Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
CNBC TV, Bloomberg TV, Fox Business Channel, the Wall Street Journal and the New York Times Mislead Investors on Initial Claims for Unemployment Compensation
Raymond Richman, 1/22/2012
Are the media mentioned above deliberately deceiving investors as to the initial claims for unemployment compensation during the week of January 14, 2012? Secretary of Labor Hilda Solis’s Bureau of Labor Statistics reported that seasonally adjusted initial claims were 352,000, a decrease of 50,000 from the previous week’s revised figure of 402,000. This was the data reported by CNBC TV, Bloomberg TV, and Fox business channel on January 19, and by the Wall Street Journal and the New York Times and other print media on January 20.
The same report in which the BLS reported the seasonally adjusted data also reported the actual number of claims and the total number receiving unemployment compensation but the media did not report it. ...
Switching fleets to CNG is a no-brainer
Howard Richman, 1/19/2012
When I was in Boston for my youngest daughter's college graduation, I noticed that all of the within-airport buses were running on CNG (Compressed Natural Gas). They looked the same as other buses, except that they did not give off diesel smoke. Since CNG burns cleaner, their engines will probably last longer without requiring oil changes.
The switch of Boston Airport buses to CNG is part of a growing switch of fleets to CNG. Eventually, the increasing number of CNG filling stations will make it possible for households to switch to CNG. (Click here to see the GM pick-up truck that I plan to buy once a CNG filling station opens up in my area.)
The main drawbacks of CNG are: (1) filling stations are not readily available everywhere, and (2) the fuel tanks take up more room on the vehicle. Neither of these drawbacks applies to public buses. In a January 18 blog entry on the Pike Research website, Anissa Dehamna (In D.C., Running on Natural Gas) suggests that the switch-over can save the public transportation companies money, even if they have to build their own filling stations:...
Emmanuel Goldstein makes the case for our Scaled Tariff in his blog
Howard Richman, 1/17/2012
On December 14, Emmanuel Goldstein endorsed our scaled tariff in a blog commentary entitled "The case for a scaled tariff." His writing is clear and powerful.
He begins by discussing the American jobs crisis, not only the high unemployment, but also the growing income inequality and the stagnating median income. He points out that the solutions provided by the right (lower taxes and regulation) and the left ("a large federal entitlement for everyone") would not solve the problem.
He understands the classical economic argument against tariffs, but also understands that it does not apply in the United States today. He writes:
[A]ccording to classical economic theory, high tariffs only serve to protect inefficient import-competing industries while inviting retaliatory tariffs that hurt more efficient exporting industries.
The thing is, that theory only holds when trade is fairly balanced. The problem is that the US has a massive trade deficit with a number of developing countries (led by China) who limit their imports. So while we lose lots of jobs to outsourcing and imports from countries with lower labor costs, because of the trade deficit we gain a comparatively tiny number of jobs in exporting industries.
In his final paragraph he recommends our Scaled Tariff as a possible solution. He writes:...
Growing trade deficit quashing recovery -- again!
Howard Richman, 1/13/2012
The November data, just reported this morning by the Commerce Department, shows a rising overall trade deficit ($47.8 in November up from $43.3 in October). This worsening trade picture is spearheaded by declining net exports to China ($293.0 billion for the 12 months ending in November) as shown in the graph below:
In the summer of 2010 (the so-called "summer of recovery"), President Obama's massive stimulus would have produced an economic recovery, but it leaked abroad as growing trade deficits due to the adoption by many U.S. trading partners of China's mercantilist currency-manipulation strategy, as shown in the chart below:...
Investors Are Entitled to Better Reporting of Unemployment Insurance Claims
Raymond Richman, 1/12/2012
While no one ever went broke underestimating the intelligence of the American voter, why should the media underestimate the intelligence of the American investor by reciting statistically manipulated data rather than the original data when the latter is readily available. Readers of this blog were made aware months ago that the figures issued by the US Bureau of Labor Statistics of the number of initial claims for unemployment insurance made during the preceding week include one doctored set of data called “seasonally adjusted” (SA)and another set of unadjusted data (NSA), i.e., the actual number of claims. In its notice to subscribers of the availability of the Report for the week ending January 7, 2012, the BLS included this single paragraph:
"In the week ending January 7, the advance figure for seasonally adjusted initial claims was 399,000, an increase of 24,000 from the previous week's revised figure of 375,000. The 4-week moving average was 381,750, an increase of 7,750 from the previous week's revised average of 374,000."
