How to Keep the Young Jobless

The young suffer from unemployment to a far greater degree than the rest of the population. How does government bumble, to make it worse for them?

For one thing, left-leaning politicians raise minimum wages, in federal government and the 10 states where minimum wage levels are higher than federal.

Teen unemployment is about 26%, the worst since World War II, compared to 24% in July of 2009. Black male unemployment is about 50%, up from about 39% in July, 2009.

Union pressures. through the White House and Congress, add to the burden of minimum wages. That is also a significant factor in adding to teen joblessness. Low-rung workers are not directly affected, or even unionized, but union contract wages get adjusted upwards with higher minimum wages. Thus, the logic for union pressure.

So, the cycle of unemployment among the youth will continue as politicians seek favor from ignorant voters.

The Government is Always Clueless

The public always has the false assumption that Government bureaucrats, and that includes the Secretary of the Treasury and the head of the Federal Reserve, are really completely “in the know.”

Let’s say they know more than 99.9% of the public, but that does not mean they know what it takes to perform their job.

They are, after all, merely human beings. They may have little more information than we all do. But they may have no more expertise, and far less practical experience than many of us do. Many bureaucrats have never had top-level corporate experience. Or even operated a pushcart.

I know, because I attended graduate school evenings, 3 1/2 years studying money markets and the Treasury and the Federal Reserve, while I was a Senior Analyst. And I was a very-top corporate executive, and know the failings of often inexperienced, yet highest-level bureaucrats and academics.

They often make mistakes everyday. Unfortunately, they cannot admit flagrant mishaps, for the sake of their jobs, or their political party. So, they blame everyone but themselves. Past administrations, the media, and their critics.

They haven’t really a clue and will never fess up to that. The damage they do to us all is immeasurable.

The Department of Veterans Affairs and Government Health Coverage

If you want to see how poorly the government supervises health care look at its record of treating veterans over the years. If the government covers veterans so poorly, how do you think it will treat the general population?

Apart from general neglect of needs, this includes experience with health care rationing and questionable episodes during the Clinton Administration, which were remedied in part during George W. Bush’s tenure.

Add to the mixture the pressure of enormous additional scope of coverage and the potential for fraud, which now is a major factor in Medicaid and Medicare, and you have one gigantic mess.

Notice that the media have swept this scandal under the rug while the health insurance debate has been unfolding?

More College Entrance Tinkering

To make sure more dumb kids get into college when they are unable to pass SAT tests, many colleges, including the fabled Ivy League schools, have announced they are going to give credit to a college applicant’s personality, for his or her evaluation, as part of testing.

From what I see, this could add about 200 points to the SAT score for those who fail minimal SAT standards.

I have been saying for years, college kids are getting dumber, colleges are getting fatter, and the country is suffering for it.

No one is being fooled except the citizens of the country. They are beset by below-grade college graduates, and it shows in our workforce, institutions and government.

College Kids Continue to Get Dumber

It’s been reported that only about 23% of 2009 high school graduates who took the ACT college-entrance test have the skills to succeed in college. That is not a misprint. It is a harbinger of our future as a second-rate nation.

Most college-bound kids do poorly in math and science. About half flunk reading. About one third flunk English.

Forget about training more doctors so we can treat all those new patients the government wants to cover under their vaunted government insurance program. That will mean health coverage with second-rate medicine and medical practice.

Forget about scientists. We can watch them operate only in scripted Hollywood movies. And other concocted fantasies.

But we can get more of the easy-stuff kind of college graduates. Such as lawyers and community organizers!

Micro-Finance and the Hypocrisy of Its Use

Micro-finance has gotten lots of publicity about its use overseas, particularly in countries such as India, Latin America and eastern Europe. This is a business of making the smallest of loans to the tiniest entrepreneurs, who usually run one-person operations.

There are said to be about $2.5 billion invested by private investors in such projects, on the assumption that borrowers who take as little as $100 or so at a time are good risks.

Some borrowers are said to receive a total of as much as $400 over a few years. Fund investor return is supposedly about 5% and the default rates are said to range a bit more than 2%. Much better than from the past financial meltdown records.

Problem: Well over 230 micro-finance investment institutions are now in the business. There is an acknowledged bubble forming. Little regulation exists. Furthermore, the reported default rate is suspiciously low.

