Friday, November 06, 2009
Thursday, November 05, 2009
Wednesday, November 04, 2009
Tuesday, November 03, 2009
Friday, October 09, 2009
All of these factors will tend to inhibit the pace of the economic recovery.
Thursday, October 08, 2009
Wednesday, October 07, 2009
Tuesday, October 06, 2009
Monday, October 05, 2009
Friday, September 11, 2009
Friday, July 24, 2009
The average annual income for family physicians is $173,000, while oncologists earn $335,000, radiologists $391,000 and cardiologists $419,000, according to recent data compiled by Merritt Hawkins, a medical recruiting firm.
The disparity results from Medicare-driven compensation that pays more to doctors who do procedures than to those who diagnose illness and dispense prescriptions. In 2005, for example, Medicare paid $89.64 for a half-hour visit to a primary-care doctor in Chicago, according to a Government Accountability Office report. It paid $422.90 to a gastroenterologist who spent about the same amount of time performing a colonoscopy in a private office. The colonoscopy, specialists point out, requires more equipment, specialized skills and higher malpractice premiums.
Wednesday, July 22, 2009
As many FierceHealthcare readers already know, many U.S.-based medical students are shying away from primary care, largely because primary-care physicians make far less than specialists. As a result, many institutions are hiring foreign-trained residency graduates; in fact, more than half of all primary-care residency graduates are immigrants.'
Tuesday, July 14, 2009
Wednesday, July 08, 2009
Tuesday, July 07, 2009
Monday, July 06, 2009
'Quantitative easing - expanding base money in circulation (mainly bank reserves with the central bank by purchasing government securities) - isn’t working in the US, the UK or Japan.
Credit easing - outright purchases of private securities by the central bank, which can either be monetised or sterilised - is achieving little in the US or the UK, although it has not been pushed too hard yet.
Enhanced credit support in the Euro Area - providing collateralised loans on demand at maturities up to a year at the official policy rate - is not working either.
These policies are not improving the ability and willingness of banks to lend to the non-financial sectors. They have had little positive impact on the corporate bond market. It is not surprising why this should be so, once we reflect on the actions and the conditions under which they are taking place.'
Thursday, May 28, 2009
'A new study by the RAND Corporation found charter schools do not harm conventional public schools and charter students are more likely to graduate high school and go on to college than other public school children.'
Wednesday, May 27, 2009
A Change to Pass/Fail Grading in the First Two Years at One Medical School Results in Improved Psychological Well-Being''Our study has demonstrated that a change from a five-interval (A, B, C, D, F) to a two-interval (pass/fail) grading system in the first two years of medical school at the University of Virginia School of Medicine was not associated with a decline in students' academic performance (course performance in the first two years of the curriculum, USMLE Step 1 scores, clerkship grades, or USMLE Step 2 CK scores). This is consistent with previous data from the University of Michigan Medical School showing that a change from a four-interval (honors, high pass, pass, fail) to a two-interval (pass/fail) grading system in the first year of medical school resulted in no statistically significant change in performance'
Tuesday, May 26, 2009
Another area that Obama will be looking to regulate I am sure. How do dolts in government know what is good for the market?
A majority of the jurisdictions examined have additionally issued policy statements on nanotechnology regulation. Pelley and Saner argue that these statements are designed to serve a dual purpose: "On one hand, they signal to industry that the jurisdiction in question is committed to the continued development of nanotechnology, and that it is therefore safe for companies to invest in that jurisdiction. On the other hand, they signal to consumers that jurisdictional governments are committed to ensuring the continued health and safety of its citizens and of the environment."
Monday, May 25, 2009
From The Baseline Scenario:
'financial innovation is generally good in and of itself, although it has a high risk of creating “negative spillovers” – a higher risk than for non-financial innovation: “Most financial innovations are positive, and we don’t know ex ante which will be negative, so giving ourselves the power to block certain innovations because they might have negative spillovers is risky.” At first blush, this seems like a reasonable extension from real-world innovation to financial innovation.'
Wednesday, April 22, 2009
Sixty percent (60%) of Americans say the federal government has too much power and too much money, according to a new Rasmussen Reports national telephone survey.
Just nine percent (9%) say the government has too little power and money. Twenty-four percent (24%) believe the government has about the right amount of both.
While slightly more than half of those working for both the government and private industry say the government is too big, 79% of entrepreneurs feel that way.
Republicans and adults not affiliated with either major political party are far more concerned about the government’s size and wealth than Democrats are. Eighty-eight percent (88%) of Republicans and 62% of unaffiliateds say the federal government as too much power and money. Among Democrats, however, just 35% agree, while 44% think the size of government is about right.
Those who earn less than $40,000 per year are more wary of the size of the government than are those who earn more. Sixty-two percent (62%) of investors say the government has too much money and power, compared to 57% of non-investors.
Tuesday, April 21, 2009
From a recent testimony by some prominent economists:
Columbia University professor Joseph Stiglitz and MIT professor Simon Johnson warned the Joint Economic Committee of Congress that the current government policy of propping up troubled financial giants could impede an economic recovery.
They each said spending taxpayer dollars freely on behalf of struggling big banks risks drowning U.S. productive capacity in debt -- while handing what amounts to an enormously costly subsidy to politically powerful financial sector insiders.
If the Obama administration fails to hold troubled banks accountable for their problems, the U.S. could face a lost decade of economic growth like Japan's in the 1990s, they said.
The third skeptic, Federal Reserve Bank of Kansas City President Thomas Hoenig, said policymakers must allow troubled firms to fail rather than propping them up, a la AIG (AIG, Fortune 500). He said banks must be treated consistently, regardless of their size or connections, for the sake of restoring confidence to markets and normal function to the economy.
Monday, April 20, 2009
To make health care and other core services more readily available to people in need, management efficiencies will never go far enough, he said, speaking Sept. 10 at the Commonwealth of Virginia Innovative Technology Symposium.
During the group’s travels, they visited a hospital dedicated to heart care. More than 6,000 patients have open heart surgery at the hospital each year, with surgeons performing an average of 14 a day at a cost of $1,500 each. In contrast, the average doctor in the United States performs at most four a day, at a cost of $35,000 or more, Chopra said. Yet the doctors in India do not make dramatically less money than their U.S. counterparts, he said.