Most reporters evidently did not go on to read the report itself. If they did they would have been amazed to find that the actual number of initial claims filed amounted to 642,381, 143,381 higher than the seasonally adjusted number. The difference is so great that it requires an explanation from the BLS. But none has been forthcoming. ...
Romney ad hits Obama for letting China counterfeit US intellectual property
Howard Richman, 1/9/2012
The other Republican candidates give Obama a pass on trade policy, because they plan to adopt the same policy if elected. Romney is making it an issue.
And this should be a huge issue! Since Obama took office, his trade policy has cost American workers 800,000 manufacturing jobs, not to mention the jobs lost that would have provided services to these productive workers. Then, in the summer of 2010, he let the growing U.S. trade deficit abort his economic recovery (see Obama Fiddles While Economy Falters). And the utter incompetence continues. For the past 21 consecutive months he has let the Chinese government grow its trade surplus in goods with the United States, as compared to the same month the previous year....
Jack Davis commentary may have given Romney the win in Iowa
Howard Richman, 1/8/2012
In a December 28 commentary in the Des Moines Register (Romney's business experience will help him take on China), Jack Davis, founder of I Squared R Elements and, like us, a balanced trade advocate, endorsed Governor Mitt Romney for president. Here is how he began:
“We can’t just sit back and let China run all over us. They’re stealing our jobs.”
That’s a direct quote from Mitt Romney, reported by the Wall Street Journal.
I couldn’t have said it better myself. My company, serving the manufacturing supply chain worldwide, has watched the number of manufacturers in this country steadily decrease. Product we used to ship to the Midwest we now send to the Far East.
Romney is the only major presidential candidate to tell it like it is when it comes to China’s grand theft of our jobs, our industries and our children’s future....
Davis especially lauded Romney for taking on more than just China's currency manipulations, he wrote:...
Long Term Predictions: CNG, manufacturing and house prices -- Listen to Howard on The American Entrepreneur with Ron Morris
Howard Richman, 1/7/2012
Follow the following link to download the MP3:
http://recordings.talkshoe.com/TC-139/TS-577450.mp3
Santorum emphasizes bringing back U.S. manufacturing in his Iowa victory speech
Howard Richman, 1/4/2012
In the Iowa caucus votes on Tuesday, the two major Republican presidential candidates who who have presented plans for bringing back American manufacturing, Santorum and Romney, tied for first place. Here is what Santorum said in his victory speech:
Real house prices will probably keep falling
Howard Richman, 12/31/2011
On December 29, S&P Case-Shiller published its October estimate of average house prices using sales and resales of the same houses to make their estimate. The latest data shows the continuing fall in real house prices since June 2010 shown in the graph below:
The latest data agrees with our prediction of how fast house prices would fall. Specifically, in the April 14, 2011, American Thinker (House Prices in Free Fall) we wrote:
If current trends continue, real house prices (house prices after subtracting inflation) will likely lose about a quarter of their real value over the next 4 years....
Payroll tax cut -- a new entitlement?
Raymond Richman, 12/22/2011
The cut in payroll taxes proposed for 2011 was greeted by economists as a powerful contribution to economic recovery. There is no evidence that it contributed to recovery at all in 2011. The federal Bureau of Economic Analysis reported that the U.S. Gross National Product, the total amount of goods and services produced in the U.S., increased at a rate of only 1.3 percent in the second quarter of 2011 and 1.8 percent in the third quarter. Economists of Deutshe Bank in 2000, predicted that the economy would grow at a rate of 3 percent by the 3rd quarter of 2011 without the 2011 tax cut and 4 percent with the tax cut. They were obvously using a clouded crystal ball. We are now warned by the same economists that failure to pass the tax cuit would cause a downturn in the economy, presumably of 1 percent. They were wrong then and are wrong now. We believe the economy would do quite well if we had a government that was not hostile to private enterprise.
There is also little evidence that any growth at all resulted from the Recovery Act of 2009 which allocated nearly $800 billion dollars to be spent between 2009 and 2011 inclusive. We predicted its failure to induce economic growth because the projected government spending was concentrated on transfers to states, school districts, and local governments to finance their budget deficits (most of them have constitutions which limit their borrowing), wasteful expenditures on environmental projects none of which would be undertaken without major federal and state subsidies, and wasteful subsidies to hybrid and electric vehicles and biofuels, etc. The President’s proposed $500 billion stimulus package for 2012 is characterized by similar defects as we pointed out in a recent article of this site.
