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The U.S. economy continues to strengthen. Last week, we learned that 209,000 jobs were created in July. This increase represented the sixth consecutive monthly payroll gain of more than 200,000—the longest such stretch since 1997. Over the past 53 months, our private sector has produced nearly 10 million new jobs. The unemployment rate has fallen nearly four percentage points from its peak of 10 percent in October 2009, dipping to a six-year low of 6.1 percent in June… With real GDP having grown at a strong 4 percent pace in the second quarter, the economy is now 6.6 percent larger than it was before the Great Recession.

As we know, the economy is not great yet. One of the major reasons can be see by the lack of demand for large base items that comes from the lack of spare change among many people resettled into new jobs now paying less than their old jobs.

Take recreational boats… It does not make sense to increase production of boat building when those extra boats will not be sold because there are not enough people with enough money to buy them… There are plenty of people; just not enough with the sufficient funds they once had left over to pay for that boat on the lake…

boat sales

As you can see, despite the positive job data, we have a distance to go before we reach the esoteric heights where Americans are confident enough to spend money on items requiring additional manufacturing jobs to be created…

Essentially people need to be paid more so they can buy more.

So how do we go about that? Write wages in stone? That doesn’t work, it’s been tried. If wages are not marketable, then they become an entitlement. If I can’t sell myself to a higher bidder, then my personal expansion is out of the question. Likewise, I may be very productive, and that covers my coworkers who are not productive at all. If one gets paid for only showing up, over time, that is all some will do. So writing wages in stone as a policy is out.

Economic graphs made across history show us an interesting trend. Wages were flat though the 1800’s. 100 years of flat wages. When the income tax went into effect, the first rise began. When it was cut, the wages declined. Then with the New Deal, with its increased rates, they again soared. When income taxes reached near 100%, national unemployment was in the negatives because of the very high number of people working two jobs. Only when taxes were cut in ’88, did wage rates begin to fall, to rise when taxes were raised in ’92, climbing all the way until the W. Bush Tax Cuts went in, and they’ve been declining ever sense…

Why? It is debatable because it is a task so huge, that mining data is impossible. But we tracked. It happened. As is the usual human tendency, even when it is something we don’t understand such as patting Betty Grable’s pin up’s bottom every time you fly up to engage the enemy, each time we are successful, we keep doing it…

In theory, if you have money as an employer, which is about to be taxed and handed over to Uncle Sam, putting it into your business makes more sense than handing it over carte blanche. At least in your business, you still have control over it and can steer it in directions you desire. That includes paying ones people. “Hey, Boss? I’ve got a baby on the way, and my wife can’t work. I’ve done a lot for you, can you spare more money a week?” “Might as well,” he says, “I don’t get to keep any of it; Uncle Sam takes everything extra I make”..)…

Which explains why the economy only began to really grow, after January 2013, when the Bush tax cuts on the top .5 of one percent were pushed up to 40% from Bush’s 35% rate…. That extra 5% was the catalyst for the growing economy we see now.

Compare what would have happened if Obama had lost in 2012…..

Romney’s budget plan would lead to a net loss of 554,000 jobs by 2014

A budget revenue-neutral, would lead to a net loss of 1.9 million jobs over the next two years, largely because of deep spending cuts, the report found.

The weaker job growth and outright job losses under the Romney plan are driven by his proposal to cap government spending at 20 percent of gross domestic product (GDP), a move that implies very large cuts to overall spending.

And just to put a finger on how well this really is? Here is the growth outlook posted by economic think tanks leading up to the election of 2012. One must bear in mind they are probably going to be politically inflated considering when they were announced….

“The budget plans put forward by Barack Obama would lead to increased employment of about 1.1 million jobs in 2013 and 280,000 jobs in 2014, relative to current policy.”

Where as actually, we outdid that. 2.2 million new jobs in 2013…. and so far as of July 2014, this year has already grown…1.6 million brand new private sector jobs…

Those calculations, once poo-poohed by Republicans as being pie in the sky and based on myth, have simply been crushed…

Raising taxes on the top earners… works.
Tax Cuts Don’t (just ask Kansas, Wisconsin, Pennsylvania, Florida, and Tennessee.)

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Campaigns Cost… Do you know where your Senator is?  In regards to campaign donations?  Chris Coons is expected to run unopposed even thought “Craigslist” has a help wanted ad for someone to run against him…  lol.  Desperate times call for desperate measures…

So…. who owns Chris Coons?

First the overview.  Since 2009 he has raised $7,684,608; he has spent $4,831,183, and has on hand $2,853,426 as of the last report 12/31/13….

His top contributor is  Young, Conway et al…. at $113,550 from individuals, not a PAC.  The next four in decreasing order with their amounts are: Skadden, Arps et al.. (international lobbying group) $86,000; Comcast (Aha!) $59,200; Morris, Nichol’s et al. (all individual; no PAC) $50,800; WL Gore and Assoc. (as expected) $47,200….

When categorized by industry, his top five contributing industries are as follows…. Lawyers/Law Firms, $1,289,984;…Leadership PACs, $446,900;….Lobbyists, $331,202;……Securities & Investment, $264,300;….Pharmaceuticals/Health Products, $212,950…..  The very people from which he campaigned to protect us against….

Currently for this election cycle, his campaign funds are 50% higher than the average so far collected per Senator.

legend Individual Contributions About Size of Contributions
– Small Individual Contributions
– Large Individual Contributions
$4,899,587
$668,274 (9%)
$4,231,308 (55%)
(64%)
legend PAC Contributions $2,383,213 (31%)
legend Candidate self-financing $0 (0%)
legend Other $401,808 (5%)

His balance is two thirds individuals and one third PACs.  However his contributions from the 99% of Americans amount to only 6% of his total.

If he ever has to choose between your interests and those of his contributors, you have only 6% pull of his heartstrings; the one percent has the other 94%…..

And this was from one of the …. good ones…

First Buffet, now Gates.  Higher rates of taxation are necessary to rectify our society, even if limited for the short term….

It is nice when those who have much money, recognize the reality.

An Amazing View Of American Corporate Profits

Focus on the Green… Notice that during the worst Recession since the Great Depression, not once did after tax corporate profits dip below to where they were in the late ’90’s, when we were at our most successful economic expansion ever. Only one report even came close.

At one glance one can see what it wrong with the economy. Money that once kept the economy going, so well it ate our national debt, is now sucked out of our economy in the form of corporate profits.

Raising taxes on corporations back up to the levels of the nineties, when we had the greatest economic expansion in the history of the modern world, is how we create those missing jobs.

If one looks at the chart, all that money above the year 2002, should going back into the economy, not getting pulled out of it. If the amount of profit made everyone wealthy in the nineties, making the same amount, and making us all wealthier in the process, should be the direction we need to take….

Raising the tax rates on corporations, will not make them pay anymore in taxes. They are smart enough to know where to bury it and create jobs, to keep it untaxed.

As long as the growth begins… that would be fine with me…

Bottom line is in one glance, one can see exactly why our economy has been sick since the Bush Tax Cut went in effect in 2002.

Last nights meeting dominated the talk show circuit this morning.   Even Nancy got on (lol)… Where was Liz?

Roughly there were 200 people there against the power plant, and 4  for.  How do we know this?  After one speaker who was a plant from the boilermaker union asked it be approved,  one Tea Party type standing in the back row, shouted “YEAH” and clapped with two hands over his head.  It was ridiculous, Really.  His spouse clapped loudly,  she was sitting in the back row, and one other person midway up the right, clapped once or twice tepidly.

it really made the Tea Party type look bad… He looked a little like Dr. Singleton formerly of the CRI, except he wore a facial hair arrangement that went out of style after the Civil War.  Of course he was wearing a green shirt with a tie.  K-mart deluxe. He should have just clapped and no one would have noticed how few supporters in Newark were behind the power plant.  But his loud explosion drew everyone’s attention to him, and not that he minded, he probably like Ted Cruz thought playing the brave unflinching forward marching dork was one that would enhance his reputation.

Like Ted Cruz, he was wrong.

The ratio was 200 to 4.  If any politician is supporting the building of the power plant on the grounds it creates jobs, if that ratio corresponds, he can count on 2% of the vote.

The bottom line is this needs to be Newark’s decision.  No one else’s.  Newark has to live with the consequences of their decision.  Do they want a power plant next to them for 75 years?   Any agreement made now with these owners, will be switched as soon as the first outside buyer takes over.  What is promised now, will not last, We saw with the Bain Capital revelations last year….

The noise will be constant,  The pollution will be never ending,  The toxic chemicals brought in, will have to go somewhere…

The accurate number of jobs that will be created will be 23.  Roughly 7 on three separate shifts.  Of course those out of state personnel hired to build the plant may buy a McDonald’s sandwich or two, but is this really worth all the negatives…. ?

I have my own opinion.  But those who live there, need to decide.  (Why should I decide for everyone?  WTF am I?)….

Whatever Newark itself decides, needs to stick.

Economic theory, which is basically bullshit, is often coached in mathmatical terms to disguise the fact that it is pure bull.  However there are some very simple concepts which make very good common sense, and if one looks at that, instead of how to use current data to justify one’s action politically, one comes up with obvious surprising results.

Labor Demand < Labor Supply

That is why so many people are out of work.  Now here are the players.

  1. Workforce Market
  2. Corporations
  3. Commodity Market
  4. Foreign Investments
  5. Financial Markets
  6. Households
  7. Government

Government is our last option.

So our workforce if we compare the same counting today as was during the Great Depression, is running at 85% capacity.  Meaning 15% are unemployed.

Going down the list then,

Corporations are at their best ever. Corporate profit the highest percent of GDP ever.

Financial Markets also are at their best ever.  Dow Jones is at record highs.

Commodities are performing well, all indications are of a long term bull market.

Foreign Investment is at an all time high.  Never have we had this much outside money.

Real Household Income is declining.  We are headed downwards and are currently tied with 1994 as it rose out of the 91 recession, and prior to that, tied with 1984 as we were coming out of the 1982 Recession.

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Bottom line with government out our equation, we have the investment side of our economy all doing spectacularly well, and the household side going down.

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Proof enough that the free market system, or capitalist system does little for the good of any nation, just as little good it did prior to the legislation that became law after the crash of 1929 when Democrats swept the Federal Government.

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Government is the great equalizer.  For a fix, government needs to step up and side with We the people (or households), and as a referee would in any sporting event, make the playing field fair.

It can to it in either of two ways. It can impose necessary restrictions upon businesses which increase their demand for labor at the expense of their corporate profits.  For example, pass legislation to imprison CEO’s for malfeasance. Only then in order to keep their heads out of hot water, they hire environmentalists, social engineers, accountants, and other highly trained personnel whose prime function is to make sure the company is not doing anything shady.

It can also split the corporations into multiple smaller ones, each now requiring a new president, several new vice presidents, new HR’s, new financial planners, etc and with one fell swoop, increase the demand for labor.  This too, comes at the expense of corporate profits, which are currently huge primarily due to economies of scale.

And it can indirectly create demand by raising taxes.  When taxes go up on profit- earned, less profit gets earned by design; less “reported” profit, less money handed over in taxes.. Meaning the bulk of that money is now spent being reinvested into the business just so it can’t be taxed.  Building projects, higher wages, more R&D gets spent into the economy,  This too, comes at the expense of corporate profits on the books.

But that is why higher tax rates are actually the best alternative.  Higher tax rates tend to create less taxes, so government still needs to stay small.  The revenue collected is lower for the simple reason that if there was absolutely no tax, all the money earned would belong to me.  But if more of what I earn goes to you, then I will figure out a legal way to keep more for myself, and report less.  So whereas as tax rates go up, total tax revenue comes down;  the net effect is that more money goes into our economy thereby creating more demand.

The demand for labor then gradually rises to equal the supply and if it continues on its upward path, yes, yes, so there are more jobs than workers, then competition begins pushing the individual wage rates higher.

Which adds to the increased demand.

Using tax rates works best for now instead of the government interfering with day to day operations of all businesses, it actually creates an environment where each business can operate independently to its own best interest, and as they do, the demand for labor rises even more…..

