Ever since Obama took office, the media has taken note of the fact that he has brought Chicago-style politics to Washington D.C. Having lived in the Chicago area for the bulk of my life, I know quite well that "corruption" is the finger print of this Chicago-style and, for that matter, all of Illinois politics. The Illinois State prison system has been host to quite a few city and state politicians; including many of the state's Governors like Kerner, Walker, Ryan, and, now, probably Blagojevich (which would make two consecutive Governor's in a row going to jail).
With Obama and his people being practitioners of Chicago politics, it is almost inevitable that one or more of them, may find themselves in legal or ethical hot water. With health care, we have already seen glimpses of unethical behavior with the Corn-Husker Kick Back and the Louisiana Purchase. Other deals have been cut for the unions on health care and in the General Motors bankruptcy. Yes, I think its just a matter of time before some Obama official or the man, himself, is caught with the dirty hands that typically come with this style of governing. If it's Obama, we could see another first: The first Black President to be impeached.
Tuesday, March 9, 2010
Monday, March 8, 2010
Postal Insanity
Last week, the media's airways were filled with commentaries about the possibility that our U.S. Postal Service (USPS) just may eliminate Saturday mail delivery. The USPS is in deep financial trouble. This year it is expected that it will have a financial loss of $7 billion dollars. The year prior it was $4 billion. By cutting out Saturdays, the Postmaster General expects to save $3.5; far short of the $7 billion that they will lose this year.
Besides the Saturday mail gambit, the USPS, as usual, plans to raise rates. And, every time they do, they lose the only money maker they have: First Class Mail. By raising rates, they continue to force the typical first class mailer to an alternative service: The Internet.
The Post Office's problems aren't Saturday mail or the need for higher rates. The real problem is the amount of labor they have hired and the amount of benefits that their labor force receives while they are working, as well as after retirement.
Despite all the efforts to automate, the productivity of the Post Office has barely increased over the years. The reason for this is that it is a labor behemoth that is primarily dedicated, these days for sure, to the delivery of junk mail. Because of junk mail, the postal workforce is forced to deliver mail to almost every customer on a daily basis. A situation that truly "only" benefits the postal workers union. On top of it, they charge less for labor intensive junk mail than for a simple first class letter -- the mail that they were originally chartered to deliver.
When you think about it, the average postal delivery customer probably only gets fewer than a dozen pieces of legitimate mail per month. Yet, every day, the postman is there hand sorting junk mail into each and every mailbox. Junk mail is time consuming at the delivery end and it is also time consuming because of sheer volume. As a result of all that junk, the carrier must restock his truck or mail sack more frequently. Again, more labor.
If America is serious about saving its mail system, it should demand that the US Postal Service return to its mandated charter of delivering correspondence and not junk advertisements. If those advertisers still want delivery of their junk, they -- not us -- should pay a heavier postal rate. Let's keep Saturdays and let's stop the insanity of the constant rate increases that exceed normal inflation and just seem to push the Post Office deeper into debt.
Besides the Saturday mail gambit, the USPS, as usual, plans to raise rates. And, every time they do, they lose the only money maker they have: First Class Mail. By raising rates, they continue to force the typical first class mailer to an alternative service: The Internet.
The Post Office's problems aren't Saturday mail or the need for higher rates. The real problem is the amount of labor they have hired and the amount of benefits that their labor force receives while they are working, as well as after retirement.
Despite all the efforts to automate, the productivity of the Post Office has barely increased over the years. The reason for this is that it is a labor behemoth that is primarily dedicated, these days for sure, to the delivery of junk mail. Because of junk mail, the postal workforce is forced to deliver mail to almost every customer on a daily basis. A situation that truly "only" benefits the postal workers union. On top of it, they charge less for labor intensive junk mail than for a simple first class letter -- the mail that they were originally chartered to deliver.
When you think about it, the average postal delivery customer probably only gets fewer than a dozen pieces of legitimate mail per month. Yet, every day, the postman is there hand sorting junk mail into each and every mailbox. Junk mail is time consuming at the delivery end and it is also time consuming because of sheer volume. As a result of all that junk, the carrier must restock his truck or mail sack more frequently. Again, more labor.
If America is serious about saving its mail system, it should demand that the US Postal Service return to its mandated charter of delivering correspondence and not junk advertisements. If those advertisers still want delivery of their junk, they -- not us -- should pay a heavier postal rate. Let's keep Saturdays and let's stop the insanity of the constant rate increases that exceed normal inflation and just seem to push the Post Office deeper into debt.
Saturday, March 6, 2010
Some Truths About Wellpoint's 39% Health Insurance Rate Increase in California
Prior to Obama's Health Care Summit, the Democrats were up in arms and were quick to repeat that health care reform was needed to keep bad health insurers from jacking insurance rates up by 39%; as was the case with Wellpoint Anthem Blue Cross in California. But, the 39% is a political exaggeration that is being used, not to control the health insurers, but, instead, takeover health care in America.
It is true that Wellpoint will raise "some" insurance premiums by 39%. But, the operative word is "some" and not all; as the Democrats would have you believe. As it is, they will raise premiums by an average of 25% which, too, is still very high; but, significantly lower than the exaggerated claim by the Democrats.
What people seem to forget is that health insurance is a highly regulated activity in all 50 states; with extremely liberal California being one of the most avid regulating entities. For that reason, you should know that Wellpoint didn't just raise their rates without getting prior approval from the State of California's Insurance Commission.
Since 2007 and the beginning of the recession, Wellpoint's profits had been falling. From 2007 to 2008, their profits fell nearly 40%. But, by the end of 2009, Wellpoint's profits were actually double that of 2007. Therefore, the need for a rate increase was being distorted by Wellpoint and, apparently, the California Insurance Commission fell for it; hook, line, and sinker.
In typical fashion, the Democrats love to use "extremes" as an example of why they should do something. But, in reality, all extremes are hardly the norm and the use of them is more theatrics than reality. Probably the worst case of using extremes was when Rep. Louise M. Slaughter told a story where a woman was forced to use her dead sister's dentures because she didn't have insurance (Click to See Full Story: HEALTH: Slaughter’s story goes national ). Of course, the reality is that we don't have a rash of people running around with the dead people's dentures in their mouths. More importantly, most health insurance doesn't cover dental. So, even if the Democrats do pass health care reform, that woman will still have to wear her sister's fake teeth.
For sure, Wellpoint's rate increase, by any measure, is totally out of line. However, under the current state-by-state regulation of health insurance providers, it is up to the State of California to come down hard on Wellpoint for distorting it's earnings numbers in an attempt to justify an outrageous rate increase. Also, the Democrat's attempt to portray this single incident as the "norm" in the industry is also out of line and irresponsible. They, too, should be punished by being thrown out of office on their ears in November's mid-term elections.
It is true that Wellpoint will raise "some" insurance premiums by 39%. But, the operative word is "some" and not all; as the Democrats would have you believe. As it is, they will raise premiums by an average of 25% which, too, is still very high; but, significantly lower than the exaggerated claim by the Democrats.
What people seem to forget is that health insurance is a highly regulated activity in all 50 states; with extremely liberal California being one of the most avid regulating entities. For that reason, you should know that Wellpoint didn't just raise their rates without getting prior approval from the State of California's Insurance Commission.
Since 2007 and the beginning of the recession, Wellpoint's profits had been falling. From 2007 to 2008, their profits fell nearly 40%. But, by the end of 2009, Wellpoint's profits were actually double that of 2007. Therefore, the need for a rate increase was being distorted by Wellpoint and, apparently, the California Insurance Commission fell for it; hook, line, and sinker.
In typical fashion, the Democrats love to use "extremes" as an example of why they should do something. But, in reality, all extremes are hardly the norm and the use of them is more theatrics than reality. Probably the worst case of using extremes was when Rep. Louise M. Slaughter told a story where a woman was forced to use her dead sister's dentures because she didn't have insurance (Click to See Full Story: HEALTH: Slaughter’s story goes national ). Of course, the reality is that we don't have a rash of people running around with the dead people's dentures in their mouths. More importantly, most health insurance doesn't cover dental. So, even if the Democrats do pass health care reform, that woman will still have to wear her sister's fake teeth.
For sure, Wellpoint's rate increase, by any measure, is totally out of line. However, under the current state-by-state regulation of health insurance providers, it is up to the State of California to come down hard on Wellpoint for distorting it's earnings numbers in an attempt to justify an outrageous rate increase. Also, the Democrat's attempt to portray this single incident as the "norm" in the industry is also out of line and irresponsible. They, too, should be punished by being thrown out of office on their ears in November's mid-term elections.
Friday, March 5, 2010
Another 9.7% Unemployment Rate Report?
According to the Bureau of Labor and Statistics, the unemployment rate held steady at 9.7% (Click to See Full Story: Payrolls fall by 36,000; jobless rate steady at 9.7%).
What is amazing is the fact that, each month, the unemployment rate either holds steady (as in this February) or falls (as was the case in January) despite job losses. This month's report for February showed that 36,000 more people became unemployed. In addition, the number of people who lost their jobs in January was adjusted upwards by another 35,000 unemployed workers from the previously reported number. Add to those numbers the fact that the Federal Government added 15,0000 Census workers whose jobs will go away in few months and, effectively, this report is saying that 84,000 "more" workers have lost their jobs in the last two months. Yet, the unemployment rate remains the same.
What's even more disturbing about the report is the fact that the discouraged workers -- those who have completely given up looking for work -- rose from 16.5% to 16.8%. The discouraged workers number is what the Bureau of Labor and Statistics has been using to keep the unemployment rate artificially low. As I have said before, this exclusion of people who have given up looking for work from the greater workforce just makes those workers who do have a job a greater piece of a smaller workforce; making the unemployment rate appear to be less.
Now, to my last comment and the effect of the weather on this report. Even, the Bureau of Labor and Statistics, who mentioned the weather as part of their report, said they couldn't quantify it. So, Obama's chief economic adviser, Larry Summers, was all wet to say that weather would distort the unemployment picture. Then, too, I was wrong in saying that the unemployment rate would be higher than 9.8%. I guess I was too naive in thinking that the number of discouraged workers would abate and the unemployment number would start to rise again.
While, the media headline number will show an unemployment situation that is improving by leveling off, the reality is less than optimistic if you look below the surface. Every week, the economy continues to report that more than 469,000 workers are joining unemployment lines; and, that is a reality that says thing are still bad, economically and mentally, in this country. We really won't start creating jobs until that number gets below 350,000 on a weekly basis. Until then, this economy will still be in the doldrums.
What is amazing is the fact that, each month, the unemployment rate either holds steady (as in this February) or falls (as was the case in January) despite job losses. This month's report for February showed that 36,000 more people became unemployed. In addition, the number of people who lost their jobs in January was adjusted upwards by another 35,000 unemployed workers from the previously reported number. Add to those numbers the fact that the Federal Government added 15,0000 Census workers whose jobs will go away in few months and, effectively, this report is saying that 84,000 "more" workers have lost their jobs in the last two months. Yet, the unemployment rate remains the same.
What's even more disturbing about the report is the fact that the discouraged workers -- those who have completely given up looking for work -- rose from 16.5% to 16.8%. The discouraged workers number is what the Bureau of Labor and Statistics has been using to keep the unemployment rate artificially low. As I have said before, this exclusion of people who have given up looking for work from the greater workforce just makes those workers who do have a job a greater piece of a smaller workforce; making the unemployment rate appear to be less.
Now, to my last comment and the effect of the weather on this report. Even, the Bureau of Labor and Statistics, who mentioned the weather as part of their report, said they couldn't quantify it. So, Obama's chief economic adviser, Larry Summers, was all wet to say that weather would distort the unemployment picture. Then, too, I was wrong in saying that the unemployment rate would be higher than 9.8%. I guess I was too naive in thinking that the number of discouraged workers would abate and the unemployment number would start to rise again.
While, the media headline number will show an unemployment situation that is improving by leveling off, the reality is less than optimistic if you look below the surface. Every week, the economy continues to report that more than 469,000 workers are joining unemployment lines; and, that is a reality that says thing are still bad, economically and mentally, in this country. We really won't start creating jobs until that number gets below 350,000 on a weekly basis. Until then, this economy will still be in the doldrums.
Thursday, March 4, 2010
The Problem With Doing With Less
During the Great Depression, people learned to be frugal and save money. Once the depression was over, they continued that frugality and spent less and saved more for many years to come.
Today, this country is laboring in a recession with high unemployment. Once again, Americans are saving more and spending less. Every day that this recession continues on, today's Americans, like those of the Great Depression era, are being ingrained with the same sense of being penny wise and probably won't return to their lavish spending habits of the past; even after the recession is well over.
At the same time, businesses are learning a similar lesson. They are learning how to spend less and how to make more products and deliver more services with less people. This morning, the nation's Productivity Report came out and business productivity increased by an astounding 6.9% from last year (Click to See Full Story from Reuters: Jobless claims fall, productivity surges). This is worrisome. Like those Americans who have learned to save and probably will continue to spend less after the recession is over, American businesses, too, are less likely to hire back as many workers when the good times return.
This is why, time and again, employment is the last to recover in any depression or long term recession. We blew a whole year with a failed stimulus package. In that year, businesses were forced to learn how to survive with less people and productivity soared. Because of the failed stimulus package and because of that lost year of recovery, business may have acquired productivity habits that could keep people unemployed for a very, very long time.
Today, this country is laboring in a recession with high unemployment. Once again, Americans are saving more and spending less. Every day that this recession continues on, today's Americans, like those of the Great Depression era, are being ingrained with the same sense of being penny wise and probably won't return to their lavish spending habits of the past; even after the recession is well over.
At the same time, businesses are learning a similar lesson. They are learning how to spend less and how to make more products and deliver more services with less people. This morning, the nation's Productivity Report came out and business productivity increased by an astounding 6.9% from last year (Click to See Full Story from Reuters: Jobless claims fall, productivity surges). This is worrisome. Like those Americans who have learned to save and probably will continue to spend less after the recession is over, American businesses, too, are less likely to hire back as many workers when the good times return.
This is why, time and again, employment is the last to recover in any depression or long term recession. We blew a whole year with a failed stimulus package. In that year, businesses were forced to learn how to survive with less people and productivity soared. Because of the failed stimulus package and because of that lost year of recovery, business may have acquired productivity habits that could keep people unemployed for a very, very long time.
Wednesday, March 3, 2010
Throwing Water On My Prediction
It didn't take long for my prediction of a 10% unemployment rate on Friday to have water thrown on it.
This morning -- as is the case every month -- Automatic Data Processing (ADP) corp released it's own pre-unemployment report statistics. In their report, they showed a vastly improved employment situation for February with the least amount of jobs being shed since April '08 (Click to See Full Story: Private sector sheds 20,000 jobs in February).
The reason that the ADP Report is so significant is because that company is one of the largest payroll processing companies in the country. As a result, they are able to easily tell if payroll headcounts have declined or risen from one week to another or, as in this case, from month-to-month.
Of course, if I'm wrong on the upcoming report, then so is Larry Summers in predicting that the February "snows" would distort the unemployment situation. I'm still betting that the unemployment rate will go up based on the rising number of jobless claims that have been reported in the last 7 weeks. Whether or not it goes up to 10% is anyone's guess, now, with ADP reporting such better numbers than expected.
Please note: I intentionally scheduled my blog to be posted at 1:00 in the morning (rather than my normal 6-ish posting time) "knowing" that the ADP report would be released just a few hours after that. I could have easily waited and, then, never published that entry after having seen a favorable number. However, I was determined to be truthful to my prediction and not play games with other influencing statistics that had yet to be released. As it is, my prediction is significantly weaker than it was yesterday when I originally wrote that posting.
This morning -- as is the case every month -- Automatic Data Processing (ADP) corp released it's own pre-unemployment report statistics. In their report, they showed a vastly improved employment situation for February with the least amount of jobs being shed since April '08 (Click to See Full Story: Private sector sheds 20,000 jobs in February).
The reason that the ADP Report is so significant is because that company is one of the largest payroll processing companies in the country. As a result, they are able to easily tell if payroll headcounts have declined or risen from one week to another or, as in this case, from month-to-month.
Of course, if I'm wrong on the upcoming report, then so is Larry Summers in predicting that the February "snows" would distort the unemployment situation. I'm still betting that the unemployment rate will go up based on the rising number of jobless claims that have been reported in the last 7 weeks. Whether or not it goes up to 10% is anyone's guess, now, with ADP reporting such better numbers than expected.
Please note: I intentionally scheduled my blog to be posted at 1:00 in the morning (rather than my normal 6-ish posting time) "knowing" that the ADP report would be released just a few hours after that. I could have easily waited and, then, never published that entry after having seen a favorable number. However, I was determined to be truthful to my prediction and not play games with other influencing statistics that had yet to be released. As it is, my prediction is significantly weaker than it was yesterday when I originally wrote that posting.
Summers On Winter
Yesterday, Larry Summers -- one of Obama's chief economists -- warned that the blizzards of 2010 will probably "distort" the unemployment numbers (Click to See Full Story: Winter storms to distort US jobless figures-Summers).
First, you had the Associated Press saying that last week's unexpected filings for unemployment insurance benefits (jobless claims) was a result of the recent storms (Click to See My Blog Entry: Another Bad Employment Number). Now, Obama's front man on economics is saying the same for the monthly unemployment numbers that are due to be released this Friday.
A couple of points..
First, my guess is that Friday's numbers are going to be really bad. Summers is acting like he doesn't know what the they will be; but, the agency that will be reporting them actually reports to Obama and I am quite sure everyone was already given a heads up. That's why Summers is suddenly out on the street trying to soften the blow by using the ridiculous "the weather did it" story. Last month, when the rate looked better, it wasChristina Romer out in front hyping the positive effects of the stimulus package in creating jobs. One thing you can always count on is that there are no poker faces in the Obama Administration when it comes to holding either good or bad cards.
Secondly, isn't it interesting that Summers is following the Associated Press' lead of last week on the winter weather affecting unemployment. It makes you wonder if the always-loving-Obama AP wasn't used as a "point man" in helping to get the public mindset primed to believe that weather -- as opposed to Obama's failed stimulus -- is responsible for bad unemployment. I know I'm sounding quite cynical but the Associated Press has almost always managed to make lemonade from every lemon that Obama hands this country.
The bottom line is that I will be surprised if Friday's unemployment numbers aren't bad. The consensus of economists is that the rate will jump from 9.7% to 9.8%. However, my guess is that we will go back up to 10%. Just my opinion.
First, you had the Associated Press saying that last week's unexpected filings for unemployment insurance benefits (jobless claims) was a result of the recent storms (Click to See My Blog Entry: Another Bad Employment Number). Now, Obama's front man on economics is saying the same for the monthly unemployment numbers that are due to be released this Friday.
A couple of points..
First, my guess is that Friday's numbers are going to be really bad. Summers is acting like he doesn't know what the they will be; but, the agency that will be reporting them actually reports to Obama and I am quite sure everyone was already given a heads up. That's why Summers is suddenly out on the street trying to soften the blow by using the ridiculous "the weather did it" story. Last month, when the rate looked better, it was
Secondly, isn't it interesting that Summers is following the Associated Press' lead of last week on the winter weather affecting unemployment. It makes you wonder if the always-loving-Obama AP wasn't used as a "point man" in helping to get the public mindset primed to believe that weather -- as opposed to Obama's failed stimulus -- is responsible for bad unemployment. I know I'm sounding quite cynical but the Associated Press has almost always managed to make lemonade from every lemon that Obama hands this country.
The bottom line is that I will be surprised if Friday's unemployment numbers aren't bad. The consensus of economists is that the rate will jump from 9.7% to 9.8%. However, my guess is that we will go back up to 10%. Just my opinion.
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