Christie N.J. Budget Proposal: I’ll Have One of What He’s Having

Gov. Chris Christie budget speech full text |

This a proposed budget; not the final budget. An over-optimistic proposal is not a capital sin but the main problem is that if this become the budget and the revenue does not meet the glossy expectations, of course the governor will rather sacrifice something else  than his pet-tax-cut experiment – not for any economical reason but for purely political and propagandistic purposes. And here are two further points:

First: The question if the governor is throwing this in to influence the VP selection in the event that Romney becomes the republican candidate in 2012. That would be the most unconscionable act but nothing surprises me. And anyway, I still believe it would be a futile sacrifice of New Jersey’s interests: I think that Romney – if he wins the nomination at all – most likely will choose a more conservative VP from the South or Midwest. A Northeastern ticket may not do very well in November considering that the bulk of the republican base is not in the Northeast.

Second: Every imponderable is against the prospect of a fast recovery: High consumer leverage, possible conflict with Iran, possible U.S. intervention in Syria (Obama may turn more hawkish if he sees re-election in doubt), China’s economy slowing down, political gridlock in Washington, more problems with the EU crisis  (Greece is not out of the woods and Portugal is beginning to show signs of distress again), New Jersey’s highest unemployment in the Northeast, wage stagnation, and the list goes on – all on the negative side.

The Straits of America – Nouriel Roubini – Project Syndicate.

I frankly can’t imagine how the administration arrived at this rosy forecast. As in “When Harry Met Sally”
I’ll have one of what he’s having.

Then, for the sake of argument, we must arrive at the best scenario – that everything goes well – and thus face the question: What does this tax cut accomplish – from the economic point of view? My answer is: Nothing, and the same goes for the democratic alternative. Both proposals are political; not economical measures. They are too small, would be applied in lieu of drastic structural reforms, and as they have been proposed are spread out – because the fat State of New Jersey is unable to do any better – so the input of cash in the economy is diluted to insignificance.

But we will see what comes out as final product at the end of June. By then, the French presidential election will be over and we may have a socialist government in France which may close the chapter of euro rescue. Or all hell may have broken lose in the Persian Gulf. And even if neither happens, we should be addressing our outstanding obligations before they compound beyond reach.


Re-surging Manufacturing Will Face Shortage of Skilled Workers

U.S. manufacturing sees shortage of skilled factory workers – The Washington Post.

This is a third and last of an education series.  First of all, I must clarify that there is no measurable manufacturing re-surgence in New Jersey but it appears to be happening in other states. Second, I must also emphasize that numerous employers prefer to entice experienced workers already employed to join their shops rather than train new, inexperienced workers – a very myopic policy in my opinion. Third comes the fact that automation has changed the nature of many manufacturing operations and the new employees must be computer literate and  must meet higher academic standards overall.

This is what has happened: As the manufacturing sector moved overseas, the actual industries were liquidated, and their old manual lathes and metal presses sold out. As labor and fuel costs entice some manufacturers to return to the United States, they equip their new shops with state of the art machinery which, more often than not, is computer controlled.

This is called is some disciplines “The Hamburg Factor” – from Hamburg when it was razed by allied bombing in WWII. When the city and its factories were rebuilt after the war, they installed state of the art machinery while the victors, in this case the United States and Britain, both of which had not seen such degree of destruction – the U.S. saw none – had their factories equipped with older, less efficient machinery. That effect was particularly damaging to Britain’s economy because it lacked the resources to modernize.

That effect will be playing here and the new industrial workers will have to know more. Dedicated schooling is needed.  And here enters the possibility of preparing some students – those less inclined to pursue an academic college-bound path – to follow this alternative.

It is unlikely that we will see any revival of manufacturing in New Jersey under the current political system. Some structural changes must happen first. But if elected and all the reforms I propose pass, there is a substantial likelihood that manufacturing will return to New Jersey. However that will only happen if the prospective employers see a readily available, qualified work force.

Thereof the importance of setting up a linkage between schools and current N.J. employers in order to create apprenticeships and enhance the scope and number of trade schools in the state.

Unfortunately, although I would like to expand and give more details on this plan, it is impossible because we can not foresee what the prevailing economic conditions will be in 2014 and 2015 . There could be a massive return of manufacturing to the U.S. or not. But the policy of New Jersey should be to plan ahead for an eventual return of significance and competing with other states for those businesses. To compete effectively, a number of conditions must be met and one very important is offering high quality workers.

2011 Ends in Flux

BBC News – Ireland faces new wave of emigration.

It is not only the Irish. There are also many young Spaniards, French, Portuguese, Italians, emigrating to Germany Australia, Canada, and the U.S. But the euro is dropping and that may mean that European exports will become cheaper. Italy’s bonds are selling at lower interest. There could be light at the end of the long eurozone tunnel.

Meanwhile, the U. S. economy continues to sputter. It is moving but painfully so.

Employment is a function of supply, which in turn is a function of demand, which in turn is a function of disposable, income, wages, wealth shaped in a reasonably low and widely-based  pyramid. Does anybody understand that concatenated relationship? It is of no use to have cheap credit if there is no demand.

Another War?

Who cares if Iran develops a nuclear weapon? That is why we have a nuclear deterrent, isn’t it? North Korea and Pakistan both have nukes and the chances of terrorists getting their hands on one bomb are at least as great in those countries as it would be in Iran.

