Central Perk

luni, 13 decembrie 2010

New Behind the Scenes Photos from November

Your Daily Snapshot for
Monday, Dec. 13, 2010

Photostream: Behind the Scenes in November

Check out 79 behind the scenes photos from the month of November and get the inside scoop on a few of these photos from Official White House Photographer Pete Souza.

View more photos.

President Barack Obama greets the Sinkfield family in the Outer Oval Office, Nov. 24, 2010. (Official White House Photo by Pete Souza)

Seth's Blog : The myth of the simple business plan

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The myth of the simple business plan

The status quo is accepted, regardless how complex, but we demand the new thing be simple.

Here's a business plan for a textbook manufacturer ca. 1955:

Hire a professor, pay them to spend years making a textbook. Hire a lot of salespeople, have them visit other professors and their committees, selling them a book they won't ultimately buy, but will merely force others to buy. Then build an infrastructure to make sure the bookstores have the book that the students are instructed to buy against their will. Then add meaningless updates to the book regularly so the used textbook market doesn't impinge on new book sales.

If someone pitched you that business model a century ago, you'd laugh.

Most giant industries have similarly convuluted plans. For some reason, we require new business models to be far more elegant...

The secret to classic industries is that each step in the plan must be simple. So simple that it's easy to explain and scale. But those simple steps can certainly add up to a complex web.

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duminică, 12 decembrie 2010

Mish's Global Economic Trend Analysis

Minnesota Governor Tim Pawlenty on Public Unions vs. Taxpayers
Jim Chanos: "Adam Smith will get his Revenge on China's Real Estate Bubble"
Williams Calls for "Great Hyperinflationary Great Depression"; A Very Easy Rebuttal
Sunday Funnies 2010-12-12 Art of Congressional Compromise

Minnesota Governor Tim Pawlenty on Public Unions vs. Taxpayers

Posted: 12 Dec 2010 05:39 PM PST

I have finally found another governor besides Chris Christie who makes me want to stand up and salute. Minnesota Governor Tim Pawlenty says the moral case for unions does not apply to public employment.

Please consider Government Unions vs. Taxpayers by Governor Tim Pawlenty.

Much has changed. The majority of union members today no longer work in construction, manufacturing or "strong back" jobs. They work for government, which, thanks to President Obama, has become the only booming "industry" left in our economy. Since January 2008 the private sector has lost nearly eight million jobs while local, state and federal governments added 590,000.

Federal employees receive an average of $123,049 annually in pay and benefits, twice the average of the private sector. And across the country, at every level of government, the pattern is the same: Unionized public employees are making more money, receiving more generous benefits, and enjoying greater job security than the working families forced to pay for it with ever-higher taxes, deficits and debt.

How did this happen? Very quietly. The rise of government unions has been like a silent coup, an inside job engineered by self-interested politicians and fueled by campaign contributions.

Public employee unions contribute mightily to the campaigns of liberal politicians ($91 million in the midterm elections alone) who vote to increase government pay and workers. As more government employees join the unions and pay dues, the union bosses pour ever more money and energy into liberal campaigns. The result is that certain states are now approaching default. Decades of overpromising and fiscal malpractice by state and local officials have created unfunded public employee benefit liabilities of more than $3 trillion.

We proved that even in deep-blue Minnesota, taxpayers can take on big government and big labor, and win. In coming years, that fight will have to be joined throughout the country in city halls, state capitals and in Washington, D.C.

Reformers would be wise to adopt three overriding principles.

First, we need to bring public employee compensation back in line with the private sector and reduce the overall size of the federal civilian work force. Mr. Obama's proposal to freeze federal pay is a step in the right direction, but it falls well short of shrinking government and eliminating the pay premium enjoyed by federal employees.

Second, get the numbers right. Government should start using the same established accounting standards that private businesses are required to use, so we can accurately assess unfunded liabilities.

Third, we need to end defined-benefit retirement plans for government employees. Defined-benefit systems have created a financial albatross for taxpayers. The private sector dropped them years ago in favor of the clarity and predictability of defined-contribution models such as 401(k) plans. This change alone can save taxpayers trillions of dollars.

