ArizonaGlen

The Financial Meltdown: Absolutely Nothing Has Been Fixed

Gee, I was just starting to mellow out today and now I am all upset again. The question is what can be done about the fact that our country is being run by liars, thugs, and thieves? Very distressing as I see my prospects grow steadily dimmer and nothing is being done to change that. According to the CBO numbers the minimum healthcare plan for the average family of four to meet the mandate will cost $15,000 per year ($20,000 per year according to the insurance industry) by the year 2016 under the healthcare legislation. Since I only pay around $5,000 per year right now for decent coverage for my family it is clear that the self employed will be royally screwed by this plan. We are barely making it now so there is no way we can afford premiums of over $1,000 a month. That is as much as my mortgage!

Arizona Maxes Out Line of Credit in Two Weeks Flat

I just checked the revenue and expenditure figures and based on the projected revenue for FY2010, Arizona will have to adopt expenditure levels slightly less than FY2005. I remember 2005 and don't remember anyone complaining about a lack of state spending that year, nor has population grown by so much that it should make a big difference.

Arizona Maxes Out Line of Credit in Two Weeks Flat

Being an Arizonan I can tell you that spending got drastically out of hand in our state during the 2003 to 2007 years under the mismanagement of Janet Napolitano and the Republican controlled legislature. We did put a $700 million rainy day fund in place but blew the whole thing in 2008, the first year of the recession! If we would just adopt the 2005 budget it would be balanced but the politicians (even our hapless Republican Governor Jan Brewer who is insistent on a 1% sales tax increase) have to act as if reverting to what the budget was 5 years ago is draconian.

I run a small business and my revenue has fallen to what it was in 2004 and guess what, I have to keep my budget to what it was in 2004 and somehow I still manage to pay my bills, feed myself and my family, and pay my taxes (which are about a third of what they were in 2007, my highest revenue year).

What the people running the state don't understand is the only way to get revenue up is to bring jobs and businesses to the state and a 1% sales tax increase will most certainly not do that. In fact, the 1% increase will tank the economy further and then they will say its worse than we thought and we need even more tax increases. The short sighted idiocy of our state government is truly amazing.

Japan: Will It Soon Be 'The 20 Lost Years'?

My vote is we call it "The Lost Score"

Sam Stovall: This Decade's Losers Should Be Next Decade's Winners

The decade isn't over yet and December is historically a relatively volatile month. Not to say that I think the numbers will change drastically from this article but lets wait until the decade is at least over before wasting our time on the mathematics.

Is a Deficit-Neutral Stimulus Possible?

And another thing, I am getting tired of liberals using "deficit neutral" as somehow a wonderful thing that validates their idea. I can come up with alot of deficit neutral programs if I just raise taxes an equal amount to offset the cost.

In my mind a true deficit neutral program is one that generates enough new economic activity to pay for itself with new tax revenue without raising the existing tax rates or coming up with a new tax.

Is a Deficit-Neutral Stimulus Possible?

"The problem with an FTT, of course, is that it needs to be applied everywhere in the world all at once--or midtown Manhattan simply moves to Canary Wharf."

Since this is obviously not going to happen you destroyed the entire premise of your column by yourself. This is one of the main problems with liberals, they never take into account global externalities or that people will change their behavior based on whatever new scheme they come up with. This is along the lines of the Global Warming alarmists stating "Cap and Trade will not cost American jobs, as long as China and India adopt the same system."

It's like liberals live in an alternate universe, I seriously do not understand how they honestly think that their policies are going to do anything of what they say they will.

The Consequences of Underemployment

I am just a bit surprised that he is able to make $15.96 and hour at Lowe's and $13.70 an hour at a gas station. Most of those jobs in Arizona pay between minimum wage and $10 an hour and are still very competitive to get at that rate.

Obama's Fears of a Double Dip Recession Are Nonsense

And what is this talk about a double dip recession? You have to get out of the first recession before that can happen. The only part of the economy that was not in recession the third quarter was government and auto on cash for clunkers steroids. You need two quarters of negative growth to enter a recession, I would think you should need at least two consecutive quarters of real positive growth to get out. I am a small business owner and can tell you that this quarter is definitely going to be negative again.

Initial Job Claims Pretty Flat

We are still losing jobs at a faster rate than at the worst part of the 2001 recession. It still seems as if we are a long way from the job numbers stabilizing, let alone seeing any job gains. Unless this administration decides to change course I see 12% BLS unemployment (and 20% true unemployment) by mid year.

Structural Unemployment: The Only Cure

Jeff,

I liked your article and agree that we do have a global oversupply of labor - definitely relative to the available capital base and increasingly relative to the resource base. I am not sure how we could implement a shortened work week however with all of the fixed costs of having each employee, which is about to get even higher with the new health care reform legislation.