Electronic medical records are another example of where the debate must change. EMRs have the potential to improve care for everyone, but such systems can cost $30,000. Many people are wondering how physicians will pay for that, Chopra said, when they really should be asking how to lower that price to $1,000
Monday, April 13, 2009
The traditional Beltway logic on health care reform goes like this:
- The problem is that 46 million Americans lack health insurance.
- Government should provide health insurance to those 46 million people, or at least pay for it.
- Let’s expand a taxpayer-subsidized health insurance program to cover the 46 million, or maybe create a new program.
- (Alternately: Let’s mandate that everyone has to buy/have health insurance.)
- This means everyone will have health insurance. We have solved the problem.
Thursday, March 26, 2009
What Mr. Becker has seen over a career spanning more than five decades is that free markets are good for human progress. And at a time when increasing government intervention in the economy is all the rage, he insists that economic liberals must not withdraw from the debate simply because their cause, for now, appears quixotic.
But he complains about "counterproductive" government policies "designed to lower mortgage rates to stimulate demand." He says he was against the Bush Treasury's idea of capping mortgage rates (which was only floated) and he has "opposed the mortgage plan of President Obama." "It goes against both these adjustments . . . it would hold up prices and increase construction. I think that's a bad idea at this time."
On the subject of recovery, Mr. Becker repeats his call for lower taxes, applauds the Fed's action to "raise reserves," (meaning money creation, though he said this before the Fed's action a few days ago), and he says "I do believe one has to try to do something more directly to help with the toxic assets of the banks."
"When you get a larger government, when you have the government taking over Social Security, government taking over health care and with further proposals now for the government to take over more activities, more entitlements, the rational response is to have less responsibility. You don't have to worry about things and plan on your own as much."
Thursday, March 19, 2009
As the AIG bonus scandal explodes, Republicans are looking for ways to blame the president and the majority party. Privately, some admit that this is the first attack that’s sticking after two months of grappling with the administration and its economic policies. In private and in public, some conservatives are cool toward attacking AIG’s bonuses and demanding more government regulation of companies that receive TARP money — even if it’s a one-time deal. And some conservatives are attempting to shift the focus of voter outrage from the bonuses to the bailouts themselves.
“There is a fair degree of hypocrisy in this,” said one Republican House staffer. “It’s as if Geithner had been Treasury secretary for last three years and Obama was president in September. We had a bipartisan vote for the bailout - although the opposition was bipartisan, too. Neither party comes to this with clean hands.” The staffer echoed the public statements of some conservative members of Congress — that the frenzy of bonus-bashing was moving the debate further to the left, and losing focus for the larger battle against endless big-business rescue packages and government intervention in the economy.There is no unified Republican argument against the AIG bonuses, and there is some surprise at how quickly the party’s leaders have adopted a populist campaign to penalize AIG and pull back the bonuses. The NRCC and House Minority Whip Eric Cantor are attacking Democrats as tacit supporters of the AIG stimulus, a strategy that took several days to get off the ground.
Wednesday, March 18, 2009
But Obama and the Democrats wrote and passed a law that protected the bonuses paid out by AIG and other institutions that received TARP funds.
"Fair or not, questions about why Mr. Geithner did not know sooner about the A.I.G. bonuses and act to stop them threaten to overwhelm his achievements and undermine Mr. Obama’s overall economic agenda."
As Treasury Secretary, Geithner is responsible for communicating with the Federal Reserve since these two institutions work hand in hand. Since the Federal Reserve legally owns the AIG stake, and the Treasure is part of the Executive branch, the Treasury is responsible for acting like the owner and keep a close watch on AIG. Apparently nothing happened.
"The A.I.G. tempest has been especially explosive for Mr. Geithner because, as president of the New York Fed, he was the one administration official who had been involved in the Bush-era bailouts. "
How long will he last?
From the timesonline:
Livestock contribute 18 per cent of the greenhouse gases believed to cause global warming, according to the UN Food and Agriculture Organisation. The Danish Tax Commission estimates that a cow will emit four tonnes of methane a year in burps and flatulence, compared with 2.7 tonnes of carbon dioxide for an average car.
He should also consider taxing all the hot air coming from his administration.
Tuesday, March 17, 2009
WASHINGTON — The Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system.
The proposal is politically problematic for President Obama, however, since it is similar to one he denounced in the presidential campaign as “the largest middle-class tax increase in history.” Most Americans with insurance get it from their employers, and taxing workers for the benefit is opposed by union leaders and some businesses.In television advertisements last fall, Mr. Obama criticized his Republican rival for the presidency, Senator John McCain of Arizona, for proposing to tax all employer-provided health benefits. The benefits have long been tax-free, regardless of how generous they are or how much an employee earns. The advertisements did not point out that Mr. McCain, in exchange, wanted to give all families a tax credit to subsidize the purchase of coverage.
Monday, March 16, 2009
New Jersey’s Democratic Governor Jon S. Corzine, who hopes to win a second term in November, has now fallen behind Republican challenger Christopher J. Christie by 15 points – 49% to 34%.
The survey was taken Tuesday, the day Corzine was announcing $916 million in new and increased taxes as part of his $29.8 billion state budget for 2010.
This might be a glimpse into the mood of the electorate. With Obama's reckless spending, higher taxes, higher deficts, higher debt, lower poll numbers, you can make a strong case that the narrow margin of victory is pretty shaky for Obama.
Friday, March 13, 2009
Kundra told attendees that in his new role as federal CIO, he is "embarking on a technology revolution in government." But much of his talk to an audience of government workers and federal IT vendors was a morale-boosting rally.
For instance, Kundra promised to undo the image of the federal government as a laggard in technology adoption and innovation. "We can be thought leaders when it comes to innovation," he said.
Kundra promised to hold voluntary open-door sessions on weekends for federal IT workers who want to share their views on "high-level" technology issues. He said that he has been "amazed" by the IT talent he is finding within the government, and that some of "the smartest people I've ever met in my life are federal government employees."
Wednesday, March 11, 2009
The consumer's mind set is now turning to a economic depression according to a Rasmussen poll.
Most Americans (53%) now think the United States is at least somewhat likely to enter a 1930’s-like depression within the next few years.
The latest results are more pessimistic than those found in early January, when 44% said a 1930’s-like depression was likely in the next few years, and 46% disagreed.
In March 2008, only 38% of adults said the country is likely to slip into a depression, while most (55%) disagreed.