Is it in the interests of the United States to enter another conflict? My answer is a resoundingly no and I urge the president not to sign the law black-listing the Iranian Central Bank. The ICB sells the Iranian oil. The law would essentially be  an embargo against Iran. President Obama has said he does not like the law but will sign it anyway… Why is he doing it then for?

Every war-monger I have seen would not be doing the fighting.

China is looking north. China does not invade anybody for oil. They simply buy it.

China is the largest trading nation and has the largest merchant fleet in the world.  While we develop the new super aircraft carrier, the Ford Class, they build the largest container ships.

The Arab Spring stretches into Winter:

Fighting continues in Syria, Egypt, Yemen. Tunisia and Libya sound like success stories although un islamist party won the first elections in Tunisia – not a surprise considering they were the spearhead of the resistance for many years.

And poor New Jersey, ends the year with the announcement – by the governor himself – that 2012 will be the year of education. It is ironic, Fidel Castro, a master of demagoguery, used to dedicate the years to some grand enterprise too, at least during the first decade of the revolution. Yes, we had an education year in Cuba too and if I remember well it was 1961.

So for New Jersey, 2012 will be the year of the dismantling of public education while the root factors in the failing districts are ignored. Why are they ignored? Because they are ideological taboos for this governor.

To educate more and better, we must have the children in an education-auspicious-setting for longer time; much longer time.

In the meantime, out New Jersey economy stumbles along at a languid pace, and a dentist in central New Jersey measures our decay in the teeth of his patients:

We are not only losing our jobs and our homes; we are losing our teeth too.

Mixed Messages on U.S. Economy – Who’s Right?

Economy ends tough 2011 on a surprising upswing –

After healthy growth in 2010, thanks to the temporary government stimulus, the economy plummeted in 2011 but is has been creeping up from the pit of the 1st quarter. Will the upward trend continue?

I am not an economist but I believe the basic elements required for strong growth are missing: We do not have a surge in exports and we do not have increases in wages and the standards of living which would de-leverage the American consumer and stimulate internal consumption.

Then if we add to that the dismal political atmosphere in Washington, we must come to the conclusion that growth will remain anemic throughout 2012.

New Jersey will continue to lag behind the nation due to its enormous political overhead and antiquated tax laws. The number of foreclosed homes and high property taxes will continue to hinder the revival of the housing market.

If New Jersey Fails To Create Healthcare Exchange by 2014, The U.S. May Do It For Us

Concern growing over deadlines for health- care exchanges – The Washington Post.

This could affect what people pay for healthcare and what businesses pay for the healthcare policies of their employees which in turn could affect employment, economic activity, state revenue; in short: Everything.

I have stated numerous times that, if elected governor of New Jersey in 2013, we will create a healthcare exchange with a powerful public option in it. Affordable healthcare available to all is one of the principal barometers  that measure quality of life. Quality of life is one of the factors which attract corporations to invest in a region.

Driving People to Accept the Unacceptable

Obama Says Righting U.S. Economy to Be ‘Long-Term Project’ for Presidents – Bloomberg.

It was early in 2002 when the Bush administration sold the idea yhat the “War On Terror” would last for generations. It came just in time to replace the extinct Cold War. Bush then told Americans that the best way to fight the war was shopping; there were no war bonds, or tax increases (in fact just the opposite), or rationing, or general conscription. There were two invasions, Afghanistan and Iraq, both carried out sufficiently under-strength so that both conflicts would protract for over a decade.

Was the latter arrogant folly or a Machiavellic calculation?

In the interim, the new war was used to suppress civil liberties for everyone. Under the pretext of no-racial-profiling, we all came under surveillance. Even today, when Al Qaeda is all beaten and reduced to a few old men, the U.S. Congress debates a new law which will allow the government to arrest anybody, anywhere, for any length of time, and without any declared cause or warrant. I presume that the legal principle of Habeas Corpus is passe.

A conservative Supreme Court will attest to the constitutionality of the new law. The constitution of the USSR sounded pretty similar to the U.S. constitution. The difference was that nobody cared about the USSR constitution. We are rapidly closing that gap.

Now president Obama is following Bush steps, with an adaptation to economics. He is already setting the expectations up for a prolonged period of socio-economic imbalance: “Reversing structural problems in our economy that have been building up for two decades, that was going to take time,” Obama said yesterday. It is not a coincidence that governor Christie has said exactly the same thing in New Jersey.

What is anybody doing to correct those structural problems? Nothing. In fact, it is more like quite the opposite.

I have already saved and put away this posting 4 times because it is depressing enough. Everybody is just kicking the can down the hill a bit, just to get through their terms, elections, re-elections, lives, etc.

Clarification on the Posting About the Central Banks Action Today

The U.S. Federal Reserve Board is not really giving  free money to Europe but making  more dollars available to lend at a lower interest so the other central banks borrow from the Feds and then in turn they can lend to their banks at a lower interest so the banks can also lend at a lower interest so the borrowers pay less interest and that is supposed to benefit businesses and consumers.

By the way, The Federal Reserve does not borrow money. The step taken today do not increase the deficit. The only one allowed to issue federal bonds – that is borrowing – is the U.S. Treasury Department. The Feds on the other hand, are independent from the federal government and they print money so when they do the money supply increases.

That could lead to inflation if the economy takes off but I think you’ll all agree with me that there no danger of a takeoff  for now – we are kind of stagnant. And the current crisis overrides any fear of inflation.

What the central banks are trying to prevent is a panic if the euro fails because then everybody puts their money under the mattress and in that case we have a Depression – with a D.

Thus I do support the move although, believe me, I am part of the 99% and closer to 99 than to the single digits.