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Anyone who argues for less government input into the economy is in the wrong century and can’t read economic figures that are plain as day.  So how does one interpret the cries for less regulations that are hurting corporate profits?  Easily. One realizes that sooner or later corporate profits have no choice but to fall, so our household income can increase. Loss of corporate profits is a “good thing”.

One should mention in the same breath, that labor’s percent of wages is deteriorating all across the world.  It is a world wide phenomenon.  The answer is simply that deference of all governments over the past decade and a quarter, has been given to those in charge of investment.

Policies favoring Investment must now take a back seat to those which put people back to work, which if done, raise the incomes of all of us… Even those of  the 1% , though not as much as they have been lately been accustomed.  But everyone still benefits.

Raising taxes is where we need to go.

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The tycoon wishes to remain anonymous because he is one of the most solid Republican monetary supporters.

But when asked how he reads this chart, here is his compelling answers….

“Aside from the obvious, that we have had 39 months of continuous private sector job growth, something not seen since the Clinton Era, I suppose the biggest question remains as to “why” the glitches. Why are there parts that drop down in the recovery and seem to go backwards?

Here, let’s just go through the time-line. Let’s start at the bottom of the inverted pyramid… The general climb out of the hole was due to TARP money which jump-started construction projects and the big infusions to banks which kept the economy from falling off the cliff into the pit of no return. It culminated with a big push of Census hiring in March of 2010. Most attention was on Obamacare at that time and with everyone’s lack of attention from the president, congress, and corporate, things languished for several months. Also one must remember that the Republicans looked like they would make big gains in 2010 and turn all Obama’s directives around. That would be very bad if it were so, and no one sank any money into investment until the election determined things.

Those who figured Obama would win, (Northeast and California) invested heavily in October only to be mistaken and with the Tea Party rattling their sabers upon their win, no one invested anything at all. We all thought the economy would crash and burn again. Up until the election we fully expected the Bush Tax Cuts to be eradicated, so our goals had been to move our funds over into areas where they would not be taxed, primarily investment into our own companies. As the tax laws became extended, many of us were not in the right zone at the right time to take advantage of the two year grace period that tends to better reward those investing in liquid assets as opposed to longer term job creating ones.

By 2011, in February we realized the Tea Party was nothing but a boil, a cyst, a sham, and things would hold current at a status quo. February, March, and April we made plans to go forward and grow. Then in May, the first debt crises occurred and shocked, we all pulled back. The Tea Party did not vote on its unceremonious raise and emergency measures were begun to be implemented by the Federal Treasury. In June, we rode our previous success fully betting that no one, not even the Tea Party would be foolish enough to destroy America’s credit rating for their own political gain. By July, we knew we were horribly wrong. We pulled back on every investment option we possibly could.

The Grand Design ($4 Trillion Budget Arrangement) never did come about. If it had we would have thrown everything into getting on the ground floor of the next boom. But by August 2011 we were confident enough to begin putting some of our extra money now trickling in over to self-investment and it continued straight through January 2012.

That was when Republicans began their Primary campaign in earnest and the Democrats were silent by having no primary or no opponent to which to reply; all bets were that the Democrats were very vulnerable. In fact, it looked like it could be a clean sweep of both Houses and the Executive. This would mean all new investment was futile. The Fed would raise interest rates according to all these Republicans against soft money, costing banks billions and overall investment would slow to a crawl. This slide lasted until the juxtaposition of the two party conventions back to back, which gave us all a clear idea of who would win. I mean who would you want behind the shoulder advising the policy of the next president:  Bill Clinton or Clint Eastwood? The fruits of our investments through Sept and Oct. paid off through November and December. Although we too had quite a scare after the first debate.

Then came the Sequester. It is hard to remember now that we really thought we were going off a cliff back then. Once settled, January’s hiring was alread done but February received the spike of top money shifting from taxable investments over to job producing non-taxable investments. The stock market jumped  as world money became content that America had finally finished with its infatuation that the top 1% carry the economy as a whole and should be taxed less, jumped back in. Problems in China and Europe made sure we were the world’s safest investment at the time.

