Ben Bernanke of the Federal Reserve Bank

Ben Bernanke, who heads up the Federal Reserve Bank, works hard at his job, which has been dealt a rough hand, and his intentions are fine.

However, I feel his latest announcement to provide four media open conferences each year will not do the American economy any good. The actions of the fed should not be disclosed to the public in advance, in any event. So why this policy?

The Fed is most effective when it creates economic shock, not by tipping off the financial world in advance. Otherwise, financial players will act in advance, and help counteract what the fed action is supposed to do.

Importing Workers With Little Skills

I comment often abut the poor education American students get in public schools and in college, despite the huge drain such education takes each and every year on taxpayers.

In the high schools, the U.S. has a high dropout rate. It’s interesting to see how we compare with other countries in this regard. Our rate is about 23%, Germany’s is under 3% and Japan’s a bit more than 5%; Great Britain’s about 9%. However, Portugal’s is 37% and Mexico’s 56%.

Little is said in the media about the result of U.S. immigration policy where we import even legal immigrants who do not have high school equivalency. How do we train them for the skilled jobs we need? There are already no jobs for the able. How do we prepare for the unready?

Costs That Rise Faster Than Inflation

Many costs are rising faster than inflation. The most important is that of going to college.

One reason is that the government subsidizes this effort with tax breaks. Schools are, therefore, not under pressure to reduce their charges. They do give scholarships, but charges tend to rise far too much beyond normal inflation.

Schools claim their own expenses are rising but they may not be exerting enough effort to curtail budgetary controls, with government subsidies and income tax accommodations assured.

Franchise Ownership Negatives

Do you know what should be the two major reasons for buying a franchise?

One is name recognition. The other is the training that they ought to give you.

However, few franchisers give you real name recognition and training?

Yet, franchises are not cheap. You pay up front for a license, and the royalties thereafter will be a big cut of your bottom line. In fact, those royalties may equal half your net profits, if you ever manage to get any.

I hardly ever recommend the purchase of a franchise because franchisees never really get true name recognition, and the required training from the average franchiser.

Only a handful of franchises are worth buying. (See my Earl J Weinreb NewsHole® comments).

Build From Scratch or Buy Companies?

Larger companies often have to decide whether to build their business or a new operation from scratch or buy a company outright, that is, one already in operation.

Many companies, especially in the pharmaceutical business, prefer the acquisition route. It’s expensive because you pay a big premium for a company after it has developed an expensive new drug.

On the other hand, if you attempt to research new drugs, with all startup losses and heartbreak expenses, you have lots of cost as well.

My feeling from my observations is this: In the long run, pharma companies, at least, will pay less for in-house drug product development; there’s a major premium for successful products.

MBA Futility

An MBA or Master of Business Administration degree is available for almost any college program from accounting, business management, criminal justice, education, engineering, finance, government, politics, real estate, to a variety of arcane subjects.

There’s an overabundance of MBA students and graduates with MBA degrees. They have become relatively useless, except, for their use in a resume. There are simply too many to attract the attention they formerly did.

MBAs are expensive to get and, someday, students may realize they are not even worth their use on a resume.

Government Stimulus Vs Private Jobs

Using alleged Keynesian estimates, the government-sponsored stimulus was supposed to create 5 million jobs. This was estimated at the time to be $1.50 of economic activity for every $1 spent by the government.

But that estimate never considered the economic costs of borrowing or higher taxes. The Obama stimulus plan to create 5 million jobs actually resulted in a loss of 3 million jobs instead.

An often misunderstood lesson: Government spending crowds out private spending with its added disadvantage of having zero multipliers.

Stopping Business Fraud

Business fraud grows apace, despite internal vigilance and official governmental vigilance. Regulatory laws are expensive and time-consuming for industry to enforce; still industry fraud remains a problem.

Whether you operate a small shop or a section of a very large business, there are some corrective rules of thumb. Check and double-check the background of those you hire. Once they’re on staff, constantly educate employees about fraud. The idea is to show them you are strict about the subject, as there is a strong psychological element to the educational process.

For large corporations: Despite Sarbanes-Oxley and annual audits, fraud is a business constant. A change of auditors every year is one solution.

Ignorant Business Justice

American justice can be questionable when it concerns businessmen.

It’s time to note once again a problem about the lack of civil rights for citizens who are involved in business. Whether as entrepreneurs, small business operators, merchants, or CEOS of small and large companies.

