Charlie Rose

EyesOnYou  01/15/2011 10:29 PM Report

Much of what Pearlstein discussed is true and was obvious years ago. It's sickening to see these so-called economists and journalists are discovering the obvious too little too late.

Now explain to me why we should subsidize the global corporations based in US, that refuse to create jobs here, with the expense of the US legal and regulatory infrastructure.

As for exports and how Germany is managing. Well, I'll give you an simple example. I recently renovated my apt. at the cost of 400k. You want a good kitchen, you buy German. You want good faucets, knobs, fixtures etc., you buy German. You want good furniture, you buy French. These are not cheap products. Tell me why I can't buy American made products of equal quality. Subzero/Wolf does it. Blue Star does it, APPLE does it. But where is the rest????

JohnGelles  01/13/2011 12:15 PM Report

Eric Janszen (author of The Post-catastrophe Economy) worries that the American rescue of its biggest bankers has traded in the business cycle for the bubble cycle.

He does not advise against the rescue but puts it this way: the only thing worse than the coming bubble in green energy and infrastructure investments would be no-bubble.

I like Janszen (author and owner of iTulip news and investment advisory service) and his friend Michael Hudson (scholar at the Univ. of Missouri Kansas City -- Mecca for Keynesian thought for today modified to fit all needs -- )

But I do not like the idea that we cannot manage today's surplus of industrial capacity and shortage of all things needed to end poverty with shipments of food, water, care, housing, education, and organization, to the poor -- together with the money (ours or theirs) to buy them.

Out law and accounting language and practice is at fault -- not our engineering or the good intentions of people really concerned with the future of peace and democracy as our constant goals.

Charlie Rose has not yet met the right people to make sense out of our opportunities. He ought to send some staff to the University of Missouri Kansas City Economics Department and Center for Full Employment. His staffer should not come back until a series of Keynesian solutions is collected for presentation to the audience.

We are entitled to hear that the choice Ben Bernanke faces is not between high inflation or high unemployment. It is rather between zero unemployment and idiocy. We, of course, should not chose to keep what we have all misery that follows from it.

Ricardo_Amaral  01/13/2011 04:40 AM Report

Preview of coming attraction

Here is a preview of the coming US dollar meltdown

The Day the Dollar Died

http://www.youtube.com/watch?v=2N8gJSMoOJc&feature=pyv&ad=6050032234&kw=fox%20news

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Ricardo_Amaral  01/12/2011 11:27 PM Report

Here is my suggestion to Finance Minister Guido Mantega as what his response should be to Ben Bernanke’s letter published on the Financial Times.

First, Guido Mantega has to play the same rhetoric game that Ben Bernanke has been playing – instead of saying that the purpose of his policies is to cause a major devaluation of the US dollar – he calls it Quantitative Easing (QE). QE it’s a cute way of saying major devaluation of a currency.

Second, there's nothing wrong in positioning Brazil right now to play the same currency games that China and the United States have been playing.

We need to be a realist and recognize that the currency game is not going to change for a long time regarding China and the United States, because of the internal problems that it would cause for the economies of these 2 countries.

The time is now for Finance Minister Guido Mantega to announce what I have been suggesting since last year: a 35 percent devaluation of the real, and adopt a fixed rate currency system for the real pegged to a basket of currencies including the US dollar and the Chinese yuan to anchor the real against the US dollar and the yuan – and keep the new currency system until the market conditions change and at that time the Brazilian central bank would make the necessary adjustments.

If Guido Mantega does not follow this strategy then the real will continue appreciating against the US dollar and the yuan with catastrophic consequences for the Brazilian economy.

Finance Minister Guido Mantega instead of calling these changes a part of a global “Currency War” – he should play the Ben Bernanke game and call it an adjustment to the new China/USA currency system.

Wall Street would buy it and would find more acceptable that kind of language.

I like to suggest that people should listen to this NPR radio program that explain the process that Brazil had to go through for people to start believing on Brazil’s currency. This program also explains the process that the Federal Reserve uses to create money from thin air.

The Invention of Money – January 7, 2011

http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money

Ben Bernanke could learn a lot from the Brazilian experience regarding what it takes to make people believe in the value of the country’s currency – trust it’s all the central bank has to justify the trust that people has in a certain country’s currency. If people stop trusting the central bank then that currency it’s in deep trouble.

