Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Bernanke needs to get with the program
Today, Federal Reserve chairman Ben Bernanke told the House Financial Services Committee that the rapidly falling unemployment rate reported this past year by the Bureau of Labor Statistics does not fit with the other data he has been seeing. He said:
Bernanke is showing a lot of common sense here. Although he has not looked carefully at the BLS data, he realizes that something is fishy. Former Reagan budget director David Stockman calls the manipulations of the data by the Bureau of Labor Statistics (BLS) and the Bureau of Economic Analysis (BEA) "The Economists' Truman Show."
For example, the unemployment rate fell in January partly because the Bureau of Labor Statistics (BLS) reclassified 1.177 million people who might otherwise have been considered as unemployed as having dropped out of the labor force. (To find this December-to-January adjustment in the BLS press release, check out Table C.)
Bernanke probably looked carefully at the GDP numbers just released this morning. The headlines trumpeted the increase in real GDP in the fourth quarter at an annual rate of 3.0%, but a closer examination reveals that real GDP would only have grown by a minute annual rate of 1.3% if not for inventories growing at a 1.7% of GDP clip. The following table shows the contributors to GDP growth during each quarter of the past year....
Rick Santorum was never fooled by the global warmers' hype
If you haven't been reading Anthony Watt's Watt's Up with That Blog, linked to on our sidebar, you have been missing some gems:
If you were taken in by the anthropogenic global warming theory, it wasn't your fault. The adherents even had Newt Gingrich and Mitt Romney persuaded. To his credit, Senator Santorum was never fooled.
Santorum's Federal Reserve position shows economic common sense
In a February 23 interview on GBTV, Senator Santorum's discussion of the Federal Reserve showed off his economic common sense. Here is the relevant segment:
Santorum was being interviewed by Glenn Beck, who has taken the foolish position that the Federal Reserve should be eliminated and that the United States return to a gold standard. Santorum did not agree, but he had sensible ideas of how the Federal Reserve should be reformed. His discussion showed his understanding of three key economic principles:...
Rules vs. Authorities -- Listen to Ray's Feb. 18 radio interview
Follow the following link to hear a February 18 interview with Ray Richman on the Ron Morris' American Entrepreneur radio show.
The discussion of rules vs. authorities was especially interesting. The monetarists at the University of Chicago, where Ray got his doctorate, believed that the government should be bound by rules. Instead, we have Federal agencies making up the rules as they go along. These agencies are using their authority to discourage investments in the American economy. Follow the following link to download the mp3 of this segment of the show:
The Economist Declares the US Economy Is Being Suffocated By Over-regulation
We would like to call your attention to an editorial in The Economistof Feb. 18, 2012 entitled “Over-regulated America” and sub-titled, “The home of laissez-faire is being suffocated by excessive and badly written regulations.” It cites inter aliathe Dodd-Frank law of 2010 as “far too complex and becoming more so. At 848 pages…”. Yes, you read that right! “Worse, every other page demands that regulators fill in further detail. Some of these clarifications are hundreds of pages long. Just one bit, the ‘Volcker rule’, which aims to curb risky proprietary trading by banks, includes 383 questions that break down into 1,420 subquestions.” And “.. of the 400 rules in mandates, only 93 have been finalized. So financial firms in America must prepare to comply with a law that is partly unintelligible and partly unknowable.”
As for Obamacare, “Every hour spent treating a patient in America creates at least 30 minutes of paper-work , and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000.” And a study for the Small Business Administration “found that regulations in general add $10.585 in costs per employee.” The Economist is to be congratulated for calling attention to the problem of over-regulation that is so harmful to the American economy.
Unfortunately, The Economist is not against government regulations but only to their complexity....
In the February 16 Wall Street Journal, Mitt Romney had a commentary about China (How I'll respond to China's Rising Power). He criticized President Obama's failures in China negotiations, attributing them to to Obama's other goals:
President Obama came into office as a near supplicant to Beijing, almost begging it to continue buying American debt so as to finance his profligate spending here at home. His administration demurred from raising issues of human rights for fear it would compromise agreement on the global economic crisis or even "the global climate-change crisis." Such weakness has only encouraged Chinese assertiveness and made our allies question our staying power in East Asia.
Romney plans a tough policy on China's trade cheating:
Meanwhile China's president-in-waiting Xi Jinping's five-day visit to the United States last week resulted in an agreement that China would cheat a bit less, as it continues to pursue its strategy of keeping out legitimate American movies, music and software while permitting their piracy. Reuter's reports:...
