Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Shale gas, not government, fueling our recovery - Ray was published in the Tribune Review on Friday
Howard Richman, 5/13/2013
He began:
The weekly report of actual initial unemployment insurance claims for the week ending April 27, coupled with the decrease during the previous week, showed that 298,692 claims were filed. A showing under 300,000 is consistent with a mild recovery; 250,000 would indicate a fairly strong recovery.
But the administration cannot claim credit. The boom in the natural-gas-from-shale industry, a private-sector phenomenon opposed by the administration's Environmental Protection Agency, is responsible. Serendipity is once again saving the American people from Washington's foolish economic policies.
To read the rest go to:
http://triblive.com/opinion/featuredcommentary/3972392-74/gas-government-natural#ixzz2TDgFzxez
Book Review of David A. Stockman, The Great Deformation: The Corruption of Capitalism in America (Public Affairs, New York, 2013)
Raymond Richman, 5/12/2013
David Stockman’s background made him uniquely qualified to write this insightful analysis of the follies committed by politicians, economists, investors, and business leaders over the past half century. He graduated as a history major at Michigan State, did graduate work at Harvard in 1968-70, served in the House of Representatives from 1977 until his resignation in 1981 to join the Reagan Administration and served as Director of the Office of Management and Budget until his resignation in 1985. He spent the decades since then working first for Salomon Brothers and left to create his own investment fund, and headed an auto parts firm that went bankrupt in 2005. Paul Krugman, commenting on the book, called him “a cranky old man”. Unlike Stockman, Krugman does not worry about the deficit, believing it is manageable whereas Stockman believes that “the fiscal cliff is permanent and insurmountable. “It stands at the edge of a $20 trillion abyss of deficits over the next decade.” He writes that it is now “Sundown in America: the end of free markets and democracy.”
Stockman is right that we are close to the end of free markets and democracy. How did we arrive at this point? Who was responsible? What brought us to this point? This book is an attempt to answer those questions. ...
Trade Deficits and Unemployment
Jesse Richman, 5/3/2013
Shale Natural Gas Stimulates Economy As Federal Government Weakens the Recovery
Raymond Richman, 5/2/2013
The weekly report of actual initial unemployment insurance claims for the week ending April 27, 2013, coupled with the decrease during the previous week, showed that 298,692 claims were filed. A showing under 300,000 is consistent with a mild recovery; 250,00 would be more desirable. But the administration cannot claim credit. The boom in the natural-gas-from- shale industry, a private sector phenomenon opposed by the administration’s Environmental Protection Agency, is responsible. Serendipity has once again saved the American people from Washington’s idiotic policies.
The federal government has run budget deficits amounting to many trillions of dollars and the Federal Reserve has printed money like mad but it has hardly been enough to make a dent in our massive unemployment. It has barely accommodated new entrants to the labor force and has been so ineffective that involuntary unemployment is still 15 percent not the 7 percent the Department of Labor has been reporting because it does not count as unemployed people no longer looking for work.
The Keynesian policies pursued by the administration have been ineffective. Pres. Obama’s 2009 $800 billion economic stimulus ran out of stimulus as soon as the spending stopped. There was no Keynesian multiplier. And the massive annual government budget deficits had no Keynesian multiplier. ...
Morici predicts manufacturing and house price slumps
Howard Richman, 4/25/2013
University of Maryland economist Peter Morici predicts a deceptively strong GDP report for the first quarter (Deceptively strong US GDP report expected). On the near horizon he sees slowdowns coming in U.S. manufacturing and house prices.
As far as U.S. manufacturing is concerned, he sees layoffs on the horizon due to President Obama's decisions to tolerate Asian mercantilism:
The continuing surge of Chinese exports onto American store shelves, and weakening demand for U.S. products in recession torn Europe are dampening demand for U.S. manufactures. Japan's weak yen policy is imposing tougher competition on U.S. automakers and other manufacturers of technology-intensive products. Already, the Commerce department reported durable goods orders fell 5.7% in March, indicating much slower sales going forward.