The hostility of this regime to private enterprise is also evidenced by the President’s refusal to allow the building of a pipeline from Canada to the Gulf, his ban on drilling in the Gulf, and by the so-called Environmental Protection Agency’s rulings apparently intended to destroy the productive coal industry. Private investment was also affected negatively by increased business regulations. Given that the payroll tax reductions were expected to be temporary anyway, the first effective for only 2011 and the recent Senate-passed recent two-month extension to February 28, 2012, it is unlikely to promote private investment. To make it permanent would be at the expense of the Social Security System unless the payroll tax cut were made up by other taxes or borrowed funds that add to the national debt and have to be paid by taxpayers in the future. Borrowing to finance the tax cut has international economic repercussions because it weakens the dollar which is the standard for international trade. There are already calls for a new world standard by China, which is beginning to promote its yuan, by the IMF which is promoting its drawing rights, and by the Eurozone at least until the recent collapse of sovereign debt in the eurozone....
China raises their 25% tariff on American-made cars
Howard Richman, 12/15/2011
President Hu of China said this week that China is persuing a balanced trade policy. If you believe that one, I've got a bridge in Brooklyn that I want to sell you.
The graph above shows the US trade deficit with China in goods as reported by the Commerce Department on Friday. At $291.8 billion for the twelve months ending in October, it was the highest trade deficit for a 12 month period ever recorded with China.
Meanwhile, the Chinese government is upset that despite its already high 25% tariff upon American-made vehicles, a few American-made cars are still being purchased by Chinese consumers, so they just raised their tariff. The Guardian reports:...
Canada Abandons Kyoto Treaty. The U.S.( Not a Member!) Should Abandon It Also.
Raymond Richman, 12/14/2011
Canada withdrew as a party to the Kyoto treaty on December 12, 2011, a few days ago. It appears likely that other countries will soon follow. The U.S., which is not a party to the Kyoto treaty has been behaving under Clinton, Bush, and Obama as though it were. Although the Senate of the United States refused to approve becoming a party of the treaty, the U.S. government has been cooperating and acting as a full party to the treaty without authorization from the American people. It has been foolishly wasting billions of dollars—no, hundreds of billions—costing American workers hundreds of thousands of jobs and delaying the recovery of the U.S. economy from the recession. Moreover, the billions spent by the federal and state governments have had no effect on climate change. The money spent was completely wasted and succeeded only in reducing the living standards of American worker.
The actions taken under the treaty, the huge subsidies to inefficient wind and solar power, and biofuels have cost American workers hundreds of thousands of jobs and reduced their standards of living all in the name of a doubtful theory of man-made global warming (AGW). Dissenting scientists are convinced that global warming is a natural phenomenon and that man-made emissions play a very small role. But even if the theory were valid, the costs of the measures taken in its name were totally unjustified because they exceeded any possible benefits. And it is a fact, acknowledged by every responsible authority, that the expenditures have not contributed anything of benefit to humanity. The vast sums spent would have been better spent on weather problems we can do something about: hurricanes, tornadoes, cyclones, droughts, and a myriad of other climate problems needing our attention.
China calls Canada's decision 'preposterous'. It is only a coincidence that China is the leading exporter of solar panels and parts for windmills and is the world’s largest emitter of carbon gases. It was exempted by the Kyoto treaty from its obligations as an emerging country! Canadian Greenpeace joined China’s criticism and a spokesman said the country is protecting polluters instead of people. To the contrary, the windmills are noisy, unreliable, and kill migrating birds. They have to be shut down when the winds are too strong and do not generate enough electricity when there are no winds. So fossil fuel plants must be built to back them up. When not built on public lands, neighboring farmers have to be paid thousands of dollars to accept the noise. And they all need to be subsidized because they cannot compete on their own. They require huge subsidies from both the states and the federal government for any entrepreneur to undertake their construction. In addition, the federal government obliges the electric utilities to buy electricity from them and they are permitted to pass the higher cost on to consumers in the form of higher prices. Not only do they not contribute to economic growth but they hamper economic growth.
The Canadian environment minister, Peter Kent, said meeting the country's Kyoto treaty obligations would cost each family $1,600. In our view that is a gross understatement. But he is right that it would impose on Canadian workers and on Canadian companies an intolerable burden. More than that, economic studies have shown that Canada would benefit and the U.S. would suffer little harm from global warming.
