Monthly Archives: September 2010

Can Politicians Help Us?

Can Politicians Help Us?
Wednesday, September 29, 2010 by

The word “politician” usually comes with a negative connotation. It often brings to mind thieving, lying, corruption, and malfeasance. Nonetheless, most people seem to look to politicians to manage their world for them, to protect them, and to make their lives better. In every instance of local or national elections, citizens are deeply focused on choosing the politician they think will do the best for their community or nation. They seek politicians with experience, knowledge, insights, and ideas. They seek a leader.

But can our elected officials, even if honorable and well-intentioned, really improve our lives? Let’s take a look at the various possible avenues of assistance.

Currently, the main demand placed upon politicians is to create jobs for us. But, since it is companies — not the government — that create jobs, such a task is impossible. Government can expand and draw more workers into its ranks, or it can directly finance the creation of specific jobs in a specific marketplace with taxpayers’ money. In either case, a destruction of wealth is involved, and the jobs — unlike private-sector jobs — do not pay for themselves but in fact require ever more taxpayer funding each year, which further reduces capital in the economy.

If jobs are not profitable — if they are not part of a production process that results in creating at least the same amount of sales revenues as the costs that went into generating those revenues — then they use more resources than they create; they destroy wealth. That ultimately means fewer goods available for each person, and at higher prices.

But even if the government subsidizes unprofitable jobs (e.g., green jobs) and “funds” (i.e., subsidizes) that work to make up for its lack of profit, there is still a net destruction of wealth. This is because subsidies come directly from what would otherwise be our incomes.

When money is taken from us through taxes to pay the extra costs required to produce something that we would not voluntarily choose to purchase on our own at that higher total price (i.e., the selling price plus the subsidy we paid out of pocket to make the item “worth” producing), our money is wasted. Other goods we would prefer will not become available because the resources used to make those goods were instead used in making the product we didn’t want.

Except for building space stations, military bases, or other government-funded, wealth-destroying activities, government creates and builds nothing. It thus has no power to create real jobs in the marketplace; it can only “manage” and regulate.

To repeat, only individuals and individual companies produce and create; their ideas and capital are what profitably creates jobs.

Year by year, most of the currently existing companies would hire more workers if only they were allowed. For example, suppose a company has $100 to pay out in wages. Suppose further that it has hired 9 people for an average wage of $11.11 per hour each ($11.11 × 9 people =$100). If there had been a tenth person available to perform work at the company and help increase its production, why wouldn’t the company have hired that person and spread the $100 across 10 people, instead of 9, at a wage of $10 per hour each ($10 × 10 people = $100)?

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Global Cooling and the New World Order

By James Delingpole
The Telegraph

Bilderberg. Whether you believe it’s part of a sinister conspiracy which will lead inexorably to one world government or whether you think it’s just an innocent high-level talking shop, there’s one thing that can’t be denied: it knows which way the wind is blowing. (Hat tips: Will/NoIdea/Ozboy)

At its June meeting in Sitges, Spain (unreported and held in camera, as is Bilderberg’s way), some of the world’s most powerful CEOs rubbed shoulders with notable academics and leading politicians. They included: the chairman of Fiat, the Irish Attorney General Paul Gallagher, the US special representative for Afghanistan and Pakistan Richard Holbrooke, Henry Kissinger, Bill Gates, Dick Perle, the Queen of the Netherlands, the editor of the Economist…. Definitely not Z-list, in other words.

Which is what makes one particular item on the group’s discussion agenda so tremendously significant. See if you can spot the one I mean:

The 58th Bilderberg Meeting will be held in Sitges, Spain 3 – 6 June 2010. The Conference will deal mainly with Financial Reform, Security, Cyber Technology, Energy, Pakistan, Afghanistan, World Food Problem, Global Cooling, Social Networking, Medical Science, EU-US relations.

Yep, that’s right. Global Cooling.

Which means one of two things.

Either it was a printing error.

Or the global elite is perfectly well aware that global cooling represents a far more serious and imminent threat to the world than global warming, but is so far unwilling to admit it except behind closed doors.

Let me explain briefly why this is a bombshell waiting to explode.

Almost every government in the Western world from the USA to Britain to all the other EU states to Australia and New Zealand is currently committed to a policy of “decarbonisation.” This in turn is justified to (increasingly sceptical) electorates on the grounds that man-made CO2 is a prime driver of dangerous global warming and must therefore be reduced drastically, at no matter what social, economic and environmental cost. In the Eighties and Nineties, the global elite had a nice run of hot weather to support their (scientifically dubious) claims. But now they don’t. Winters are getting colder. Fuel bills are rising (in the name of combating climate change, natch). The wheels are starting to come off the AGW bandwagon. Ordinary people, resisting two decades of concerted brainwashing, are starting to notice.