When push comes to shove, a decided moral hazard exists. Even the most determined entrepreneurial but poor of the borrowers will have to feed themselves and their families before loans are repaid.

The potential losses for investors can then be serious.

Unrealistic Liberal Politicians

Leave it to politicians to pile on with idiotic schemes during a deep recession. They see to bash business so that less people are employed.

How do you get business in this predicament? Make it more expensive to hire, especially with small business. After all, they may have fewer lobbyists to pester politicians.

Example: In the most liberal of liberal bastions, New York City, their inept City Council decided to give mandatory sick pay to all, whether small business could afford it or not. If you have over 10 employees you must give 9 sick days, if less than 10 employees, 5 sick days. Or pay $1,000 fines. So, if you are a small operator, and you cannot afford the added costs, you go out of business. For that burden goes with ever-increasing minimum wages.

Small business is suffering acutely from the Great Recession, so even if they remain in operation, small business just hires less help.

Yet, everyone in Washington on the left is happy, particularly those who show voters how they are out to help “workers.”

Are We Hiring and Firing Too Often?

I find that most companies normally fire help too readily, simply because they hire too readily.

My experience, as a co-founder and top executive officer of an international employee-contracting firm, leads me to that conclusion.

Most managers do not leave themselves sufficient flexibility. Poor planning is the culprit in most instances. Though these days, I may give companies in dire straits some slack.

Too much firing and rehiring is expensive in the long run because of wasted know-how, severance costs, training expense, etc.

The Basic Cause of the Housing Bubble

In case the public has forgotten, let’s reprise the basic cause of the housing bubble and the financial meltdown that has culminated in our current Great Recession.

Wall Street was saddled with subprime loans which it marketed, thanks to the liquidity promoted by the Federal Reserve.

Those subprime loans were given birth by:

One: The 1992 Federal Housing Enterprises Financial Safety and Soundness Act (GSE Act)

Two: Fannie Mae and Freddie Mac who were to buy $6 trillion of single-family loans over 16 years.

Three: The 1977 Community Reinvestment Act (CRA) to low income and moderate income communities.

Four: All aided by Acorn (Association of Community Organizations for Reform Now)

It would thus appear the deep recession we have is a product of our Congress and its pandering populist politicians who, to this very moment, blame everyone but themselves for the imposed disaster.

CO2 Limits Hurt the Economy

Anyway you slice it, CO2 limits hurt the economy. Clean-air regulation is a mishmash of non standard gobbledegook's. Especially when it comes to CO2 when it is not even clear that CO2 actually is a pollutant.

The Clean Air Act was written to satisfy a group whose nebulous religion dictates that something be done about so-called global warming. There are poisonous materials in the air, without doubt. To what extent CO2 is a pollutant that does damage is confusing, even to most scientists. Particularly when cost-benefit analysis is applied to the subject,

What is clear is that environmentalists religiously undertake enormously expensive, economically disastrous projects that attempt to curtail CO2 and other emissions, without any idea of the unintended consequences.

Retail Health Clinics

Amidst all the constant chatter of the high cost of medical coverage and health insurance, there are alternatives which hardly ever get attention.

There are health clinics already being used, whereby folks can see a registered nurse quickly for emergencies, at a for-profit, licensed facility, that can be easily found, usually at malls. The nurse can refer the seriously ill patents to doctors or hospitals. The facilities are supervised by doctors.

These facilities are more comfortable for those who are not sick or hurt enough to go to emergency rooms of hospitals, The private clinics are set up to be low cost and can be covered by forms of insurance.

Forget About Unleashing Employees to Do Their Thing

The idea that a company does best when employees are free to operate with ideas of their own, sounds good and acceptable to most employees, but is often thought up by those who have never run a real business.

Besides, this management feature depends on the nature of a business. It may sometimes be o.k. for a creative type of operation, but not the average business, where a creative mess would be unthinkable.

Employee suggestions are always useful and should be considered. But if they were bosses, employees would have been the real employer in the first place.

Government-Operated Health Care and Forced Union Membership

Little-noticed possibilities in a public option or “coop” type of universal health care would be the facilitation of unionized hospitals and other providers. This could be the end of any vestige of so-called lower-cost health care.