He argues that rising house and agricultural land prices are due to a speculative boom, that will eventually bust. Morici writes:...
Variable Single-Country Tariffs Are the Key to U.S. and Eurozone Recovery
Raymond Richman, 4/23/2013
As John Maynard Keynes urged at conferences to create a brave,new world during WWII, balanced trade is the KEY to world economic stability. Balanced trade is the key to U.S., European, and world economic recovery. The massive unemployment in the U.S. and Southern Europe , Brazil, and others cannot be corrected by austerity alone. A world gold standard without the right of each country to employ flexible tariffs will not produce economic recovery nor will any other currency standard.
Austerity in Greece, Italy, Spain,, Portugal, France, and the U.S. will not produce economic recovery nor will vast government expenditures do it, nor will monetary policy. The Keynesian multiplier is a fiction. Government spending creates the illusion of recovery and not real recovery. Austerity in Southern Europe kid not work. Huge budget deficits and quantitative easing in the U.S. produced no genuine recovery. Nothing will work except relatively balanced trade and relatively balanced budgets and monetary discipline, i.e. creation of sufficient money to accommodate stable growth. The economic history of the past decade in the U.S. and the Eurozone have proven that.
The failure of the “new deal” in the 1930s and the budget deficit and the policies of the past decade under Presidents George W. Bush and Barack Obama have proven the non-existence of a Keynesian multiplier. Nearly all the increase in GDP was the net increase in government spending. Prof. Valerie Ramey of the University of San Diego has shown that increased spending by government is accompanied by diminished spending in the private sector. The failure of Pres. Obama’s economic stimulus plan of 2009 and the subsequent U.S. budget deficits are evidence of the non-existence of a multiplier. ...
Variable Single-Country Tariffs Are the Key to U.S. and Eurozone Recovery
Raymond Richman, 4/23/2013
As John Maynard Keynes urged at conferences to create a brave,new world during WWII, balanced trade is the KEY to world economic stability. Balanced trade is the key to U.S., European, and world economic recovery. The massive unemployment in the U.S. and Southern Europe , Brazil, and others cannot be corrected by austerity alone. A world gold standard without the right of each country to employ flexible tariffs will not produce economic recovery nor will any other currency standard.
Austerity in Greece, Italy, Spain,, Portugal, France, and the U.S. will not produce economic recovery nor will vast government expenditures do it, nor will monetary policy. The Keynesian multiplier is a fiction. Government spending creates the illusion of recovery and not real recovery. Austerity in Southern Europe kid not work. Huge budget deficits and quantitative easing in the U.S. produced no genuine recovery. Nothing will work except relatively balanced trade and relatively balanced budgets and monetary discipline, i.e. creation of sufficient money to accommodate stable growth. The economic history of the past decade in the U.S. and the Eurozone have proven that.
The failure of the “new deal” in the 1930s and the budget deficit and the policies of the past decade under Presidents George W. Bush and Barack Obama have proven the non-existence of a Keynesian multiplier. Nearly all the increase in GDP was the net increase in government spending. Prof. Valerie Ramey of the University of San Diego has shown that increased spending by government is accompanied by diminished spending in the private sector. The failure of Pres. Obama’s economic stimulus plan of 2009 and the subsequent U.S. budget deficits are evidence of the non-existence of a multiplier. ...
Washington Post Condemns European Climate Policies
Jesse Richman, 4/22/2013
The Washington Post editorial board condemns Europe's mis-managed greenhouse gas emissions policies in an editorial today. http://www.washingtonpost.com/opinions/europe-is-becoming-a-green-energy-basket-case/2013/04/21/4b1b81d0-a87e-11e2-b029-8fb7e977ef71_story.html
Europe's failed effort to implement a continent-wide cap on greenhouse gas emissions managed through a market for carbon permits is the central focus of the editorial...
