LCACM

Why Bernanke Should Be Fired

The author is absolutely correct in saying that Bernanke does not deserve to be reappointed considering his role in the crisis. However, it appears that Obama does not have a firm grasp of Economics/Finance, so is playing it safe by reappointing the Bush financial team.

Reich: Don't Expect Lost U.S. Jobs to Return

Sections of the US financiers have been in search of slave labor for a long time. During the era of Slavery, they managed to profit handsomely by enslaving a section of it's population. Though finacially profitable for a few slave owners, it was brought to an end by US iPresident Abraham Lincoln. Perhaps even at that time, economists could argue that Slavery was an economically more productive and efficient system. In the 20th century, Communist China had managed to enslave it's entire population, using Marxist ideology. Starting in the 1980's US financiers and Communist Leaders in China realized the profit potential from this huge slave labor force in China. They could be made to work long hours at low wages and no environmental regulations, and their products shipped to US markets to fetch high profits. Any critics could be silenced as being anti Free Market. Fortunately the solution is fairly simple and is a win-win solution. WTO should insist on a Global Minimum wage enforced via proportional tariffs for defaulting countries. This will ensure that workers in emerging countries can consume not only their own products but some imported products as well. This will end the unbalanced system we have at present.

Weekly Forecast for November 30 and December 7, 2009

chris coonan "25% of all US Children are on Fooo d Stamps right now, and one in eight adults"
The Food Stamps are paid for by the US government, who in turn is borrowing the money from the Chinese Communists via US Treasuries. In other words 25% of US children and 1 in 8 adults are indirectly being fed by the Chinese Communists. And don't forget they also manage to feed 1.3 billion Chinese.
US is forever boasting about Human Rights and conveniently forgets Human Responsibilities. This line of thinking has brought the country to this sad state that it is depending on the Chinese to feed a percentage of it's children and adults. What makes it even stranger is that US population density is a third that of China and a tenth that of India. If these populous countries can feed their own populace, US families should definitely be in a position to earn sufficient amounts to feed themselves.
It is high time for the US citizens to reexamine naive US Government policies, that make it impossible for US citizens to feed themselves.

Historical Bull Market Returns, Duration Suggest More Upside for the Current Rally

In previous eras mentioned by the author, the US economy did not have to deal with intense low wage competition from Asian countries. The reason for the wage differences is perhaps the efficient family units that are common in Asia and fast disappearing in the West. The incremental cost per person in Asia is minimal, enabling Asians to accepts lower wages compared to Western employees.
This low wage competition is likely to impact US wages which in turn will negatively impact the US economy and the US stock market.

What Does It Take to Become a Truly Competent Investor?

It is probably true that mathematics is not required for profitable Investing, as long as the other market participants are equally ignorant. A Sanskrit saying states "When in the company of fools, the learned should keep quiet"

The Socialist Calculation Problem and Regulation of Financial Markets

The author is writing based entirely on ideology that believes that it is impossible for the Governmeent to do anything properly. This thinking entirely ignores facts, and has directly contributed to financial deregulation and meltdown. As an example, Glass Steagall act had provided a firewall that had successfully prevented the greed of bankers from bringing down institutions where they worked. Financial lobbyist undid Glass Steagall and sure enough a financial meltdown follows. The author is critical of baby steps that the EC is trying to take towards the goal of accountability at financial firms. Baby steps always seem awkward, even those of a future ballerina.

Nasdaq Sale: Why Would Schapiro and FINRA Lie?

The author has done a superb job, exposing a very important issue. Looking forward to the next post.

American Austerity Is About to Begin

The author and several of the commentators seem to indicate that US citizens must suffer great economic hardship to placate the Free Market Deity. To change the current economic course, we need to first understand what brought us to the juncture of the economic meltdown.
US and other World economies have been sucked into the economic black-hole, first promised by Russia's Kruschev (en.wikipedia.org/wiki/...) in his "We will bury you" speech. It appears that the Communist threat has instead been made good by today's Communist China, using Free Trade as their weapon of choice. Corporate CEOs have been willing collaborators of the Communist regime, investing billions in China to shift manufacturing plants there.
Even if Americans started to save, CEOs would figure out a way to plough those savings into China, unless the US government takes steps to prevent that.

