Employment Profile: 2005 vs 2010

We have compared the employment profiles for 2005 and 2010 and they tell a somewhat frightening tale.

First let us look at the break outs in 2005 and 2010. We do that below:



















This is 2005. Watch what happens to manufacturing and construction and Government and Health and Education.

Now to 2010:



















We now line these up side by side by category as below:



















This starts to tell the tale. Now we finally show the percent difference between 2010 and 2005 by category as below:



















What this tells is manufacturing and construction, the value creation jobs, are being lost at a great rate and the jobs sucking out money from the economy, government and health and education, are growing.

In 1948 when I was in the first grade we had one teacher and 45 students. In high school we had the same ratio. Now we have two teachers and at most a dozen students. Has quality changed? Not at all, it has decreased. In health care we now have so much overhead due to Government regs and it will just explode under the new programs. In education we have more deans and associate and assistant deans that the cost of higher ed is also exploding.

The problem and the solution is simple. Cut these useless overhead items. If you were on the Board of a start up with these ratios you would fire the management immediately. You cannot continue this bleeding!

Global Warming and Daylilies

The genus Hemerocallis is also known as the daylily. It is interesting in that the twelve species have varying bloom dates, the day of the first bloom from the first day of the year of the bloom. Thus a bloom data of 130 means 130 days from January 1 of the year of the bloom.

Flowers bloom depending on how the year before was as well as the period just before the bloom. The change in the bloom date for a plant fixed in space over time reflects the conditions of temperature, water, and other factors. It becomes a sentinel for global warming as we shall show.

Now let us first show the temperature, average, and rainfall, total, for our area for the past twenty years.



















We see little global warming but considerable change in total rainfall. Why we really do not know. But rainfall did change considerably.

Now we can show Bloom Date, BD as follows:



















Namely we have Bloom Date dependent on average temperature and total rainfall as an example. From the BD we can determine the global warming factor, namely the change in T the average temperature as a function of time as well as global wetting, the change in W as a function of time. In our case there problem is wetting and not warming.

But before continuing let us look at 20 years worth of data we have collected for the early four species, H minor, flava, dumortierii, middendorfii. They are below:









































































We looked at this raw data, and unlike the Brits we keep data and will share it if requested, and we find a trend of clear shortening of the bloom date. Now that may mean global warming or global wetting or both.

We then use the temperature and rainfall data and then conclude that there was global wetting. That was unquestioned. We frankly were surprised. There was no warming effect observed although at first glance one would have thought so.

Yet this also applies to the tree ring data which follows the same path botanically. One could infer warming when in reality it may be wetting. One thus must be careful to first understand the underlying plant physiology before blindly applying data.

MIT Prof At It Again

Prof Gruber at MIT says today in NEJM:

In summary, analysis by both the Congressional Budget Office and the CMS actuary show that the ACA will substantially reduce the federal deficit, only slightly increase national medical spending (despite an enormous expansion in insurance coverage), begin to reduce the growth rate of medical spending, and introduce various new initiatives that may lead to more fundamental reductions in the long-term rate of health care cost growth. The ACA will not solve our health care cost problems, but it is a historic and cost-effective step in the right direction.

At the same time the CBO states:

CBO estimates that total authorized costs in the first two categories probably exceed $115 billion over the 2010-2019 period, as detailed below.1 We do not have an estimate of the potential costs of authorizations in the third category.

The administrative and other costs for federal agencies to implement the act’s provisions will be funded through the appropriations process; sufficient discretionary funding will be essential to implement this legislation in the time frame called for. Major costs for such implementation activities will include:

1. Costs to the Internal Revenue Service (IRS) of implementing the eligibility determination, documentation, and verification processes for premium and costsharing credits. CBO expects that those costs will probably total between $5 billion and $10 billion over 10 years.

2. Costs to HHS, especially the Centers for Medicare and Medicaid Services, and the Office of Personnel Management for implementing the changes in Medicare, Medicaid, and the Children’s Health Insurance Program, as well as certain reforms to the private insurance market. CBO expects that those costs will probably total at least $5 billion to $10 billion over 10 years.

The CBO further states:

CBO estimates that the amounts authorized for these items exceed $86 billion over the 10-year period (out of the roughly $105 billion total shown in the table that was provided along with the May 11 letter). Thus, CBO’s discretionary baseline, which assumes that 2010 appropriations are extended with adjustments for anticipated inflation, already accounts for much of the potential discretionary spending under PPACA.