China preventing Apple from selling legitimate iPads while permitting sale of knock-offs
The Los Angeles Times on February 13 reported (iPads seized in China over trademark row) that the Chinese courts are preventing Apple from marketing iPads in China. Here is a selection:
In general, the courts in China do the bidding of the Communist Party of China. This particular decision went against Apple, even though Apple had bought the rights to the iPad name from Proview back in 2006, as the Los Angeles Times article points out:...
China's trade strategy explained
[I recently had a chat with one of my students in which I explained how China's trade strategy works. I thought some of you who are confused about China's strategy might find it interesting also.]
Student 6:01 pm
Howard Richman 6:03 pm
Howard Richman 6:05 pm
Student 6:06 pm
The Revealing Moon Debate -- We're published in today's American Thinker
US merchandise trade deficit with China set a new record in 2011
According to data released by the Commerce Department this morning, the U.S. merchandise trade deficit with China set a new record high in 2011 at $295.5, up from the last record high, $273.1 billion in 2010. Previous to that, the record was $268.0 billion in 2008. The U.S. trade deficiit with China has deteriorated for 23 straight months (when compared to the same month one year earlier), as shown in the graph below:
Trade deficits are a drag upon economic growth and produce a continuing loss of good paying U.S. jobs. When trade is in balance, jobs lost to imports are replaced by more productive jobs producing exports. But when the U.S. lets its trading partners manipulate currency values and place barriers upon U.S. products, the U.S. loses jobs while gaining little but debt.
In his State of the Union speech on January 24, President Obama said that he is doing much to improve our trade relationship with China. He suggested that someday he might even be able to reduce Chinese pirating of U.S. movies, music and software. Specifically:...
David Stockman: The statistics coming out of the BLS and BEA are "The Economists' Truman Show"
Writing in the Wall Street Examiner on February 5, Bruce Krasting and David Stockman (President Reagan's budget director) discussed the sudden fall in the labor force participation rate reported by the Bureau of Labor Statistics (BLS) in January. A full 1.177 million people who might otherwise have been considered as unemployed were reclassified as having dropped out of the labor force in a single month.
The BLS is not trying to hide their sudden change in the labor force participation rate, they discuss it in a table at the bottom of their press release. But with the exception of the business press, the mainstream press publishes the headline data that the BEA puts at the top of the press release and they ignore the rest.
Stockman calls the statistics coming out of the BLS and BEA (Bureau of Economic Analysis), "the economists' Truman Show." He writes:
Republican candidates revealed how they think during the moon debate
The discussion of Gingrich’s moon colony proposal at the January 26 Republican presidential candidate debate tells us a lot about the Republican Final Four. It reveals how they would approach their decisions as President and lets us predict the economies that they would produce. (Click here to watch this portion of the debate.)
Speaker Gingrich: The Big Idea Man
Speaker Gingrich initiated the discussion of a possible moon colony during a speech in Florida designed to appeal to NASA workers that was televised by CSPAN the day before the debate. He urged that the United States set a new national goal to put a permanent colony on the moon by the end of the decade and make that colony the 51st state. But the most creative part of his idea was his method for involving entrepreneurs in the venture.
He is aware that NASA, as is true of almost all government-run institutions, has deteriorated over time. These days, it can’t even get satellites up into space. Gingrich would largely replace NASA with contests. He said:...
Jobs gain in January partly due to warm winter in U.S.
President Obama received some good news when the January jobs and unemployment numbers came in better than economists expected. But the numbers were not nearly as good as they seemed. They were largely the result of an incorrect seasonal adjustment. Action Forex, a weekly Internet publication of Wells Fargo, makes this point:
Still, Wells Fargo sees these jobs numbers as a positive sign. They write:...
Obama's SOTU: Still No Manufacturing Jobs -- we're published in today's American Thinker
Here's how we begin:
To read the rest go to:
Initial Unemployment Compensation Claims Exceeded 400,000 Week Ending January 28, 2012
Initial unemployment compensation claims exceeded 400,000 during the week ending Jan 28, 2012. What you did not see, hear, or read in the media Thursday or Friday Feb. 2-3, was the unadjusted number, i.e., the actual number of initial claims reported by the BLS beginning in the 4th paragraph below. Instead, the media, including Rick Santelli of CNBC, the Friday WSJ, Bloomerg, et al. reported that the number of claims filed was 379,000 when in fact it was 415,094. ...
Journal of Economic Literature:
Atlantic Economic Journal: