Wednesday, September 17, 2014

Are We Really Better Off Since Obama Took Office?

In front of adoring crowds at one of his all-too-many campaign style events, President Obama has claimed that "By almost any measure, we are better off since I took office" or that America is stronger under his watch.

The problem with such statements is that they are factually untrue when looking at the broader state of our union.

Sure, the President can claim that overall unemployment is down from where it was when he took over the reins of government in January 2009.  But, to get there, overall unemployment rose to a rate of 10% in the first year-and-a-half of his presidency.  Something that the so-called "stimulus" was supposed to avoid by promising that the unemployment rate wouldn't go above 8%. Even now, 5 years passed the end of the official end of the recession, this country still has an unemployment rate that is a full point above pre-recession levels.

Our major cities have extraordinarily high unemployment rates.  Chicago, Obama's home town, is still at 8.0%; and, that's just recently down from a January 2014 rate of 9.6%.  Detroit, now in bankruptcy, had an unemployment rate of  17.7% in July.  A city like Atlantic City, that depends heavily on Americans spending leisure-time money, is suffering from cash-strapped tourists unable to indulge in what they have to offer. The casinos are closing and the unemployment rate sits at 13.7%. More worrisome is the fact that our three largest cities -- Los Angeles, New York, and Chicago -- are dangerously close to following Detroit into bankruptcy.

The Gross Domestic Product (GDP) is stuck at a 5-year growth rate of about 2%. This is, at least, the worst recovery since World War II and, some say in the history of the United States when using alternate methods of calculating GDP.
Then there's the overall economic health of America.  For 5 straight years the median incomes of this country have fallen and income inequality has risen to a record high.  Half the jobs created under this President's watch were low income/low paying.  When he took office, only 30 million Americans were on food stamps.  Today, that number is 47 million; a 56% increase.  Similarly, only 38 million Americans were living in poverty.  Today, that number is a record 47 million and has stood at 15 percent of the population for the last 2 years. Thus, as the population grows, so does the amount of people left in poverty.

Of course, the real elephant in the room is the amount of debt that Obama has left us with; a number that only gets worse by the day.  At the beginning of his first term, the federal debt was $10.6 trillion.  Today, it is closing in on $18 trillion; just $250 billion from the current number (as of this writing) of $17.756 trillion. A number that, for the first time in this nation's history, is greater than the total annual economic output of the country.  Of those advanced economies in the world, only Portugal, Italy, Ireland, Greece and Spain can claim debt levels above their economic output. All of which are near bankruptcy and on the brink of bringing the European Union to its knees.

When we see people standing behind President Obama and nodding in agreement that things are better, you have to wonder what planet they're from.  Most other Americans (74% in one poll) still think that we never recovered from the recession.  And, in so many ways, they're right.

References:

By almost any measure, we are better off since I took office: http://www.realclearpolitics.com/video/2014/07/10/obama_by_almost_every_measure_we_are_better_off_than_when_i_took_office.html

Obama claims US is 'stronger' than 'when I first came into office' as economy weakens, debt soars, America loses global influence and border crisis deepens: http://www.dailymail.co.uk/news/article-2722926/Obama-claims-US-stronger-I-came-office-economy-weakens-debt-soars-America-loses-global-influence-illegal-immigrants-flood-border.html

Half Of The Jobs Created During The Recovery Were Low-Paying: http://thinkprogress.org/economy/2013/05/14/2008591/jobs-recovery-low-paying-minimum-wage/

Chicago Unemployment Rate Falls to 8.0%: http://www.worldbusinesschicago.com/news/chicago-unemployment-rate-jul2014

Detroit Unemployment Rates:  https://ycharts.com/indicators/detroit_mi_unemployment_rate

Unemployment rises in most US states in July: http://www.detroitnews.com/article/20140818/BIZ/308180072

 Another Atlantic City Bust: Trump Plaza Closes: http://abcnews.go.com/US/wireStory/trump-plaza-4th-atlantic-city-casino-shutdown-25528499

3 huge cities flirting with bankruptcy: http://money.msn.com/investing/post--3-huge-cities-flirting-with-bankruptcy

Obama’s economic recovery: officially the worst in US history: http://poorrichardsnews.com/post/41366829334/obamas-economic-recovery-officially-the-worst-in-us

Median Income Falls For 5th Year, Inequality At Record High: http://www.huffingtonpost.com/2013/09/17/median-income-falls-inequality_n_3941514.html

47 million Americans on food stamps: http://img.washingtonpost.com/blogs/wonkblog/files/2013/09/SNAP-participants.jpg

That’s rich: Poverty level under Obama breaks 50-year record: http://www.washingtontimes.com/news/2014/jan/7/obamas-rhetoric-on-fighting-poverty-doesnt-match-h/?page=all

America's Poverty Rate Stuck At 15 Percent For Second Straight Year: http://www.huffingtonpost.com/2013/09/17/poverty-america-census_n_3940812.html

 74% said we are still in a recession: http://patch.com/new-hampshire/concord-nh/is-the-recession-over-yet#.VBR1qmNAVLU

U.S. Federal Debt Exceeds GDP: http://jamesviser.com/?p=995






Tuesday, September 16, 2014

Scottish Independence and the Survival of the European Union

Most Americans don't seem to understand why Scotland's independence from the United Kingdom (UK) is such a big deal. It is and, it will have a far reaching impact on the survival of the European Union (EU).

Arguably, beyond the pure advantages of having an economic cooperative between European countries, the glue that really holds the European Union together is the preponderance of like-minded liberal politics; with the only conservative and economic elephant in the room being Germany.  For the political stability of the EU, Germany's economic influence and conservative politics has always been countered by the economic power and political influence of  a predominately liberal United Kingdom.  This is where the small country of Scotland comes in.

Scotland is very politically liberal; and, is primarily responsible for maintaining liberalism in the U.K.  If it cedes from the United Kingdom, their dominant liberal voting will be gone and conservatism is sure to seep into the UK's political landscape and, suddenly, the EU could find itself with its two dominant partners, England and Germany, being conservative; meaning that the policy making within the European Union could also turn decidedly conservative.  This will not sit well the remainder of the EU countries who seek to maintain a liberal agenda.  Thus, Scotland's departure could force others to leave in order to protect their own internal need for a European Union that is steeped in liberal politics.

References:

Scots independence battle reaches fever pitch on streets and screens: http://www.reuters.com/article/2014/09/14/us-scotland-independence-idUSKBN0H60MG20140914

If the Scots Gain Independence, Expect a More Conservative U.K.: http://takingnote.blogs.nytimes.com/2014/09/08/if-the-scots-gain-independence-expect-a-more-conservative-u-k/

Monday, September 15, 2014

The Ray Rice Battering Case: A Failure Of The Police And The Justice System

A lot of people are angry that the NFL didn't act quicker and more decisively in meting out punishment to Ray Rice for literally cold-cocking his fiancee in that elevator.  But, instead of targeting the NFL, we should be more upset with a policing and justice system that failed to jail Rice that very night and subsequently file charges against him.  What he did was assault and battery and, potentially, could have killed Janay Palmer.  This is a crime for which Rice could have served up to 6 months in jail.

Blaming the NFL for not acting is to ignore the real villains.

How many of the thousands of battered women in this country can expect the NFL to mete out justice to their particular batterer? Are we now expecting employers, not the justice system, to intervene on behalf of battered women?

Our anger should be aimed at the Atlantic City police department and the criminal justice system in that state for not acting on behalf of the victim, Janay.  It is apparent that they put Ray Rice's celebrity ahead of justice.

The NFL should only have been involved in punishment if Rice failed to show up for work because of his having to serve time for assault and battery; or, punished because of some "morals clause" in his contract. Just like any other employer.

References:

New Jersey Assault and Battery Laws: http://www.assaultandbattery.org/new-jersey/

Saturday, September 13, 2014

Obama's Sad Coalition To Fight ISIS

In President Obama's prime-time speech with regard to fighting the threat of ISIS, he referred to a broad coalition of countries that will join in our effort to destroy ISIS.  Sadly, that 'broad' coalition only stands at 9 other countries: Britain, France, Australia, Canada, Germany, Turkey, Italy, Poland and Denmark.  Even sadder is the fact that only one Muslim country -- Turkey -- has joined us. However, Turkey is probably an ally in name only since they just announced that they won't get involved in combat activities or allow the U.S. or other allies to use their airbases or air space to launch attacks.     So...is the coalition now falling apart?

All along, Obama has told us that the fight against ISIS is regional.  So, where are all those regional Muslim countries that surely could be threatened?  Now, I realize that Israel is sort of tied up with its own problems right now but, what about Saudi Arabia, Jordan, Oman, Egypt and so many other Muslim countries that could be targets of ISIS and their attempt to build a world-wide caliphate?

A friend of mine -- a regional sales manager for a major pharmaceutical manufacturer -- once said that: "If you can't even convince a cancer patient to buy a drug that will cure his cancer, you have no place being in pharmaceutical sales." In the same way, if our President can't convince a small Arab country like Jordan that it is in their best interest to fight ISIS, then something is seriously wrong with his leadership skills.

