The Sun rises in the East, the Sky is Blue and....

Congress is going to raise the statutory national debt limit by 1.8 Trillion dollars to a new limit of approx. 14 Trillion dollars...This is roughly the current National debt (red numbers below).  As I suggested in class, it will be embedded in a Pentagon funding bill that few will vote against.  Republicans will fuss about it and grandstand, but they know it will pass AND they will get their pet projects inserted in the latest spending bill which is the reson they need to raise the debt limit this much in the first place.  Disgusted with both parties...What is an American who wants responsible, limited government to do?

The national debt is divided into two major categories, Pubic Debt and Private Debt.  Public debt is the amout of debt the Federal Govt essentially owes to ITSELF, in the form of Bonds ("IOU's) that are in public various trusts fund, i.e. Social Security trust fund ($2.244 trillion), Federal Emplyees Trust Fund ($738 billion), Military Retirement Fund ($249 billion), etc.  Basically these are funds owed to government trust funds that have money in them because of taxes collected today from the future beneficiaries of these funds.  The total owed to these funds is approx.  $7.109 trillion.  The Private Debt is debt owed to individuals (domestic and foreign), private investments funds, and other governments.  Of the total amount of the debt owed to the pubic approx. 50% is held by foreigners (counties and individuals), which amounts to about $4.280 trillion. Of this amount China owns 25% and Japan 23%, so roughly half of debt owed to foreigners is owed to two countries (OPEC countries are not too far behind).

This is a Painful Issue..

This week myself and 3 JWAC members (Alex Baker, Ben Martin, Haley Bupp) went to view a documentary called "The Greatest Silence: Rape in the Congo".  I know, it sounds like a peculiar thing.  I had NO IDEA what a problem this was.  Rape is being used by the Congo military AND "rebels" from within the Congo and from surrounding countries (Rwanda, Uganda, etc).  The conflict is mainly in the Easterm part of the Congo where it is commodity rich---oil, gold, diamonds, and  mineral called Coltan (80% of the world's supply is in this area) which is used in the circuit board of the cell phone you are using.  The central government is weak and cannot stop the rebels, and even their OWN military, from raiding these areas to gain access to these commodities and sell them on the world market.  These groups terrorize the local villages to force them to leave.  When they enter a village they pillage and brutally rape and torture women and children in front of the husbands, then kill the husbands.  It is a horrendous situation.  Coincidently, there is an article in today's New York Times that reminds us that unspeakable violence is STILL taking place in our world today.  We made an excellent contact at the documentary viewing and JWAC will try to bring them to campus to further inform us on this human rights issue...PLEASE JOIN US!! Help create awareness of these types of issues!!

Forget 2012---THIS is the sign of the coming Apoclypse!!

China passes the US in the purchase of New Cars. This is actually a good sign for the US.  The Chinese have been notorious savers and there are signs that consumption spending is increasing as the emerging middle class flexes its economic muscle.  As incomes rise they will buy not only more Chinese goods and services but more imports (perhaps even from US businesses!).  In addition, with a depreciated dollar there is an incentive to buy US goods/services.  Gee, maybe even our cars! 

What do the 3 Stooges and College Football Have in Common???

Seriously, dont they have better things to do...Seriously....

Helping the Developing World One Village at a Time...

Women taking control in an area that traditionally leaves them with out social/economic power to be independent.  This is one reason why we are in Afganistan (at least how I rationalize it in my mind) and why we need to "finish the job". If we don't then these women, will lose any hope of living a "free" life and to progress in society.  We all know the horror stories of the Taliban rule.  It seems safe to assume that life will return to the way it was for women in the area.  Why do "feminists" seem reluctant to speak out against this? I mean really speak out and take action.  We need to support efforts like this, not with mis-guided aid that benefits contractors and foriegn suppliers, to build a confident and self-sufficient Afganistan.  I know these micro-economic activities are taking root ALL over the world in developing countries.  Why dont we hear more about them? Numerous organizations, from CARE to non-profit entrepreneurs like http://www.indegoafrica.org/ are making life better one village at a time.  I actually hope governments DO NOT get involved in this. Best left to people who REALLY care about genuine development....

Walmart Practices blatant discrimination...

Example of 1st Degree Price Discrimination in Microeconomics...Walmart is trying to capture as much Consumer Surplus as possible!!

Is Economic Recovery Just Around the Corner????

