Monday, September 23, 2013

Osama bin Laden

May 2, 2011, the US killed Osama bin Laden, President Obama's top priority. The US has a tendency to believe that one leader is responsible and if he can be killed, the terrorist threats would be eliminated.  Instead bin Laden's assassination created  even more hatred and zeal in terrorists groups and now there are dozens all around the world.  

Thursday, September 19, 2013

Minimum Wage

Your hamburgers are too cheap.  Workers in fast-food restaurants are not paid a living wage.  The minimum wage should be increased to at least $10.  Opponents say that a higher minimum wage will result in higher priced burgers, etc.  Well, isn't that the point? 

Wednesday, September 18, 2013

Repo Man

Money market mutual funds, which many regard as safe investments, lend cash to banks, brokerage firms and asset managers for one day at a time.  The next day by mutual consent, the loans are turned over.  The "repo market" is a huge $4.6 trillion.  Everything is cool until it's not.  Using short term borrowing to cover long term investments such as mortgages is inherently vulnerable to changes in expectations.  If one party becomes nervous and does not renew, the market collapses as it did for Lehman and Bear Sterns five years ago.
Sorry, but markets are not automatic and wonderful.

(For background see NYT, Sept. 13, 2013.


I think Thomas Freidman has it right.
"Many Americans also understood that when it came to our record in the Arab/Muslim world since 9/11, we were 0 for 3. Afghanistan seems headed for failure; whatever happens in Iraq, it was overpaid for; and Libya saw a tyrant replaced by tribal wars. I also think a lot of people look at the rebels in Syria and hear too few people who sound like Nelson Mandela — that is, people fighting for the right to be equal citizens, not just for the triumph of their sect or Shariah."

Saturday, September 14, 2013

Accountants must act in public interest in Britain.

A British court ruled that accountants must act in the public interest rather than helping merger raiders from pocketing a large part of the assets of firms going bankrupt. NYT Sept. 12, 2013
Sometimes good sense rules.

Monday, September 9, 2013


Johnny Cash sings a song in which he says “St. Peter don’t you call me, ‘cause I can’t go, I owe my soul to the company store.”  This thought now dominates popular thinking .  But why is it that jobs depend on capitalists any more than returns to capital depend on labor?  Did you ever try to build something with only dollar bills?  Confusion on this point leads to local governments subsidizing companies to locate in their jurisdictions to the extent that taxpayers give back much of their wages in taxes. And then they bitch about taxes.
It leads to Congressional representatives objecting to reduced military spending and base closing because it reduces local employment.  But the money would be spent for other goods providing equal employment.  Instead of subsidizing military production, we should help employers and employees by sharing the costs of transition.  Contrary to much economic thinking, reallocation of labor and capital is not costless and if it is not shared, political action freezes assets in old lines of production.

Sunday, September 1, 2013


Congressional Gridlock is not so bad.  There would be none if Romney were President with a Republican Congress.  But can you imagine the havoc that would create?