Obama Beware: 9% Unemployment Rates Are NORMAL for European Welfare States Like France
Historical Unemployment Rate in France: 1970 to 2010
"Americans today are alarmed that unemployment has stayed around 9 percent for so long. But such unemployment rates have been common for years in Western European welfare states that have followed policies similar to policies being followed currently by the Obama administration (see chart above of the jobless rate in France).Those European welfare states have not only used the taxpayers' money to hand out "free" benefits to particular groups, they have mandated that employers do the same. Faced with higher labor costs, employers have hired less labor."
BERK: We heard today that President Obama is going to propose a "temporary" "targeted" tax incentive for employers who hire. Sounds great, right? Wrong.
It is more of the same government intervention that will help the employees and employers that do hire, even if the employers were going to hire anyway - that's what we see - but will hurt future hiring and the other employers that are not in a position to hire even at the subsidized cost - that's what is unseen. By not considering the unseen consequences of the seen policies, the technocrats in the White House are dooming us to permanent 9% unemployment.
Professor Mark Perry from the Carpe Diem Blog comments: "What is both really interesting and depressing (if it were to happen here) is that the annual unemployment rate in France was below 3% every year from 1970 to 1974, and then since 1984 it's been at or above 8% every year, with just a few exceptions."
BERK: The President should call off his National Labor Relations Boad's lawsuit to prevent Boeing from setting up a new production line in right to work state South Carolina. It represents everything that is wrong with his approach to economic policy. He says, speaks, feels, commands, but never accomplishes regulatory reform. Either they don't believe that millions of economic actors who make millions and millions transactions and decisions everyday, see this NLRB use of law as another arbitrary attempt to restrict freedom of South Carolinians and Boeing employees and shareholders to freely contract over state lines. Too bad that South Carolina is a "right to work state" where you are not forced to join a union before you can work. The WSJ:
When CEOs or entrepreneurs fear political intervention that might impose higher costs, they are more reluctant to invest or to hire new employees. That's especially true when the economy is already growing slowly, or emerging from recession.
The NLRB's assault on Boeing has been especially damaging because it violates what most Americans consider to be a core tenet of U.S. capitalism—the ability to move capital or business where you think it has the best chance of success. Boeing's executives are being punished for remarks they made long ago about strikes at their Washington plants.
Transportation Stocks & Railcar Loadings
via blog.yardeni.com
How can the President say that the "Bush tax cuts" were for the wealthy, when they pay more total dollars now than before? Really...Try to explain that away.
Crowding out private borrowing is what we are seeing. The US government spends trillions. The US banks buy more and more of US government bonds at lower and lower interest rates. At some point, the Federal Reserve hopes that banks, corporations and investors will climb out of the bomb shelter and invest in riskier assets. I believe that will not happen until it is clear the US government will stand aside and stop interfering.
As credit specialist David Goldman observers, banks are still plowing more and more money into government securities -- the opposite of real banking activity.
What should worry investors, rather, is the simple question: how can the banks make money when no-one wants to borrow and asset returns are imploding? The absence of viable investment opportunities for the banks is illustrated most poignantly by one data point, namely banks’ accelerating purchases of Treasuries.
Bank purchases of treasuries spiked upward during the past several weeks just as the yield curve flattened and Treasury returns collapsed. It was one thing for banks to borrow at next to nothing and buy 2-year notes at 1%. The trade doesn’t make sense now. It is risky for banks to go far out the yield curve, but they seem to be doing so.
Marc Hodak just published an article in Directorship about myths arising from a simplistic view of compensation. Marc tackles 7 myths that show the hysteria surrounding not just the banks pay scandals but all public company pay at this time of year (proxy season).
An important contribution in this article is his obliteration of the "managerial power" thesis for "high and rising" CEO pay. CEOs control their feeble board members who then are forced to lavish huge pay onto the executives - regardless of performance.
Here's the money quote according to Marc:
