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Raising Lazarus From the Dead?
Today is Palm Sunday, marking the beginning of Holy Week for the Orthodox Church.
I'm not particularly religious but decided to stop off St-George church
this afternoon to light a candle. Nobody was there; it was so peaceful
and serene, just the way I like it when praying.
This morning I
watched the American political shows, and then reflected on how
mainstream media presents certain topics on the economy. Bear with me as
I take you through some topics.
First, ABC's this Week discussed the Ryan budget,
proposing $6 trillion in federal government spending cuts. I think
Republicans are dreaming if they think they can pass these cuts. As far
as all the fear mongering on raising the debt ceiling, I will bet with
all the doomsayers out there that the US won't ever default on its debt.
And as
far as raising US government revenues, there is any easy solution, it's
called a value-added tax, better know as a goods and services tax
(GST). Canadians and Europeans know all about it. It hasn't crimped
Canada or Germany's growth. It's a fair tax because it's a consumption
tax, therefore non-regressive. The rich are back, spending more than ever on luxury goods,
so it's easier to tax what they're spending on than introduce more
income taxes. (The smartest thing the Conservatives did in Canada was
tax free savings accounts, TFSAs, and the dumbest was cut the GST by
2%).
I then watched Indra Nooyi, whom Fortune Magazine has listed
as the most powerful businesswoman in the world for several years
running, discuss her thoughts on a "blueprint" that brings manufacturing jobs back to the United States:
"We
need to start somewhere. I think the first step is, create a blueprint
for the country," Nooyi told CNN's "Fareed Zakaria GPS" in an
interview that aired Sunday."I don't think worrying about the
re-industrialization of America is a Republican issue or a Democratic
issue. It's the country's issue," she added.
"There
is an extremely qualified cadre of recently retired CEOs and C-suite
(top-level) executives who can all be co-opted to help author this
blueprint for the future."
Obama's Democrats have been sparring
with opposition Republicans over how much government spending to slash
this fiscal year, as part of a broader budget war and debate over how to
rein in a runaway deficit.
The president, Nooyi said, should
"forge these coalitions" that would lay out an economic framework for
the coming decades that would highlight energy efficiency.
"I
don't know if they can do it with an election year coming up (in 2012),
but I think people can put their differences aside and worry about the
country."
She acknowledged that such a project would take years,
but said there were several short-term measures that could revitalize
job creation in America, including slashing taxes on US subsidiaries
that bring foreign profits back to the United States.
Some US firms are "trapped in overseas countries, because the tax rate to bring them back is extremely high," Nooyi said.
She
suggested taxing repatriated money at 15 percent, compared to the top
corporate rate of 35 percent -- a move she described as "a creative way
to address unemployment without adding to the deficit."
In a
report this year, the Association for Financial Professionals estimated
that US firms had a total of $1 trillion in overseas cash and
investments.
Should Washington lower the tax on repatriated
profits, "the likely inflow of capital into the US would stimulate
capital investment and hiring, contributing to economic recovery in the
short run and economic growth in the long-term," according to the
association.
I don't buy the argument that US
corporate taxes are too high "trapping" profits abroad. As far as those
retired CEOs and C-suite executives, bring them on, anything is better
that that shameless self-promoter called Donald Trump (if he runs for
office, it will be a gift to Obama).
Ms. Nooyi also talked about
how Pepsico is now focusing on health conscious food. While I welcome
this shift, it's too little too late. There will be a revolution in
health conscious diets over the next decade in the US and elsewhere and
if the Pepsicos and Coca Colas of this world aren't part of it, they
will lose big.
But Ms. Nooyi is an impressive woman and she
didn't get to where she is by being behind the curve. She is in a
minority among Fortune 500 CEOs. She told Fareed Zakaria that she worked
"her tail off" to get to where she is and her accomplishments should be
a source of inspiration for all women.
On the economy, she
said that "Bill Sixpack" is back, saying things are better but too many
Americans feel uneasy with their economic prospects. As I stated above,
things are great for the rich invested in stocks, not so great for the
millions of unemployed or underemployed struggling to get by as food and
energy prices keep creeping up.