Union objectives and not consumer interests will take preference as it does today with education, as one glaring example. Further, It could do to any government plan what Big Unions did to GM and Chrysler.

Such strike threats on state or regional levels will blackmail at will, at all times, whatever and whenever union demands come up for contract renewals.

Predictions by Market Futures?

Executives always make predictions. They are not always happy making them because accuracy is difficult, especially the longer they extend into the future.

On the assumption that those who are more certain of their prediction will bet on it, actual prediction markets have been created. They are not new, having been used to anticipate winners of presidential elections and Super Bowls. But now we have what have been called business futures, for forecasts on GDP and unemployment.

Check out www,cfo.com for more information.

Why Not Natural Gas?

The U.S. has vast supplies of natural gas but refuses to develop them. Algae, bio-diesel, solar power, and wind, are subsidized, but still will not be sufficient sources of energy. In twenty years, almost 80% will still come from fossil fuels.

The U.S. is extremely fortunate to be rich in shale deposits in many parts of the country. Nevertheless, left-leaning politicians refuse to develop those riches which can give us energy for the next century. while alternatives become more practical.

High-tax New York State is a further example: High-tax New York City’s watershed has natural gas deposits which have not been developed. Tax relief as well as energy solutions are overlooked by their politicos.

Recessions Start and Continue with Dumb Political Thought

Recessions are bound to happen in normal economic cycles. They are not the fault of capitalism. They are remedied by free markets. Only those who do not understand free markets act in a way that prevent normal corrections from being made. And when normal corrections are not permitted, you get prolonged recessions and even depressions.

Stupid politicians force the hands of economists who should know better, and thus we get bailouts instead of normal corrections, which may include self-correcting bankruptcies. What is worse, however, is the ongoing poor psychology that persists among the population, as the result of political machinations.

That, along with knee-jerk higher taxation to make up for lower government tax revenue, adds to the bad psychology that sustains these severe conditions.

And when you are really a dumb politician you add legislation the majority of the public does not want, at a cost that imposes even more enormous taxation, plus budget deficits that cannot be reigned in, short of raging future inflation.

Environmentalists Should be Taught Practical Economics.

Everyone wants a clean environment. Everyone wants verdant forests, clean lakes and rivers, with abundant fishing. Everyone wants to protect species to see that they continue to exist.

We know that many fall by the wayside due to varying reasons, some having to do with human existence. After all, we must compete for living space.

Also: Everyone wants jobs for those who want to work. Everyone wants cheap and plentiful food.

Somewhere, there has to be a distinction made by us, about which of the above takes preference.

An example: Right now, because of fish we do not eat and which are insignificant except to botanists who study them as part of their curricula, we are suffering a severe water shortage and drought in the San Joaquin Valley of California. The shortage has produced conditions which sharply reduce fruit production, and raise fruit prices.

The only ones happy about this human disaster are environmentalists in the U.S. government. They feel they have accomplished their objectives of saving that tiny inedible fish for posterity.

Humans? I guess they don’t count.

Companies Are Conserving Cash While American Industry is Foundering

By paying less dividends and not buying in their stock, companies are conserving cash in a way they had not done in recent years. That is because banks are not making loans. And it is hurting industry.

Corporations have to sell stock whenever possible to raise cash. In the past, such funds were sourced from commercial banks.

This is another indication of the failure of the Obama Administration to properly repair the banking system. In its attempt to clean up banking books, they have done two things:

One: They have made banks gun shy, afraid to make loans, and

Two: They have made funds available to banks at practically no cost, so banks produce tremendous earnings merely investing in U.S. bonds instead of American industry.

This is especially true of the banks that “were too big to fail” and were bailed out. Many of the smaller banks cannot freely lend funds because of the tight rein put on them, by their regulatory agencies.

The Tort System and High Price of Medicine

A 2006 report in the New England Journal of Medicine said that 54% of the malpractice dollar went to Lawyers and administrative costs. At the same time, many would-be clients could not find a lawyer because the claim would not be high enough to warrant any lawyer to take the claim.

It is obviously a poor system and needs correction. Yet, despite the heated efforts of the Obama administration and left-leaning politicians to impose health care reform, nothing has been included in their plans to impose any reform to this malfunctioning medical tort system.