References:

Obama Enlists 9 Allies to Help in the Battle Against ISIS: http://www.nytimes.com/2014/09/06/world/middleeast/us-and-allies-form-coalition-against-isis.html

Breaking: TURKEY REFUSES OBAMA REQUEST to Use Its Airbases to Fight ISIS: http://www.thegatewaypundit.com/2014/09/breaking-turkey-refuses-obama-request-to-use-its-airbases-to-fight-isis/

Friday, September 12, 2014

Obama's Political Calculus On Immigration Reform

Today, more than 5-1/2 years since taking office, President Obama blames the Republicans for not passing comprehensive immigration reform into law.  A fact that he claims has forced him to act alone.  But, instead of acting by the end of this summer, as promised, he has now pushed his go-it-alone executive actions back until after the fall elections.  His rationale for the the delay is that Republicans would use it as a wedge issue against vulnerable Democrats at this critical time.

Simply, Obama knows that any sort of amnesty for illegal aliens is politically lethal. 

Therefore, contrary to all the promises he made while running for the Presidency in 2008, he did nothing in his first two years in office at a time when he totally out-gunned the Republicans with complete control of Congress; including a veto-proof Senate.  His excuse: The economy was the priority.  However, during those supposed do-nothing-else-but-the-economy years, he did manage to pass ObamaCare into law.

Hispanics are being used by Obama.  Just as is every other minority group in this country. His promises and blame-the-Republicans tactic is being used to merely string along those who are eager for immigration reform.  Wake up Latino Americans.  Like everything else, Obama will never tackle any hard political issue unless it results in a sure political win.  As a State Senator in Illinois, he avoided any controversy by simply voting "present". Never a decisive "yea" or "nay" that could possible hurt his election chances.   A weak approach that he continues to use today

References:

Obama’s failed promise of a first-year immigration overhaul: http://www.washingtonpost.com/blogs/fact-checker/post/obamas-failed-promise-of-a-first-year-immigration-overhaul/2012/09/25/06997958-0721-11e2-a10c-fa5a255a9258_blog.html

Obama to Delay Immigration Action Until After November Elections: http://www.nbcnews.com/storyline/immigration-border-crisis/obama-delay-immigration-action-until-after-november-elections-n197306

Obama's "present" tension: http://www.politifact.com/truth-o-meter/article/2008/feb/13/obamas-present-tension/

Thursday, September 4, 2014

A Texas Story and Why Our Increasing Dependence On Wind and Solar Is So Wrong

I think a lot of people would be surprised to know that Texas -- that bastion of conservative politics -- is actually the greenest state we have, with about 9% of its electrical power generation coming from wind.  And, plans are in the works to bump that number up to 15% in the near future.

But, last winter, amid the freezing temperatures of the so-called polar vortex, wind power failed the state by only being able to provide about 3 percent of its power needs.  As a result, conventional fossil-fuel powered plants barely had enough reserve power producing capability to prevent the state from a complete grid failure that could have plunged millions into the darkness of a statewide blackout.  A blackout that would keep people in the cold because, even if they had gas furnaces, electricity is still needed to run the fans and the thermostats.

The lack of wind power isn't just some rare occurrence due to a rare polar vortex. In 2008, Texans had another near grid emergency for lack of wind. 

What their story tells us is that there always has to be enough reserve fossil fuel power available to compensate for a possible 66% drop in wind.  In the above case, the reserve needed was at least 7%. If Texas increases wind power to 15%, the reserve needed should be at least 12%.  In other words, for every kilowatt of new and added wind power, another 66% of a kilowatt of fossil fuel must be added or held in reserve as backup.  Simply, this means that the cost to the consumer will have to be 66% higher than need be, but it also means that power companies will be hard pressed to cost justify any new power plants or the expansion of existing power facilities just so that capability can sit there in the eventuality of another polar vortex event.  If they don't, the odds of wide scale power blackouts only goes up.

Solar is even worse.  Every night, solar power production goes to zero.  So, at a time when people are at home, away from work, and using a lot more power than they did during the day, solar power goes silent and fossil fuel power plants must make up more than 100% of the slack. Additionally, on cloudy days, when solar efficiency is greatly reduced, fossil-fueled plants must be amped up to take up the slack.