The moral case for unions—protecting working families from exploitation—does not apply to public employment. Government employees today are among the most protected, well-paid employees in the country. Ironically, public-sector unions have become the exploiters, and working families once again need someone to stand up for them.

If we're going to stop the government unions' silent coup, conservative reformers around the country must fight this challenge head on. The choice between big government and everyday Americans isn't a hard one.

I Salute Governor Tim Pawlenty

Governor Pawlenty, I salute you. Moreover I call for the scrapping of Davis-Bacon, prevailing wage laws, the end of defined benefit plans for all public workers, and the end to collective bargaining of all public union workers.

The US desperately needs to look at pension benefits of public union workers, even existing benefits.

I do not know where Pawlenty stands on military spending or other critical issues but his stance on public unions is certainly a breath of much needed fresh air.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Jim Chanos: "Adam Smith will get his Revenge on China's Real Estate Bubble"

Posted: 12 Dec 2010 01:51 PM PST

China bulls may wish to consider the other side of the story as noted by Chanos in China Overbuilding to 'Hit a Wall'

"Construction is 60-plus percent of GDP, compared to exports of 5," said Chanos, who is the founder and president of Kynikos Associates.

"The problem is that consumption as a percentage of Chinese economy has declined in the last 10 years, from 40 to 35 percent. It's all real estate," he said. After the US, China has the world's second largest economy.

Chanos said that steel, iron ore, cement and other materials needed for construction will be "under pressure."

Video Notes

China is building US-priced condos where the average income is $3500 per person.

Margins on Chinese companies are razor thin. If China hikes rates substantially most companies in China will lose money. Chanos thinks they already are. "Every company we have looked at has accounting issues. The lower you get in the story the more interesting it becomes."

If China implodes, Chanos thinks the US will fare relatively well on the basis "Europe exports more to China than the US, and that South America is dependent on China as are parts of Asia."

When asked about the sustainability of what China is doing, Chanos commented that a lot of what the state is doing is "misdirected investment" in order to keep nominal growth. At the end of the day, that will come back to haunt them.

Chanos mentioned Adam Smith a couple of times in the interview. Adam Smith is author of The Wealth of Nations.

"Adam Smith will get his revenge in China's real estate market. It is very difficult to manage these kinds of bubbles."

I happen to agree with Chanos on all counts, adding that an implosion in China, or even a significant slowdown would be beneficial to the US dollar. For additional discussion of the US dollar please see Williams Calls for "Great Hyperinflationary Great Depression"; A Very Easy Rebuttal

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Williams Calls for "Great Hyperinflationary Great Depression"; A Very Easy Rebuttal

Posted: 12 Dec 2010 11:52 AM PST

Those looking for Sunday entertainment can pull out the popcorn and watch this video of John Williams calling for the "Great Hyperinflationary Great Depression", coming your way soon.

I have rebutted such thinking a hundreds of times, so I do not even have to write a rebuttal. It's been prepared in advance. Here is a 5 point summary of where Williams goes wrong.

1. Williams focuses on money supply, ignoring credit although credit is far more important
2. William ignores numerous global interconnections. Calling for hyperinflation in the US alone ignores happenings in Europe, Japan, and China. I remain amazed at how US-centric hyperinflationists in general are. Monetary printing in China far exceeds that in the US, and it is the Euro and the Yen most at risk now, not the US dollar.
3. Williams ignores relatively small changes in Social Security that can keep that system afloat for another decade or longer. Regardless, SS is a huge future problem that will matter at some point, just not now. Currently, collapsing consumer credit in the US is soaking up all the Fed's printing.
4. Williams ignores numerous constraints on the Fed and Congress
5. Williams ignores US gold holdings, the largest in the world
6. Williams ignores the massive influence of consumer attitudes and bank attitudes towards lending.

For a look at constraints, please see Failure to Consider Constraints - My Response to "Has Mish Deflated the Inflationistas?"