All this, of course, spells big trouble for the global power elite. As well as leading to  food shortages (as, for example, it becomes harder to grow wheat in northerly latitudes; adding, of course, to such already-present disasters as biofuels and the rejection of GM), global cooling is going to find electorates increasingly angry that they have been sold a pup.

Our fuel bills have risen inexorably; our countryside, our views and our property values have been ravaged by hideous wind farms; our holidays have been made more expensive; our cost of living has been driven up by green taxes; our freedoms have been curtailed in any number of pettily irritating ways from what kind of light bulbs we are permitted to use to how we dispose of our rubbish. And to what end? If man-made global warming was really happening and really a problem we might possibly have carried on putting up with all these constraints on our liberty and assaults on our  income. But if it turns out to have been a myth……

blofeld

Well then, all bets are off.

The next few years are going to be very interesting. Watch the global power elite squirming to reposition itself as it slowly distances itself from Anthropogenic Global Warming (”Who? Us? No. We never thought of it as more than a quaint theory…”), and tries to find new ways of justifying green taxation and control. (Ocean acidification; biodiversity; et al). You’ll notice sly shifts in policy spin. In Britain, for example, Chris “Chicken Little” Huhne’s suicidal “dash for wind” will be re-invented as a vital step towards “energy security.” There will be less talk of “combatting climate change” and more talk of “mitigation”. You’ll hear enviro-Nazis like Obama’s Science Czar John Holdren avoid reference to “global warming” like the plague, preferring the more reliably vague phrase “global climate disruption.”

And you know what the worst thing is? If we allow them to, they’re going to get away with it.

Our duty as free citizens over the next few years is to make sure that they don’t.

Al Gore, George Soros, Bill Gates, Carol Browner, John Holdren, Barack Obama, David Cameron, Ed Miliband, Tim Yeo, Michael Mann, Ted Turner, Robert Redford, Phil Jones, Chris Huhne, John Howard (yes really, he was supposed to be a conservative, but he was the man who kicked off Australia’s ETS), Julia Gillard, Kevin Rudd, Yvo de Boer, Rajendra Pachauri….The list of the guilty goes on and on. Each in his own way – and whether through ignorance, naivety idealism or cynicism, it really doesn’t matter for the result has been the same – has done his bit to push the greatest con-trick in the history of science, forcing on global consumers the biggest bill in the history taxation, using “global warming” as an excuse to extend the reach of government further than it has ever gone before.

It is time we put a stop to this. In the US, the Tea Party movement is showing us the way. We need to punish these dodgy politicians at the ballot box. We need to ensure that those scientists guilty of malfeasance are, at the very least thrown out of the jobs which we taxpayers have been funding these last decades. We need to ensure that corporatist profiteers are no longer able to benefit from the distortion and corruption of the markets which result from green regulation.

We need a “Global Warming” Nuremberg.

7 Reasons Why a Dollar Crisis Is Imminent

This author below forgot to mention the most important reason:  Government Intervention in the markets from which most of these 6 reasons stem from.    The countless restrictions placed on business, manipulation of the money supply, mismanagement, government bailouts, and succombing to special interest groups have all restricted liberty and stifled the economy.

6 Reasons Why a Dollar Crisis Is Imminent
SeekingAlpha.com

The U.S. dollar is sliding dangerously close to a steep cliff — a possible point of no return at which the currency could collapse and America could join the ranks of the world’s banana republics.

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For more than thirty years, the U.S. has resisted the restructuring, austerity and market forces required to restore the health, competitiveness and potential of its economy.

Extending a long-running policy of neglect, denial, short-sightedness, political expediency and corruption, for the past two years, the Federal Reserve has tried to prop up the increasingly uncompetitive and defective U.S. economy with what amounts to unprecedented amounts of money printing — still in effect and slated to expand. The government as a whole has increasingly spent beyond its means, doubled down on debt and pushed the limits of inflation risks as it milks the outdated perception of the dollar as a “safe haven” for all it’s worth.

The bill is coming due and the table is being set for the biggest currency crisis ever. Almost all of the key ingredients are in place for a crisis of confidence that will threaten to overwhelm all efforts to contain it — something beyond the magnitude of currency crises that unraveled Mexico in 1994, Asia in 1997, Russia in 1998, and Argentina in 1999. The similarities are now beyond disturbing.