Here is my thought process on this and let me know what you think:

Normally the total cost of an employee to a business (including wages, benefits, equipment, taxes, and the cost of meeting the govenment paperwork and regulations, etc.) is around twice the wage paid to the employee (I realize this can vary alot depending on the business but I think it is close enough for my example and mathematically easy to work with).

Now lets assume a business has 100 employees paying them $10 an hour in wages or $20 an hour total cost. At a 40 hour work week each employee will cost the company $400 per week or $40,000 total wages and an additional $40,000 in all other associated costs or $80,000 total cost to employ all 100 employees per week.

Now we switch to a 30 hour work week. We will assume that this company still needs 4,000 hours of labor so the number of employees will increase to 133 (great, we created 33 more jobs!).
A couple of problems arise however - the company not being a masochist wants to keep their total labor costs @ $80,000 a week. Therefore each employees total wages and benefits will need to be reduced from $800.00 to $600.00. The further problem is the fixed costs per employee is not going to drop 25% just because their hours are 25% less (in fact many costs such as equipment and health insurance will stay exactly the same). I am going to guess that the non wage costs per employee will only drop 10% or from $400 to $360. Subtract $360 from $600 ($240) and divide by 30 and now our employee is not only working less hours but is only getting $8 an hour in wages and total pay has nearly dropped in half ($400 to $240).

Now I understand you may argue to raise the minimum wage to solve this problem but what if the business is no longer profitable and they say the hell with the whole thing and go out of business or outsource to China. Then the argument will be to impose stiff tariffs on Chinese goods which may increase the number of jobs here but will increase the cost of living and dramatically increase the price of any natural resources that we must import (i.e. oil).

I have thought about our present predicament and have looked at arguments from both sides of the political spectrum and do not think that there is currently any policy that we can implement that will raise our standard of living going forward. The gig is up for the US. We had a couple of great decades where people sent us real stuff in exchange for worthless peices of paper but that is coming to an end.

Structural Unemployment: The Only Cure

I work in the architecture profession in Arizona as a project manager. (I have a degree in architecture from UVA but have not yet finished my licensing requirements). One thing I have noticed about architecture more than other professions is how cutthroat pricing gets in rough economic times. There are alot of sole proprietor architects who are much older and got their license when it was much easier and do projects for a small percentage of what a firm will charge. Not only are more than 50% of architectural professionals unemployed here but the ones that are employed are being forced to settle for fees less than half of what is recommended by the AIA just to get a project.

When you combine a steep drop in available work and the steep drop in fees I imagine total revenue for architectural firms (at least in Arizona) is down more than 75%. I don't see this changing anytime soon, in fact I see it getting worse as more and more unemployed architects decide to compete as sole proprietors. The people who are going to be worst hit are all these people who spend $20,000 to get a drafting degree from ITT Tech and find that now all drafting is done by licensed architects and other experienced professionals since they will now work 80 hours a week for 30k a year.

Why Government Deficits Don't Affect Interest Rates

Antal Fekete has written alot of papers on this subject stating that deficits financed by quantitative easing provide for risk free bond speculation (because the speculators front run the Fed in the bond market since they know what interest rate target the Fed is trying to reach) which keeps rates low and actually exacerbates deflation, the exact opposite of the Feds goal. His papers are an extremely interesting read and give a good counterpoint to the prevailing wisdom of inflationary pressures going forward.

Updated Economic Forecast for 2010: Slight Progress Lowering Unemployment

First, I think your graph is wildly optimistic but certainly within the realm of possibility especially if we are using BLS statistics as our measuring stick. Still I am curious about a couple details.

1. Why the forecast drop in GDP growth rate at the end of 2010? This seems to indicate to me that you are believing that the GDP growth is going to be due to the stimulus package (whose largest impact is in 2010, an election year of course) and then will drop off (i.e. the stimulus package will not follow the Keynesian theory of jumpstarting growth in the private sector).

2. What about prospects beyond '10. We will need several years of 3-4% growth to get back to full employment.

Military Spending Double Whammy: Increasing Unemployment and Reducing GDP

"But instead of doing anything to encourage a sustainable recovery in employment - such as rebuilding America's manufacturing base,"

Your article seems to follow a similar philosophy to Peter Schiff which I am more or less in agreement with, although neither you nor Mr. Schiff seem to ever say exactly how we are supposed to rebuild America's manufacturing base without both (a) lowering both wage and benefits for American workers and (b) tackling China's currency manipulation without imposing some kind of trade sanctions. I am increasingly coming to the conclusion that there is no solution that results both in a stable economy and an increased standard of living. There is simply not enough capital and resources to sustain full employment at the standard of living we are used to while in a global economy.