Korea-US Trade agreement has cost about 50,000 jobs so far
Howard Richman, 4/16/2013
In 2012, despite the fact that South Korea is a currency manipulating country (see Bernanke's Figure 8), Congress passed and President Obama signed KORUS, a so-called "free trade agreement" with South Korea. Ever since it went into effect in March 2012, U.S. net exports (exports minus imports) of goods to South Korea have fallen as shown by the following graph:
From the year ending February 2012 to the year ending February 2013, US net exports of goods to South Korea fell from a negative $13.2 billion to a negative $18.1 billion. Assuming that each American manufacturing worker produces about $100,000 of product, American manufacturing workers have lost about 50,000 jobs, so far, as a result of KORUS.
The loss of manufacturing jobs could, conceivably, be overcome by gains in jobs in the service sector. However, net American service exports to South Korea have been relatively stagnant. There was only a $0.5 billion increase in U.S. net exports of services to South Korea from 2011 to 2012.
The United States is on track toward achieving the loss of 159,000 jobs to KORUS that was predicted by the Economic Policy Institute. Sam Williford wrote on March 21, 2011 (NAFTA Is Proof that KORUS Will Be Disastrous):...
ALERT: Good or Bad Economic News, Report of Initial Unemployment Claims
Raymond Richman, 4/11/2013
Once again, there is an unexplained divergence between CNBC reports of a decrease in initial weekly unemployment claims when, in fact, there was a substantial increase in the number. The media always report the “seasonally adjusted” number. For the week ending April 6, CNBC reported that number of initial unemployment claims filed declined 42,000. The actual, the not seasonally adjusted number, the unadjusted number, was an increase of 37,025 in the number of unemployment claims to 353,933. As I reported previously, we had a report that during one week in March, the actual number of claims had fallen below 300,000, a very good number. It turned out as I reported the following week that it was not repeated and therefore was not a good indication that our economy was beginning to recover....
Why is the media hiding the worsening US-China trade deficit?
Howard Richman, 4/9/2013
Why is the American media misinforming the American people about the worsening US-China trade deficit? The graph below shows the actual trade deficit, with a 12 month moving average:
In February, the U.S. merchandise trade deficit with China hit another 12 month record, falling to $321 billion over the last 12 months. In 2012, the U.S. had a service trade surplus with China of $17 billion, so the U.S. trade deficit with China in goods and services is now about $304 billion as compared to $298 billion at the end of 2012 and $280 billion at the end of 2011.
Yet the mainstream media all reported that the U.S. trade deficit with China improved in February, ignoring the fact that it is always lowest at this time of year. Here's a sample:...
The Gods of the Copybook Headings are in Cyprus - We're published in today's American Thinker
Howard Richman, 4/5/2013
Here's is a selection:
[T]he "terrible swift sword" of the Gods of the Copybook Headings is a two-edged sword. It is not only slashing the savings of investors, it is also slashing away at Cypriot employment:
- Cyprus used to be an international center for banking. The jobs serving foreign depositors died when Cyprus confiscated 37.5% of deposits exceeding 100,000 euros by converting them into nearly worthless bank equity.
- Many of Cyprus' businesses are now going bankrupt due to a cash crunch. Not only did they lose 37.5% of their bank deposits of over 100,000 euros, but now they only have limited access to their remaining funds.
- Cyprus's biggest employer, the government, has kept its wages and employment high. But in return for the low interest 10 billion euro loan that will keep it solvent, the Cypriot government will have to move its budget toward balance.
Meanwhile, Cyprus' underlying problem, its huge trade deficit, is not being addressed. From 1995 through 2012 Cyprus averaged a current account deficit (trade deficit) of nearly six percent of GDP. Borrowing that much money from abroad to buy imports makes for huge international vulnerabilities. If the problem goes on too long, the choices become stark. Either the lenders do not get repaid, or someone steps in to pay them. In Cyprus, the lenders did not get repaid.
Countries that run trade deficits do not save; they live on borrowing from abroad. The going is good while the foreign loans are flowing in, partly due to real estate bubbles and stock market bubbles. But eventually, they lose credit. Cyprus has now lost credit.