More…

Why you will pay more to subsidize special interest groups (your neighbors)

The following article shows the faulty reasoning that illustrates what Henry Hazlitt described as:

“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

Essentially,  by placing tariffs on Chinese goods to protect favored US industries everyone else will have to pay the higher costs of goods to subsidize their neighbors who work in these protected industries.

When the trade war begins, these short term benefits to protected industries will be negated resulting in a lower standard of living for all.  Only Free Markets can raise the standard of living and virtually eliminate unemployment.

Story from The Telegraph:

Risk of trade war rises as key US committee backs tariffs on China
The risk of a trade war between the US and China has increased after a key Congressional committee backed a bill to allow US companies to seek tariffs on Chinese imports.

By Richard Blackden, US Business Editor
Published: 11:00PM BST 24 Sep 2010

The adoption of the measure by the Ways and Means Committee on Friday means it will now be voted on by the House of Representatives on Wednesday.

“China’s exchange-rate policy has a major impact on American businesses, and Americans jobs, which is what this is all about,” said Sander Levin, a Democrat from Michigan and chairman of the committee.

China’s determination to shackle the strength of its currency helped turn the country into the world’s manufacturing hub for everything from iPods to T-shirts and, until the recession bit, attracted few critics. But an unemployment rate of 9.6pc in the US, as well as upcoming Congressional elections, is spreading anger across Capitol Hill.

According to the bill’s supporters, a properly valued yuan would move jobs back to the US as exports from China become more expensive. The Peterson Institute for International Economics in Washington argues up to 500,000 American jobs could be created.

The move by the committee is awkward for the White House which has steered clear of officially classifying China as a “currency manipulator” for fear of the repercussions of a trade war. President Barack Obama urged Chinese premier Wen Jiabao to take more aggressive steps when they met at the United Nations on Thursday, but the Chinese leader said that the value of the yuan was not the cause of the $145bn (£91bn) trade deficit the US is running with China.

Underlining the high stakes for China over its key economic relationship, Mr Jiabao said that if the yuan rose sharply he couldn’t “imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs”.

Not every US company shares the committee’s view. Wal-Mart and Citigroup are among companies lobbying against the Bill, fearing it will provoke retaliation in China. If the bill passes next week, the Senate will still need to vote on it.

Report: US would make Internet wiretaps easier

Report: US would make Internet wiretaps easier

Only the naive think it’s not easy right now. This is why Research in Motion (RIMM) is getting so much domestic and international flak for their highly secure email service. Soon they will be forced to provide a backdoor key.

The issue at hand is whether or not it’s legal for big brother to mine and warehouse sensitive information without end-user consent.

Broad new regulations being drafted by the Obama administration would make it easier for law enforcement and national security officials to eavesdrop on Internet and e-mail communications like social networking Web sites and BlackBerries, The New York Times reported Monday.

Source: news.yahoo.com

“Put On a Happy Face” – by Doug French

From Doug French at mises.org:

Put On a Happy Face
by Doug French

Since two years of zero interest rates, $800 billion in fiscal stimulus, and the bailout of any business remotely viewed as systemically important haven’t resuscitated the dead economy, now the tonic suggested is optimism. American business owners and consumers need to quit getting their daubers down and keep the sunny side up.

George Mason professor of economics Tyler Cowen believes concern over the collective mood is not just for psychologists anymore. Optimism and pessimism are “very relevant to the difficulties that policy makers face: a deficit of optimism has much to do with why the United States economy remains stalled today,” writes Professor Cowen in the New York Times.

So the Fed can huff and puff and make itself triple its precrash self, “But if it could just convince Americans that it was committed to monetary expansion and economic growth, it would help the economy pick up speed,” according to the George Mason professor.

Cowen goes on to explain that while the Fed is spewing liquidity, people and businesses just aren’t holding up their end of the stimulus bargain. The common folk out in the real world have increased their demand for liquidity. They are spitting in the face of Fed bureaucrats and college professors who can’t figure out why folks aren’t taking advantage of the cheap money, flipping their calendars back to the bubble years, and buying bigger homes, bigger cars, and bigger flat screens.

Brother Bernanke is preaching the way to economic salvation, Cowen claims, but the congregation is unsure of the Fed chair’s conviction. Cowen writes, “If no one believes the Fed’s commitment to price inflation, spending and employment will not go up. The plan will fail, and people will view their skepticism as vindicated.”