For a look at global interconnections including a discussion of rampant inflation in China and why hyperinflation is more likely in Japan than the US, please see Multiple Simultaneous Games of "Chicken"; Price Controls on Walmart; China Declares Shift to "Prudent" Monetary Policy

For a look at currency issues including a lengthy discussion of credit and why it is important please consider Fiat World Mathematical Model

Finally, Williams seems to ignore that hyperinflation is primarily a political event not a monetary event. The idea the world is going to flat out abandon dollars anytime soon is quite simply preposterous.

For further discussion of inflation, deflation, and what causes hyperinflation, please see "Straight Talk" with Economic Bloggers, an interview with Chris Martenson.

My call does not change. The US will go in and out of deflation for a considerable period of time, just as Japan did. The determining factor is mark-to market valuation of credit and money supply.

Right now, the Fed has temporarily overcome massive deflationary forces. For how long remains to be seen.

For the "hyperinflationary great depression", all we have to do now is wait a year to see.

Addendum:

Numerous people have asked me to respond to Deflationists Take Note: Bernanke Succeeds In Offsetting Shadow Banking Collapse

For starters I do not concern myself with M3 and I have been consistent on ignoring it in both directions.

Moreover, monetary inflation never really stopped, and that is something I have said many times, even called for in advance. It is irrelevant given that credit is far more important.

If one views inflation through the eyes of monetary measures alone, then we will have the absurd scenario of seeing "deflation" just as the economy is strong enough for Bernanke to start contacting the Fed's balance sheet. Practically speaking that is of course preposterous, and it is one of many reasons focusing on various monetary measures in isolation leads to absurd conclusions.

This is not pointing a finger at ZH as I actually agree with his statement "Bernanke Succeeds In Offsetting Shadow Banking Collapse".

In simple terms, the Fed and government spending have temporarily overcome credit deflation. This is nothing new. It has gone on since March of 2009.

I did think the economy was about ready to slip back into deflation in summer of 2010, but speculation on QE followed by actual QE put that on hold.

Now, Congress has stepped to the plate with more stimulus and that will likely put the kibosh on a double dip-recession in 2011. I did not see that coming and I do not know anyone who did. I think Bernanke is the one who put Obama up to that. If so, it does suggest the economy is far weaker than most realize.

However, the idea that either QEII or the new stimulus is going to ignite serious "price inflation" is flawed. Even with that stimulus, all Congress really did is replace the stimulus effects now expiring. It will take that stimulus to barely maintain the economy at the stall rate.

One thing I agree with Bernanke on is the GDP stall rate is about 2.5%. I look at it this way: The first 2.5% of GDP is hedonics, imputations, and other statistical nonsense that did not happen at all.

Thus, it should be no surprise there is little to no decrease in unemployment until GDP starts growing faster than 2.5%.

Finally, risks are still skewed to the downside. State cutbacks loom, Build America Bonds (BABs) are set to expire, risk of municipal bankruptcies is great, home prices are again contracting, inventories are rising, Europe is likely to slip back into recession, and there still is no driver for jobs yet benefits for 99er's are set to expire. Yes Congress did extend the program, but not the number of weeks, at least not yet.

That is one hell of a lot of headwinds even if Congress extends the number of weeks of unemployment insurance. I am sure I missed many more.

All things concluded, there is ample reason to believe the US is still following the path of Japan, and on a marked-to-market credit aspect basis the US will likely hop in and out of deflation for the foreseeable future.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Sunday Funnies 2010-12-12 Art of Congressional Compromise

Posted: 12 Dec 2010 12:36 AM PST

How Congress Approached the Tax Compromise

Charles Hughes Smith weighs in with a humorous way to stimulate the economy. Please consider White House, Republicans Offer Bloggers $100K Each in Compromise Deal

An Irishman Speaks His Mind

This video has been making the rounds. It is hilarious but it does contain very harsh language.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Seth's Blog : Everyone and no one

[You're getting this note because you subscribed to Seth Godin's blog.]

Everyone and no one

Two things are always not true:

Everyone likes this.

No one likes this.

Sorry.

If you try to please everyone, the few you don't delight will either ruin your day or ruin your sense of what sort of product you should make.