To read the rest, follow this link:
http://www.americanthinker.com/2013/04/the_gods_of_the_copybook_headings_are_in_cyprus.html
The Gods of the Copybook Headings are in Cyprus Now, and Coming Here Soon
Howard Richman, 4/2/2013
The above you-tube video shows Glenn Beck reading Rudyard Kipling's 1919 poem, The Gods of the Copybook Headings. In that poem, Kipling compares the truths of the real world ("the Gods of the Copybook Headings") with the promises of social progressives ("the Gods of the Market Place"), and he concludes that nations which follow the false promises of the social progressives eventually rediscover reality, often when it is too late.
In his April 2 column (Today, Cyprus, Tomorrow…) Pat Buchanan sees the Gods of the Copybook Headings at work in Cyprus today. He argues that those investors who loaned their money to Cypriot banks were ignoring reality, writing:
From Asia to Europe, people concerned about the safety of their money are looking at Cyprus, with many surely saying, “There, but for the grace of God, go I!” And they likely hear in the anguished cries of Russian, British and Cypriot depositors, who got no warning and failed to get out in time, a fire bell in the night for themselves.
If this persuades depositors to seek security first for their income, pensions and savings, and to transfer funds out of risky banks into more solid institutions, is that such a bad thing?
If Kipling’s Gods of the Copybook Headings, who arrived on Cyprus in March with their terrible swift sword, are back in charge, is this not better than having Western taxpayers forever securing the deposits and investments of the rich and feckless?...
Estimating Climate Sensitivity
Jesse Richman, 4/1/2013
A recent article in the Economist reviews recent research suggesting that the sensitivity of the climate to changes in carbon dioxide levels. Various estimates suggest that the sensitivity is lower than the IPCC previously estimated, while the role of natural variability in climate may be larger than had previously been estimated...
No Recovery From the Great Recession Is in Sight
Raymond Richman, 3/28/2013
As I reported last week, initial claims for unemployment compensation during the week ending March 16, 2013 broke below 300,000 for the first time since 2007. And I asked if it marked the beginning of a recovery from the Great Recession. It turns out that the answer is negative. The number of initial claims rose in the following week ending March 23, 2013. The seasonally adjusted number of initial claims rose by 16,500 to 357,000 and the seasonally unadjusted (the actual!) number rose 14,706 to 315,659. Of course, the preceding week’s numbers could have been a fluke and so could the latest week’s numbers.
What is hampering the recovery? Just this week in an op-ed in the Wall Street Journal, Mortimer Zuckerman, editor and publisher of the US News and World Report, labeled the claims of recovery to be a fantasy, pointing out as we have done, that the true unemployment figure is 14.9 percent, not 7.7 as reported officially.
The claims of recovery appear to be substantiated by the rise in the prices of stocks as indicated by the Dow-Jones and other stock markets indices. But the quantitative easing by the Federal Reserve Board has provided financial institutions with increased money for lending, much, if not most of it, has simply increased the prices of assets such as stocks and real estate. The FED’s financing of the trillion dollar deficits has enabled increased government spending which is a stimulus to the economy as long as it lasts but is at the expense of diminished private expenditures.
The stimulative effects of increased government spending on consumption and investment are largely offset by the fact that it stimulates imports and does nothing to increase exports. In fact, it is government policy to stifle the production of fossil fuels which we still import. The trade deficit rose to $44.4 billion in January, 2013 from $38.1 billion in December, 2012. Fortunately, the private sector has been increasing the output of oil and natural gas in spite of environmental extremists’ powerful influence on government policy. In fact, the fossil fuel boom is the strongest stimulus to the recovery we have and helps to offset the depressing effects of the government’s “green” policies. ...
Great Recession Caused by U.S. External Account Deficit
Jesse Richman, 3/26/2013
A recent article by Thomas Oatley and coauthors in the Political Science journal Perspectives on Politics argues that the global financial system is particularly vulnerable to systemic crisis when that crisis originates in the U.S. because the U.S. and U.K. banks are centrally located in the international finance system.
In a follow-on blog post, and an in-progress book manuscript, Oatley extends that analysis to focus on that the decision to finance the War on Terror through borrowing rather than taxes led to a worsening of the U.S. trade deficit, which led to the financial crisis....