How the Federal Reserve creates money from thin air: the Federal Reserve just click their mouse into a Bank’s account with the Federal Reserve and by changing the balance of that account money is created from nothing. (A complete explanation of the Federal Reserve magic act it is given at minute 35 of the above radio conversation on NPR)

The Federal Reserve magic of creating money from thin air just go as far as people continue trusting the Federal Reserve – and that trust can be lost at any time, and after that….

*****

The US dollar and the biggest default in history

http://www.elitetrader.com/vb/showthread.php?s=&threadid=121313

*****

Financial Times (UK)

Published: January 12, 2011

“Get real, Brazil”

Dear Mr. Mantega,

Being frustrated politicians ourselves, we at the Federal Reserve rather envy you your “currency war tub-thumping”. But as Brazil’s finance minister you might want to think of the consequences if we were actually to treat your ramblings seriously.

You say that “deep down” our policy of quantitative easing is a trade strategy – a weapon to boost competitiveness at your expense. Ending QE with a sharp rise in US interest rates would indeed strengthen the dollar against the real.

But it would also make America’s fragile economy crumble, by increasing the cost of corporate debt, at a record level of almost 50 per cent of gross domestic product and (through higher mortgage rates) destroying the property market and bank balance sheets (32 per cent of the $13,400 billion in bank assets are loans secured on real estate). Consumption would tumble.

And you must remember what happened when the US economy went pop almost three years ago? Money flooded out of Brazil and your claimed self-sustaining growth engine stalled. And if interest rate differentials suddenly move in our favour, investors would cease to find the returns on Brazilian assets so attractive. And you actually need their hot money to help increase investment levels from a low fifth of GDP as well as to balance your current account deficit.

But Mr. Mantega, it was big of you to complain about China too, this time. Thanks for that. Ultimately the real is so strong because commodity prices are so high, and that in turn is because China’s currency has been kept artificially low. OK, our QE makes that problem even worse. But frankly, Mr. Mantega, you need to get off our case on that one. QE is just another form of monetary policy and US rates are low because our economy is currently weaker than yours. When the outlook improves, we will tighten. You’re not exactly suffering down there. Or is there something worrying you that markets don’t yet appreciate?

Yours sincerely,

Ben Bernanke

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Ricardo_Amaral  01/11/2011 01:58 AM Report

By the way, Brazil does not blame China for the currency games.

Brazil blames the United States for unsound economic policies of low interest rates and QE1, QE2, QE3 and so on...

The US unsound economic policies is destabilizing the economies of many emerging markets around the world.

Ricardo_Amaral  01/10/2011 05:22 PM Report

In January 2011 the real unemployment rate in the United States is around 25 percent.

Here are some of the pieces that gives you the real unemployment rate in the US:

15 million unemployed workers

9 million underemployed workers

2 million discourage workers

5 million unemployed workers (who are hiding on the disability figures)

4 million people who should be in the labor force are no longer there -- and the US government doesn't know what has become of them.

3 million Americans moved to other countries to look for opportunities and, because they gave up on the US job market

**************************

38 million people and this adjusted Total gives us the real unemployment rate in the United States of almost 25 percent of the labor force.

And on top of that - never mind the millions of people who are forced into retirement, or decided to go back to school to learn a new trade or to further their studies, because they can't find a job on the current US job market.

*****

Note: ...the underemployment rate is at 16.8 percent for 9 million more people.

http://jobs.aol.com/articles/2010/09/15/underemployed/

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http://www.post-gazette.com/pg/10248/1085217-28.stm

Sunday, September 05, 2010

...There are 3.5 million people missing in the U.S.

Their families know them. Their neighbors see them come and go.

But 3.5 million people who should be in the labor force are no longer there -- and the government doesn't know what has become of them.

On the first Friday of each month, the Bureau of Labor Statistics reports the nation's monthly unemployment rate.

*****

“A Growing Trend of Leaving America”

By Jay Tolson

US News and World Report - July 28, 2008

http://www.usnews.com/news/articles/2008/07/28/a-growing-trend-of-leaving-america.html

...at least 3 million U.S. citizens a year are venturing abroad. More interesting, the biggest number of relocating households is not those with people in or approaching retirement but those with adults ranging from 25 to 34 years old.