The most recent survey also found that half of all adults (49%) say today’s children will not be better off than their parents. Only 26% hold the more optimistic view, while another 25% are not sure. Those results have changed little from January, when only 27% said children will be better off and 47% disagreed. Twenty-six percent (26%) were undecided at that time.
Sunday, March 08, 2009
The Politico has an interesting piece on this. Some highlights:
“I’ve had more unsolicited offers for participation from the Obama people in 45 days than in the last eight years from Bush,” said Rosenthal (NYT Editorial page director).
Rosenthal said the Obama administration’s approach is consistent with the one the Obama campaign used, and for a reason: It worked. Citing an example, he said that an Obama campaign aide succeeded in convincing him back in July — before an editorial ran — that Obama had not, in fact, reversed his position on a controversial D.C. handgun ban.
Washington Post editorial page editor Fred Hiatt said in an e-mail that the Obama team has been “open and responsive” to requests from The Post’s editorial writers. Hiatt said that helps The Post “produce smarter and more knowledgeable editorials.”
But the White House knows that what gets written in Washington and New York filters out into the country — and that it needs support from those who are most likely to get their news from the inside-the-Beltway press, members of Congress, policy wonks and, of course, other journalists.
Creszenzi figured consumers might go back to saving about 9% of their disposable incomes, the savings rate that prevailed from the 1950s through the early 1980s.
Saturday, March 07, 2009
Which brings me to the bailout.The psychological trouble with current attempts to fix the economy by stimulation is that they don't have that air of unpredictable inevitability that is associated with good music and inspired action. Everything the people in authority now do has an air of delayed predictability. The nationalization of failing banks, when it comes, will be accompanied by the sound of dragging heels. I have an image of a child being reluctantly pulled towards the bedroom, his heels scraping against the carpet as he resists the inevitable bedtime.
What's needed is to get people confident enough about the future to spend again. I'm increasingly skeptical that public spending will quickly effect this, because confidence is shot. Everyone is going to be cautious about spending for a long time from now on, Keynes or no Keynes. The velocity of money slows as everyone starts to hoard, and GDP declines despite an increase in money supply. One way to fix this is to charge a fee for saving your money, i.e. negative interest, or high inflation, use it or you lose it, but that's fearful velocity, not confident velocity. Another is lower taxes, putting more money permanently in people's pockets, but that leaves less for government spending initially, and has no effect on the unemployed. A third is a charismatic confidence-inspiring leadership, but think Germany in the Thirties. I'm a little stymied for now, and so, I sense, is everyone else. There's no quick fix and no substitute for good fresh wise leadership.
Friday, March 06, 2009
From the Washington Times:
The charitable giving deduction reduction, which would limit deductions for couples making $250,000 or individuals making $200,000, provoked the most heat Thursday. Mr. Obama is counting on that provision to raise $179.8 billion over 10 years.
"This will lead people to give less to charities if they behave the way they've behaved in the past," he said. "We've already seen a drop in giving as a result of the economic collapse. On top of that, this will just reduce the amount of giving."
Asked about that, Office of Management and Budget Director Peter Orszag said Mr. Obama took care of that by giving charities government money to make up part of the difference. "Contained in the recovery act, there's $100 million to support nonprofits and charities as we get through this period of economic difficulty," he said.
Thursday, March 05, 2009
The government is making it worse. It's pretty embarrassing for President Obama, who doesn't seem to have a clue what's going on—which would make sense from his background. And he has hired people who are part of the problem. [Treasury Secretary Tim] Geithner was head of the New York Fed, which was supposedly in charge of Wall Street and the banks more than anybody else. And as you remember, [Obama's chief economic adviser, Larry] Summers helped bail out Long-Term Capital Management years ago. These are people who think the only solution is to save their friends on Wall Street rather than to save 300 million Americans.
I'd like to see them let these people go bankrupt, let the bankrupt go bankrupt, stop bailing them out. There are plenty of banks in America that saw this coming, that kept their powder dry and have been waiting for the opportunity to go in and take over the assets of the incompetent. Likewise, many, many homeowners didn't go out and buy five homes with no income. Many homeowners have been waiting for this, and now all of a sudden the government is saying: "Well, too bad for you. We don't care if you did it right or not, we're going to bail out the 100,000 or 200,000 who did it wrong." I mean, this is outrageous economics, and it's terrible morality.
Wednesday, March 04, 2009
The bottom line is that I fully believe the American Recovery and Reinvestment
Act will have the effects we said it would.
We are projecting somewhat stronger growth than some private forecasters. In part, this is due to the fact that we did the forecast two months ago, and the economic news since then has not been good. But the more fundamental reason is that we firmly believe the stimulus package, together
with financial stabilization and our housing policy, will have a tremendous impact. I understand that actual developments may prove me wrong. But everything I know from history and macroeconomics tells me that the policies we are taking will make a crucial difference.
Given the breadth, depth, and expected length of the downturn, we need broad stimulus – some that will come on line quickly and some that will give the economy a boost next year, and stimulus that will affect all sectors and regions.
Tuesday, March 03, 2009
If you are a deficit hawk who lamented the Bush budget deficits, the new administration's budget should not make you feel much better. President Obama will give us different fiscal priorities than President Bush did, but the borrowing and debt imposed on future generations will not be very different, at least if the numbers presented in the Obama administration's own budget document can be trusted.
During the period 2005 to 2007, the U.S. unemployment rate hovered in the ballpark of 5 percent. What was the budget balance? According to OMB historical documents, the budget deficit averaged just under 2 percent of GDP during those three years.
Now compare these results to the new Obama budget. According to their numbers, under their proposed policies, the budget deficit will average a bit over 3 percent of GDP during that time.
Monday, March 02, 2009
White House officials said Sunday that President Obama would sign a $410 billion spending bill that includes thousands of pet projects, known as earmarks, despite campaign promises to put an end to the practice.
In appearances on television talk shows, Mr. Obama’s budget director and chief of staff both played down the issue. “We want to just move on. Let’s get this bill done, get it into law and move forward.”
Officials estimate that the omnibus spending bill, meant to pay for government operations through Sept. 30, contains nearly 9,000 provisions added by legislators to use public money to pay for projects in their home districts.
The earmarks account for at least $3.8 billion of the total spending in the package, according to estimates, including $1 million to control Mormon crickets in Utah, $162,000 to control rodents in Hawaii, and money for the presidential libraries of three Democrats: Franklin D. Roosevelt ($17.5 million), John F. Kennedy ($22 million) and Lyndon B. Johnson ($2 million).The legislation would increase overall spending by 9 percent compared with last year, including significant increases for health care, education and energy.