At Last, There Are Signs of a Beginning to Recovery From the Recession
Raymond Richman, 3/21/2013
Actual Initial Unemployment Insurance Claims fell below 300,000 during the week ending March 16, 2013 for the first time since May 12, 2007! So the economy is at last beginning to show signs of recovery from the recession. To what do we owe this spark of improvement? Will the recovery last?
The media reported that during the week 336,000 seasonally adjusted initial claims were filed, an increase of 2,000 from the previous week. If the reporters read the report of the U.S. Bureau of Labor Statistics, they would have read that the actual number of claims filed was 299,143. Neither CNBC nor Bloomberg TV reported the actual number which would have caused the stock market to rise. Instead, it fell on the news that unemployment claims had risen.
How the BLS calculated the seasonally adjusted number, God knows. It is hard to believe a seasonal adjustment in the month of March would differ by nearly 37,000, more than ten percent. (Moreover, the BLS made similar calculations in 2012 and 2011, so the statisticians apparently don’t ever get around to recalculating the seasonal adjustments!)
There are a number of reasons why unemployment claims have fallen. The government has been “stimulating” the economy by keeping the federal budget in the red by over a billion dollars a year for the past four years. This represents an increase in the demand for goods and services. Unfortunately, much of this demand was for foreign goods and services. The international trade deficits that the U.S. has experienced since the 1990s created employment abroad and caused unemployment at home. As a result, the increase in government spending had a much smaller effect than it would have had in the absence of the trade deficits. ...
Cyprus' Debt a Long Time Building
Jesse Richman, 3/21/2013
The European Union is currently wrestling with the debt problems of Cyprus and the Cypriot banks. In some ways these problems are new. But in many ways they are old. They have been building for decades as Cyprus has lived on borrowed money. Eventually nations that do not save, that live on borrowing, lose credit.
According to Trading Economics (http://www.tradingeconomics.com/cyprus/current-account-to-gdp) from 1995 through 2012 Cyprus averaged a current account deficit of nearly six percent of GDP.
The Unemployment Rate Is Closer to 15% Than 7.7%
Raymond Richman, 3/10/2013
Employment reports dominate the economic news on Thursday and Friday and sent the Dow Jones average to record heights. While the employment news was labeled as encouraging by the media, a look at the numbers was not very encouraging at all.
The first report, the number of initial claims for unemployment, was declared to be encouraging because the seasonally adjusted number of initial claims was positive, having fallen by 7,000 during the week ending March 1, 2013. To the contrary, the actual number of initial claims during that week increased by 23,198.
Two other reports were equally negative. The first was widely ignored. It showed that the trade deficit worsened in February. The third report was widely declared to show economic growth. It reported that over 200,000 new jobs were created in February. The bad news was the continued decline of manufacturing jobs, the real key to economic growth. Taking into consideration those no longer looking for a job who are not counted as unemployed and those employed part-time involuntarily, the real unemployment rate is fifteen percent not 7.7 percent as officially reported.
Following is what the Bureau of Labor Statistics actually reported about initial unemployment claims in the week ending March 1, 2013:
Rep. Kaptur's Balancing Trade Act Needs Teeth
Howard Richman, 3/3/2013
On January 4, 2013, Rep. Marcy Kaptur (Democrat of Ohio) introduced H.R. 192, the Balancing Trade Act of 2013. She correctly explained that every $1 billion of trade deficit costs more than 5,000 jobs:
In an effort to stem job losses as a result of the trade deficit, I have also introduced and will fight passage of H.R. 192, the Balancing Trade Act. This legislation requires the President to take the necessary steps to eliminate or substantially reduce a trade deficit the United States has with any country if the trade deficit totals $10 billion or more for three consecutive years. Some economists estimate that each $1 billion in the trade deficit costs the United States more than 5,000 jobs. H.R. 192 would ensure that those job losses are stopped and the bill would prevent them from occurring in the future.
Ms. Kaptur is correct about the job losses, but the problem goes much deeper than that. The United States has been stuck in a depression (a long period of economic stagnation with high unemployment) since the fourth quarter of 2007 as a result of our chronic trade deficits. The economics is quite simple. Trade deficits subtract from aggregate demand and income while trade surpluses add to aggregate demand and income....