Most of these young people who are leaving the country have higher education degrees, and these are the people that the United States need to keep as part of its workforce.

*****

I was talking to a friend of mine about 3 weeks ago about the exodus of illegal immigrants from the United States, and he told me that one of his businesses – a money transfer business – is not making enough money even to pay the bills.

He has this money transfer business for a long time and most of his clients are from Latin America including Mexico – he told me that he always did very little business with Brazil. In the last few years his gross money transfers have declined more than 60 percent and the money that he makes today in fees on that business is not enough to pay all the costs of running the business.

He told me that too many of his customers have returned to the countries from where they come from.

I have been mentioning for a long time about the exodus of illegal immigrants from the United States – finally the US mainstream media started grasping the trend that is going on for quite a while, but they rarely mention that subject.

I hate to bring this up but this exodus of Americans and also of illegal immigrants has a major economic impact on the United States. You can bet that the exodus is affecting in a negative way the local economy of many towns around the country including everything related to real estate, to local businesses, and local economic activity in general. Never mind the loss of human capital.

The mainstream media here in the United States rarely say a word on this subject, but in the last 3 years the United States had reverse illegal immigration - that means that there are more illegal immigrants leaving the United States than illegal immigrants coming in - the net loss of illegal immigrants has been around 2 million people during that period – and you can see what is happening with this reverse illegal immigration not only by the exodus that has been happening around the communities where these illegal immigrants used to live, but also in the large decline of the amount of money that these illegal immigrants used to send home to help their families.

This trend of reverse immigration has not happened in the United States in a long time probably in over 100 years. These reverse illegal immigration is the “canary in the coal mine” and represents a major alert signal to the implosion that is happening inside the US economy, since these illegal immigrants are the type of people who would take any type of job to survive and to help their families.

Just keep in mind that the illegal immigrants represent the canary on the coal mine.

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Ricardo_Amaral  01/10/2011 05:15 PM Report

“The Bad News Behind a Falling Jobless Rate”

By Rick Newman

US News and World Report

Friday, January 7, 2011

http://finance.yahoo.com/news/The-Bad-News-Behind-a-Falling-usnews-1060692632.html?x=0

It sounds like welcome news. The unemployment rate dropped from 9.8 percent to 9.4 percent, the sharpest one-month drop since 1998. After months of grim news about jobs, it finally seems like things are heading in the right direction.

But the fine print is discouraging. The economy did add 103,000 new jobs in the latest month, which accounted for about half of the steep drop in the unemployment rate, according to forecasting firm IHS Global Insight. But the number of new jobs is much lower than economists expected, and the current pace of job creation is far too weak to offset all the jobs lost during the recession. The other reason the unemployment rate fell is a shrinking labor force. Nearly 400,000 unemployed people stopped looking for work in the most recent month, because they felt no jobs were available. They gave up, in essence, and dropped out of the labor force. And that is not what is supposed to happen as the economy recovers and workers, in theory, become more optimistic.

Such "discouraged workers" have become a key variable in the jobless numbers, and in the overall direction of the economy. There are now about 4 million Americans classified as "discouraged" or "marginally attached to the labor force," which basically means they'd look for work if they thought it were available--but they don't, so they're not.

That's in addition to about 14.5 million people who count as unemployed, because they're actively looking for jobs.

Four million labor-force dropouts may not sound like a lot compared with a total labor force of nearly 154 million, but those marginal workers represent the difference between healthy growth that would bring the economy roaring back, and the kind of tepid growth we have now, which leaves millions of consumers feeling unsure about their jobs and anxious about the future.

A shrinking labor force also masks deeper weaknesses in the economy. The size of the U.S. labor force peaked at about 155 million in October 2008, right after the collapse of Lehman Brothers and the financial panic that led to millions of layoffs. Back then, the percentage of adults either working or looking for work was 66 percent, about average for the last two decades. The labor-force participation rate has since fallen to 64.3 percent, the lowest level since the early 1980s. Fewer Americans are working, and fewer Americans want to work. If the participation rate were still 66 percent, unemployment would be closer to 12 percent--a number nobody would tout as cheerful news.

