Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.
It Could Have Been Worse
About the only thing Populist Progressive Democrat Congressman Peter DeFazio can say about Obama these days is it could have been worse. Long slide down from the irrational exuberance of 2008.
Expect More More Market Insanity
This is a no brainer, but just in case someone out there thinks the Market ride is over, Market Watch gives you some outliners on why it's going to be another wild ride. This site will overview these economic reports, but for computerized flash trades, uh, we can't even write that fast.
The Dow Jones Industrial Average, DJIA -1.57%, shed 4% in the past week, for an 11% loss in August. Similarly, the S&P 500 Index, SPX -1.50%, dropped 4.7% on the week for a 13% loss in August, and the Nasdaq Composite Index, COMP -1.62%, dove 6.6% for the week for a 15% August haircut.
The dollar fell against the major currencies Friday, pushing it toward a weekly decline, while the greenback hit a new low against the Japanese yen.
Gold, GC1Z +1.83%, futures surged to another record Friday as investors held a dim view of global growth prospects and sought instead the perceived safety of the metal.
Gold added 6.4% in the week and closed at $1,852.20 an ounce. It has gained 14% this month, having ended July at $1,631.20 an ounce. On Friday, it traded as high as $1,881.40 an ounce, an intraday record for the metal.
How Big is the Deficit
According to its CBO score, the Budget Control Act of 2011 (a.k.a. the debt ceiling agreement) initially reduced aggregate budget deficits over the next ten years (2012–2021) by $917 billion, with a provision that ensures that deficits will be reduced by another $1.2 trillion (either through an agreement in the joint committee that is ratified by Congress, or through automatic spending cuts). The chatter in Washington is that even with the $1.2 trillion, this is still too small, and there is still this massive deficit hanging over our heads. This is true to an extent, but not the way you are being led to believe.
Foreign Students on Work Visas Walk Out On Hershey
Yet another cheap labor scam, this time corporations bring over students on work/travel Visas and instead of seeing America, they are forced to become glorified slave labor. The question never asked is why is this allowed in the first place with an official unemployment rate above 9%, with the unemployment rate for those under 25 hitting depression era levels?
The students, from countries including China, Nigeria, Romania and Ukraine, came to the United States through a long-established State Department summer visa program that allows them to work for two months and then travel. They said they were expecting to practice their English, make some money and learn what life is like in the United States.
In a way, they did. About 400 foreign students were put to work lifting heavy boxes and packing Reese’s candies, Kit-Kats and Almond Joys on a fast-moving production line, many of them on a night shift. After paycheck deductions for fees associated with the program and for their rent, students said at a rally in front of the huge packing plant that many of them were not earning nearly enough to recover what they had spent in their home countries to obtain their visas.
Bad Math Makes It to Key Economic Indicators
Frankly, it's very easy to make a calculation mistake, a cut and paste error, or a typo. Sorry, blame Microsoft. I do. This Wall Street Journal piece outlines the latest problems with raw data. Yes folks, check everything, we do.
Last week, the U.K.'s statistical agency erroneously reported that second-quarter construction output, a key measure of economic activity, had risen 2.3%, then corrected the figure to a far less robust 0.5%. The revision whipsawed financial markets.
Sometimes, technology makes it easier for mistakes to happen. Computerized trading has given rise to a genre of errors on Wall Street known as fat-finger slip-ups, because pressing a wrong key can mean a difference of millions or billions in trades. Several times in the past two decades such flubs have sent market indexes careening.
With so much data flowing in to corporations and governments, glitches are inevitable, says Gary Steinberg, a spokesman for the U.S. Bureau of Labor Statistics. His agency routinely issues corrections to its official reports. So far this year, they have had three dozen corrections, which are distinct from routine revisions of economic indicators issued once more precise data become available.
HP is a Shining Example of Bad Corporate America
In case you missed it, two months after releasing a major technology product line, HP cancelled it, plus now wants to compete with IBM, moving to software and services, and exit from the hardware & PC business. Why? Low Profit Margins. Who helped make low profit margins happen in the world of PCs and hardware? Why Hewlett-Packard with their never ending offshore outsourcing and labor arbitrage. Market Watch really nailed it in calling HP the worst of Corporate America:
Thursday’s performance is a fitting example of how short-lived any rays of hope are for HP these days amid the frenetic pace of company developments. The 10-figure buyouts. The claims that it is rethinking its role in the tech sector. The blatant flaunting of its massive cash stockpile at a time when companies claim to be suffering from the economic downturn.
Hewlett-Packard is everything that’s wrong with corporate America right now — stupidity, a lack of innovation, bloated operations and no leadership.
Lots of people thought that Hewlett-Packard was batty when it bought Palm in 2010. At the time, the company didn’t bother to hedge its bets but instead engaged in the typical hyperbole of a big-name buyout.
The piece goes on. We can point to hundreds of companies who do the same absurdity. Executives fire entire divisions, execute a non-sensical LBO which gives great bonus to executives, fire the very engineers who generated key critical patents in the past, thinking they can offshore outsource that creative energy for cheaper or more frightening, believe only the young can innovate.... Corporations routinely start major technology initiatives only to cancel the entire technical strategy without giving it any change and, of course, fire everyone involved to boot. Stupid is as Stupid does. So sorry Packard & Hewlett that your legacy is now being dragged through the mud.
Obama Grants De Facto Amnesty
Unable to pass the Dream Act through Congress, the Obama administration just did it through the executive branch. 300,000 illegals will not be deported, instead given guest worker Visas. This op-ed calls it:
the Obama administration Thursday announced it will impose a version of the Dream (development, relief and education for alien minors) Act on America through administrative fiat.
This is blatant political pandering in an election cycle at the expense of American citizens.
On Thursday, Homeland Security Secretary Janet Napolitano told Congress she has authority to halt deportation of illegal aliens not perceived to be a criminal threat as long as they meet certain criteria, such as attending school or having family in the military.
The new rules would cover up to 300,000 illegal aliens. In 2010, the government deported 200,000 with no criminal records. Under the new rules, most would now likely be allowed to stay and apply for permits.
Opposed by a majority of Americans and twice defeated in Congress, the federal Dream Act essentially grants amnesty to any illegal alien in America if they agree to enlist in the military or attend a U.S. college.
It's true, the Obama administration is more interested in enabling further immigration than using administration power to generate jobs for Americans. Come on, with this level of a jobs crisis anyone believe we need to import more foreign guest workers?
About the only silver lining is taking each situation on a case-by-case basis. But knowing the politics, there won't be too much practicality here in who really deserves to stay, instead more politics. Think that will pull enough votes for ya in 2012 Obama and Democrats?
Warren Buffet's Tax Me!
This Warren Buffet op-ed calling for the super rich to be taxed more raised quite the stir. Gee, the super rich need more money than God, I wonder why that is?
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.
Additionally taxing investment profits at 15% increases financialization or the great casino gambling hall called the Markets, and decreases investment in the real, or production economy.