Are we at the bottom of the fall in employment?  Hard to say for sure but a net loss of "only" 11,000 jobs is significant given the situation for the last 9 months or so.  We are still going to behind the 8-ball for a long time, however.  It is estimated that the US economy must created at least 125,000 rto 150,000 net NEW jobs EVERY month to keep up with population increases (immigrants/birth rate) AND new entrants into the job market (yes, that is you graduating high school student and/or graduating college student!).  So when we start the economic recovery we will still be behind, technically, by 1 to 2 million jobs. There are a couple of charts in the WSJ today that are informational.  This one...

has a couple of interesting points. The number of temporary workers hired helped stem an increase in the unemployment rate.  Businesses are hesitant to hire permanent workers right now for a couple of reasons.  One, the spike in GDP (demand for new goods and services) is encouraging to businesses, but there is uncertainty as to the sustainability of that demand.  Statistically, few businesses are going to add to their workforce if they are unsure that new orders for their products/services are going to be demanded longer-term.  What they will tend to do is hire temporary workers, if needed, to fill in labor gap they may be experiencing in production.  Second, perhaps along with, or before, hiring temporary workers, businesses will give "extra" hours to workers who had their hours cut because of lack of demand for their good/service.  As you can see from the chart, the average work week increased slightly.  There is still under-utilized capacity in most businesses so, the prudent business owner is going to try to get the most out of the trimmed down workforce as possible (and the workers may be greatful for the increased hours/overtime) before realizing it will be more cost effective to hire additional workers as they reach/surpass capacity.  Only then will "new" (NOT jobs that were lost then the SAME job re-filled --that is NOT job creation!!)  jobs be actually created. 

The second chart shows where the jobs were lost and where gained...

We know 7,000 of the "new" jobs were created in the public sector and most (I assume) of the Education AND  probably a good portion of the healthcare jobs (approx half of all healthcare spending originates from government, Fed/State).  These jobs are ALL taxpayer financed and are made possible by revenues from individuals, business, or borrowing (since revenues are falling and these plans are not already budgeted, I am guessing they are paid for with borrowed money).  I am sure a good number are residuals of the fiscal stimulus that makes its way through the bureaucracy and necessitates the hiring of people to oversee the vast sums of money going to designated "shovel-ready" projects.  My question is, will these jobs disappear when the stimulus money runs out or are they going to be so embedded that they will be impossible to eliminate?  Does this lead to a permanently enlarged public sector?  Is this good? Bad? or will the economic growth resulting from it be so significant that these jobs will eventually pay for themselves?  Whaddaya think???

America as Texas vs. California

How does Texas stack up against California as a place to do business?? Texas gets criticized for being "stingy" in the area of social services and the environment, and it is an area for improvement.  However, there is something to be said for not being over-extended in fiscal obligations, when in good economic times are relatively easy to fund, but when there is a down-turn in the business cycle those same programs that people come to rely on get funding cuts and people "suffer".  For better or worse, we tend to be on an even keel in terms of the size of state government and what we promise in future financial obligations.

Past Recessions Explained---GREAT interactive graphic

Click HERE for an excellent graphic and short 2 minute explanations of recessions since 1960...Highly recommended!!

Food Stamp Usage Across the Country

Automatic Stablizer at work...Food stamps(Link to NYTimes article) are a Non-Discretionary Fiscal Policy that "kicks in" whenever the state of the economy demands it...Govt spending will INCREASE to meet the need...

Supply is GREATER than Demand---Should we SUBSIDIZE Apple Growers???

Becaue of a bumper crop of apples (for story click HERE), the price that apples growers are getting in the market are at their lowest levels in a long time.  In fact it is a money losing propostion to even pick the apples off the tree (lots of wasted apples).  What is the opportunity cost of picking the apples? Of NOT picking the apples?  Because this may cause some growers to go out of busines, should the Federal Govt offer subsidies to the farmers so they can stay in business and assure a future supply of apples? (Link courtesy of Mankiw)

@###%#%%*&#^^^#%^^+# BLASTED ETHANOL!!!!!!!!

More fall-out from Ethanol Mandates..URGGGHHH!!!

What If Buying Food was JUST LIKE The Way We Buy HealthCare in the US...See Video!!!

As a student you are probably dont know how we actually purchase Healthcare in the US. It is a system violates one of the basic tenets of Economics---Lack of CLEAR PRICES!!  Click HERE for a 45 second video that pretty well sums up how we price health insurance here...

Ummmm...Happy Thanksgiving???

Children Age 12 Have To Use A Booster Seat While in a Car....

Well, sort of...Part of a chapter in the new book by Levitt and Dubner "SuperFreakonomics" is about child seats and how the data show that if a child is over 2 years of age their is no significant safety advantages of a car seat versus just wearing a regular seat belt (for Levitt's research, click HERE)...This is a link they provided to a BBC article reporting that in 2006 the British government passed a law requiring children up to 12 (yes, 12!!) years old, or UNDER  4' 5" to be in a booster seat...Can you imagine telling your 12 year old son/daughter/brother/sister to get into the booster seat?  Also, why the height requirement?  Why, if they are concerned about safety, does this not apply to adults who happen to be shorter than 4' 5"??  Seems excessive to me...What do you think?