And if you believe the critic who insists that no one is going to like what you made, you will walk away from a useful niche.

One other thing: Sometimes it's easy to confuse, "the small cadre of people I want to impress because my ego demands that this 'in' group is important," with "everyone." They're not the same.

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sâmbătă, 11 decembrie 2010

Mish's Global Economic Trend Analysis

Nine Simple Questions; The Fed? Ron Paul’s Not a Fan; Bonus 10th Question

Posted: 11 Dec 2010 05:23 PM PST

When it comes to the Fed, military spending, bailouts, and upholding the constitution, Ron Paul stands alone, and he is about to make Bernanke miserable.

Please consider The Fed? Ron Paul's Not a Fan

On Thursday, House Republican leaders announced that Representative Ron Paul of Texas, the outspoken Republican libertarian who ran for president in 2008, will become the chairman of the subcommittee that oversees the Fed. His position on the central bank is captured in the title of his 2009 book, "End the Fed". Here's some of what he wrote:

The Gold Standard

"Whenever I talk of a gold standard, there are always people ready to accuse me of having some obsession or fixation. Fetish is a word thrown around. In fact, I'm only observing reality: the idea of sound money in most of human history has been bound up with gold money."

A Full-Time Counterfeiting Operation

On Mr. Bernanke: "There is something fishy about the head of the world's most powerful government bureaucracy, one that is involved in a full-time counterfeiting operation to sustain monopolistic financial cartels, and the world's most powerful central planner, who sets the price of money worldwide, proclaiming the glories of capitalism."

New Money Out of Thin Air

"Only the Federal Reserve can inflate the currency, creating new money and credit out of thin air, in secrecy, without oversight or supervision. Inflation facilitates deficits, needless wars and excessive welfare spending."

Low Interest Rates

"Artificially low interest rates are achieved by inflating the money supply, and they penalize the thrifty and cheat those who save. They promote consumption and borrowing over savings and investing. Manipulating interest rates is an immoral act. It's economically destructive."

The Obama Legacy

"For the same reason a disease cannot be cured by more of the germ that caused it, the inflation and debt accumulation of the Obama years will not inflate our way out of it. This depression will likely last and last."

See the article for more select quotes regarding The Bailouts, The Beginning of the End, and Fed Chairman He Has Known.

Ron Paul's Nine Questions

In case you missed Ron Paul's passionate speech on Wikileaks please watch. this video.

With a tip of the hat to From The Old here are the questions Ron Paul asked in his speech.

Number 1: Do the America People deserve know the truth regarding the ongoing wars in Iraq, Afghanistan, Pakistan and Yemen?

Number 2: Could a larger question be how can an army private access so much secret information?

Number 3: Why is the hostility directed at Assange, the publisher, and not at our governments failure to protect classified information?

Number 4: Are we getting our moneys worth of the 80 Billion dollars per year spent on intelligence gathering?

Number 5: Which has resulted in the greatest number of deaths: lying us into war or Wikileaks revelations or the release of the Pentagon Papers?

Number 6: If Assange can be convicted of a crime for publishing information that he did not steal, what does this say about the future of the first amendment and the independence of the internet?

Number 7: Could it be that the real reason for the near universal attacks on Wikileaks is more about secretly maintaining a seriously flawed foreign policy of empire than it is about national security?

Number 8: Is there not a huge difference between releasing secret information to help the enemy in a time of declared war, which is treason, and the releasing of information to expose our government lies that promote secret wars, death and corruption?

Number 9: Was it not once considered patriotic to stand up to our government when it is wrong?

Thomas Jefferson had it right when he advised 'Let the eyes of vigilance never be closed'

Please note the common sense discussion of Ron Paul vs. the completely hysterical (as well as totally misguided) reaction of Sarah Palin: "Assange is an anti-American operative with blood on his hands. Why was he not pursued with the same urgency we pursue al Qaeda and Taliban leaders?"

My response:
Excuse me for asking but since when does exposing corruption and hypocrisy make one an al Qaeda' terrorist? Is the whole world supposed to stand up and salute our illegal wars, our torture of civilians, our holding of prisoners in Cuba with no charges being filed. Are we supposed to salute or simply look away from fraud by our banks and coverups in our Treasury department?