Housing Prices in a Rational Rebound?
Jesse Richman, 2/26/2013
The most recent edition of the Case Shiller Index suggests that the U.S. housing market continues to rebound from the housing slump. Indeed, home prices are apparently moving up at a torrid pace in some cities. Overall, the pattern seems to be of more modest increases, but the trend has been up over the last few months almost everywhere. This lends support to my claim last September that the end of the great bubble deflation had been reached. http://www.idealtaxes.com/post3556.shtml. In some cities prices remain at depressed levels relative to historic norms once those are adjusted for inflation. In other cities, however, some additional declines may well occur...
Trade Deficits Increase U.S. Debt Vulnerability
Jesse Richman, 2/22/2013
A paper presented earlier today suggests that countries with trade deficits are substantially more vulnerable to debt crisis / inflation spirals. Whether the U.S. is equally vulnerable to such problems remains a subject to debate though. David Greenlaw, James D. Hamilton, Peter Hooper, and Frederic S. Mishkin write:
"Our nonlinear regression results imply that a country can quickly move from the group without problems to the group that faces nearly insurmountable problems if its debt rises significantly above 80 percent of GDP, particularly if it is running a large current-account deficit...
Peter Navarro and Greg Autry, Death by China--Confronting the Dragon-- A Global Call to Action (Prentice Hall, 2011) .
Raymond Richman, 2/18/2013
This book is more than a year old but it is not out-of-date. Peter Navarro and Greg Autry may be accused of China bashing but as they write, “It’s not China bashing if it’s true”. And they have their facts right. Peter is a professor of economics and public policy at the University of California at Irvine and Greg Autry is an economist for the American Jobs Alliance and the Coalition for a Prosperous America. They accuse China of every trade sin from marketing defective products, employing tariff and non-tariff barriers and export subsidies, engaging in currency manipulation, attempting to monopolize rare earths, stealing American technology, and engaging in cyber sabotage. This has cost millions of American jobs and diminished American economic and military power. Both parties are guilty of paying too little attention. And the American press and politicians are accused not only of turning a blind eye but justifying doing nothing by embracing free trade as an ideology.
If you have not been following our relations with China carefully this past decade, this book is MUST READING. ...
Pres. Obama Policies Are Leading to the Loss of More American Jobs
Raymond Richman, 2/16/2013
Mortimer Zuckerman, editor in chief of U.S. News & World Report, in an op-ed piece in the Wall St. Journal (2-16-13) entitled “By Any Measure, the Jobs Disaster Continues”, confirms what we have been writing in this space for months namely that the press has been misreporting the unemployment data because they employ the seasonally adjusted numbers reported by the Bureau of Labor Statistics instead of the actual numbers. He writes:
“January was supposed to have seen 157,000 jobs created…But the supposed hiring was based on seasonally adjusted numbers … The real, unadjusted figures for January show that nearly 2.8 million jobs disappeared, which happened to be worse than the 2.63 million lost in January 2012.”
He also points out that the statistics do not include the number of “discouraged workers who have dropped out of the labor force.” Were they included, “the formally announced unemployment rate would be around 9.8%, not the headline 7.9%.” And, “After four years America remains in a jobs depression as great as the Great Depression.” ...
Archive
May 2013
- Shale gas, not government, fueling our recovery - Ray was published in the Tribune Review on Friday
- Book Review of David A. Stockman, The Great Deformation: The Corruption of Capitalism in America (Public Affairs, New York, 2013)
- Trade Deficits and Unemployment
- Shale Natural Gas Stimulates Economy As Federal Government Weakens the Recovery
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
Categories:
Book Reviews
Capital Gains Taxation
Corporate Income Tax
Consumption Taxes
Economy - Long Term
Economy - Short Term
Environmental Regulation
Real Estate Taxation
Trade
Miscellaneous
Outside Links:
Wikipedia:
Journal of Economic Literature:
Atlantic Economic Journal: