Baltimore Orioles’ John Angelos NAILS IT!

May 1, 2015

If you didn’t see CBS This Morning today, then you have to watch this interview.  Baltimore Orioles Executive Vice President John Angelos explains a tweet he made concerning the real root cause of the riots in Baltimore.  He lays the blame squarely at the feet of “political elites” who have shipped American jobs overseas.  I encourage you to watch the interview (link provided above) if you can suffer through the dumb Toyota Camry ad that precedes it.  But the following quote from the interview says it all:

…my greater source of personal concern … is focused rather on the past four decade period during which an American political elite have shipped middle class and working class jobs away from Baltimore.

He went on to explain that by “American political elite” he means both Democrats and Republicans who have embraced this trade policy.  His analysis of the situation in Baltimore is dead on.  As is the case throughout America, there is a seething anger over what trade has done to our economy and, as we’ve seen with the Freddie Gray case, any spark can set it off.

Good for you, Mr. Angelos!  I’ve suddenly become an Orioles fan!

Per Capita GDP Falls in 1st Quarter

April 29, 2015

The Bureau of Economic Analysis announced this morning that GDP (gross domestic product) grew at an annual rate of only 0.2% in the first quarter of this year, at the bottom end of the range of analysts’ expectations.

However, while the “pie” grew by 0.2%, the number of people crowded around the table, grew at an annual rate of 0.8%, thanks entirely to immigration.  As a result, per capita GDP – everyone’s share of the pie – fell at an annual rate of 0.6% – a recessionary figure.  Here’s a chart of real per capita GDP since 2000:  Real Per Capita GDP.  Since the onset of the “Great Recession” in the 4th quarter of 2007, GDP has risen by only 2.7%.  That’s an annual growth rate of only 0.4% – virtually no growth at all.

And here’s something else I find interesting.  Check this chart of the percent change in GDP since 2005:  Change in Real Per Capita GDP.  Notice that, since the recovery from the recession began in 2009, the frequency of negative quarters is increasing.  From the 3rd quarter of 2009 until the first quarter of 2011, six quarters passed before we had a negative quarter.  Then another six quarters passed before a 2nd negative quarter.  But, after that, there were only four quarters between negative quarters.  Most recently, there were only three quarters of positive growth before another negative quarter.

This recovery, fed by stimulus spending and $4.5 trillion in “quantitative easing” by the Federal Reserve – both of which have dried up – has run out of gas.  The economy is teetering on the brink of another recession.  It’s no surprise.  Nothing has been done to remedy the conditions that precipitated the last recession – our huge trade deficit and out-of-control immigration-fueled population growth.  In fact, it was falling exports that led the decline in per capita GDP in the first quarter.  Remember Obama’s pledge to double exports by 2015?  Never happened.  Not even close.

Contrary to the talk that you hear about a recovery that’s gathering momentum, or a slowdown that is only transitory, this economy is sick and is in serious trouble.  Its capacity for serving as a “host” to prop up the economies of badly overpopulated nations is practically depleted.  It’s now totally dependent on deficit spending and money-printing.  And equity markets have transitioned from vehicles for investing in the economy into a scheme for sopping up money from central banks.  Investors are playing a dangerous game of chicken with central banks when bad economic news is welcomed in the hopes of raising the odds of more money-printing.  Never have we entered a recession with interest rates already at zero and with a balance sheet that already has the Federal Reserve feeling queasy.  The ability of these economic gimmicks to mask the effects of overpopulation and a host-parasite trade regime has nearly run its course.  Watch out!

“How Many Are Enough?”

April 19, 2015

On our last night in Ireland, I watched a BBC broadcast about the upcoming election in Britain (to be held on May 7), which included interviews of both current prime minister (and Conservative Party leader) David Cameron and his challenger, Labour Party leader Ed Miliband.  One of the hot topics was immigration.  In general, the majority of Brits are completely fed up with the high rate of immigration there.

As a matter of background, with the exception of the tiny nations of The Netherlands and Belgium (both barely more than city-states), the U.K. is the most densely populated nation in Europe, with 683 people per square mile.  The U.K. is almost twice as densely populated as China.  And its population has grown by 8.4% since 2007 – all of it due to immigration.

As it did throughout the world, unemployment soared in Britain during the Great Recession, and it remains elevated today – at 7.2%.  And during times of high unemployment, workers – employed or not – take a dim view of immigrants being brought in to compete for their jobs.  We see the same thing here.  Discussions about immigration are always framed in the context of jobs and the demand for social safety net services.

It seems that Ed Miliband had taken David Cameron to task for his immigration policies.  But the BBC interviewer pointed out that the Labour Party’s immigration policies were just as liberal when they held power.  The interviewer asked Mr. Miliband whether he would actually cut the rate of immigration.  The answer was no.  I was stunned at the interviewer’s response.  He pointed out that the overcrowded U.K. was a nation of 64 million people, and asked, somewhat angrily, “how many are enough?”  “70 million?  75 million?”  His question was met with only a blank stare from Mr. Miliband.  There was no reply.

I never thought I’d live to see the day that a journalist would frame immigration in its proper context and ask how many people are enough.  But, apparently, when you reach the population density of the U.K., overcrowding becomes too much to bear and people begin to ask the question.  If people begin to ask the question, can an honest answer be far behind?  If one developed nation concludes that it has reached its limit, and acts on that conclusion, will it be long before other nations see the benefits of a stable or even shrinking population?  How will our journalists and politicians respond when Brits begin to say that “we wish we’d have done this much sooner?”

I have always maintained that the only effect of immigration – the ONLY effect – is to grow our population.  Immigrants possess no magic elixir for healing the economy.  Immigrants don’t create jobs.  They merely grow the population and the number of jobs grows as a result, though no one notes the fact that the result is proportionally fewer jobs.  Immigrants possess no skills that aren’t already found in abundance among our native population.  Thus, any discussion of immigration that doesn’t begin with its effect on population growth is a completely flawed analysis.

I know, I know, I’m reading too much into this one little interview.  It’s just nice to hear a voice of reason among all of the poppycock and balderdash (as the Brits might call it) that characterize discussions of immigration here in the states.

Back from Ireland

April 14, 2015

My wife  and I have just returned from a trip to Ireland, America’s worst trade partner in terms of their per capita trade surplus in manufactured goods, and I thought I’d share some observations.

First of all, perhaps because I visited areas more attractive to tourists (mostly in Kerry County), I didn’t really see much evidence of a large presence of American companies there.  However, shortly after arrival, as we were checking into our hotel just outside Dublin, an older gentleman who was dressed as a businessman somehow recognized me as an American and asked if I was there on business.  “No, we’re just here on vacation,” I replied.  “Oh, well there are a lot of American companies here, you know.” he said.  “Yeah, I know.” I replied.  If only he knew just how well I knew that fact and how I felt about it but, following an all-night flight and a harrowing drive through Dublin to the hotel (my first experience driving on the left in a right-hand-drive, manual transmission car), I didn’t have the energy to get into a discussion.

One morning at breakfast at our next hotel in Killarney, a young hotel employee (maybe thirty) who was busy bussing tables and restocking the breakfast buffet, struck up a conversation, asking what part of America we were from.  “Michigan,” we replied.  (I found it interesting that of all of the people we met who asked such a question, maybe only half knew where Michigan was located.  It was oddly comforting that Europeans can also be “geographically-challenged” in the same way that many Americans are criticized for being.)  Anyway, the thing that this young guy seemed most interested in was the current state of the job market in America.  He noted that things had been difficult there as Ireland struggled to emerge from the economic mess it landed in during the “Great Recession.”  (You may recall that Ireland was dubbed one of the “PIIGS” nations of Europe – Portugal, Ireland, Italy, Greece and Spain – who had racked up massive national debts and were now a drain on the Euro Zone economy.)

On another occasion, as we waited for a tour of the Muckross House in Killarney National Park, one of the ladies selling tickets bemoaned the fact that they were short on tour guides, thanks to government austerity measures.  I was beginning to understand that employment was still a significant concern in Ireland.  This seemed strange, given Ireland’s relatively huge trade surplus with the United States.

The longer we were there, I grew more accustomed to the charm of the Irish brogue.  But I also began to notice that, in many cases, the accent didn’t seem right.  I then began to realize just how many of the people we were speaking with weren’t Irish at all but immigrants, primarily from around Europe and some clearly from the Middle East.  Especially in the hotels, the staffs seemed to be dominated by immigrants.  At an ice cream shop, the young lady who waited on us was French.  When I asked if it was difficult to get a work permit in Ireland, she explained that as a citizen of the Euro zone, she had just as much right to work there as anyone.

Although Ireland is twice as densely populated as the U.S., it’s actually rather sparsely populated by European standards, where most of continental Europe is as densely populated as China.  Thus, it’s become a magnet for migration of Europeans looking for a better life in a less crowded land where, though unemployment is still a problem, it’s much better than in other places.  We talked with a lady who had recently moved to the Killarney area from England, a nation four times as densely populated as Ireland.  She was ecstatic to be there.

Ireland is a beautiful place that everyone should try to visit at some point.  The people are friendly and we never had a bad meal.  The countryside is beautiful, dominated by sheep pastures delineated by ancient stone walls and hedgerows.  But, as someone hypersensitive to the subject of overpopulation, I can see that Ireland is in a state of transition, and I fear that their culture will gradually fade into the boring sameness that increasingly characterizes our globalized world.

Speaking of England, on our last day in Ireland I was watching a BBC news broadcast in which some journalist was interviewing Ed Miliband, Labour Party candidate challenging David Cameron for British prime minister in the upcoming election.  I was shocked (pleasantly so) by a question that the interviewer put to Mr. Miliband.  But that’s a subject for my next post.



March employment signals economic slow-down

April 5, 2015

For the past few months I’ve complained that the government’s employment statistics weren’t reflecting reality.  They weren’t corroborated by other economic data and just seemed – well – trumped up.

It seems that reality has finally caught up with the Bureau of Labor Statistics (BLS), who yesterday released employment data for March that wasn’t just weak; it was downright bad.  Every aspect of the report was bad.  First of all, the headline number of 126,000 jobs created (from the establishment survey) was far below even the low end of estimates.  And the employment level (from the household survey) was much worse, rising by only 34,000 jobs.  The official unemployment rate held steady at 5.5%, but that was thanks only to the BLS’s “labor force vanishing act” trick of claiming that another 96,000 workers gave up looking for work.

And there was more bad news.  Those inflated January and February employment estimates were revised downward by 69,000 jobs.  And the average work week contracted by 0.1 hours, another sign of a weakening labor market.  Aside from gains in business services, health care and retail, all other sectors of the economy (including manufacturing and construction) were flat or actually declined.

You can’t blame the weather for these weak figures.   The weather was pretty benign for the last three weeks of March.  And the labor dispute that nearly shut down ports on the west coast?  That was resolved early in March.  The only real explanation (corroborated by other economic data) is that the economy is slowing noticeably.

At the beginning of this year, amid all the euphoria over a “booming” economy, I predicted that growth would slow and stall in 2015.  It’s starting to happen.  I also predicted that, contrary to nearly-unanimous expectations of a rate hike by the Federal Reserve in June, they would not raise interest rates at all this year.  This bad jobs report will surely put off any rate hike for at least a while longer.  My point is that when you understand the role of worsening overpopulation in eroding per capita consumption, you understand that an economy propped up by stimulus and monetary expansion isn’t sustainable, especially when those stimuli have been removed.


It’s Official: Obama’s Trade Policy a Complete Failure

March 8, 2015

Shortly after taking office in 2009, President Obama traveled to Mexico to fulfill a campaign promise to address the failings of NAFTA (the North American Free Trade Agreement).  The trip was a major embarrassment.  Mexico sent him home with his tail between his legs and nothing but new Mexican tariffs to show for his efforts.  (Since then, our trade deficit with Mexico has worsened by 42%.)  In the wake of that spanking, he turned his trade focus to exports, challenging his economic advisors to make America into a Germany-like export powerhouse.  In January of 2010, he vowed to double American exports within five years.

On Friday, the government released the trade figures for January, 2015, so the results are in.  The president’s strategy of focusing on exports instead of imports has been a total failure.  In January of 2010, total U.S. exports were $143.7 billion per month.  Five years later, they have risen to only $189.4 billion – an increase of only 31.8%.  The president has fallen short of his goal by almost $100 billion per month, or $1.2 trillion per year.  As if to punctuate that failure, exports declined in January by $5.6 billion to the same level as December of 2012.  Here’s a chart that graphically displays the extent of this failure:  Obamas Goal to Double Exports.