As evidenced by how the Swiss operate health care and medical malpractice, and noted here by me, it is possible for impartial judges to see that patients seeking redress are compensated when injured. And without fraud or hefty legal fees.

Should You Buy Gold Coins?

I have in the past commented on the subject of gold as an inflation hedge because the Federal Reserve will be hard-pressed to monetize the huge debt that is bound to augment future inflation.

But I told readers to look at gold prices over the years. The price today is really not much higher than that of the 1980’s. With simple compound interest, gold ought to be about twice what is today.

There are many ways to beat inflation. But if your decision to do that is to buy gold, and you decide on gold coins, which do you choose?

Gold comes in different forms; plain coins, rare coins, and bullion, all of which must be safely stored in bank vaults or at home. That can be dangerous because of potential theft, and thus require expensive insurance. Storage costs can mount.

Gold is a good holding in dire emergencies. Excellent in rare coin form. For example, refugees fleeing Europe in the 1930s used them. But their value can be erratic and gold pays no interest if just sitting around.

Furthermore, there is a big spread between the price one gets when selling coins and one pays when buying, what the trade calls bid and ask prices.

My suggestion: No matter what choice you make, select by coin condition, in addition to rarity. Condition, however, is sometimes very subjective, depending on whether you are the buyer or seller, but it is a rule of thumb to keep in mind.

Minimum Wages Do Little, Except Increase Wages in Union Contracts

When employers hire someone, they pay what a worker is worth to them. If he or she is not worth the minimum wage, whatever it maybe, the boss will not go for it. Whether the wage is $10 an hour or $2. Raise the wage too high and it is more likely that employee will be priced out of the picture. If an employee is truly needed, he or she will get what value that employee has in the employer’s estimate.

Union contracts for its higher-wage employees are always adjusted upwards from the minimum wage, so the employed folks on the top are the ones who truly profit from the minimum wage increase.

Potential lower-rung employees, subject to minimum wages, often never get hired, because they have little skills and are thus too expensive to employ.

Defaulting on College Debt

It is bad enough to have to spend a fortune to get through college, only to find yourself with a degree that does not enable you to find a viable job. It is worse when that pursuit of a career puts you in extreme debt.

What do you then do?

Defaulting on college-induced debt can be rough. You will have to get a handle on the type of debt, whether federal or private, and its terms. I suggest you contact the National Student Loan Data System, at www.nslds.ed.gov.

There may be some forgiveness programs for government workers and teachers, along with AmeriCorp volunteers and similar programs.

But as a precaution, avoid heavy student loans, or do not go much further into debt than you may already have.

Cap-and-Trade Revisited: A Disaster

Cap-and-trade was thought of in academic circles as a good idea decades ago but even the two students who devised the original concept. which politicians today have implemented, no longer believe in their original theories.

A University of Wisconsin graduate student in the 1960s had a novel idea to cap pollutants. Today Thomas Crocker says he is skeptical that cap-and-trade is the most effective way to regulate carbon emissions.

It appears to me that the purpose of the bill is primarily to raise taxes across the board and give Washington more power to control our entire industrial output.

Cap-and-trade also has created an industry that has become very profitable for those promoting its faulty science.

VAT (Value Added Taxes) Revisited

In Britain, the value added tax has grown from 10% to almost 18% and is headed higher, In Europe VATs run as high as 25%.

VATs are vicious because they are hidden, They never appear as a tax but as part as the cost of what you buy. The consumer usually never rails directly against the politicians responsible for imposing them but the merchants on the retail end of the transaction.

This is perfect for use by left-leaning politicians. The merchant is also stuck with the paperwork and the inherent bureaucracy that is part and parcel of such taxation.

Now you see why left-leaning politicos in this country are now entertaining the idea of using VATs to pay for their budget deficits while claiming they are not raising taxes on the poor and middle class. The VATs do just that.

Future Environmental Costs Can be Catastrophic

Industry balance sheets are not accounting adequately for future environmental cleanups. Analysts look at bad loans and strength of assets. They should also be looking at liabilities.

Including contaminated groundwater and heavy-metal pollution, asbestos, oil and gas leaks. And obligation from1970’s laws such as Superfund. Companies have had to add accruals to their books.

The question: How well is Corporate America accounting for this mass of liabilities. Many major company books are showing only minimal contingent costs of this kind.

