The Shrinking New Jersey

Real gross domestic product (GDP) increased in 43 states and the District of Columbia in 2011, according to new statistics released yesterday by the U.S. Bureau of Economic Analysis (BEA). New Jersey moved in the opposite direction.

New Jersey was among the few states which actually experienced a GDP contraction: -0.5% and that explains why government revenue is also down. New Jersey’s unemployment rate was 9.1 percent in April, a full percentage point above the national rate.

New Jersey is now the 47th state out of 50, measuring from best to worst, in economic performance. Only Wyoming, Mississippi, and Alabama are worse off. We are the brakes on the national economic recovery.

http://www.bea.gov/newsreleases/regional/gdp_state/2012/pdf/gsp0612.pdf

Governor Christie will go on pushing his fiscally unsustainable tax cut which will have no economic effect because a single such measure does not stimulate aggregate demand – the missing link in our economy.

But blaming the policies of Governor Christie alone for the economic decline is a gross simplification of the facts. Unfortunately, almost everyone, including the media, prefer simplifications. Candidate A vs Candidate B; or Raise Taxes vs Cut Taxes. That is why single issues become so disproportionally influential in elections: Abortion, Guns, Gay Marriage, etc .

The reality is that in New Jersey, regardless of what candidate we elect, the roots of the problems are in the political system. And attacking the system is not safe. I have already been harassed for what I am doing and this is just the beginning. We are not even in our election year yet.

A candidate fails New Jersey the moment he/she shuns to even attempt to revamp that system. I mean really doing change; not just propaganda and token tinkering.

What is the political system? The two dominant political bureaucracies, Home Rule, political patronage, political money, the tax code, the laws that skew the political contest in favor of the two parasitic parties, and more.

But it is much easier to focus on one face than on a myriad of political and economic reforms.

As I have said many times: It is not so much what Governor Christie has done. It is what he has not done. His sin is for the most part in omission.

If elected governor, my administration will be made up of technocrats. The mission will be to put New Jersey on a path of economic growth and social balance. Nothing will be untouchable.

In a presidential election year, a gubernatorial candidate for the year after is a lone wolf. However if we look at the two presidential candidates, Obama and Romney, there are differences in positions but when we come to the actual actions, they do not look as distinct. Obama appears as the lesser of two evils. Telling of our political drought is the fact that many people vote for one candidate just to keep the other one out of office.

New Jersey shall have a more diverse menu in November 2013.

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Moody’s Assigns Negative to New Jersey; Questions “Comeback”

The rating agency forecast that New Jersey is falling behind the nation and revenue will remain below expectations. Since government revenue is almost a direct function of GDP, the forecast indicates that New Jersey’s economic growth will lag behind the rest of the country for the next 14 months. Job creation is also determined by economic growth.

This is an implicit indictment of the economic policies – or lack of – of the Christie administration and his democrat accomplices in the N.J. Legislature.

Add Moody’s to those questioning Christie’s ‘Jersey Comeback’ : page all – NorthJersey.com.

Governor Christie launched a propaganda blitz with his “New Jersey Comeback” at the start of the year, perhaps aiming more to a national audience than to New Jersey itself. However, it has backfired in the face of the numbers. In fact, New Jersey is a drag on the national economy.

The evidence is symptomatic of a monumental philosophical failure.

At the roots of our difficulties is the reluctance of both dominant parties to engage in the drastic structural reforms needed. An overhaul of the tax code, increasing the minimum wage, elimination of the layer of county governments, and a constitutional amendment abolishing certain aspects of home rule are at the core of those reforms. Already in the third year of his administration, the governor is short in time to begin implementing the changes needed, even if he wanted to.

In the end, the future of New Jersey will be in the hands of the voters in November 2013: You will be deciding your own future and your children’s.

Contrary to National Trend, Curve of Foreclosures in New Jersey Points Up

“New Jersey officials estimate 50,000 to 100,000 previous cases are still pending.”

NJ Spotlight | Foreclosures in New Jersey in a Troublesome State of Flux.