Shortly, Texas will find itself making some very hard decisions.  This is because President Obama's new EPA coal regulations -- decidedly designed to completely shutdown coal-fired electricity production -- will go into effect. As coal-fired plants are being forced to shutdown, will Texas either go with more wind or will it convert those coal plants to natural gas?  I would hope, given this year's experience, they would cautiously do the first option or wholeheartedly embrace natural gas.

The bottom line is that we, as a nation, can never be fully dependent on wind and solar for our electricity as some would lead us to believe.  As a country, we have always had a dominant economy because of cheap and reliable power.  Wind and solar are neither and, ultimately, our dependence on these too technologies will hurt us in growing businesses and creating jobs.

In my opinion, wind and solar should never be directly attached to the power grid.  Instead, the electricity produced from these two technologies should be used to produce hydrogen gas which can be stored and then used, as needed, to produce electricity.  This way, fluctuations in demand can be better dealt with.  Most importantly, burning hydrogen to produce electricity produces no carbon; just plain H2O.  As an added advantage, that same hydrogen can even be used in automobiles that are so-equipped to burn it.

References:

Role of Texas wind power debated after winter emergency: http://fuelfix.com/blog/2014/01/08/role-of-texas-wind-power-debated-after-winter-emergency/

2008: Loss of wind causes Texas power grid emergency: http://www.reuters.com/article/2008/02/28/us-utilities-ercot-wind-idUSN2749522920080228

Obama EPA Issues Coal-Killing Rules To Cut Carbon Emissions 30 Percent: http://www.forbes.com/sites/christopherhelman/2014/06/02/obama-epa-issues-coal-killing-rules-to-cut-carbon-emissions-30-percent/

Wednesday, September 3, 2014

The Detroit Experiment: Michigan's New Minimum Wage

Most advocates for raising the minimum wage argue that it would pull people out of poverty and, in fact, is good for the economy because it gives people more money to spend.  Because of this, some actually contend that raising the minimum wage creates jobs due to the increased consumer demand and the general strengthening of the economy.

Of course, I'm the old stick-in-the-mud student of economics who believes that raising the minimum wage causes wage inflation and that hurts more people than are helped.  Inflation of any kind, hurts businesses and costs jobs since the vast majority of Americans won't see their wages go up enough to counter the increase in prices.  Thus the consumer buys less and pays more for what they buy.  This is especially true for the millions of Americans who live on fixed incomes or social security, which has only gone up a meager 1.1% in the last 5 years; while overall inflation has exceeded 2%.


So, it will be interesting to see what happens in the city of Detroit following Michigan's Labor Day increase in the minimum wage by 10% to $8.15 an hour.  Here's a city that is already bankrupt with an unemployment rate of 14.5% in April and with more than 38% of the city's residents in poverty.  Currently, the average individual income is $14,861 a year.  By raising the minimum wage to $8.15 an hour, the average minimum wage worker in Detroit could see a full-time salary of $16,300; assuming two weeks of unpaid vacation and no overtime.  And, of course, this is $1,439 higher than the current average salary in Detroit.  But, keep this in mind.  While I don't know exactly how many workers in Detroit will benefit from the hike, on a national basis, there are only 1.5 million workers who earn exactly the minimum wage.  That's only four-tenths of a percent of our population.  But raising it affects many more than just those earning that wage by what I call the leap frog effect.  Because the minimum wage earners instantly get raises, it can leap-frog some other employees above him/her who will then,  in fairness, have to have their wages increased.  Some estimates are that this could affect 17% of all the workers or more than 8% of the nation's population.

In the title, I call raising the minimum wage an experiment.  If the proponents of the increase are correct then good things should happen to Detroit's horrible numbers noted in the preceding paragraph.  However, if I am right, the current downtrend in unemployment will reverse itself. The poverty number will only go higher; and, the average salary won't be affected by much, if any.  Also, it will show how irresponsible the legislature in Michigan was to further risk damaging Detroit (and, other high unemployment cities in Michigan) by passing this new law.  A law that won't just raise the minimum wage this year; but, also all successive years until it tops out at $9.25 in 2018.  And, why?  Because raising the minimum wage in this election year was politically expedient, Yes, even for the Republican legislature; as in the case of Michigan.

References:

Minimum wage hike launches this Labor Day: http://www.myfoxdetroit.com/story/26417826/minimum-wage-hike-launches-this-labor-day

Detroit QuickFacts: http://quickfacts.census.gov/qfd/states/26/2622000.html

Detroit Unemployment Rate: https://www.google.com/search?q=detroit+unemployment+rate&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a&channel=sb

Characteristics of Minimum Wage Workers, 2013: http://www.bls.gov/cps/minwage2013.pdf