In addition, there are a number of other items that could overlap some or even by a considerable amount with current law activities assumed in CBO’s baseline. Title V of PPACA includes many of those items. For example, section 5210 and sections 5301-5303 of PPACA replace provisions of prior law with new provisions offering a great deal more detail. The May 11 letter addresses these potential sources of overlap. The last paragraph on page 3 of that letter states: “Although Tables 1 and 2 provide more information about the discretionary costs associated with PPACA, they do not represent all of the potential budgetary implications of changes to existing discretionary programs—including both potential increases and decreases relative to recent appropriations…”

That is the savings that Gruber lauds have been wiped out and more so by the CBO. This is the same Gruber who allegedly was being paid as the mouth piece for the White House without allegedly fairly and openly disclosing as such.

I never stop wondering about those Economics and Business types!

The NY Times and Economic Confusion

The NY Times is at it again. Their economic reporter Leonhardt writes about the US and its economy is akin to Greece. I lived in Greece, I ran a company in Greece, I speak Greek, and Mr. Leonhardt, the US is no Greece.

The NY Times in the copy on the photo in the Leonhardt article states:

In Greece and the United States, citizens expect the government to provide social services like Medicare.

That is, in my opinion, utter and complete nonsense in the US. It is in my opinion false and an outright distortion of the truth! Why? In the US we pay for an insurance plan, which frankly if we were to die we would never collect on, and the plan agrees to pay for Social Security and Medicare. We paid for that you folks at the Times, we do not get it free and we do not expect the Government to provide what we have already paid for! What utter nonsense! Frankly in my opinion that clap trap from the Times detracts from the words of Leonhardt!

Yet Mr Leonhardt has some very valid points which could be made clearer if not shrouded in the Greek metaphor.

Mr. Leonhardt states:

The numbers on our federal debt are becoming frighteningly familiar. The debt is projected to equal 140 percent of gross domestic product within two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today...We have not figured out the kind of government we want. We’re in favor of Medicare, Social Security, good schools, wide highways, a strong military — and low taxes. Dealing with this disconnect will be the central economic issue of the next decade, in Europe, Japan and this country...Seven percent of G.D.P. is about $1 trillion today. In concrete terms, Medicare’s entire budget is about $450 billion. The combined budgets of the Education, Energy, Homeland Security, Justice, Labor, State, Transportation and Veterans Affairs Departments are less than $600 billion.

This is why fixing the budget through spending cuts alone, as Congressional Republicans say they favor, would be so hard. Representative Paul Ryan of Wisconsin has a plan for doing so, and it includes big cuts to Social Security and the end of Medicare for anyone now under 55 years old. Other Republicans have generally refused to endorse the Ryan plan. Until that changes or until the party becomes open to new taxes, its deficit strategy will remain unclear...Democrats have more of a strategy — raising taxes on the rich and using health reform to reduce the growth of Medicare spending — but it is not nearly sufficient...What would be? A plan that included a little bit of everything, and then some: say, raising the retirement age; reducing the huge deductions for mortgage interest and health insurance; closing corporate tax loopholes; cutting pensions of some public workers, as Republican governors favor; scrapping wasteful military and space projects; doing more to hold down Medicare spending growth.

Let's look at the data and then make a few suggestions.

First the revenue to the Government.



















A major source of income to the Government comes from personal income and the taxes on it. The chart above shows what has happened to this source. It was growing very nicely and then the Banking fiasco hit. Should was assume it will be stuck in the mud forever or should we assume that wit proper Government hands off it will grown again. Given what we know now and the pressure and confusion from Washington we can but assume slow recovery. That is the problem. Unlike Greece the US pays taxes.

Yet we have to have income upon which to collect taxes. Income assumes jobs, jobs assumes a favorable economic environment and limited to zero Government intervention. Progressives have never created jobs, they redistribute what income there is but for the most parts the records of the progressives is that of job destruction.



















The above shows the cause of the income drop, reduction in employees. There appears to be a glimmer of hope but we are well below five years ago in total employees and thus the large unemployment rate.



