This brings me to my other topic, inflation. Zero Hedge posted an interview with Jim Grant
saying "there will be a lot of it suddenly". I got blasted for
commenting that I don't see how inflation can take hold without wage
inflation.
In an environment where corporate America has destroyed
unions, kept wages low, cut jobs to shift them abroad, it's
hard to see major inflation "all of a sudden". I know that inflation is
rising in emerging markets, spurred by the Fed's aggressive policies,
but let me share with you a comment from one of the smartest pension
fund managers I know (we were discussing the Shadowstats figure pegging
inflation in the US at 10%):
The guy from shadowstats may have some micro points, but he’s just plain nuts on the CPI. He added up every single potential adjustment to CPI, and says that all of them add up to a 6% (?) understatement. Thus his “True CPI” is (reported CPI + 6%).
Unfortunately, if CPI is “really” 8% per year for the past 10 years, vs. 2%, that compounds up to a huge gap. For example, that roughly implies that if you deflate nominal GDP by CPI, it’s been falling in “real terms”. Also, consumption would have to be contracting 3—4% on average over that period. But that flies in the face of actual volume data, which rose over the period. The only way his numbers make sense it that every other stat is being manipulated in a consistent manner to be in line with the CPI.
I have no worries about imported inflation, other than on oil/gasoline/food prices, but that’s still a relative price story. Oil prices fell in nominal terms from 1980-1998, but that did not stop inflation from rising steadily over the period. You cannot ignore wages, which are 70% of the cost of production. Unless wages rise, you can’t see price hikes sticking – by definition, volumes fall, and that will crush the price hikes. The only places you see imported inflation are countries like Iceland, where they import practically everything other than cod.
This
pension fund manager is a sharp cookie. He reminded me in the late
1990s, everyone was short JGBs, waiting for the implosion of the
Japanese bond market. There were back-up in yields, but over the next
decade, JGBs beat out not only the Japanese stock market but the S&P
500 too. In other words, just because yields are low, doesn't mean that
Treasuries can't outperform stocks on a risk-adjusted basis over the
next decade.
The Fed is doing everything it can to reflate risk assets and introduce
inflation back in the system. I've been writing about this ever since Operation AIG ("All In Goddammit").
There is only one thing that petrifies corporate America and bankers, a
long protracted period of deflation. Demographics are terrible in
Europe and Japan, and while growth is strong in emerging markets, the
risks of deflation have not subsided. That's why I expect more liquidity
to be pumped into the system. And with more liquidity will come more
warnings from Inflationistas that we are doomed but all that will happen
is more volatility in the financial markets which will benefit the
financial oligarchs and the ultra wealthy. Hopefully some of that
"wealth" will trickle down and start sustaining job growth.
That's
the Fed's game plan and it hasn't changed. The big question is will the
Fed succeed? Will it "raise Lazarus from the dead" and resuscitate the
US economy? I honestly don't know, but I will tell you this much,
they'll do whatever it takes to avoid debt deflation. That much I can
guarantee you. Below, part of Fareed Zakaria's interview with Indra Nooyi.
»
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leo thinks the system is ok but just needs some adjustments. yeh right.
what we need is some of this to get us started. anarchy in greece ....
http://www.independent.co.uk/news/world/europe/anarchy-erupts-in-greece-...
man o man, if those welfare and foodstamp checks and unemployment checks ever stop coming, look out.....
Indra Nooyi told CNN's Fareed Zakaria......
and these 2 are who you point out , who have the blue print how to fix America ......how about finding someone who was born in America?
We have even outsourced our thinking to foreigners ? (nothing personal against Ms Nooyi) But thats the general flow in this land.
I'm cool with a little VAT, IF the IRS goes away...COMPLETELY getting out of my life, my pocketbook, my businesses and dies a slow painful death (((actually I have no complaint with any individual employed by the IRS (some folks at the FDA need to be in jail but another story for another day ((ask yourselves why 2 drugs (colchicine and quinine) that have been around for 200 years are now available ONLY in BRAND name versions))) Please excuse the triple parenthetical expressions, it is a habit in my writing style I'm trying to break.
We must be very, very careful on this course. Repeal of the 16th Amendment and abolishment of the IRS must be built in. Also, I don't much care for a VAT tax, which would be hidden in the price of goods on the shelves. A sales tax would be more transparent.