Sunday, March 01, 2009
From Niall Ferguson is Laurence A. Tisch professor of history at Harvard University
The resources available for policing the world are certain to be reduced for the foreseeable future. That will be especially true if foreign investors start demanding higher yields on the bonds they buy from the United States or simply begin dumping dollars in exchange for other currencies.
Economic volatility, plus ethnic disintegration, plus an empire in decline: That combination is about the most lethal in geopolitics. We now have all three. The age of upheaval starts now.
Barack Obama now faces a much larger and potentially more troubling axis—an axis of upheaval. This axis has at least nine members, and quite possibly more. What unites them is not so much their wicked intentions as their instability, which the global financial crisis only makes worse every day. Unfortunately, that same crisis is making it far from easy for the United States to respond to this new “grave and growing danger.”
Iran, meanwhile, continues to support both Hamas and its Shiite counterpart in Lebanon, Hezbollah, and to pursue an alleged nuclear weapons program that Israelis legitimately see as a threat to their very existence.
The democratic governments in Kabul and Islamabad are two of the weakest anywhere. Among the biggest risks the world faces this year is that one or both will break down amid escalating violence. Once again, the economic crisis is playing a crucial role. Pakistan’s small but politically powerful middle class has been slammed by the collapse of the country’s stock market. Meanwhile, a rising proportion of the country’s huge population of young men are staring unemployment in the face. It is not a recipe for political stability.
This club is anything but exclusive. Candidate members include Indonesia, Thailand, and Turkey, where there are already signs that the economic crisis is exacerbating domestic political conflicts. And let us not forget the plague of piracy in Somalia, the renewed civil war in the Democratic Republic of the Congo, the continuing violence in Sudan’s Darfur region, and the heart of darkness that is Zimbabwe under President Robert Mugabe. The axis of upheaval has many members. And it’s a fairly safe bet that the roster will grow even longer this year.
Saturday, February 28, 2009
In 1965, 27% of Federal spending was mandatory. on Today, 53% of Federal spending is on auto-pilot. The entire Social Security, Medicare, and Medicaid system will need to be overhauled or scrapped. Benefits will have to be reduced and taxes will have to be raised. There are no other choices. Medicare costs will explode over the next 40 years. The increasing debt will result in interest payments on the debt becoming the largest expenditure in the federal budget. The longer we wait to address this unavoidable train wreck, the more likely it will result in generational warfare between baby boomers and younger generations.
As entitlements and net interest grow, discretionary spending gets squeezed. Non-defense programs, which include, activities related to children, transportation infrastructure, education, training and research that should promote future economic growth and prosperity, come under increasing funding pressure. We are forced to ignore investments in the future to pay for commitments made decades ago. The short term focus of our Washington politicians has ruined our fiscal future. Children don’t vote, and younger people are less involved in the political process. As a result, the political gain from immediate increases in spending or reductions in taxes outweighs the eventual economic benefits of more politically costly but fiscally responsible choices. This is a criminal and immoral act upon our future generations. It is time to hold these politicians accountable for their actions.
Friday, February 27, 2009
In the time it takes to say Audacity of Hope, we’ve added $25,000 to the National Debt. There are many pundits who say the National Debt doesn’t matter. We are only paying 3.4% on our 30 Year Treasuries and there is always enough demand. The dollar continues to be steady versus the Euro. Government debt as a percentage of GDP was 122% during World War II, versus only 78% today. All of these statements are true, today. On March 1, 2008 I could have said that the American banking system was sound. I would have appeared to be right. Two weeks later Bear Stearns collapsed and the downward spiral of our worldwide financial system accelerated out of control. Are these reasonable questions to ask?
- How long will foreign countries fund our rapidly accelerating deficits for a 3.4% return which will be wiped out by a slight decline in the USD?
- Will foreign countries with their own economies contracting and pouring billions into domestic stimulus even have the funds to invest in U.S. Treasuries?
- Is there a tipping point when Bernanke has printed one too many dollars? If there is, you can be sure he won’t see it coming.
- When government debt reaches 110% of GDP next year, will we be in better or worse position as a nation than we were in 1945 as the only remaining power in the world?
- How do you solve a $53 trillion unfunded liability problem while tripling your National Debt in the space of 10 years?
Thursday, February 26, 2009
The White House is relying on a set of optimistic economic assumptions in its budget that allows the Obama administration to claim a steeper drop in the deficit in coming years than many mainstream forecasters expect.
The budget forecast assumes that U.S. gross domestic product -- the nation's total economic output -- will decline about 1.2% this year, while private forecasts -- measured by the Blue Chip survey -- show a 1.9% decline. Next year the Obama team forecasts 3.2% growth, while professional forecasters expect a 2.1% gain.
Economic assumptions are vital to the budget forecasts. Stronger growth translates into more profits for businesses and greater income for individuals. That means higher tax receipts, which can reduce the nation's annual deficit and total debt.
The Obama budget puts the deficit at less than $600 billion starting in 2012 from $1.75 trillion this year. Getting to that point requires GDP to rise more than 4% a year by then -- meaning the U.S. would quickly return to growth rates similar to the boom years of the 1990s -- after the worst financial shock since the Great Depression. Such growth is more than a full percentage point above private-sector growth estimates for 2011 and 2012.
The debt service as a % of disposable income for consumers is above Great Depression levels as we enter the Next Great Depression. These levels are unsustainable. Consumers normally have a limited number of choices. They can pull a Trump and declare bankruptcy to wipe out the debt or reduce spending dramatically while paying down their debt. This is what is required to purge our capitalist system of its excesses. Instead, our Government “leaders” are coming to the rescue with your tax dollars. You have already given $7 billion to Capital One and American Express so they can hand out more credit cards with $20,000 limits to pizza delivery boys. When you see someone carting a 52 inch HDTV out the door of Best Buy, you may be making his credit card payment. Barney Frank, and his band of merry Congressmen, has also provided $9 billion of your hard earned tax dollars to GMAC Financial and Chrysler Financial. GMAC Financial used the name Di-Tech to lure millions of gullible poor people into negative amortization no doc mortgage loans at the peak of the housing bubble. When you see a BMW 525i parked in front of a boarded up house in West Philly, know that you are making the car payment for that deadbeat.