Larry Bell in a Forbes article, August 23, 2011, entitled “The Alarming Cost Of Climate Change Hysteria” calculated some of the costs. These do not include the billions in subsidies granted by the states and the burdens borne by workers and consumers. He writes: “ The U.S. Government Accounting Office (GAO) can't figure out what benefits, if any, taxpayers are getting from the many billions of dollars spent each year on policies that are purportedly aimed at addressing climate change.” Neither can we. Here are some of the costs he reported :...
Romney's Theory about Why Companies and Countries Decline - We're published in today's American Thinker
Howard Richman, 12/13/2011
Follow the following link to read it:
http://www.americanthinker.com/2011/12/romneys_theory_about_why_companies_and_countries_decline.html
The Economists' Liberal Agenda, a review of: Roubini, Nouriel and Stephen Mihm, Crisis Economics: A Crash Course in the Future of Finance (NY: The Penguin Press, 2010.
Raymond Richman, 12/12/2011
One of Nouriel Roubini’s genuine claims to fame was his prediction on September 7, 2006 in a talk at the International Monetary Fund in Washington, D.C. that the nation’s economy would soon suffer a once-in-a-lifetime housing bust that would be followed inevitably by a deep recession. Roubini was not alone. Distinguished Yale Professor Robert Shiller, whose name appears in the authors’ acknowledgements, called the stock market bubble in 2000 and the housing bubble in 2005. Roubini has developed a reputation as a contrarian and I was looking forward with great anticipation to this book which I expected to be full of new and creative ideas.
Unfortuinately, I found the book very disappointing. There is very little in the book that does not represent conventional liberal ideas. He exhibits little faith in the free market, ignores the huge costs of environmental policies, has no solution to the jobs lost to outsourcing abroad. etc
In their book, the authors could not bring themselves to blame the government or the FED for the housing bubble although the FED’s failure to contain the bubble before it became such a threat does come in for criticism. But they downplay the role of the Community Reinvestment Act of 1977, one of whose administrators was the FED itself. The FED should have rejected the appointment to maintain its freedom of action vis-a-vis the banks. We agree that it was not the act itself that caused the bubble; it was the actors who implemented the act over the decades of the bubble. Pres. George H.W. Bush, for example, made it possible for ACORN and other leftist neighborhood organizations to “blackmail” the major banks by requiring an annual open meeting at which consumers could complain about the inadequacy of the banks response. ACORN and other leftist organizations succeeded in actually gaining contracts with the banks to initiate and process mortgages, in the process earning millions of dollars and strengthening their political power. And the left in Congress, Barney Frank, et. al., pressed Fannie Mae and Freddie Mac to buy mortgages made to unqualified borrowers. ...
Listen to Ray on the Ron Morris (The American Entrepreneur) Radio Show
Howard Richman, 12/9/2011
Ray was on Ron Morris' show on November 26. If you want to listen, click on the following link:
http://recordings.talkshoe.com/TC-139/TS-563192.mp3
Romney’s Theory about Why Companies and Countries Decline
Howard Richman, 12/6/2011
When Republican presidential candidate Gov. Mitt Romney was growing up, his father was rescuing American Motors Corporation by focusing upon a new type of car, the compact, putting his company’s resources into the Rambler. When his father took over, American Motors stock was selling for $5 per share. After the success of the Rambler, it rose to $95.
How did American Motors succeed when it was competing with General Motors, which had all the advantages that experience, size and wealth confer? In his 2010 book No Apologies, Romney writes:
When I was about ten, I asked my dad how he thought the company’s Rambler automobile could ever compete with General Motors; they were so far ahead that catching up appeared impossible. He said something that has since been widely attributed to him: “There is nothing as vulnerable as entrenched success.” (p. 34)
Romney is a student of why companies and countries go into decline. After graduate school, he went to work for the Boston Consulting Group where his boss did a study of the advantages of leadership:
His analysis demonstrated that a company with twice as much experience as another should enjoy a 20% to 30% cost advantage. That’s why, he concluded at the time, IBM should be more profitable than Burroughs, GM more than Chrysler, Owens-Illinois more than Anchor Hocking. Sears more than JCPenney, Goodyear more than Firestone, and Xerox more than AB Dick. His predictions were borne out, at least for a time, But one by one, great leading companies, like leading nations, found that their potential for advantage was not a guarantee for success. (p. 36)
According to Romney, companies and businesses decline for the same reasons. They ignore challenges and threats. They squander their advantages. Due to easy money, they stop doing the things which made them great in the first place. According to Romney, the following made America great and should be part of our revival:...