There's usually a decline in the size of the labor force during recessions, as people who might ordinarily work decide to go back to school, or to stay home and help out around the house, until the job market improves. But the decline in the size of the labor force over the last two years is the sharpest since World War II, and economists now think the labor force could be shrinking permanently.

Bank of America Merrill Lynch recently predicted that labor-force participation will tick upward as the recovery picks up, but then resume a gradual downward trend that's been in place since 2000. Their analysis shows that a shrinking labor force could whack a full percentage point off of GDP growth annually.

That would have a tangible impact on millions of Americans. Slow economic growth means an indefinite oversupply of workers, which would continue to hold down pay levels--even for those with jobs that feel secure. That would make it harder to save, pay down debt, and keep up with inflation.

Fewer earners in the economy also means fewer people paying taxes, which would exacerbate federal deficits and state and local budget shortfalls, which are already a big problem. And of course the unemployed will continue struggling to make mortgage payments, maintain health insurance, and in many cases simply put food on the table, straining the social safety net that working Americans pay for.

Economists still expect the unemployment rate to go back up as the economy improves, which, paradoxically, would be good news because it would signal that discouraged workers are regaining some hope and treading back into the job market. IHS Global Insight, for instance, predicts that unemployment will drift back toward 10 percent in 2011, then turn around and end the year close to 9 percent. But that up-and-down trend, typical at the end of recessions, was already supposed to be happening by now. Instead, workforce discouragement seems to be lasting much longer than usual. Optimism, for many, remains as elusive as a job itself.

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Ricardo_Amaral  01/10/2011 05:12 PM Report

“Economists foretell of U.S. decline, China's ascension”

By Mark Felsenthal

Reuters - Monday January 10, 2011

http://finance.yahoo.com/news/Economists-foretell-of-US-rb-3281831038.html?x=0&sec=topStories&pos=4&a sset=&ccode=

DENVER (Reuters) - To hear a number of prominent economists tell it, it doesn't look good for the U.S. economy, not this year, not in 10 years.

Leading thinkers in the dismal science speaking at an annual convention offered varying visions of U.S. economic decline, in the short, medium and long term.

...MIT's Simon Johnson put it more bluntly, saying the damage from the financial crisis and its aftermath have dealt U.S. prominence a permanent blow.

"The age of American predominance is over," he told a panel. "The (Chinese) Yuan will be the world's reserve currency within two decades."

*****

I started writing on this subject more than 5 years ago – but I am glad the herd is finally grasping the obvious.

Brazzil Magazine - June 2, 2005

“While China Rises the US Falls in Brazil and Latin America” Written by Ricardo C. Amaral

http://www.brazzil.com/2005-mainmenu-79/152-june-2005/9296.html

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Ricardo_Amaral  01/10/2011 05:10 PM Report

The implosion of the US state budgets it has started in 2011 – starting with California where they will cut spending by $12.5 billion.

By the time they are done cutting the state budgets and of local communities – more than 1 million people will lose their job in 2011. And government at all levels in the US are not going to be a source of job creation in 2011.

When you add the job losses from the private sector as a direct result of these massive layoffs that will happen around the country then the unemployment picture in the US economy it will be even worse than in January 2011.

It is a good thing the Labor Department has the discourage worker category for then to be able to hide a few more million American workers who can't find a job. Thanks to this black hole category the US government will be able to reduce its official unemployment rate even further to about 9 percent by placing a few more million Americans into the black hole category.

The American black hole works like magic – the US government place millions of unemployed workers on that category and they disappear.

*****

California's Brown Unveils $12.5 Billion in Spending Cuts

By Michael B. Marois

Bloomberg News - Jan 10, 2011

http://www.bloomberg.com/news/2011-01-10/brown-proposes-cutting-california-spending-by-12-5-billion-t o-close-gap.html

California Governor Jerry Brown's budget will cut spending by $12.5 billion, including as much as a 10 percent pay reduction for most state employees, aides said.

The plan, which Brown is to unveil today, will also raise $12 billion by retaining tax increases due to expire and making other modifications. Some of the revenue will go to cities and counties as part of Brown’s plan to transfer spending authority from the state to local governments.