That’s total exports.  What really counts are exports of manufactured goods, since that’s where jobs are concentrated.  There the news is even worse.  In January of 2010, we exported $86 billion worth of manufactured goods.  Five years later, that figure has risen to only $109.1 billion, an increase of only 26.9%, falling short of the goal by $62.6 billion.  In fact, manufactured exports haven’t risen one bit in almost three years.  Here’s the chart:  Manf’d exports vs. goal.

With this trade strategy, President Obama took the easy way out, preserving his popularity around the G20 punch bowl instead of serving the best interests of American workers.  This trade policy never had a chance of succeeding.  Germany is an export powerhouse because it has America as its trade patsy.  There is no country that would serve as a similar patsy for us.  Exports are determined by foreign demand, over which we have no control whatsoever.  Imports, on the other hand, are completely within our control but, as Obama found out in Mexico, that ruffles some feathers.  He’s had six years to fix our broken trade policy and he’s completely whiffed on what is arguably the most critical issue facing the American economy.  He deserves to go down in history as an utter failure.

Where is the media on this issue?  Will no one hold his feet to the fire on this broken promise?

If the economy is adding so many jobs, where’s the evidence?

March 6, 2015

If there’s one thing that I’ve learned from the two most recent jobs reports (for January and February, the latter released this morning), it’s what a fabrication the report has become, with numbers concocted to fit the administration’s narrative about the strength of the economy.  There’s no better evidence of this than the January jobs report.  If you’ve followed this blog, you may have noticed that I didn’t even comment on the jobs report last month.  That’s because the numbers were preposterous, fabricated to “fit” the Census Bureau’s sudden addition of a million people to our population at the end of 2014 (an adjustment the Census Bureau makes from time to time).  In order to “fit” the new population figure, the January jobs report claimed that the employment level (taken from the household survey) soared by 760,000 in January.  In order to prevent this from making the unemployment rate drop by an unbelievable amount, the jobs report also claimed that over a million people suddenly decided to rejoin the labor force in January when only 600,000 had rejoined the labor force in all of 2014.

Turning to today’s report for February, the establishment survey supposedly showed an addition of 295,000 jobs.  However, the employment level rose by only 96,000.  In spite of that small increase in the employment level, the unemployment rate dropped by two tenths to 5.5%.  Why?  Because the labor force contracted by 178,000.  Come on!  Demographic forces don’t shift so willy-nilly.  If over a million people flooded back into the labor force in January because jobs were becoming so plentiful, then that’s a trend that would have continued into February instead of mysteriously and suddenly reversing to yield a nice decline in unemployment.  And the headline jobs numbers for January and February haven’t been corroborated by ADP, the payroll processing firm, who estimated that job growth slowed in February to 220,000.

If the demand for labor was so strong, then that should translate into wage growth as the supply of labor begins to dwindle.  It hasn’t.  In February, wages rose by only 3 cents to an average of $24.78 per hour.  For “production and non-supervisory employees,” wages didn’t rise at all.  In the past twelve months, wages rose by only 2.0%, barely keeping pace with inflation.  February’s increase is an annual rate of less than 1.5%.

An increase in demand for labor is typically preceded by a growing workweek.  Employers add workers when the workload rises and overtime pay justifies the hiring of additional workers.  There’s no evidence of that happening.  The average workweek has remained flat at 34.6 hours for the past five months.  The manufacturing work week was flat at 41.0 hours and manufacturing overtime actually edged down by o.1 hours.

Nor is this supposed strong job growth supported by other economic data.  Construction spending has been slowing.  Factory orders are declining.  The trade deficit in goods is steadily worsening.  First-time jobless claims have been rising for the past month.  And layoff announcements have begun to rise.

Even the Federal Reserve seems unconvinced by the jobs data, continuing to hold off on interest rate hikes until it sees more solid evidence of job growth, especially in the form of wage growth.

Former Labor Secretary Robert Reich was always an advocate for American workers.  This evening, Labor Secretary Thomas Perez was interviewed by Judy Woodruff on the PBS Newshour.  (   I was struck by how he came across not as an advocate for American workers, but as a shill for administration policy, actually suggesting that job growth would be stronger if Republicans would only get behind Obama’s immigration policy.  I was eating dinner and nearly choked!

It will be interesting to see how much longer the administration can continue this narrative of strong job growth in the face of other data that tells a completely different story.


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