Assange is not even a US citizen. Clearly, Sara Palin is not capable of figuring out the implications of her proposal to hunt down foreigners allegedly in violation of US laws.

If we can prosecute others for violating our laws (if Assange even did such a thing), then why can't Iran or Iraq prosecute George Bush for violation of their laws?

Bonus 10th Question

Here is a key 10th question Ron Paul failed to ask: Since when does the US have the right to impose its laws on the rest of the world?

The answer, no matter what neocons may think, is "we don't".

Sara Palin cannot think clearly, she just reacts, perpetually grubbing for attention. The simple truth of the matter is she is not fit for office no matter how much media attention she receives. Hopefully Republicans come to their senses regarding her electability before it's too late.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Chicago's Mayor Daley Discusses Bankruptcy For City Pensions

Posted: 11 Dec 2010 10:56 AM PST

Mayor Daley is begging Governor Quinn for pension reform.

Quinn now has on his desk a bill that would allow state to withhold sales tax and income tax revenue from cities that won't do more to fund their pension plans.

Property taxes will have to go up for cities to meet their pension obligations and that is on top of a massive income tax hike that governor Quinn campaigned for.

Daley, aldermen ask Quinn to veto pension measure

The Chicago Tribune reports Daley, aldermen ask Quinn to veto pension measure

Mayor Richard Daley this afternoon expressed his frustration with the city's pension situation, suggesting that the retirement funds need to be fixed before leaders are forced to declare them bankrupt as a way to restructure.

Speaking on a Global Metro Summit panel at the University of Illinois-Chicago with Philadelphia Mayor Michael Nutter and Los Angeles Mayor Antonio Villaraigosa, Daley at first appeared to indicate that allowing the pensions to go bankrupt so they could be reorganized was something he believes could happen.

"I'm one who believes that pension funds can go bankrupt and then you reorganize, and that's the hardest thing to say," Daley said.

Moderator Richard Stengel, managing editor of Time Magazine, then asked Daley: "Let them go bankrupt?"

"Yes, and then you reorganize it," Daley replied.

The mayor's comments came after much of the Chicago City Council sent a letter to Gov. Pat Quinn today urging him not to sign a pension reform bill passed by the General Assembly and Daley again lambasted the plan.

Daley has been publicly attacking the bill at every opportunity over the past week, saying it would lead to the biggest property tax increase in Chicago history. Daley said he doesn't know whether Quinn will listen to Chicago officials' pleas not to sign the legislation, but he said he and Quinn have different views on raising taxes.

"(Quinn) wants to tax people. What can I do?" Daley said.

"We can't go tax crazy, but people may want to go tax crazy," the mayor said.

The bill requires municipalities move toward funding police and fire pensions up to 90 percent of obligations by 2040, and allows the state to withhold sales tax and income tax revenue from cities that don't do so. Daley says that to meet the pension funding standard would require a $550 million property tax hike in Chicago.

A letter to Quinn signed by 43 of Chicago's 50 aldermen acknowledges the need for pension reform, but says any legislation should include increased employee contributions and lower benefit payouts.

Now?! Why Now?

Now Daley is whining. Now?! Why Now?

He should have thought about this before the election. Quinn campaigned on a pledge to raise the state income tax by 33% (from 3% to 4%) thereby buying the vote of every public union worker in the state.

Who is to blame if not Daley and idiots in Chicago who voted to return Quinn to office by a margin of 87% to 13%, hundreds of thousands of votes.

All it would have taken to defeat Quinn was one simple statement by Daley endorsing Bill Brady. Quinn won the election by 19,000 votes out of over 3.6 million cast. Quinn's margin of victory was 46.6% to 46.1%.

Daley could have gotten any favor he wanted for endorsing Brady. Any! But no! Daley sat on his ass and let this happen.