The largest U.S. state by population faces a $25.4 billion budget gap over the next 18 months, Brown said in a statement. The 72-year-old Democrat, who took the oath of office last week, has vowed to reach a budget agreement with state Legislators over the next 60 days.

“These cuts will be painful, requiring sacrifice from every sector of the state, but we have no choice,” Brown said in the statement.

His plan will chop an amount equal to 10 percent of the current year’s $125.3 billion in spending. Cuts include $1.7 billion from Medi-Cal, the state’s version of the Medicaid program for the poor; $1.5 billion from CalWorks, a welfare-to- work program; and a combined $1 billion from the University of California and the California State University systems, which together serve 663,000 students.

Additional cuts will be made to prisons and the courts.

Spending on kindergarten through 12th-grade education will be spared, Brown said.

“Schools have borne the brunt of spending reductions in recent years, so this budget maintains funding at the same level as the current year,” he said.

Voters will be asked to extend increases in sales and income taxes as well as vehicle license fees in a special election in June, Brown said.

His proposal involves total state spending of $127.4 billion for the 2011-12 fiscal year which begins July 1. Of that, $84.6 billion would come from the state’s general fund.

REMant  01/10/2011 05:08 PM Report

Not only was employment less than expected, but the unemployment figure dropped, because so many stopped looking for a job, and thus were not included in the figure. I was dismayed to see this fact omitted in the Post's stories. I agree with Pearlstein that we have to focus on sustainability. If that were not true, we'd have seen the kind of "recovery," which happened after 2001, and we can't afford to keep them on the dole. The states are now finally faced with that reality, and the Congress is not going to be bailing them out. It should be mentioned in passing that sustainability is not Steven's paper's concern, which ran a front page story today asking merely whether ppl will spend enough of the tax cuts to make any difference, and, of course, complaining that the higher income brackets will (obviously) have the most money to spend. The question is rather whether people will find enough of significance to spend the money on. Sustainability means that the benefits outweigh the costs, that it is economically efficient and productive. To ppl who appear to believe that all the things men say or do are of equal value this seems to be a hard sell.

The observation about Germany is very good, but I think we need to do more high tech manufacturing ourselves. We need better education for that, and I doubt it can be found at the mall, or even The Mall, tho I don't disagree with a little aid and guidance from whatever source, nor would I think any of our trading partners at this juncture. I applaud GE for its appliance decision, and, in fact, if you look back to when the GE chairman was last here, I asked why not. I have since purchased a GE washer, tho I don't know where it was put together. And I doubt we can dominate either the software or entertainment markets as we used to. What I would like to see out of both political parties is clear evidence that they understand we have to employ ppl to make things for themselves, that they have to earn enough to do just that, that this is fundamental, and fundamental the world over. It is not a merely local issue.

We've had enough get-rich-quick schemes. I hope the administration doesn't get its head turned by anymore proposals that merely raise employment figures temporarily, or promise a return to bubblenomics. I am worried, too, that we will see a lot of hypocritical talk about the kind of globalization which benefits elites, but not the average worker. And I'd like to reiterate in that regard, when the US prints money, or makes it cheaper for it citizens to obtain, which amounts to the same thing, it makes it harder for the poor in other countries and who cannot retaliate by decreasing the price of their exports to us, and esp those who must buy commodities usually denominated in dollars. It should be really be viewed as a flagrant act of aggression.

I trust the GOP realizes they will also have to contribute to a balanced budget.

VAT's have an advantage with respect to bounties, as Steven said, but a huge disadvantage, as with all excise taxes, in being practically invisible, which is why they have been opposed, often violently, for centuries. It is all too easy for a govt to raise them, and then fund things like wars and police, and stamp the whole thing secret. "Endless money forms the sinews of war," Cicero said. The Bowles-Simpson flat-rate income tax is the way to go, and has been since it was proposed in the Reagan admin, and it is the best, too, for the ppl who really need help, because by eliminating the upper- and middle-classes' tax loopholes, it allows the threshold for those who must pay tax to be higher. Since most of those loopholes are an encouragement to speculate in real estate and securities it is also helpful as a deterrent to undesirable behavior.