Of course there are a number of reasons for such a sorry condition. However, two causes that stand out are:

1. Our huge property taxes which in many instances amount to the equivalent of second mortgages and:

2: The New Jersey economy is more stagnant than the national economy – in spite of the “New Jersey Comeback” fairy tale.

The potential consequences of this housing trend in our state are to be measured in both human and fiscal terms. In the first, we will have more homeless families, more broken homes, more children living in poverty, etc.

In the fiscal area, as more homes are foreclosed, property values tend to decrease, bringing more homeowners to give up on their de-valued homes, when their pre-recession mortgages sink deeper under water.

To a degree, the approaching wave of foreclosures could have a snowball effect on the economy of New Jersey. That is foreclosures trigger more foreclosures and additional economic strains: Less consumption, more pressure on social services, less tax revenue, etc

With housing one of the main residual industries in the state, this phenomenon will stall any significant growth that other niches of the economy may achieve.

Abolishing property taxes for primary residences and some commercial property in New Jersey, as I propose (please refer to Pages for details) is almost a matter of survival for our state. Zero property tax would have a lifting effect on property values almost immediately.

I am not proposing such drastic reforms as I have been doing for 2 years because I want to make a mess of things: They are desperately needed. That is the only reason.

Did Christie’s “New Jersey Comeback” Ever Occur – Outside of His Mind?

New Jersey lost 11600 private sector jobs and added 3000 public positions in March. That is the opposite of the image Christie has been bragging about ad nauseam at every town-hall meeting and radio show since January this year. The March figures, even though reflecting a single month, are egg on his face.

Loss of 8,600 NJ jobs clouds economic picture : page all – NorthJersey.com.

Christie’s office referred questions on the job figures to New Jersey’s top economist at the Treasury Department, Charles Steindel, who admitted that there is a definite correlation between between employment and revenue. He did not say it but there are other correlations – sometimes I wonder if they understand them – such as that of employment and economic growth and with aggregate demand. Some are functions of the others.

Steindel said it is a long term relationship, and one month of bad job figures is not enough to redraw the state’s budgeting plan. Again, I must add, one month of good figures is no reason to open the champagne either.

“Data is volatile from month to month, it jumps up and down,” Steindel went on. “I think it’s a little hard to pin too much on the fact that you had a month where things seemed to go in the opposite direction.”

Mr. Steindel is assuming that the natural direction is forward. But there is no natural direction. The economy will move according to a given set of conditions. Those conditions, in New Jersey, do not favor growth. Steindel’s sentence should be corrected and say that we really do not know where the state economy is heading and should include the word stagnation. 

Although an economic failure of the Christie administration would facilitate my election, I do wish the New Jersey economy to improve. The problem is that I do not see real basis for optimism on such an expansion: Not with the current tax and government structures in New Jersey.

The stubbornly high unemployment rate – remains at 9% – betrays the governor’s portrayal of the state under his stewardship as an example of how to rebound the economy.

Christie is a lawyer who has decided to micromanage both education and the economy in New Jersey: That is a recipe for disaster because he is not qualified to do either. But he is not alone. Democrats are not far behind. In fact, he could not do many of the things he is doing without the complicity of at least some of the democrats in the NJ Legislature.

The loss of jobs is always deplorable. Even more deplorable is the rigidity and selfishness of the two political parties which rather see the state decay that give up their power and perks. We are governed by leeches. Significant structural changes in government and the tax system are desperately needed.

My entire economic revival program rests on the premise of increasing aggregate demand in New Jersey. Demand generates supply and increasing supply creates both jobs and wealth.

How the ARC Cancellation Affects Atlantic City

Actions always have consequences. The ARC cancellation abounds in them. In my article before this one I described the development of a fast train and rail line to Atlantic City and Cape May. It would be via Penn Station-Hoboken-Newark-Red Bank-Atlantic City-Cape May and it could change the future of Atlantic City and southeastern New Jersey for the better.

However, there is a problem which I did not mention yesterday: The rail tubes under the Hudson may not have the capacity to admit those new express trains to southern New Jersey. That could rule out Penn Station as the starting point. The Hoboken station, I believe, is simply a transit station and does not have a size for becoming the starting point of a new line.