They really ought to be protected as a minority, as compared to the majority who work for others as employees.

To those unfortunates: Beware of Hanging Juries and Judges, should you wind up in court as a defendant. Whether in a civil or a criminal case. Whether you are innocent or guilty.

Because many members of the jury, including the judge, may well be inclined to consider you guilty before you can prove yourself innocent. And just because you are an entrepreneur, merchant, or CEO of a small or large company.

Most Americans. as well as college graduates, lawyers and judges, have little knowledge of business and finance.

Therefore, they are influenced by the media’s negative attitude towards business and finance and they tend to harp on “greed” of those involved in industry.

Venture Capital Turndowns

I recently commented on basics for applying for venture capital and the need for a suitable business plan.

In the event you get turned down, as you will often be, keep coming back with follow-ups. Few seekers of venture capital are successful with their early attempts.

You must be consistent and persistent, to get attention. So stick to these basics and keep trying. Good luck counts.

Note: I have found that venture capitalists are not all brighter than most in the financial community. Those who have made fortunes at what they do in this work, mostly have stumbled upon the big winners. They have been taking unmerited bows the way lottery winners do when they pick winners. (See my Earl J Weinreb NewsHole® comments).

The Technically-Skilled Worker Shortage

You constantly hear about how many manufacturing jobs are being lost to get lower costs overseas.

Could it be that we actually have a shortage of technically-skilled workers? Could that be because we are educating too many kids in college with the wrong skills?

The Organization for Economic Cooperation and Development has completed a study that indicates that less than 10% of teenagers in the U.S. study skilled trade careers for jobs with manufacturers and utilities.

We have had this shortage for about twenty years. As a result, there aren’t sufficient qualified workers in many areas of essential work. And the workforce is getting older, so the problem is becoming more acute.

We get more unemployable college grads, more lawyers, and more manufacturing jobs are sent overseas where the skills may be.

Seeking Venture Capital With a Business Plan

When making a proposal for venture capital always use reasonable numbers in your proposed Business Plan. At the same time, you must show that your business is scalable. That business can become big enough to attract enough attention.

Venture capitalists make money by eventually selling their equity interest to the public on a large scale. They think in terms of hundreds of millions in potential profits. Your business therefore has to grow fast in just a few years, in order to be an interesting investment for them.

There has to also be what venture capitalists call an ”exit strategy.” When that eventual public underwriting or IPO., or a sale to a large corporation can take place.

Are Corporations Really Hoarding Cash?

Those who argue U.S. corporations are hoarding cash really are not looking closely at balance sheets.

They are looking at cash deposits only. In other words, they are not aware of business operations or principles, or they simply make it a practice to overlook normal business obligations. The latter may be direct, pending or contingent, but they represent actual liabilities that companies have.

Venture Capital Facts

There is plenty of venture capital around. However, the problem is that venture capitalists worry they have little escape opportunities with which to make their eventual profits.

Venture capitalists make their big profits only when they can sell their ownership through a major Wall Street underwriting. or with a private sale to a major corporation.

And that is now a long shot in today’s recessionary/tepid recovery economy. Exit strategy is now more problematic. Some skeptics may say the Bigger Fool Theory is clearer; would-be buyers are not as eager to buy in to as many venture capital propositions.

Why the Euro?

The Euro has become more of a political device than an economic requirement. Dreamt up and managed by the French, with the Germans called on to foot the bills as they come due with each country=member’s fiscal mismanagement, or the European Community’s monetary debacles as they arise.

Yes, the Euro makes it easy to travel about among member countries because it eliminates the need to convert local currencies as before, But each country goes its own economic way anyway, with its own ingrained cultural and spending habits.

The Euro has not been able to change those habits and, therefore, problems persist.

Making Banks More Risk-Free

Banks in Europe and America are under pressure again to add to capital, with further stress rests, in order to withstand any potential, future credit problems.

Risk-weighted assets can be assumed to be as high as 70% of total assets in the large U.S. banks. The stress figure in Europe is half that for various accounting reasons; which are not that strong.

In other words, the assessments are pretty much subjective.

Furthermore, it’s all nonsense. As panic=driven problems will negate supposed cushions, as will a tendency to have mark-to-market accounting.

Much of what goes on is political maneuvering and posturing.

Government’s Late Medical Data

Government data are always far behind current information. It occurs with labor statistics; it’s certainly true in the case of medical practice.

The medical profession has up to date, practical knowledge. Doctors are aware of the nuances of medications and techniques which government data lack. Yet laggard government data will be the basis upon which ObamaCare will be dictated by panels.

This is not just an idle scare tactic by those who do not want government-administered decisions. This is the way medical decisions are made in the UK and elsewhere, under government health care.

Public Unions’ Pension Education

The main problem of public pensions is the following. Unfortunately, it is hardly ever explained by the media. If it were, the taxpayers would be truly aroused.

If the employer, or locality, funded by taxpayers gives a 5% contribution toward pensions to a union member and does it as a 401 (k) as would most private employers today, that employee would invest it. That same contribution is given to the public employee, but with a major difference. He gets a defined benefit. He does not invest it. The state or locality must do it.

And because of one-sided, pressured negotiated terms, the negotiator is in a position of getting favors from the union he is dealing with; that is, political contributions.

But that is not the whole story. The taxpayers’ side must also assume the defined benefit; earning as much as 8% on retirement funds today, when that is impossible these days and will be, perhaps for the next 50 to 70 years.

Another Way For Cheaper Health Care

Health care can be cheaper without ruining the entire system with a nationalized, socialized version.

One way in accomplishing this, would be for doctors and hospitals to set their bills at the lowest rates now being charged insurance companies. That discount would be given to the non-insured. That usually is a fraction of what the insured now pay.

Cannot afford that? Those who cannot, can get free vouchers.

Health Insurance Competition

ObamaCare will eventually compete with private health insurance.

There already are about 1500 private health insurance plans. They can compete with each other if they are allowed over state lines. The ONLY plan that would have NO competition would be the eventual public plan. With no capital or working cash outlay, the taxpayer will provide funds to undercut those 1500 competitors.

If you now have private health insurance, it will be priced out of the market entirely. However, you will eventually pay more or have your benefits reduced. Or rationed, as the only attempt at cost-cutting.

This was done in England, Canada, and with other foreign health insurance programs, as their experience shows. (See the Earl J Weinreb NewsHole® comments.)

Expired Patents

A U.S. district judge has said it's unconstitutional for plaintiffs to sue on claims that expired patents have appeared on defendant products. That the matter, instead, was a function of the federal government to pursue.

This type of lawsuit had become another growrh industry for aggressive lawyers.

After all, there are many issued patents, particularly on consumer products. And patents have a limited life. And it isn’t always convenient to get the patent notice off a label soon after expiration. Or, is it a crime to let folks know you had the original patent in the first place?

But it’s hard to stop lawyers from trying. There are so many of them. And they have to make a good living the best they can.

Too Many MBAs

About 150,000 MBAs graduate each year. Our graduate schools have accommodated demand by producing such degrees.

It’s easy to come up with what academe suggests a business executive or financial expert ought to know. At the same time, the educator must be certain not to make the course too difficult or classes will not be filled. Schools are a growth industry, after all.

So we get a happy medium. Lots of students, and graduates. All with degrees, which in the real world of business and finance, have become relatively useless.

Except for their use in a resume. These days, we are reaching the stage where there are simply too many MBAs to attract the attention they formerly did.

Beware Of Baseline Budget Maneuvers

Automatic annual increases over a baseline is part of a legislative gimmick used by big-spenders. Any slight reduction in this automatic increase is then considered by those spenders to be a budget cut. But in reality, the budget usually has still been increased.

It’s like having spent $20,000 for an auto three years ago, that can now be had for $25,000. But you go today to the showroom intending to buy another one for $50,000, settling instead for one at $40,000, while telling your wife you just saved the household $10,000.

That picture contains lots of smoke and mirrors.

Choosing a Future Job?

Don’t select your career on the basis of what is easiest to train for, as too many others will do the same. In fact, that has been the reason so many college graduates today find that their degrees are meaningless when it comes to the job market.

Find out what will be needed ten and twenty years ahead. Not necessarily knowledge gleaned from college courses. There are plenty of research studies along these job and career opportunity lines.

And don’t fall for the excuse that when all else fails, the country can always use another lawyer, or a historian, or political science grad. (See the Earl J Weinreb NewsHole® comments.)

All Americans Need ObamaCare?

Are all Amercans getting medical help now? Yes, they do, even if destitute, when they go to ERs.

In dealing with this small group, should we tinker with the entire health insurance system?

ObamaCare could have everything collapse. What we like today should be kept; what we would like corrected can be changed. The use of doctors and medical treatment, when we want it, and when we need it can be retained.

A solution: Give the poor uninsured a free membership card for private insurance of their choice.

Government Insurance Cost-Cutting

ObamaCare’s argument is that government health insurance will be cheaper than private health insurance. That’s not true, and defies past experience wherever practiced, overseas or in Massachusetts.

And take a look at Medicare and Medicaid if you want to see costs rising far beyond health expense estimates. The many reasons are conveniently overlooked when it’s politically necessary to do so.

1) Private insurance does a far, better job of preventing fraud that do government programs.

2) Private administration is more efficient. When government attempts to cut its overhead costs, it does so by paying questionable bills. Efficiency is a lesser option.

3) Private insurers also create effective doctor and medical networks that government has heretofore not done to avoid errors, and probably will never accomplish.

4) Government reduces operating costs by delaying or simply not paying for certain coverage. Rationing may be done by age or what a consulting board says should be treatment standards. We know it causes a loss of lives by comparing American statistics with those of countries with socialized medicine, such as the UK and Canada.

Small Loan Availability

Payday loan providers are always under attack from government liberals. Usually the fee is about $15 for a $100 two-week loan. That’s o.k. as a temporary loan, if it is not repeated twenty six times a year, when the rate would become outlandish. There is therefore room in the economy for such emergency service.

Left-leaning government observers never like this, because they think folks with poor financial ratings should get the same terms as those with top credit. Default rates are never considered as government liberals don’t foot the bills.

But folks with bad credit have always needed emergency funds in good and bad times. We know why so many in the past patronized mobsters for funds, paying, enormous interest charges, plus limbs and lives. as a penalty for non-payment.

So when legitimate services charge what do-gooders say is too much, an attempt is made to stop the business, and go back to the old days.

There is a Cheaper Way to Health Care

Credible estimates say obesity costs about 216,000 lives annually. It’s been also estimated that universal health coverage, with its enormous costs and drastic overhaul of the health system may save just 18,000 lives. And that can cost trillions.

What is needed is education in schools, public forums, and media about general health habits.

And how attempting instead to fine tune our present health care system, with trillions of unavailable health dollars, can bankrupt our entire economy for generations to come.

Who is Truly Rich?

The Obama administration’s definition of who is rich hovers about an annual figure of $250,000. Sounds like a lot, but it’s not. If you live in New York City you can cut about half of it for federal, state and local income taxes. Then there’s an enormous cost-of-living hurdle to overcome, if any of you have visited that city.

But that argument for taxation is primarily based on outmoded figures, at a time when families depended on only one of its members working. They may have been the norm twenty years ago.

Today, women have careers, especially after their children are grown, when both husband and wife, and sometimes single youngsters add to household income, it’s easy for s middle class family with costs that add up. To gross $250,000 annually.

Family total income may reach what this administration calls “rich” and get taxed accordingly, only when you add up a total of very modest earnings. These individuals are not after-tax “rich” by any definition.

Premature Layoff Announcements

Corporate disaster is always possible when tipping off creditors and employees well in advance of plant closings. Yet, liberal politicians and their union backers have legislation where employers of a certain size and type must notify employees well in advance of possible close-downs.

Employees would like to know early on if they are to be trained for other jobs. But such action may unduly scare them in the event the plants are not eventually closed.

Often, financial conditions are poor, and finances cannot be arranged properly until the last minute. However, once a notification has been made, companies may have already lost employees with which they would have been able to salvage the operation.

Furthermore, once the mandatory plant closing announcement is made, the company’s credit may be permanently damaged. Stockholder values, including pension holders and similar institutions, may be adversely effected.

ObamaCare’s Meaning

Too large a segment of the public still does not understand what happens when the government is in charge of spending or granting funds for health.

It can never be even-handed when there are budgets and limited funds to consider.

Example: We already have this to a degree in the United States today, when more research is done on breast cancer than on prostate cancer. That happens because of political pressures. In turn, AIDS research has always received more funds than does breast cancer.

In Europe, rationing of drugs and treatment results from chronically limited funds.

Medical research in the U.S. will eventually be curtailed as well, when funds are constrained.