Required Reading, Michael Lind's "The Cost of Free Trade"
Raymond Richman, 12/4/2011
Every once in a while, we read an article or a commentary that we believe should be called to everyone’s attention. If you want to know why the U.S. went from being the world’s leading creditor to leading debtor in three decades, we are unable to recommend anything better that Michael Lind’s superb article in The American Prospect on December 1, 2011(www.prospect.org/article/cost-free-trade) entitled The Cost of Free Trade. Mr. Lind is policy director of the Economic Growth Program at the New America Foundation. He describes the politics of free trade and protectionism from the founding of the republic, how politicians in both the Democratic and Republican parties not only allowed but encouraged the deindustrialization of the U.S., and how all the presidents since WWII, Republican and Democrat, sacrificed American industry and American workers to achieve international political objectives and continue to do so to this day.
Every citizen should be aware of this history. But knowing how it all came about and developing policies to correct the situation requires more than one article. We disagree with the policies the author recommends. We believe we have proposed on this site the correct policies to balance our trade and restore our manufacturing sector. But his assessment of how and why we became the world’s leading debtor and how much it cost us is a pre-requisite for doing anything about it.
Lind argues that our international trade policies need to be reversed “both in general and in particular toward China.” We would include Japan and Germany as well. “Over the past two decades, leading U.S. manufacturers, both the venerable (like General Electric) and the new (like Apple), have offshored millions of jobs—by one recent estimate, 2.9 million—to China to take advantage of the cheap labor, generous state subsidies, and low currency valuation that are linchpins of China’s mercantilist development strategy.” In our view, China has been implementing a number of mercantilist (promoting exports and discouraging imports) policies in addition to those mentioned....
Republican presidential candidate Gov. Buddy Roemer would require balanced trade
Howard Richman,
In an interview with Ian Fletcher, Republican presidential candidate Gov. Buddy Roemer said that he would require balanced trade if he were elected president. Specifically, when asked what he would do to end America's trade deficits he said:
So we've got to consider things like a serious tariff to end our trade deficit. Not something I'd rush into blindly, and maybe there's other ways to skin this cat, but I wouldn't flinch at putting a 30 percent tariff on Chinese goods, or a tariff on imports across the board, with the whole world or the countries running a surplus with us. And the interesting thing, of course, is that once the other side knows that, knows that we'd do a tariff, maybe they learn real fast to be a bit more reasonable? But you've got to have a credible threat that you'd do it if you want that "Speak softly and carry a big stick" stuff to work.
When he said that he would consider imposing a tariff upon those countries which run trade surpluses with the United States, he was coming very close to our scaled tariff proposal. The tariffs in that proposal would only be imposed upon those countries which run trade surpluses with the United States. The rate of the tariff would be proportional to the trade surplus, giving those countries an incentive to take down their barriers to American products. Not only that, the scaled tariff would be WTO-legal (For more on this topic, see our article The Scaled Tariff: A Mechanism for Combating Mercantilism and Producing Balanced Trade, just published by the peer-reviewed Journal of International Law and Trade Policy.)
Requiring balanced trade would create about 5 million manufacturing jobs each producing about $100,000 of product. And those well-paid manufacturing workers would in-turn buy services from other Americans. The result would restart American jobs growth both in the short- and long-term. Gov. Roemer, who has an economics degree and an MBA from Harvard, is aware of these effects. In response to the question "How do you feel about the trade deficit?" he said:...
United Kingdom's Prince Phillip Calls Wind Farms "Useless and a Disgrace"
Raymond Richman, 11/27/2011
Jonathan Wynne-Jones writing in the Daily Telegraph 11/21/2011 reported that Prince Phillip, Duke of Edinburgh, “in a withering assault on the onshore wind turbine industry .. said the farms were useless and ‘a disgrace’. He also criticised the industry’s reliance on subsidies from electricity customers, claimed wind farms would ‘never work’ and accused people who support them of believing in a ‘fairy tale’.” He also noted that the windmills have to be switched off during strong winds because of complaints about their noise and they produce electricity at a higher cost than traditional energy sources. The writer adds, “The Duke’s views are politically charged, as they put him at odds with the Government’s policy significantly to increase the amount of electricity generated by wind turbines.”