Chicago deserves to suffer. The whole rest of the state shouldn't have to. But it will, and Mayor Daley is to blame.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Your Weekly Address: Protecting the Middle Class and the Economy

Your Daily Snapshot for
Saturday, Dec. 11, 2010

Your Weekly Address: Protecting the Middle Class & the Economy

The President strongly urges both parties in Congress to pass the compromise on tax cuts, unemployment insurance, and job creation. Not doing so would hurt the middle class, those struggling to find work, and the economy itself.

Watch the video.

Weekly Wrap Up

Framework on Tax Cuts: Austan Goolsbee’s breaks it down on the White Board, a chart on wins for working families and more information on how this bipartisan agreement delivers key victories that will give the average American family assurance that there will be more money to pay the bills each month. Learn more about the framework on tax cuts, unemployment insurance and jobs.

DREAM: "Now is the time to press on with our full support for the DREAM Act. We’re closer than we’ve ever been and we’re not giving up," Secretary of Education Arne Duncan. Read the post.

West Wing Week: “It’s alive!” Watch the video.

Notable Number: $2,500. Learn more about how the President saved more than 8 million students that much in tuition costs.

New Photos: 1 of 80 new behind-the-scenes shots from the month November, thanks to the White House Photo Office.

A Symbol of Hope: The menorah used at the White House Hanukkah ceremony -- on loan from a congregation in New Orleans -- is one of very few items from the congregation that survived the devastation of Katrina. Watch a short video.

#1q: Press Secretary Gibbs answers your Twitter questions on unemployment benefits and bickering between Republicans and Democrats. Watch the video response.

Tuesday Talks: This week featured a panel on the Open Government Directive, which requires federal agencies to take steps to achieve key milestones in transparency, participation, and collaboration. Watch the video. Next week, join us for a talk on the White House Fellows Program.

“A Good Deal for the American People”: President Obama holds a press conference about the tax cut compromise framework. Watch the video.

Let There Be Light: The First Family lights the National Christmas Tree with a little help from B.B. King, Sara Bareilles, Common, Maroon 5 and more. Watch the video.

Treasury 2.0: The Department of Treasury launches a new website with data visualizations, FAST search technology and a blog. Take a look at the new website.

“Our Generation’s Sputnik Moment”: While visiting Forsyth Technical Community College in Winston-Salem, North Carolina, President Obama speaks about his vision and his specific proposals for strengthening the economy.

Into the Wild: The Arctic National Wildlife Refuge is the only place in America where polar bears can be found in their natural habitat, it also just celebrated its 50^th anniversary. Learn more about America’s largest National Wildlife Refuge.

Inside the Cabinet: President Obama holds a Cabinet meeting, get a glimpse inside the meeting with these behind-the-scenes photos.

Get Updates

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Seth's Blog : "The answer is simple"

[You're getting this note because you subscribed to Seth Godin's blog.]

"The answer is simple"

...is always more effective a response than, "well, it's complicated."

One challenge analysts face is that their answers are often a lot more complicated than the simplistic (and wrong) fables that are peddled by those that would mislead and deceive. Same thing is true for many non-profits doing important work.

We're not going to have a lot of luck persuading masses of semi-interested people to seek out and embrace complicated answers, but we can take two steps to lead to better information exchange:

1. Take complicated overall answers and make them simple steps instead. Teach complexity over time, simply.

2. Teach a few people, the committed, to embrace the idea of complexity. That's what a great college education does, for example. That's what makes someone a statesman instead of a demagogue. Embracing complexity is a scarce trait, worth acquiring. But until your customers/voters/employees do, I think the first strategy is essential.

You can't sell complicated to someone who came to you to buy simple.

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luni, 13 decembrie 2010

New Behind the Scenes Photos from November

Seth's Blog : The myth of the simple business plan

The myth of the simple business plan

More Recent Articles

duminică, 12 decembrie 2010

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : Everyone and no one

Everyone and no one

More Recent Articles

sâmbătă, 11 decembrie 2010

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Your Weekly Address: Protecting the Middle Class and the Economy

Seth's Blog : "The answer is simple"

"The answer is simple"

More Recent Articles

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luni, 13 decembrie 2010

More Recent Articles

duminică, 12 decembrie 2010

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sâmbătă, 11 decembrie 2010

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