The Fed needs to boldly go where no central bank has gone since John Law’s Banque Royale, according to top economists. Once more with feeling, the Fed must promise “a credible commitment to a more expansionary monetary policy.”

But Professor Cowen has this all backwards. The Fed created this mess by slashing interest rates after 9/11 and the bursting of the dot-com stock bubble. The money flowed into all types of real estate. That money and credit created not only redundant brick and mortar malinvestments, but more jobs were created to build the unneeded subdivisions, shopping centers, and office buildings.

Employment at city halls all over America ballooned to handle vital services like checking plans and issuing permits. Retailers staffed up to handle the hordes of shoppers who used their homes as ATM machines. Dare we say, most everyone was overoptimistic. Not because they took a pill or watched Dr. Phil, but because they were spending the cheap and easy credit they thought would never end.

Now the bubble has burst, and those at the Fed and in academia believe rock-bottom interest rates should make entrepreneurs and consumers optimistic again. After all, they plugged low rates into their formulas and it worked — on paper. But it doesn’t. Because the crisis, the downturn, is the cleansing of the malinvestments brought on by the previous blast of monetary expansion.

“Why should hardheaded businessmen, schooled in trying to maximize their profits, suddenly fall victim to such psychological swings?” asks Murray Rothbard in Man, Economy, and State with Power and Market. “In fact, the crisis brings bankruptcies regardless of the emotional state of particular entrepreneurs.”

Rothbard quotes V. Lewis Bassie, who wrote in “Recent Developments in Short-Term Forecasting,” Studies in Income and Wealth:

The whole psychological theory of the business cycle appears to be hardly more than an inversion of the real causal sequence. Expectations more nearly derive from objective conditions than produce them. The businessman both expands and expects that his expansion will be profitable because the conditions he sees justifies the expansion…. It is not the wave of optimism that makes times good. Good times are almost bound to bring a wave of optimism with them. On the other hand, when the decline comes, it comes not because anyone loses confidence, but because the basic economic forces are changing.

So this whole “put on a happy face” theory is hokum. And at least one market analyst, Robert Prechter, believes that optimism still reigns, at least in the investment world. Investors aren’t down in the dumps, Prechter writes in his latest The Elliott Wave Theorist report. Mutual funds are nearly 97 percent invested and investor sentiment indexes are high.

Prechter dissects an article from Bloomberg entitled “Atlanta Awash in Empty Offices Struggles to Recover From Building Binge,” listing more than a dozen negative facts about that market referenced in the article. Yet the opinions the reporter found to quote in the article were positive, such as “Owners of troubled properties … said they remain optimistic,” and “[A] senior vice president … said in an e-mail, ‘Our outlook is positive’.”

A new office tower on Peachtree Street may be 98 percent empty, distressed sales may be nearly half the market, and in-migration has fallen 82 percent in Atlanta, but those in the real-estate business are keeping their rose-colored glasses on. As are Warren Buffett and GE’s Jeff Immelt, who claim things are getting better and there is no chance for a double-dip.

As long as the Fed keeps printing and academia keeps rolling out new theories, the cleansing of the multiple booms created by Fed interventions will continue for years. Those operating in the here and now of the real world have figured out that they should be deleveraging and saving. That may be interpreted by policy makers as doom and gloom, but it’s just good sense.

Malls make way for grocers

Shifting Consumer Lifestyle & Shopping Patterns:

Malls make way for grocers
Unconventional tenants such as grocery stores seen as new way to draw shoppers to struggling retail centers
chicagotribune.com

By Sandra M. Jones, Tribune reporter

September 26, 2010

An afternoon at the mall once meant digging through a pile of sweaters at the Gap, trying on shoes at Nordstrom and slurping an Orange Julius at the food court.

Now, at a growing number of malls, shoppers can pick up a pound of sliced turkey and gallon of milk as well.

Food stores from upscale Whole Foods to discounter Aldi are starting to appear at regional shopping malls.

It is a nascent movement. Experts disagree on whether it will become commonplace, but the grocery stores’ arrival punctuates what many mall operators have known for years: The temple of American shopping needs a 21st-century makeover.

“If you go back to the early days, the department stores were the draw,” said John Rulli, president of the mall management arm at Simon Property Group Inc., the nation’s largest shopping center operator. “The department store owned the fashion business and the mall became the fashion center.”

Now, the mall is morphing into something else: a place of commerce and convenience centered around community, he said. Mall operators are filling spaces left behind by vacant department stores with post offices, public libraries, vocational schools, drugstores and day care centers.