The stimulus plan will be a complete failure. Politicians have not taken into account the damaged psychology of the American public. We have been hit over the head with a baseball bat and will not be stepping up to the feeding trough of debt financed spending for a long time. If we do not let people and companies fail, we will encourage the same behavior that caused the problem. It will make sense for every upstanding American to stop paying their mortgage and to run their credit cards up to the limit. Pastor Adrian Rogers explained how many Americans feel today.
"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."
Wednesday, February 25, 2009
As Congressional moron after Congressional moron goes on the usual Sunday talk show circuit and says we must stop home prices from falling, I wonder whether these people took basic math in high school. Are they capable of looking at a chart and understanding a long-term average? The median value of a U.S. home in 2000 was $119,600. It peaked at $221,900 in 2006. Historically, home prices have risen annually in line with CPI. If they had followed the long-term trend, they would have increased by 17% to $140,000. Instead, they skyrocketed by 86% due to Alan Greenspan’s irrational lowering of interest rates to 1%, the criminal pushing of loans by lowlife mortgage brokers, the greed and hubris of investment bankers and the foolishness and stupidity of home buyers. It is now 2009 and the median value should be $150,000 based on historical precedent. The median value at the end of 2008 was $180,100. Therefore, home prices are still 20% overvalued. Long-term averages are created by periods of overvaluation followed by periods of undervaluation. Prices need to fall 20% and could fall 30%. You will know we are at the bottom when the top shows on cable are Foreclose That House and Homeless Housewives of Orange County.
Instead of allowing the housing market to correct to its fair value, President Obama and Barney Frank will attempt to “mitigate” foreclosures. Mr. Frank has big plans for your tax dollars, "We may need more than $50 billion for foreclosure [mitigation]". What this means is that you will be making your monthly mortgage payment and in addition you will be making a $100 payment per month for a deadbeat who bought more house than they could afford, is still watching a 52 inch HDTV, still eating in their perfect kitchens with granite countertops and stainless steel appliances. Barney thinks he can reverse the law of supply and demand by throwing your money at the problem. He will succeed in wasting billions of tax dollars and home prices will still fall 20% to 30%. Unsustainably high home prices can not be sustained. I would normally say that even a 3rd grader could understand this concept. But, instead I’ll say that even a U.S. Congressman should understand this.
Tuesday, February 24, 2009
The Andrea Gail (United States) is captained by Billy Tyne (Barack Obama) with his young first mate Bobby Shatford (Timothy Geithner). Their fishing boat was fighting the rough waves of the North Atlantic (Financial Crisis) as they sought their prize of swordfish (Economic Recovery). While they were concentrating on the task at hand, the remnants of Hurricane Grace (Unfunded Liabilities of $53 trillion) was moving up the Atlantic coast. A low pressure system ($787 billion stimulus bill) moved off the East Coast and a strong disturbance (Bank Bailout) along a cold front coming from Canada combined to create a strong Nor’easter. The intensifying storm was already dangerous (Causing Unemployment and Bankruptcies), but when the subtropical power of Hurricane Grace was sucked into the maelstrom, it became a Perfect Storm (Financial Crisis of Epic Proportions). With 75 mph winds (Deficits) and 60 foot waves (Unsustainable Spending on Social Programs & Military Spending), the storm had become enormously treacherous.
Captain Tyne (Barack Obama) received frantic warning calls from Captain Linda Greenlaw (David Walker) that the storm had grown into a killer and must be avoided. Cocky Captain Tyne (Barack Obama) thought he knew better and could make it through the storm and safely back to port in Gloucester to reap the riches of his catch. Instead of maneuvering (Reigning in spending and allowing banks to fail) to avoid the storm, Captain Tyne (Barack Obama) decides to double down and plough full speed ahead into the heart of the Perfect Storm. The Adrea Gail (United States) gets caught in the vortex of the storm. Ultimately, Captain Tyne (Barack Obama) and Bobby (Timothy Geithner) realize they will never get out alive. They make one last effort to climb a 60 foot wave and the Andrea Gail (United States) capsizes (Collapse of American Financial System), and all men are lost at sea.
Monday, February 23, 2009
President Obama has been only concerned with speed rather than long term corrective actions. The $787 billion 1,074 page stimulus bill has been passed. President Obama has signed it. The market immediately dropped 500 points. It will have no impact on the economy in 2009. The bill will stimulate nothing but the National Debt. Within months, plans for another stimulus plan will be demanded by the Democratic led Congress because speed and the appearance of action are how politicians get reelected.
"Delay is preferable to error." – Jefferson“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” – Lincoln
Sunday, February 22, 2009
In yesterday's OpEd piece in the NYTimes Thomas 'hothead' Friedman wrote:
You want to spend $20 billion of taxpayer money creating jobs? Fine. Call up the top 20 venture capital firms in America, which are short of cash today because their partners — university endowments and pension funds — are tapped out, and make them this offer: The U.S. Treasury will give you each up to $1 billion to fund the best venture capital ideas that have come your way. If they go bust, we all lose. If any of them turns out to be the next Microsoft or Intel, taxpayers will give you 20 percent of the investors’ upside and keep 80 percent for themselves.
Fred Wilson, a VC at Union Square Ventures responds:
So Tom's idea, while it looks good on paper, is a dream. The top venture firms don't want, don't need, and are never going to take government money. The same is true of the top entrepreneurs.
the venture capital business, thankfully, does not need any more capital. It's got too much money in it, not too little. Just ask the limited partners who have been overfunding the venture capital business for the past 15-20 years what they think. You don't even need to ask them. They are taking money out of the sector because the returns have been weak.
And the top 20 firms in the venture capital business are the least in need of a bailout of any group I've ever thought about. These firms, the Sequoias and Benchmarks and Accels and Kleiner Perkins etc etc can raise a fund anytime they want. Accel raised a ton of money last fall in the midst of the worst global financial meltdown in my lifetime.
The venture capital business is an asset class where the top 10-20 percent of the firms make 80%+ of the returns. That's how its always been and that's how it will likely always be. It's because the best entrepreneurs want to work with firms with reputations for making money, making connections, recruting top talent, and getting the right exit at the right time. And those are the top 10-20 percent of the firms.
Friday, February 20, 2009
Sadly, government policy responses -- not only in the U.S. -- are plainly wrong. It is not that the free market failed. The mistake was constant interventions in the free market by the Fed and the U.S. Treasury that addressed symptoms and postponed problems instead of solving them.
