Constant Budget Deficits at War-Time Levels

  

During World War II, American government spending as a percentage of GDP was about 45%. It is over 20% now, with the administration spending habits. We can, in fact, become another Greece-like world mendicant.

What does this mean for small and large businesses? Especially those who cannot compete with big government competition, in politically-favored industries?

Government spending displaces funds available for the private sector, particularly as interest rates rise.. When that occurs, firms seeking funds are certainly  less likely to get them. Yet, they are the entities which mainly create worthwhile jobs. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

   

                  

   

                               

                      

Is Rough Inflation Ahead?

Fundamentals for massive inflation are in place. Enormous budget deficits and heavy government borrowing to meet unprecedented, massive budget deficits, have done that.

The present recessionary doldrums, despite what the Washington cheerleaders say, will hold the huge inflationary consequences back only for a while. That is, until the economy recovers a bit more.

Despite occasional reassurances from government officials, there will be no way to unwind the debt build-up in any acceptable manner. Therefore, real inflation is inevitable

Unless we make huge budgetary cuts, soon. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)    

Thinking of Buying a Franchise?

It’s amazing so many publications offer advice on how to buy franchises.

 They are done for two reasons.

The primary one is to fill space. It’s a winner for getting attention. Lots of folks are interested into entering business for themselves. Give them ideas and make it sound easy; while reducing disadvantages to a minimum, you have attracted an audience.

But the second reason why these articles appear, is ignorance. They are written by those with poor knowledge of practical franchise experience from a franchisee’s viewpoint.

How many tell you how poorly the average franchisee does? How the average franchisee eventually wants out of his or her contract?

Many cost too much at the outset and each year? And fail to provide the promised management assistance. And, in vast instances, offer little name recognition. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Fresh Health Care Options

Ideally the U.S. health care system ought to remain entirely private. No public plan of any sort should be in the wings as it is now with ObamaCare.

Changes should still be made with regard to extensive tort reform and arbitration of malpractice claims.

And most importantly, an arrangement, where citizens get to pay for coverage with direct tax-deductible dollars.

If you want some sort of state arrangement of health care for those with no coverage at all, have each state administer its own system. Damages can then be localized. 

You can have a central data bank for important medical information, but each state should enforce what it wants for its own citizens. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)    

The Real Cost of Health Care

The administration has been intent on making the U. S. like the rest of the world when it comes to health care.

Germany leads in universal care. As of 2008, 52% of its employee costs went to government for social services and health care. France was right behind at 49% and Italy at 47%. Figures are about the same today.

The reason why foreign governments are able to operate within strict health budgets is rationing. Such rationing of services keeps costs within the government-construct levels. And the number of doctors supplied for that demand. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Lawyers Against Investment Opinions

Lawyers have to eat. But many want to become billionaires the easy way. A pathway they can all use, is to sue any financial adviser who can make an honest mistake when it comes to advice. That is not allowed in the financial industry according to plaintiff lawyers.

A three-judge panel of the U.S. Court of Appeals for the Second Circuit ruled to uphold a lower court’s dismissal of a case against credit agencies who had given securities opinions.

That will set back, at least for a while, the ability of such lawyers who have or want to become quick billionaires the easy way. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)    

            

   

                  

   

                               

                      

The Political Trickery of Using Higher Minimum Wages

Increasing the minimum wage when jobs are scarce is so stupid, it is almost an annual campaign for certain politicians as a viable idea.

Gauge how wise such a politician is. Because research shows minimum wage increases always cost jobs of entry level workers. It is criminal to impose higher minimums during a recession. That stymies the possibility of stimulating any increase in job opportunities.

Yet, those at lower levels generally leave for higher wages or get raises with time. It’s usually not the same worker remaining at that level. A fact proponents conveniently overlook. The vast majority of folks do not remain at that level forever.

Moreover, minimum wage increases cost jobs. Employers must think twice in estimating the value and affordability of their workers. Especially small businesses who are responsible for the bulk of American employment.

The minimum wage is a ploy of powerful unions whose contracts are then automatically revised up from minimum wage levels. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)    

            

   

                  

   

                               

                      

                                    

                               

       

Federal Guarantees Should Also Appear on the Budget

  

Marvin Phaup, a research scholar at George Washington University who examines federal budgeting, has pushed the concept whereby government guarantees ought to be seen as potential debt.

As an expert on government guarantees, he feels that government bailout costs ought to be measured and should appear in the budget. We ought to budget for possible losses on the tremendous amounts we guarantee.

Mr. Phaup was the researcher at the Congressional Budget Office who in 1996 made the initial effort to assign a value to the implied federal guarantee backing Fannie Mae and Freddie Mac.

Had we done this we would have been far better prepared to meet the resolution of the financial meltdown. And to realize the extent of the risk we were taking with the mortgage markets. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

            

   

                  

   

                               

                      

                                    

                               

                       

Windmills Aren’t For the Birds

                                                              

We know that wind power has to be subsidized by the taxpayers, in the effort of environmentalists who attempt their crackdown on carbon fuels. The same enthusiasts who are gung-ho for inefficient solar power and allied forms of green energy.

But the self-styled environmentalists also love all lower forms of cuddly beings. What about the close to 600,000 birds killed each year by the our  wind farms? All is quiet on that do-gooder front. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Entrepreneurs Too Often Lose

Highly creative entrepreneurs often build a business from scratch and do extremely well quickly, expand rapidly, only to see their business suddenly fail.

There are generally three major reasons for such failure.

One: Many entrepreneurs are poor planners from the start. They often lack an efficient business plan, to guide them in their financial start-up planning.

Two: They lack sufficient funds. Because of poor planning many entrepreneurs are in the dark about the amount of capital they will need.

Three: Many entrepreneurs are incapable of managing a rapidly expanding business, or getting an adept manager who can. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Insurance Needed for Childbirth?

               

A distinction should be made when buying insurance for childbirth costs, that is coverage for a probable event, as opposed to catastrophic, potential events. You buy insurance should you have an automobile accident and not for the purchase of gasoline.

In the same way, you buy health insurance in case you suffer an illness worse than a common cold. If you get married and intend to have several kids, you are not courting serious sickness. You are anticipating having need just for that. It’s not awaiting an accident or getting chronically ill. Unless childbirth evolves into a medical emergency.

Routine childbirth costs can be reduced under competitive  bidding, apart from other insurance coverage, at much lower prices than they are today, without government interference.

There ought to be means of separating these two kinds of coverage.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Erratic Economic Market Forecasters

           

Surveys show that forecasts of the future economy made about 25 years ago were usually proven wrong almost without exception. So why do we accept opinions of all the purveyors of future prognostication? 

 

One prediction ought to be a sure thing for the future of America. Inflation, brought on by unprecedented budget deficits. Deficits that cannot produce a viable economy, especially if politicians look to taxation as a means of reducing them.

Deficits have never before been reduced by taxation,(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Misleading U.S. Unemployment Figures

Unemployment numbers can be very misleading. They can be adjusted after publication because of errors and short-term occurrences. And other considerations must be part of the analysis. Such as job creation. Look at that alongside the unemployment figure.

Other factors must always be considered as well: The length of time folks are unemployed. The number of those taking unpaid leave from existing jobs. People who have given up looking for work. Those who may have taken early retirement. The possible diminishing size of the average work week.

All of these affect what we note as unemployment.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Why Not Privatize Social Security?

       

The question of privatizing Social Security will never be resolved if the financial and general media get away with mishandling the subject.

There are facts which never get through the leftist rhetoric the media helps expound.

Point One: It has been tried in other countries and in some states and it works.

Folks get to own their own investments in a genuine lockbox. Come hell or hot water, the funds belong to them or their heirs.

Point Two: The subject should have little to do with the vagaries or the volatility of the stock market.

An option for all is ownership in U.S. bonds, which can be tied to the inflation rate, for those who don’t like to buy stocks.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Nuclear Power is the Answer?

It’s expensive to build a nuclear power plant, but atomic power is cheaper to produce once the plant is built. And the taxpayers do not have to constantly subsidize operations as they do alternative “green” energy sources, such as wind and solar power.

And It took a tsunami PLUS an earthquake to cause the century-rare damage that occurred in Japan. This can be easily avoided in the U.S.

Atomic waste can be used so that it is minimized. We have a vast mountain in Nevada to store what little there is. The bulk of French electric power comes from atomic source. They store their relatively little waste in one room in a small town.

Tests prove a passenger jet at full speed could not dent the walls of an atomic installation. Only past misconceptions cause prejudice that prevails against atomic power, particularly on the political Left. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

            

The Doctor Shortage Ahead

ObamaCare seeks a clinic environment to save costs. That will supposedly reduce the need to overcome the oncoming severe shortage of primary care doctors. Patients will be seeing more nurses when they visit those clinics, being referred to actual doctors only when in dire need.

That will not bring in sufficient medical assistance.

Physicians are expected to be imported, as they will not be in ample supply from our schools. They will come from countries where education is cheaper and prospective doctors are willing to work for less.

I cannot vouch for their educational credentials as a means of ramping up their supply.

There will be affirmative action for more minority doctors in this country. A lowering of certification standards is already underway in the U.S., according to some specialists, to get more doctors into practice, despite official denials to the contrary.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Alternate Energy at High Cost

                                   

The administration has been sponsoring what it calls clean, alternative energy. It's going full steam ahead in its attempt to achieve “green” sources at any cost. Despite the fact we are in the midst of a stagnant economy when industry cannot afford added costs that subtract directly from economic growth.

Apart from the damage of the mad dash for high-cost, taxpayer-subsidized alternate energy, there are social burdens. Such as the fact the commercial windmills used for energy make lots of noise. So much noise that folks living near them find them unbearable? Any residence has to be well over a mile away.

And that thousands of birds are often killed in recurring incidents. And then you have the landscape eyesore. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Banking Regulatory Rule Results

A review of the Dodd-Frank Act is always in order as a lesson as to why intended regulatory rules never work in real life.

Such rules give regulators unlimited powers to do what corporate experts have always found difficult to accomplish. Still, politically-oriented bureaucrats attempt to undertake the tasks anyway, despite their lack of business acumen.

A Treasury committee determination of which financial entities pose systemic risk to our economic system is impossible in the real world, where risk is hard to identify. This cannot be easily done. Determining potential systemic risk is 100% conjecture. What steps to take, and when to take them, in order to eliminate problems, is not a practical matter.

Few experts in the business world have had the foresight to make the decisions for past incidents. Rarely do bureaucrats at the Fed or Treasury have the ability or objectivity.

The Fed and the Treasury did a poor job with the past financial meltdown and bailout function.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The Dodd-Frank Folly

The bank bailout idea was a theoretical and practical failure; done by academics, in combination with Wall Street insiders with only securities trading background. Real banking acumen was missing.

They saw to it that banks acquired more clean capital and reserves, having gotten rid of some, not all of their questionable assets.

Government honchos have seen to it that banks now earn interest kept on reserves at the Federal Reserve. Banks can borrow from the Fed at practically no cost.

That adds to bank earnings. But regulators cannot force banks to make loans to their customers. Not when customers are spooked by anti-business  administration tax and anti-industrial rhetoric and policy.

In fact, banks are now sitting with loads of available cash for industry and consumers but relatively little is getting out. Because they are still afraid to lend it as they do in normal times. They can make more, investing in securities.

So much for the smart guys in government with trillions of inflationary bail out money. All they had to do to bail out banks in the first place, apart from seeing that banks added to capital, was guarantee their assets.

No inflationary bailout loot required. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

CEO Compared to Athlete Income

Hiring, firing and controlling employee wages by government bureaucracy is now an American fact of life, evidenced by the forced firing of a pharmaceutical CEO who had not been found guilty of a crime.

You must also consider how government stimulus funds affected even entertainers-such as sports stars. Government can be very uneven-handed and injudicious.

Athletes probably get far too much salary for what they do. Considerably more earnings than top-notch CEOs. But they are under the public’s radar. So the media, in its ignorance, let’s them get away with the notoriety executives must suffer.

How? Ballparks and ball clubs are subsidized by state and local taxpayers. Each time a new ballpark is built, some government body has provided long-term assistance in financing, via cash, tax abatement or bond funding.

Federal stimulus funds backed local and state entities. So funds were made available to fund ball clubs.

Remember: Money is fungible. The payment does not have to be direct. Money can be substituted from one recipient’s pocket to the other, to hide the source of funding. It all adds up to the same total outlay.

The public complains about an executive getting more than is “fair.” What about a ball player who operates no business, and hires no one, who makes up to thirty million a year? And may actually be a loser on the field? (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

State Socialism in 1920s/1930s Italy

I have noted in my past blogs how the government has set wages of some employees. How they fire some employees, as the feds have done with General Motors and Chrysler. Or how bank management are controlled. Boeing was told where to build a new plane in order to give preference to its union employees.

This happens with excessive federal government politics, and it is one of the problems encountered in such forms of state socialism.

If you think I am exaggerating, look up the discussion of state socialism in an encyclopedia. Review your history of Italy under Benito Mussolini in the 1920s and 1930s.

It will be an eye-opener for every American today, who worries about the government controlling or influencing industry. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)             

Resolving The Enormous Debt Burden

How will we ever be able to surmount the extraordinary U.S. debt? Despite what the politicians on the left say and the Federal Reserve attempts to reassure us, there is probably only one way governments do it. Inflation. 

Governments inflate themselves out of the debt.

Jobs and a booming economy can produce tax revenues without increasing tax rates. But I’m talking 7% to 10% growth, not 2%.

You can be sure of certain events. You cannot tax yourself out of debt. It has never been done before. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

            

   

                  

   

                               

                      

                                    

Mortgage Deduction Availability

The average homeowner who deducts interest on his mortgage does get what can be called a middle class tax advantage. However, it is not what the left describes as a major benefit. They take it too.

Most taxpayers do not figure the actual comparison of taking a standard deduction versus itemizing deductions. You give up what the IRS gives in the standard deduction, to get the itemized amount, so you profit only from the difference. Calculate your benefit by doing your taxes both ways. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Black Swan Catastrophes

What are “black swan” events  in finance and business? 

These are highly improbable events that occur despite all we do to prevent them. This reflects the fact that there are rarely any black swans to be found in nature.

So, we keep attempting to protect ourselves against future black swan-type debacles. We’re spending a fortune in corporations to do so.

The U.S. Congress, with its propensity to spend, is great at outlays. The Dodd-Frank legislation is a perfect example of over-action and resulting unintended consequences, which you can be certain, will not prevent the next black swan incident.

One objective of Dodd-Frank was to make banks smaller, not too big to fail. The result is that smaller banks cannot exist amidst the new regulation, and larger banks are getting ever-larger. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The “Greedy” Rich

The rich? Leftist politicians have a conjured picture of a fat cat, smoking a cigar with his feet on a desk, or better still, a fishing rod in his hand.

Not so. The so-called rich are usually the ones employing you, the ones who run small and large companies, with emphasis on small. After all, anyone with income over $250,000 before taxes is now considered rich. Those over $250,000 a year income are often employers. 

How many jobs do they cover? Over 50 percent.

The rich from one measurement to the next are not even the same. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)