How Can We Get the Economy Back on Track?

The analysis by the author is excellent. The challenge is how to get the economists who dictate the national policy to upgrade their thinking. Conventional economic thinking has the goal of maximizing production subject to the resource supply constraints, and totally ignores the fact that due to the industrial / scientific revolutions the amount of goods produced, today far exceeds what the markets can absorb. The goal of new economic thinking should be maximization of jobs rather than production of goods. The following concrete steps can help to achieve to achieve this goal a) require all countries to institute a minimum wage structure to absorb surplus goods being produced. Imagine the surge in demand that would be produced if China/India were to institute a reasonable minimum wage. b) Institute the Export Certificates regimen suggested by none other than the legendary Warren Buffet,to slowly balance trade. Balanced trade is a must to ensure stability of demand. Currently it appears that overproduction by China is creating an economic black hole.

Wasted Olympic Dollars: What About Real Job Creation?

The author is absolutely correct in stating that the US government priority should be job creation and not Olympic games. Considering the huge levels of US Trade and Budget deficits, it is not clear why US was competing for a chance to spend $30 Billion on hosting the Olympics. Rio probably needs the Olympics to showcase their city capabilities, but Olympics would not add anything to the reputation of Chicago.

U.S.-China Trade Spat: Warning of Worse to Come?

During the 1930 Depression, Smoot-Hawley hurt the US economy as the US used to enjoy trade surplusses. When a country enjoys trade surplusses Protectionism hurts its exports. However, when a country has trade deficts, common sense indicates that Protectionism helps the economy. Currently the US is suffering from huge trade deficits, so a Smoot-Hawley type act would greatly benefit US manufacturers.
If Defense spending is good, why is Protectionist legislation considered bad?
Without strong Protectionism, the US Treasury will not have the tax resources to support a strong Defense in these highly troubling times.

Trade Deficit Threatens Recovery, Destroys Jobs

It is amazing that Obama campaigned for changing the trade from
Free Trade to Fair Trade but so far has not delivered on his promise. To reduce trade deficits President Obama needs to encourage overproducing countries to pay higher wages to their workers, to increase the size of those markets. This can be done by imposing a tariff proportional to the wage differential between US and the Exporting countries. This tariff would be higher on goods from countries that underpay their workers, and it would be less on goods from countries with better wage structure.
Consequences of such a tariff would benefit all stake holders. It will gradually improve wages and living standards in exporting countries, reduce trade deficits in developed countries and increase the overall size of the market.
Under current conditions trade with China only benefits the owners of Walmart and other large retailers to the detriment of the US economy and the general public.

Employment: Minimum Wage, Maximum Stupidity

Minimum wage laws have to be followed by all companies who have their operations in the US. So it does not put any of them at a disadvantage relative to one another. The problem is when there are countries with no minimum wage laws who export to the US. It is high time, that the US government insisted on some sort of global minimum wage for all countries in order to pursue business in the US market. It would seem obvious that a decent minimum wage would be a basic human right. Currently the the human rights activists only focus their activities on fighting for abstract rights that most people will have a hard time grasping. Minimum wages assures that all citizens have equal opportunity to participate and vote in the economic life of their respective countries.

Fixing China Trade Is Key to a Sustainable Recovery

The biggest beneficiaries of the trade deficits are the US based importers that buy cheap Chinese goods produced and sell the goods in the US. To keep the voters from demanding fairness the importers pay large sums to the election campaigns of politicians who support one sided trading. The voters meanwhile are too engrossed in the private lives of entertainers such as M. Jackson, or sports personalities. Since this situation is unlikely to change in the near future, this predictable trend of ever greater deficits and fiscal mismanagement presents itself with some stock trading opportunities. It would be better to focus on the stock trading opportunities this situation presents as we cannot change the behavior of selfish politicians or intellectually lazy voters, in the short term.

Manufacturing Employment Continues Free Fall

Perhaps the Obama Administartion is not in a position to take any action against the Chinese as they could retaliate by refusing to purchare US Treasuries. The current system is probably beneficial to owners of Walmarts and other big retailers who can buy cheaply in China and sell it a a huge profit in the US. Importantly they make contributions to the policians, to pass laws bendfitting special interests to the detriment of manufacturing workers.