Yet if we look at retail sales they are growing faster than income and clearly faster than employees. Income is growing due to the lack of hiring and thus the increase in overtime. No one wants to hire and thus take on an added Government imposed burden. Yet the consumer seems to feel more comfortable to drive up retail sales. This in turn will drive demand and hopefully drive up employment, yet income will grow then more slowly.

Now to the real problem alleged by Leonhardt. I believe that this chart tells the tale. Remember we have seen a drop in income and thus receipts. Let us examine what this does for Medicare.



















First we assume that 3% of gross personal income goes to Medicare. We will forget the fact that Congress stole all previous funds for the moment. Look back five years and we see a small gap in receipts and costs. Then we start to see the problem.

1. Costs of Medicare grow at a rate in excess of the rate of growth in income.

2. Unemployment dropped income and thus created a dramatic gap between receipts and costs thus exacerbating the problem.

3. If the economy recovers this gap may close somewhat but Medicare still has expanding costs.

Why? Because of several factors. One is that there are people on Medicare who should not be, and they should be removed. These are the hidden retired. Second, yes Medicare should be modified, namely the age should slowly rise to say 70 over the next fifteen years. Say six months per year. Secondly the Medicare tax should go to 4% from 3%. Thirdly, Medicare should focus on catastrophic care and "chronic" management and the recipients should have a larger out of pocket for regular care.

Thus Leonhadt states some correct conclusions but lacks the facts which should allow policy modifications. The real "now" problem is unemployment. The real "future" problem is cash flow and expanded entitlements. The first is a slight tax increase and the second is a careful recognition of our changing demographics.

As for the total debt, well frankly it is not Medicare nor Social Security. It is the expanding entitlements and costs resulting from the Government's gross negligence.

China and the Current Crisis

China Daily reports the following on the response of China to the current EU crisis:

Premier Wen Jiabao told Spanish Prime Minister Jose Luis Rodriguez Zapatero on Monday that China supports action to help Greece overcome its sovereign debt crisis. Spain currently holds the rotating presidency of the EU.

In a telephone conversation with Zapatero, Wen urged countries to coordinate economic policymaking, reform the international financial governance structure, maintain stability of currencies and prevent protectionism.

But it is too early to suggest the European situation has stabilized, said Yu Yongding, head of the China Society of World Economics.

"The Greek crisis fully exposed the weakness of the global economic recovery," Yu, a former member of the central bank's monetary policy committee, told China Daily. "It is hard to predict what will happen next.

The euro will probably remain weak, Yu said, while the dollar will strengthen.

It will pose a challenge for China's policymakers, who want to diversify the country's overseas financial portfolio," he said.

China's tightening policy "should stay"

China has spent the bulk of its foreign exchange reserves on dollar-denominated assets, such as US treasury bonds. It has been pondering diversifying the structure of investment.

"But now it is clear that the euro also has risks," Yu said. "It would complicate China's policymaking."

China's exports are set to suffer, Yu said, since the crisis would be a drag on the growth of Europe, China's largest trade partner. "Growth is no longer the top priority for crisis-hit countries; they have to first repay their debt and convince investors they are capable of doing that.

The impact on China's exports, however, could be limited, said Zhang at the State Council's Development Research Center.

"The weakened euro will affect trade settled in euros, but the majority of China's trade with European countries is settled in US dollars," he said, adding that China's previously announced export target of 10 percent year-on-year growth for this year should not necessarily be changed.

One outcome of the European crisis is that China is facing less pressure for the yuan's revaluation as the US dollar is rising. But the dollar's rise could damage US exports, which US President Barack Obama wants to double in five years. "Therefore, the US could press harder for the yuan's appreciation to benefit its export sector," Yu said.

China will "improve the yuan's exchange-rate formation mechanism", but the yuan would remain "basically stable", the People's Bank of China said in a quarterly report on Monday.

This may be good news for the US as it requires money for its debt but it creates a potentially long term instability which may come back to the Chinese market and then return to the US.

A Simple Way to Check the No Fly List

When you travel around the world you enter and leave many countries and when you enter you go through immigration, and yes customs, and when you leave you again go through immigration. They check who comes and who goes.

The US is the only country which does not check who goes. The airlines may do they job but they clearly have no interest other than booking the revenues.

Thus a simple solution would be to have immigration at the exit point as well as at the entering point. Then all passports can be scanned in and out, biometrics on non US citizens checked and the problem is solved.

Of course you would need a few other checks but this one would make a great deal of difference.