There's no such thing as a 'little tax'.
LOL so let me get this straight your "genius" pension butt buddy pegs inflation at 8% but the guy from Shadowstats is "nuts" because he came up with 10%?
"we were discussing the Shadowstats figure pegging inflation in the US at 10%):
The problem is that Leo only has 1 nut and has forgotten how to count.
Oh Leo.
HEY!!!!!!!!!!!!!!!!!!!!!!!!!!!
Maybe I should rephrase that to "Oleo" --- an oily, cheap, unhealthy, artificial substitute for the original, tasty, healthier product. Yep, that sounds just about right.
No Joke, they just need an enclave to find a way to grab some more of the
wealth that wasn't confiscated by the banks during the past several years.
Everybody gets a turn...
>>That's the Fed's game plan and it hasn't changed. The big question is will the Fed succeed? Will it "raise Lazarus from the dead" and resuscitate the US economy? I honestly don't know, but I will tell you this much, they'll do whatever it takes to avoid debt deflation. That much I can guarantee you. Below, part of Fareed Zakaria's interview with Indra Nooyi.<<
isn't the fed's job to transfer real wealth from society to those who own the fed?
don't the people who own the fed own most of the debt?
don't the people who own the fed tell bernanke what to do?
doesn't their debt lose value if the dollar is devalued faster than they can loot society through their captured government minions?
think about it...
<Paging Mr. Akak. Paging Mr. Akak>
Nothing real can be threatened.
Nothing unreal exists.
Herein lies the peace of God
(A Course is Miracles)
Is this a joke? These are the idiots that caused the problem in the 1st place...
"There is an extremely qualified cadre of recently retired CEOs and C-suite (top-level) executives who can all be co-opted to help author this blueprint for the future."
You're right in saying that these people caused the problem. However...
Do we really need a 'blueprint' from some central planning ivory tower? The fallacy here is in thinking that this blueprint will work so much better than all of the other centrally planned boondoggles. The problem with central planning (or blueprints if you prefer) is not who makes the plan, but rather the hubris in thinking the everyday actions of millions of individuals can be planned for - and the amount of force necessary to get millions of individuals to conform to the plan.
I'm no advocate of the ivory tower...in fact it think they should be nuked, after all, where do you think all these CEO clowns come from? SMALL BUSINESSES need to be given a chance to thrive. Eliminate red tape and cut taxes for firms with sales under $1Mil and less than 10 employees....that's the only way this economy will ever recover.
Yeah - maybe they can all get loans from the Fed. Leo's next solution will be for the US to try Feudalism so he can continue his employment as a court jester.
Hey Leo - let's get him redacted also.
Ok Leo, Let's try this one more time...
Once QE2 is over, who'g going to buy US tresuries? Is Gross or Gundlach correct? What is the solution to the unfunded US pension liability for US states? Once interest rates start to rise in the US (with over 50% of all US debt < 3 years), what tools does the government have to avoid raising interest rates... to cause the US gov't debt to go hyperoblic?
Try your rasor sharp mind on one of these questions that I've previously posted to you in a sensible and non condescending approach, and the level of respect will go up for you on this site.
i'll bite. europe imploding will help fund america's debt for a bit. eventually, though, you are correct, the treasury market isn't sustainable and it will end. the ME is being set up with muslim radicals... they are prime candidate for a default. once the defaults start, there's no telling where they spread.
eventually, america is hit with an "emergency." we all know the weapons of mass debt simply exploded as expected, but riff and raff don't know that.
austerity hits america. americans are effectively busted. since we are a debt saturated society, BY DESIGN, that means americans lose all their REAL GOODS to their master lenders (who happen to be back stopped by uncle sugar).
in short, the fed's owners own trillions in what we'd call "WORTHLESS PAPER."
do you think they will take that down with the ship? h*ll no, they will lock the debtors in steerage and hop right in their life boat - 1 per 20 passenger boat.
indebting everyone BY DESIGN is only stage one of the process. looting the citizenry BY DESIGN is stage two. busting the debtors and taking all their assets is stage three.