Currently it appears that our entire economy has matured in 2013… if anyone looks at the chart, you see that the spike in February almost perfectly cancels out the dips in January and March, and that the average across all 6 months is very consistent, almost the same number.

In fact, we have plateaued. This is where our economy is right now, growing steadily with population growth and nothing more. There is nothing any more that anyone can do to increase private sector hiring.

Nothing will change I figure until the House of Representatives gets enough democrats and government hiring can begin anew.”

“Oh” I said, “so now you are a Democratic supporter?” lol.

“NEVER!” he responded. “However I’ll admit that Republicans are absolutely worthless when it comes to growing economies.”

And there, you have “the rest of the story….”

Ecuador just offered the US $23 million for human rights training.

The US will probably turn down that little bit of free money with considerable strings attached.

How different that is from the Markell administration which gutted and revamped our entire educational department with its pursuit of Common Core…   just for its offer of  free RTTT money..

Where there is little chance the US will accept this Ecuadorian offer,  Delaware was all over its equivalent when proffered for our schools.  Its mantra as if before a limbo cord, was “how low can we go…”

Which just the opposite of  Markel, makes the Christina School District a bit more principled than the “Education Governor”,  when it comes to accepting free money with large hemp-wound ropes attached.

On July 1st the interest rate on student loans rises  from 3.4 percent to 6.8 percent of this year.

One year ago, the trillion dollar mark was crossed for the amount owed and required to be paid back for a student’s education..

3.4 to a 6.8 is a doubling… Just on a gross scale, off a Trillion dollars, the interest per year is jumping from $34 billion to $68 billion.   On a $16 trillion GDP, that is nothing.  But when you look at other figures, that jump has shocking consequences for the world-wide banking system.

The post graduate boom is usually what drives our economy.  New cars, New electronics, New houses.  Dining out. Spontaneous purchases.  A study by the New York Federal Reserve shows that graduates are living austerely to pay of their gigantic debt, most of which are more costly than the mortgages owned by middle America.  Asking someone to buy a house while paying off their educational loan, is equivalent to asking then to buy a second house while still paying off their first,  How rich does one have to be in order to do that? What amount of yearly income is required to do that? +$125,000? Does this mean there will be no net new buyers of houses for 20 years?  Anyways, after July 1st, there will be $34 billion less with which to purchase houses.

The Department of Education predicts a default rate of 13.4%… Off a trillion that means $130.4 billion dollars will be the amount defaulted. $130.4 billion. 

So adding the two together, the upcoming shock on our economy will now cost $198 billion. Poof, right out the door, $198 billion. Gone from our economy. 

Tran Union a credit reporting agency says the data in it’s files show that almost half, or 43.5% of student debt is in deferment.  In dollars off that trillion total, that would amount to $435 billion dollars of debt not being paid in a timely fashion.

Particular concern must be paid here, because more than half of college graduates under the age of 25 are either unemployed or underemployed — the highest rate in 11 years, according to an analysis of government data.

Putting the two together, we have half of those required to pay $435 billion defaulted, who are either under or unemployed.

As we saw with mortgages, when people can’t pay, there is no notice, They just walk away.

A nation depends upon its newest generation to lead them forward with energy and enthusiasm, long after the previous ones are tired and ready for rest.  This generation is coming out on the playing field, weighed down like knights of old, in ancient armor….  The upcoming football game does not look promising…  Their best 100 yard dash is just under 10 minutes.

Not likely one would say today.  But, hear me out.  This session the corporate financial targets that got hit, all missed their revenue.  That means people did not spend as was planned, but some fat on the corporate skeleton could be cut to compensate.  That fat is not there for the next report…

The economy has taken a shock from $85 billion sequestered despite only $10 billion having been applied already.  The $75 billion cuts are coming.

Even though the US market is the only safe place to put ones money today, the rest of the world is as unsafe as ever.  Since there is no where else to go with one’s money if he US market dives,… panic will begin very quickly….

The possibility is rather good for a 30-50% correction in the US Stock market.  I would still stay out and remain in Treasuries if I were you….