will still be "broke and crying" come 2011.
    > Yes we are "special". We are the greatest capitalistic democracy
    > in history. We have made mistakes but,despite views as yours, we
    > will survive and continue to be great.
    Jan 17, 2009. 12:22 PM | 4 Likes Like |Link to Comment
  • Public Pensions: Rotting from Within [View article]
    The pain is already upon us and will only get worse since our public officials refuse to recognize its causes. Unfortunately i agree that the only way this country will change its bad habits is through catastrophic resource disruptions. In particularly it is becoming more inevitable every day that the US credit rating will be downgraded-if not by the rating agencies, then by markets-and the dollar will lose its status as world reserve currency.

    Granted, this will likely take years since there is no strong replacement on hand, but if there were any reasonably strong economy/currency at the present moment the dollar would be utterly worthless.

    In response to these tough times our public leaders are making us less competitive, implicitly raising taxes at an unprecedented level through borrowing, and robbing the economy of an increasing amount of output through money creation. We are heading down the path of Socialism, crony Capitalism, and Protectionism...not a good combination! it is ultimately the Road to Serfdom.

    On Jan 14 11:42 AM Leftfield wrote:

    > The above response to this excellent article is absolutely typical
    > of gov't worker response to any challenge. When any reform comes
    > up, they flood newspapers with "how dare you" responses.
    > Only proves how insulated they are from the reality of private workers.
    > I've long advocated zero benefits for gov't workers, just straight
    > pay, equivalent to what they receive now. Then, the true costs are
    > plain to see. Reform would come quicker than a bank bailout.
    > Great idea to make public sector work time-limited. A training ground,
    > like the military. The service to the public can't be worse than
    > what I faced yesterday when I inquired about a hearing for property
    > tax reduction. The answers to my questions were confusing and contradictory,
    > no double accidentally on purpose.
    > Put gov't workers in the social security system and that might get
    > somehow fixed also. As things stand, I can hardly wait to see us
    > told to fund the lavish public sector plans even when social security
    > finally collapses. Will that wake up the public?
    > I've heard it said that reform finally comes when the pain of continuing
    > is greater than that of change. Clearly this pain needs to be great
    > and many changes are going to be forced on us. I'm hoping we're
    > not too far gone to get things right again.
    Jan 14, 2009. 11:58 AM | 1 Like Like |Link to Comment
  • Treasury TIPS: Back in Style [View article]
    A major inflection point for TIPS, and hence for inflation expectations, occurred in late November. Since then TIP is up about 10%. Not too shabby for a low yield bond fund. The TIPS market will be the forerunner of a rush to inflation protection. The Fed academics keep telling us to expect deflation, but the average person is increasingly questioning the rampant printing press actions. Let's remember that inflation is, after all, predicated on expectations more than anything else.

    The irony is that when markets return to nominal price normalcy we suddenly become at severe inflation risk. So to keep inflation at bay we hope for declining asset prices. But to keep our savings at bay we hope for increasing asset prices. In either case, the average American is screwed.
    Jan 14, 2009. 11:45 AM | 1 Like Like |Link to Comment
  • Obama's 'Buy American' Plan May Meet China's Export-Led Growth in 2009 [View article]
    We're seeing a general breakdown of the last couple decades of "free trade." Reneging trade agreements, and providing MASSIVE subsidies to domestic industry (TARP and trillions in other bailouts) can only be met with animosity abroad. This is not the broad multilateral cooperation we were promised and will only get worse. Consider the new found influence of the labor lobby and its collusion with domestic industry in search of handouts and we see there is only one inevitable outcome...
    Jan 14, 2009. 11:33 AM | 3 Likes Like |Link to Comment