It was a brave thing to say but every word is true. It was not the monarch who has no clothes according to the fable but a prince telling his subjects and the politicians who want their votes that they are naked of reason. We would go further, much further than Prince Phillip.
Proponents of the wind and solar farm subsidies argue that the reduction in carbon emissions, the social benefits, justifies the subsidies. But there is no evidence that convinces us that the spending of trillions of dollars world-wide has had any effect at all on world temperatures. They frighten us by alleging frightful things that will happen in the future, whenever that is, if emissions are not reduced substantially. But look at the benefits that were created by the melting of the glaciers historically, long before men even expelled carbon by breathing. The Great Lakes were created. Millions of acres of land in what was to become the U.S. and Canada became tillable. Billions of people are being nourished by the increased lands that became available. People are living longer and billions are fed, clothed, and housed by the prosperity generated by global warming in the past. For all practical purposes, real poverty has been eliminated in the U.S. and Canada and Europe. ...
Newt Gingrich on Trade
Howard Richman,
Ian Fletcher, author of Free Trade Doesn't Work: What Should Replace It and Why, had a piece in Friday's World Net Daily (Newt Gingrich: Free Trade Kool-Aid Drinker), in which he discussed Newt Gingrich's positions over the years on trade.
Gingrich, for example, supported President Clinton's decision to give China "Most Favored Nation" status and let China into the WTO without requiring any balance in America's trade relationship with China. He quotes the following Spring 2001 interview that Gingrich had with PBS:
INTERVIEWER: Was it a good thing to allow China to become an open trading partner?
NEWT GINGRICH: Absolutely … Trade increases the likelihood that you and they will engage in win-win activities. The difference between politics and trade is that in politics I may take something from you to give to somebody else, even though you don't want to lose it, so I raise your taxes. I charge you a fee. I confiscate your farm. In a free market you only do the things that make you happy in order for me to get the things that make me happy, and if we're not both happy the trade doesn't occur. So free markets dramatically lower the friction of human relationships and increase the relative pleasure and the relative success of human relationships. The more the Chinese and Americans [sit] down together to create more wealth, the happier they'll be with each other, the less likely we'll have conflict.
Gingrich did not understand Chinese mercantilism when he gave this interview in 2001. The goal of mercantilism is to delay consumption in the present in order to get increased consumption and power in the future. They give their trading partners increased consumption in the present followed by reduced consumption and power in the future. (For more on this topic, see our article The Scaled Tariff: A Mechanism for Combating Mercantilism and Producing Balanced Trade, just published by the peer-reviewed Journal of International Law and Trade Policy.)
Unfortunately, Gingrich still doesn't understand mercantilism. Fletcher points out:...
Bad Reporting of Initial Unemployment Insurance Claims Data Continues
Raymond Richman, 11/23/2011
Rick Santelli of CNBC, much as I admire his reporting on the bond markets, reported this morning, November 23, 2011, that seasonally adjusted initial unemployment insurance claims during the previous week amounted to 393,000 an increase of 2,000 from the previous week’s figure, hardly anything to get excited about. He was quoting from the weekly release by the US Department of Labor (Secretary Hilda Solis). The actual number of claims was included in the report but Santelli did not mention that it was not 393,000 but 437,049 an increase of 74,214 over the previous week, an alarming figure. Investors are not served by deficient reporting of economics data.
The week before Thanksgiving should have the same adjustments in seasonal factors from one year to the next so I decided to take a look at the 2010 figures. In the week ending Nov 20, 2010, the seasonally adjusted initial claims amounted to 410,000, a decrease of 29,000 from the previous week. The unadjusted figure was 462,813, an increase of 55,345. The unadjusted numbers of initial claims indicators a year ago were as favorable to economic growth prospects as this year’s data were as negative about the economy’s future prospects. While initial claims for unemployment compensation are only one factor is predicting the prospects of the economy, they should not be ignored by investors. They are an important indicator of the job market.
It seems to me that the actual figures should be reported by the media. ...
China to devote $1700 billion to new import-competition
Howard Richman, 11/21/2011
U.S. Secretary of Commerce John Bryson told reporters at the U.S.-China Joint Commission on Commerce and Trade (JCCT) earlier today (November 21) that China plans to expand its subsidies to what it considers to be the "strategic sectors" of its economy. At the same event, Chinese Vice-Premier Wang Qishan justified the expenditure. According to the Reuters story:
Chinese Vice-Premier Wang Qishan warned on Monday the global economy is in a grim state and the visiting U.S. commerce secretary said China would spend $1.7 trillion on strategic sectors as Beijing seeks to bolster waning growth.
Under WTO rules, developing countries are allowed to declare certain sectors of their economy to be "strategic sectors" and are allowed to charge high tariffs (about 25%) on imports into these sectors. Many developing countries have designated their auto industries as strategic sectors under WTO-rules, but China's definition of "strategic sectors" keeps expanding, as the Reuters article also notes:...
New Scaled Tariff Article Published
Jesse Richman, 11/15/2011
Our article The Scaled Tariff: A Mechanism for Combating Mercantilism and Producing Balanced Trade has just been published by the peer-reviewed Journal of International Law and Trade Policy.
The abstract is:
In this article we first discuss whether or not the modern form of mercantilism that contributes to the trade deficit of the United States and other countries is a self-destructive and thus self-correcting strategy. We argue that it is not self-correcting. Then we discuss mechanisms that a trade-deficit country could utilize in order to produce balanced trade. The mechanisms differ in six respects, with the Scaled Tariff excelling in each.
The entire article can be downloaded at the following website: http://www.esteyjournal.com/j_pdfs/richman12-2.pdf
Economics of Greek, Italian, and U.S. Sovereign Debt Defaults
Raymond Richman, 11/14/2011
The Greek government’s expected default on its bonds has had an enormous effect on the volatility of securities markets worldwide far beyond what should be expected from an anticipated default by a country of less than eleven million people with a GDP of only $300 billion. Italy is a different matter. Italy is a country of 61 million people and a GDP in 2010 of $2.1 trillion. Both suffer chronic budget and trade deficits that have made servicing their bonds increasingly difficult and both face the likelihood of default. The same is true of Portugal and Spain.
U.S. trade with Portugal, Greece, Italy and Spain was and continues to be relatively insignificant, although the U.S. did account for 5.8 percent of Italy’s exports in 2010. European banks hold billions of the sovereign debt of the above four countries. The write down of their debt has already caused the bankruptcy of a large French-Belgian bank, Dexia. U.S. banks hold insignificant amount of their debt and the U.S. economy is unlikely to experience anything resembling a crisis as a result of defaults in Europe.
The world has experienced dozens of defaults on sovereign debt during the past century:...
Wishful thinking expanding, but the trade data are flat
Howard Richman, 11/10/2011
If you rely upon CNBC for your economic analysis, you probably think that the trade deficit improved in September. However, according to the data released this morning by the Commerce Department, the changes in the trade deficit were negligible. According to the enthusiastic CNBC report:
The U.S. trade deficit unexpectedly shrank in September to its narrowest level since December on record-high exports, while the flow of imports from China slowed.
The seasonally adjusted trade deficit was $43.1 billion, down from a revised $44.9 billion in August, the Commerce Department said on Thursday. Analysts had expected the trade deficit to widen to $46 billion. U.S. exports rose 1.4 percent to a record-high $180.4 billion, while imports were $223.5 billion.
Imports from China, which are not seasonally adjusted, fell to $36.4 billion in September from $37.4 billion a month earlier, narrowing the trade deficit with that country to $28.1 billion.
In reality, the U.S. trade deficit with China set yet another 12-month record, worsening slightly from $289.0 billion for the 12 months ending in August to $289.2 billion for the 12 months ending in September, as shown in the chart below:
On the other hand the 12 month trade deficit with the world did improve slightly, moving from $538.3 billion for the 12 months ending in March to $537.4 billion for the 12 months ending in April, as shown in the graph below:...
Archive
Jan 2012
- CNBC TV, Bloomberg TV, Fox Business Channel, the Wall Street Journal and the New York Times Mislead Investors on Initial Claims for Unemployment Compensation
- Switching fleets to CNG is a no-brainer
- Emmanuel Goldstein makes the case for our Scaled Tariff in his blog
- Growing trade deficit quashing recovery -- again!
- Investors Are Entitled to Better Reporting of Unemployment Insurance Claims
- Romney ad hits Obama for letting China counterfeit US intellectual property
- Jack Davis commentary may have given Romney the win in Iowa
- Long Term Predictions: CNG, manufacturing and house prices -- Listen to Howard on The American Entrepreneur with Ron Morris
- Santorum emphasizes bringing back U.S. manufacturing in his Iowa victory speech
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
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