The bad policy started with the bailout of Mexico following the Tequila crisis in 1994. This prolonged the Asian bubble of the 1990s, because investors became convinced there was no risk in growing current-account deficits and continued to finance Asia's emerging economies until the bubble burst with the start of the Asian crisis in 1997-98.
Then came the ill-advised bailout of Long-Term Capital Management in 1998, which encouraged the financial sector to leverage up even more. This was followed by the ultra-expansionary monetary polices following the Nasdaq bubble in 2000, which led to rapid and unsustainable credit growth.
So what now? Unfortunately, Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner were, as Fed officials, among the chief architects of easy money and are therefore largely responsible for the credit bubble that got us here. Worse, their commitment to meddling in markets has only intensified with the adoption of near-zero interest rates and massive bank bailouts.
The best policy response would be to do nothing and let the free market correct the excesses brought about by unforgivable policy errors. Further interventions through ill-conceived bailouts and bulging fiscal deficits are bound to prolong the agony and lead to another slump -- possibly an inflationary depression with dire social consequences.
Thursday, February 19, 2009
Following the March 2000 Nasdaq bust, the Federal Reserve began to slash the fed-funds rate from 6.5% in January 2001 to 1.75% by year-end and then to 1% in 2003. (This despite the fact that officially the U.S. economy had begun to recover in November 2001). Almost three years into the economic expansion, the Fed began to increase the fed-funds rate in baby steps beginning June 2004 from 1% to 5.25% in August 2006.
But because interest rates during this time continuously lagged behind nominal GDP growth as well as cost of living increases, the Fed never truly implemented tight monetary policies. Indeed, total credit increased in the U.S. from an annual growth rate of 7% in the June 2004 quarter to over 16% in early 2007. It grew five-times faster than nominal GDP between 2001 and 2007.
The complete mispricing of money, combined with a cornucopia of financial innovations, led to the housing boom and allowed buyers to purchase homes with no down payments and homeowners to refinance their existing mortgages. A consumption boom followed, which was not accompanied by equal industrial production and capital spending increases. Consequently the U.S. trade and current-account deficit expanded -- the latter from 2% of GDP in 1998 to 7% in 2006, thus feeding the world with approximately $800 billion in excess liquidity that year.
When American consumption began to boom on the back of the housing bubble, the explosion of imports into the U.S. were largely provided by China and other Asian countries. Rising exports from China led to that country's strong domestic industrial production, income and consumption gains, as well as very high capital spending as capacities needed to be expanded in order to meet the export demand. An economic boom in China drove the demand for oil and other commodities up. Rapidly accumulating wealth allowed the resource producers in the Middle East, Latin America and elsewhere to go on a shopping binge for luxury goods and capital goods from Europe and Japan.
As a consequence of this expansionary cycle, the world experienced between 2001 and 2007 the greatest synchronized economic boom in the history of capitalism. Past booms -- of the 19th century under colonial economies, or after World War II when 40% of the world's population remained under communism, socialism, or was otherwise isolated -- were not nearly as global as this one.
Another unique feature of this synchronized boom was that nearly all asset prices skyrocketed around the world -- real estate, equities, commodities, art, even bonds. Meanwhile, the Fed continued to claim that it was impossible to identify any asset bubbles.
The cracks first appeared in the U.S. in 2006, when home prices became unaffordable and began to decline. The overleveraged housing sector brought about the first failures in the subprime market.
Sadly, the entire U.S. financial system, for which the Fed is largely responsible, turned out to be terribly overleveraged and badly in need of capital infusions. Investors grew apprehensive and risk averse, while financial institutions tightened lending standards. In other words, while the Fed cut the fed-funds rate to zero after September 2007, it had no impact -- except temporarily on oil, which soared between September 2007 and July 2008 from $75 per barrel to $150 (another Fed induced bubble) -- because the private sector tightened monetary conditions.
In 2008, a collapse in all asset prices led to lower U.S. consumption, which caused plunging exports, lower industrial production, and less capital spending in China. This led to a collapse in commodity prices and in the demand for luxury goods and capital goods from Europe and Japan. The virtuous up-cycle turned into a vicious down-cycle with an intensity not witnessed since before World War II.
Wednesday, February 18, 2009
One new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective. The goal is to reduce costs and “guide” your doctor’s decisions (442, 446). These provisions in the stimulus bill are virtually identical to what Daschle prescribed in his 2008 book, “Critical: What We Can Do About the Health-Care Crisis.” According to Daschle, doctors have to give up autonomy and “learn to operate less like solo practitioners.”
Keeping doctors informed of the newest medical findings is important, but enforcing uniformity goes too far.
Hospitals and doctors that are not “meaningful users” of the new system will face penalties. “Meaningful user” isn’t defined in the bill. That will be left to the HHS secretary, who will be empowered to impose “more stringent measures of meaningful use over time” (511, 518, 540-541)
What penalties will deter your doctor from going beyond the electronically delivered protocols when your condition is atypical or you need an experimental treatment? The vagueness is intentional. In his book, Daschle proposed an appointed body with vast powers to make the “tough” decisions elected politicians won’t make.
The stimulus bill does that, and calls it the Federal Coordinating Council for Comparative Effectiveness Research (190-192). The goal, Daschle’s book explained, is to slow the development and use of new medications and technologies because they are driving up costs. He praises Europeans for being more willing to accept “hopeless diagnoses” and “forgo experimental treatments,” and he chastises Americans for expecting too much from the health-care system.
If President Obama signs the $787 billion economic stimulus legislation Monday, he’ll again be dodging a campaign pledge he made on transparency.
During the campaign, Obama pledged to post legislation online for five days before signing it. But administration officials have said they don’t have to do that for the stimulus because the pledge applied only to non-emergency legislation.
The first bill Obama signed into law, the Lily Ledbetter Fair Pay Act, wasn't posted online until after he signed it Jan. 29.
He signed legislation expanding children’s health insurance on Feb. 4 after posting it online Feb. 1.
“The honorable thing to do is to give us the time to see the bill,” said Rep. Charlie Melancon (D-La.), a leader of the centrist Blue Dog Coalition. "When you make commitments you follow through on them."