That makes Cape May the next best candidate for a central rail station. But a rail line  serving the entire length of the New Jersey shore should have a very accessible point for residents of the state on start. Cape May is too south. Both Hoboken and Newark  are too east and lack sufficient parking. For most residents of Northern New Jersey trying to reach the shore, the Garden State Parkway would still be the means of choice.

Enter Xanadu: The mall that nobody cares for with the exception of governor Christie.

It is centrally located. It has abundant parking. The building, although odd-looking, is already there. Connecting it to the NJT Bergen County Line should be short work (about 3 miles) and from there on it would follow the already existing track through Red Bank when it would deviate onto its own new track bordering the GSP. The express would be reduced to convoy speed on shared tracks but once it left Red Bank I figure it could reach AC in less than one hour.

I as an example, living in Hopatcong, NW New Jersey, could hop in my car, drive 45 minutes to Xanadu, park there, catch the train and be in Cape May in about 1 hour and 30 minutes. NYC residents could catch that train at Hoboken but in their case it would involve changing trains.

And Xanadu could still have its mall. But this time it would have many more visitors.

Plans like this are what developing the state means. It makes the state more desirable to live in. And that includes investors and entrepreneurs. It also means jobs and more demand for goods and services.

Greek Debt Deal Passes: Europe Must Focus on Growth – U.S. Adds 227,000 Jobs – Governor Christie Throws Environment Under the Bus

BBC News – Greek debt swap ‘success’ welcomed by European leaders.

Probably not many Americans realise how much was at stake here and although the respite gained by Greece is temporary and comes at a cost, it provides time for Europe to energize the euro zone economies.

The first step toward that goal, in my opinion, is to devaluate the common currency, probably to reach parity with the US dollar. This would make imports more expensive and euro-zone exports cheaper abroad. Tourism, one of the industries where Greece can show rapid growth, would greatly benefit from a cheaper €. The Greek economy contracted 7.5% in the last 3 months of 2011 under the weight of austerity measures.

One other factor is to control the price of oil and Europe must make an effort in muffling the war drums in the Middle East. The E.U must take the high ground of reason and diplomacy. High oil prices will make growth more difficult for everyone but the weaker economies will suffer the most.

The prudence in foreign policy that I advocate above applies to the United States as well. We should not be playing firemen elsewhere when our house is smoldering.

The Greek swap deal was welcomed by numerous private sector lenders to Greece, who said it paved the way for agreement on the EU bailout.

“The very strong and positive result provides a major opportunity now for Greece to move ahead with its economic reform program, while strengthening the  €  area’s ability to create an economic environment of stability and growth,” said Josef Ackermann, chairman of the International Institute of Finance, which represents private lenders.

U.S. Extends Its Run of Strong Job Growth Another Month – NYTimes.com.

It is the third consecutive month above 200,000 nationally. Unemployment however remains at 8.3. Nonetheless, the absence of bad news is good news. If this continues, it will help President Obama in November.

Christie administration adopts rule allowing businesses to bypass N.J. environmental regulations | NJ.com.

This was expected because the governor had proposed it in 2011. New Jersey is the most polluted state in the nation, with the possible exception of Louisiana. It is an act of desperation of an administration bent on creating some economic growth on faulty foundations. Growth that comes at the expense of the environment is not sustainable but what does he care? The governor is constantly flirting with higher offices which would involve moving to Maryland or Virginia. It really does not matter (to him) if he leaves a mess behind.

If elected governor in 2013, my policies will aim at sustainable growth with most consideration for maintaining the environmental integrity of New Jersey. Will I be an environmental zealot? Certainly not. But I will not exchange public health and quality of life for the mighty dollar either.

Wholesale U.S. prices rise more than forecast

Wholesale U.S. Prices Rise More Than Forecast – Bloomberg.

Inflation without growth is the angry elephant in a house full of china. If the increases are passed on to consumers, the higher prices could have a chilling effect on consumption.

Food went up 0.6% in September.

Slower growth in China and Europe could limit further increases in the price of commodities.