At a time when they are in the midst of a deep recession that is beset by hard government taxes and restrictions.

Are There Really Death Panels in Health Care Legislation?

Individual doctors have never been happy in the past with standards set up by panels. Doctors have always differed in opinions of how to treat patients. Yet, their peers on boards often tell them what the “accepted” treatment may be for a particular condition at a given time. Those suggestions are predicated on averages and doctors correctly insist no patient is “average.”

As I noted in my earlier blog on life expectancy in the U. S., according to a study by Harvard's School of Public Health, disparities within the country exist among Asian-Americans, African-Americans, as well as those of other ethnicity. There are inherent DNA factors and life-long diet and culture influences, of which a personal physician will be aware.

I repeat my warning: They may not be called death panels, but any board-dominated edict telling a doctor how to treat an average patient that also considers that patient’s age and related illnesses, is, in effect, a euphemism for restricting treatment.

Life Expectancy and Health Costs

What underlies life expectancy? The latter has something to do with health care. But DNA and similar factors have an influence. Such as diet and everyday eating habits. Along with ethnicity considerations.

According to the CIA World Factbook's 2009 estimate, U.S. life expectancy is 78.11 years. In Britain it's 79.01. In Taiwan's it’s 77.96.

Is the best explanation for this is how they pay for medical care? Or diet and culture? Does Japan's health-care system explain Japanese longevity?

According to a 2006 study by Harvard's School of Public Health, disparities within countries do exist. Asian-American women have a life expectancy of 87 years. African-American men have a life expectancy of 69. The healthiest white people in America are in the low-income Northern Plains states. So health-care systems are not the biggest factors.

However, the higher life expectancy, the more we will spend on health care. Older folks are a major factor of cost. The president has said the "chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here."

When it comes to civil liberties, liberals are often distrustful of government power. But, for some reason, they prefer the U.S. providing "guidance" on which lives are more valuable than others.

Be warned: A government charged with extending life expectancy will meddle with health care, and also with what we eat, and how we live. As well as how we die.

Unions and the Consumer

This is not meant to be anti-union. It is a clear-thinking and logical approach to a question and problem that is never fully answered in the media.

Reporters and columnists are afraid to tangle too hard with unions. Reporters and columnists may have liberal leanings. Reporters and columnists do not always think through their subject matter very clearly when they are subject to publishing deadlines.

Reporters and columnists may be union members.

Further fact of life: Unions are in existence primarily for its members. Be they metal workers, autoworkers, school teachers, government clerks, etc. They are not primarily there for the customer or consumer, with whom the union member must deal.

Example: When school teachers go on strike, or insist on higher wages, they are the Number One Concern, When they are against school vouchers which can offer kids faced with inferior schools the better choice, the teachers Number One Concern is not the kids. It is the teacher.

So it is with every union member, except when their self-promotion ads tell you otherwise.

Entrepreneurs Are Not Starting Up New Business

In past recessionary cycles, many new businesses were started. More than half of the Fortune 2009 500 list of companies were begun in recessions or bear stock markets.

I started an employee contracting business during such a recession in the economy and stock market. With a single office, I soon had ten offices, with 74 around the country and in Canada, after 17 years, when I sold my company interest.

I employed well over 10,000 permanent employees, and a multiple of that number on a part-time basis.

All this without government stimulus or hand-out funds. The company had started from scratch with private capital and then sold stock to the public for additional financing. It made operating profits the years I was part of ownership and top management.

What we need today are more entrepreneurs starting up new business that creates real jobs, and less high-tax government standing in the way.

Higher Corporate Earnings Mean the Deep Recession is Over

Corporate earnings can increase when wage costs are significantly reduced. But that means unemployment may continue to remain high.

It will also mean productivity will go up. But that happens only during what they call a classic recovery. In fact, some economists say the end of a recession is marked when productivity goes up. But that does not remedy high unemployment problems.

Our present recession and acclaimed recovery is marred by the Obama Administration spending sprees. That necessitates taxes that hurts business before it can attempt to recover.

When companies can start hiring again and keep earnings going up will be the real positive signs of the end of the 2008, 2009 recession. That fiasco is a classic example of what happens when government uses a combination of useless stimulus and high taxation and other anti-business devises to get business stimulated.

Leave business alone, so that earnings will create the jobs for a true business recovery.