Monday, February 16, 2009
President Obama has slammed high-flying executives traveling in cushy jets at a time of economic turmoil. But soon he will have to decide whether to proceed with some of the priciest aircraft in the world — a new fleet of 28 Marine One helicopters that will each cost more than the last Air Force One.
The choice confronting Mr. Obama encapsulates the tension between two imperatives of his nascent presidency, the need to meet the continuing threats of an age of terrorism and the demand for austerity in a period of economic hardship.Equipped to deflect missile attacks and capable of waging war from the air, the new VH-71 helicopters would fly farther, faster and more safely than the current decades-old craft. But each improvement pushes up the cost. The program’s original $6.1 billion contract has ballooned to $11.2 billion, and the Pentagon notified Congress last month that it was so far over budget that the law required a review. The Obama administration now must determine if the project is essential to national security and if there are alternatives that would cost less.
Let the taxpayers eat cake while go zoom zoom zoom, zooma, zoom zoom zoom!!
Saturday, February 14, 2009
Supporters of the package describe the legislation as transportation and infrastructure investment, the idea being to use new spending to put America back to work while at the same time fixing decrepit infrastructure. However, only 17 percent of the discretionary spending in this package is for infrastructure items. More worrisome still, the final version lacks any mechanism to ensure that spending will be targeted toward infrastructure projects with high economic returns.
If we include the massive amount of interest that will accrue on the increased debt, the overall cost will total to $1.14 trillion.
The conference report dedicates 30 percent of all discretionary spending to 33 new programs totaling $95 billion and expands 73 programs which are normally part of the regular appropriations process by $92 billion.
So now funds can go to museums, stadiums, arts centers, theaters, parks, or highway beautification projects. Most significantly, this reopens the door for many of the projects on the U.S. Conference of Mayors' wish list of "shovel ready" projects that includes many items that are nothing but waste and pork, such as doorbells, construction of dog parks, replacement of street lights, and money for a "mob museum."
Friday, February 13, 2009
“I have written that what makes an economy and wealth grow is productivity. Don't think of wealth as more money, as the government wants you too (because they can always just create more of that); think of it as standard of living. I have illustrated how productivity makes standard of living/wealth rise.
But notice the government's plan of fiscal stimulus directly opposes productivity. Its objective is to create as many jobs as possible. But the definition of productivity is to do as little work as possible for the most output. So the objective of creating a lot of jobs is by definition unproductive
Everyone wants jobs and it is unfortunate that the is in this state. But we are here because we have borrowed future standard of living, living beyond our means. We now have to pay it back. Creating unproductive jobs will merely forestall that process.”
Thursday, February 12, 2009
From Mr. Practical.
The government isn't the solution since they're the enabler. They'll enable until the currency is literally destroyed. A former Chinese bureaucrat already stated that the US needs to guarantee its debt. That's code for you now work for us.
That will happen unless we just stop and let the markets correct the problem. There's too much debt, and creating more debt is no longer an option. This is sad, but economics is like physics: You can’t expect to jump out of a window and go up.
The 2 most important were excess government spending and the continued backing of the GSEs. Very simply, banks would probably have not been able to keep lending without Fannie Mae (FNM) and Freddie Mac (FRE) guaranteeing and buying up debt from banks, which encouraged them into moral hazard: lending to people that, in even a modest downturn, could never pay back their loans.
Monday, February 09, 2009
In fact, in the case discussed, the very measures which the dominant "macro-economic" theory has recommended as a remedy for unemployment, namely the increase of aggregate demand, have become a cause of a very extensive misallocation of resources which is likely to make later large-scale unemployment inevitable. The continuous injection of additional amounts of money at points of the economic system where it creates a temporary demand which must cease when the increase of the quantity of money stops or slows down, together with the expectation of a continuing rise of prices, draws labour and other resources into employments which can last only so long as the increase of the quantity of money continues at the same rate - or perhaps even only so long as it continues to accelerate at a given rate. What this policy has produced is not so much a level of employment that could not have been brought about in other ways, as a distribution of employment which cannot be indefinitely maintained and which after some time can be maintained only by a rate of inflation which would rapidly lead to a disorganisation of all economic activity.
Sunday, February 08, 2009
Here is another take from Naked Capitalism
For a fiscal stimulus (current tax cut or public spending increase) to boost demand, it is necessary that the markets and the public at large believe that sooner or later, measures will be taken to reverse the tax cut or spending increase in present value terms. If markets and the public at large no longer believe that the authorities will assure fiscal sustainability by raising future taxes or cutting future public expenditure by the necessary amounts, they will conclude that the government plans either to permanently monetise the increased amounts of public debt resulting from the fiscal stimulus, or that it will default on its debt obligations. Permanent monetisation of the kind of government deficits anticipated for the next few years in the US and the UK would, sooner or later be highly inflationary. This would raise long-term nominal interest rates and probably give risk to inflation risk premia on public and private debt instruments as well. Default would build default risk premia into sovereign interest rates, and act as a break on demand.
Beacause I believe that neither the US nor the UK authorities have the political credibility to commit themselves to future tax increases and public spending cuts commensurate with the up-front tax cuts and spending increases they are contemplating, I believe that neither the US nor the UK should engage in any significant discretionary cyclical fiscal stimulus, whether through higher public spending (consumption or investment) or through tax cuts or increased transfer payments...
Saturday, February 07, 2009
From the WSJ
The World Trade Organization is gathering nations in a special meeting Monday to try to stem the rising tide, just two weeks after saying protectionism was largely under control. On Thursday, 10 European Union commissioners headed to Moscow for talks Friday with Prime Minister Vladimir Putin and other Russian officials, where they plan to air complaints over the pace of new Russian trade barriers.
Economists and trade analysts say the current rash of trade constraints could make it harder for global economic growth to recover from the current downturn. Global trade is expected to shrink by more than 2.1% this year after growing by 6.2% in 2008, according to the WTO.
Friday, February 06, 2009
I am converted to your proposal…for varying rates of contributions in good and bad times. (June 16, 1942). Keynes, Collected Writings, vol. 27, p. 208.
…[Y]ou are able to show fluctuations in income of an order of magnitude which is significant in the context… So far as employees are concerned, reductions in contributions are more likely to lead to increased expenditure as compared with saving than a reduction in income tax would, and are free from the objection to a reduction in income tax that the wealthier classes would benefit disproportionately. At the same time, the reduction to employers, operating as a mitigation of the costs of production, will come in particularly helpfully in bad times. (July 1, 1942). Keynes, Collected Writings, vol. 27, p. 218.