Aldi, the bare-bones supermarket chain, plans to open its first store inside a mall at Westfield Group’s Chicago Ridge Mall in May, operating alongside Carson Pirie Scott, Sears and Kohl’s.

The German grocery company, which also owns Trader Joe’s, has kept overhead historically low by opening stores in off-the-beaten path places where rents are cheap. But since the recession, Aldi has become one of the fastest growing U.S. retailers, attracting a growing number of frugal consumers.

The store is taking over a space formerly occupied by Steve & Barry’s, a defunct discount fashion clothing chain.

When the American mall took root in the 1950s and 1960s, department stores anchored malls. Developers counted on department stores to draw the shoppers to feed the smaller stores in the mall.

With department stores from Sears to Saks shutting unprofitable stores and others including Mervyn’s and Gottschalks wiped out in the recession, mall operators have had to find new retailers to draw the crowds needed to support the rest of the mall.

Grocery stores are appealing because shoppers typically visit them once a week. Consumers visit regional malls, on average, less than once a month.

Indeed, when asked what kind of store they would like at their local mall in an October 2009 survey from the International Council of Shopping Centers, 31 percent of respondents said a grocery store. Only two types of stores rated higher: restaurants, at 33 percent, and discounters, at 49 percent.

That may explain why Big Lots Inc., the closeout retailer, is now on mall operators’ radar. Big Lots, which carries a wide selection of food, among other merchandise, has been on an expansion tear, opening 52 stores last year and planning another 80 this year.

“It used to be that landlords thought of Big Lots as only being interested in inexpensive locations or cheap rents,” Joe Cooper, Big Lots’ chief financial officer, said at a Piper Jaffray conference in June. “And that couldn’t be further from the truth today.”

Last year, Big Lots opened a freestanding store at the Polaris Fashion Place mall in Columbus, Ohio. Operating at the upscale mall — home to Saks Fifth Avenue, Von Maur, J.C. Penney, Sears and Macy’s — exposed Big Lots to new customers, Cooper said.

Unconventional tenants such as Wal-Mart, Lowe’s and Best Buy have been moving into malls for years. When Montgomery Ward went bankrupt a decade ago, mall operators had scores of big-box stores to fill and few department stores were expanding. That trend has accelerated.

The vacancy rate at regional and super-regional malls reached 9 percent in the second quarter of 2010, according to Reis Inc., the highest level on record since the New York-based commercial real estate research firm began tracking the data in 2000.

Meanwhile, the average asking rent for nonanchor tenants, excluding food courts, fell 0.2 percent to $38.72 a square foot, the lowest level since the first quarter of 2006.

Target Corp., one of the first big-box stores to pick up where department stores left off, has scores of mall stores. But the purveyor of cheap chic has been expanding food offerings to include full-fledged grocery departments.

At Simon Property’s malls alone, Target has 13 locations, outnumbering Neiman Marcus at 10 and Saks at 9.

“Everybody’s looking for growth opportunities,” said Bill Bishop, chairman of Willard Bishop, a supermarket consulting firm. “If these regional malls give grocery stores exposure to geographic market segments they can’t reach another way, that’s a good reason for doing it.”

Consumers may cut back the number of jeans they buy, but they will always shop for food.

Like most mall developers, Westfield Group has been hunting for retailers that are expanding to take the place of department stores that have closed or gone out of business. Westfield’s Southcenter mall in Seattle opened a Seafood City Supermarket at a former Mervyn’s, joining a mall anchored by Macy’s, Nordstrom, J.C. Penney and Sears.

And in August, Westfield unveiled an agreement with Costco Wholesale Corp. to open three warehouse clubs at Westfield shopping malls in Florida, Maryland and California. Costco is taking over a former Hecht’s Department store and a Dillard’s. The clubs are slated to open in 2011 and 2012.

The Costco stores will have entrances into the malls, rather than operate as standalone sites on the periphery of the mall. That decision provides “significant potential for cross-shopping, particularly given the repeat visitation associated with food that will benefit the sales of the entire mall,” Steven Lowy, group managing director for Australia-based Westfield, said in an August earnings teleconference.

The Costco deal is the start of a new wave of mall redevelopment, predicts an August report from Credit Suisse retail analyst Michael Exstein.

“As consumers’ needs change and department stores continue to lose share,” he said in the report, “shopping centers will look to Costco and other high-traffic formats as valuable anchors going forward.”

smjones@tribune.com

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