From Think Markets
Wednesday, February 04, 2009
Obama on his first day in office imposed perhaps the toughest ethics rules of any president in modern times, and since then he and his advisers have been trying to explain why they do not cover this case or that case. “This is a big problem for Obama, especially because it was such a major, major promise,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington. “He harped on it, time after time, and he created a sense of expectation around the country. This is exactly why people are skeptical of politicians, because change we can believe in is not the same thing as business as usual.”
In the campaign, Mr. Obama assailed Washington’s “entire culture” in which “our leaders have thrown open the doors of Congress and the White House to an army of Washington lobbyists who have turned our government into a game only they can afford to play.” He vowed to “close the revolving door” and “clean up both ends of Pennsylvania Avenue” with “the most sweeping ethics reform in history.”The language, however, was always more sweeping than the specifics. He spoke of refusing campaign money from lobbyists but took it from the people who hired them. The ethics plan he outlined, and eventually imposed on his administration, did not ban all lobbyists outright but set conditions for their employment and did not cover many who were lobbyists in everything but name.
Tuesday, February 03, 2009
Obama’s administration is moving closer to buying the illiquid assets currently clogging bank’s balance sheets and preventing them from boosting lending, people familiar with the matter said this week.
That amounts to swapping taxpayers’ “cash for trash,” Stiglitz said yesterday in a panel discussion at the World Economic Forum in Davos, Switzerland. “You shouldn’t chase good money after bad. We’re talking about a national debt that’s very hard to manage.”Stiglitz, a professor at Columbia University in New York and a former adviser to President Bill Clinton, says the plan would leave taxpayers paying for years of excess lending by banks.
Monday, February 02, 2009
That means demand is going to fall to natural levels. Which will lead to deflation and more rational consumption choices. If we have a decade of low consumption we will gain a decade of savings. That means those that save will need less social security and help from the government.
“Consumers are rational,” said Joshua Shapiro, chief United States economist at MFR. “They respond to incentives and conditions, and right now the conditions and incentives are: spend as little as you can, and pay down as much as you can. You hunker down. That’s what the consumer’s doing.” -NYT
“We have to expect spending to keep falling for some months yet,” Ian C. Shepherdson, chief United States economist at High Frequency Economics, wrote in a note to clients. “The concomitant rise in the saving rate, now at 3.6 percent compared to 0.8 percent in August, is good news in the long run but the key source of pain right now.” - NYT
Team Obama is trying to stimulate the economy by getting consumers to spend. The Fed is pushing down interest rates to zero, tyring to force consumers to move their money to higher yielding asset classes which contain more risk.
Obama should focus on long term INVESTMENTS that will retrain current workers and provide the incentives to the private market to invest. That means providing higher investment tax credits that will shield cashflows, increasing the internal rate of returns on those projects. The tax credit basically says that the government won't tax those cashflows for investors that take calculated risks.
At the same time Obama should cut tax rates on small and medium size businesses to lower their costs and reduce the risk of future cash flows. 60% of the workforce is employed by small and medium sized businesses. One proposal is the cut the payroll taxes so that employers will have more cash to shore up their balance sheet and lower the cost to hire workers. It will incent businesses to hire that additional work or keep workers instead of laying them off.
Unfortuantely team Obama is following the text book response to a atypical down turn. Let him fall on his own sword.
Saturday, January 31, 2009
We have borrowed ourselves to the brink of disaster. The only logical way to resolve this quandary is to reduce spending, pay down debt, and increase savings.
It took 28 years to get to this point, and it will take at least a decade to repair the damage. Some indisputable facts will put our current predicament in perspective:
- The US National Debt was $930 billion in 1980, or 33% of GDP. Today it is $10.7 trillion, or 76% of GDP. The national debt has grown by 1,150% in 28 years.
- GDP was $2.8 trillion in 1980. Today, it is $14 trillion - and declining. GDP has grown by 500% since 1980 - which means the national debt has grown more than twice as fast as GDP.
- Total US consumer debt in 1980 was $352 billion. Today, US consumer debt totals $2.6 trillion - 738% in 28 years. Revolving credit increased from $56 billion in 1980 to $982 billion today, a 1,750% increase in 28 years.
- The real median household income was $41,258 in 1980. The real median household income in 2007 was $50,233. Over the course of 28 years, households are bringing home 22% more. The trickledown theory turns out to be a drip.
- The personal savings rate was 12% in the early 1980s and reached negative 1% during the Bush administration. It has inched above 2% in the last few months.
Friday, January 30, 2009
I know that many Americans are looking for President Obama to solve this crisis painlessly. But there is no easy way out. The debt must be paid off and/or written off.
The politically unpopular steps that need to occur are as follows:
- Housing prices need to drop another 15% to 20% to reach fair value. This will result in more foreclosures. When prices fall far enough, the houses will sell and inventories will fall. If you cannot afford the payment on your home, you should become a renter. Not everyone should own a home.
- The government and Federal Reserve need to shine a bright light on the bad debt within the financial system. The collateral or lack thereof backing up government loans needs to be revealed by Treasury and the Federal Reserve. Covering up the worthlessness of these assets is contributing to the frozen system.
- The remaining mega-banks that have caused this crisis -- including Citigroup (C), Bank of America (BAC), Goldman Sachs (GS), Morgan Stanley (MS), and any other insolvent banks -- need to be allowed to fail, if failure is indeed their destiny.
- Failed companies with failed strategies must go bankrupt. Allowing companies (such as General Motors (GM) and Chrysler, for example) to fail brings about restructuring; the remaining healthy companies can buy the good assets.
- Only infrastructure projects that benefit the citizens of the country should be undertaken. These would include water pipe replacement, electrical grid upgrades and repairing structurally deficient bridges.
- Keeping interest rates at zero in an effort to force savers to borrow and spend is penalizing the frugal to benefit the profligate. Borrowing our way out of a debt crisis will never work.
- Consumers should be encouraged to pay down their debt loads and increase their savings rate. The sooner this can be accomplished, the sooner the country can resume growth.
- The median 401k balance was $18,942 at the end of 2007, with 39% of workers having a balance below $10,000. Approximately 8,000 Americans turn 65 every day. 20% of the U.S. population will be over 65 by 2030. An aging population with virtually no retirement savings must increase their savings and cut consumption dramatically.