hyperinflation destroys the debt owned by the fed's owners. it destroys the banks as people pull their money out to buy tangible goods. it creates massive demand competition for the oligarchs when they rush to get out cash and into real wealth.
given that "the club" of criminal robber barons don't take losses, i think hyperinflation is almost a zero probability UNTIL SUCH TIME AS THEY TURN THEIR CASH INTO SOCIETY'S REAL ASSETS (think gated community with some corporate name renting the serfs all over the place). once they have busted everyone and confiscated their real chit, then they'll bust the dollar and present the world with the... the solution.
the criminals at the top of the financial food chain will simply enveil a "new world currency" to fix all the ills.
i know a debt saturated society won't like this POV. in fact, they'll abhor it. they'll despise it. they'll hate it. why? because it is so harsh for j6p. but that's PRECISELY WHY IT WILL OCCUR IN DUE TIME.
i'd love for all the indebted homeowners to bust the oligarch debt holders and pay their homes off with cash that could buy a loaf of bread.
it won't happen. not until the debt holders have taken control of the real chit in society - and i bet at absolute fire sale prices as they will use their weapons of mass debt to eliminate any demand competition.
as for the kabuki theater that masquerades as the american "government," they are just playing their role. they don't control chit. the oligarchs do. both parties. endless war, endless debt, full frontal on the constitution, wide open borders, slave training by the TSA with hands down your pants, al qaeda dining at the pentagon, al qaeda getting pentagon support in libya, US intelligance escorting the underwear bomber on the plane, the FBI building the bomb used in WTC '93, unlimited financial crime spree, a criminal federal reserve that broke section 2a of the federal reserve act, a federal reserve that lies about its mandate - and even the typical wizard on zerohedge has no idea what the fed mandate is. no, it isn't a dual mandate and it has nothing to do with unemployment and stable price. those are the effects of the mandate, not the mandate itself.
but the oligarchs and their politicial and media and academic minions have orwelled everyone so even the informed think 2 + 2 = 5. in a scientific dictatorship, they didn't even have to torture people to reach that conclusion, either. winston smith was just a little too early.
"simply enveil a "new world currency" to fix all the ills."
you mean the "worldo"?
i have no idea what these criminals will call it, but the name will "feel good." these SOBs are as manipulative as they come.
Could you write for Leo?
+1
Leo... go back and answer some of my legitimate quesions I've asked several weeks ago...
You're not so arrogant now are you?
Tyler, for the love of God, get rid of some of these morons posting idiotic comments on ZH.
Tyler,for the love of God,stop that moron Leo from posting idiotic drivel on ZH!
Nobody is forcing you to read or comment on my "drivel". At the end of the day, I got all of your attention. In other words, I got the upper hand!
I second that emotion!
You can probably guess what my vote is....
Tyler has a bit more respect for free speech than this. There are 35 others who would have to be censored.
Leo... a serious question - what mail away diploma school did you join to get your knowledge? Do they give refunds?
You know, you bootlicking Liberals are all the same... you know better than anyone else... American are just stupid... they've never heard about a VAT... Only the wise Europeans have... and of course CBC indoctrinated intelligentsia such as yourself know better.
Show us one #uckin legitimate report that supports your drivel...
As we all know, you're only going to come back with more nonsense and hollow opinions.
Double post... it makes more sense that what you've wirtten Leo...
Leo... you poor victim. You were not blasted for your comments about inflation.
You were dismantled on this site with 36 "Junked" comments because of your shallow analysis and nonsense. No one cares about your opinion. Its analysis that we are looking for... from others that is.
You're a real victim Leo....
I forgot to pray for the trolls on ZH. Oh well, next time.
<Paging Mr. Akak. Paging Mr. Akak>
What this country needs is REAL inflation, inflation that is driven by core demand arising from core jobs that are created in this country not the phony inflation being created by phony liquidity. That is the only true solution. VAT is just another gimmick that works well in countries that have a lawless system of tax evasion - not here. What planet are you from ?
What I believe Leo misses here is the high potential for "lifestyle deflation" to stand in for wage increases. I think we are going to get that in spades, and shit will get real in a hurry for Joe Six Pack and Jane Yoga Shirt.
Net wages may remain stagnant or even drop, but those wages will continue to funnel more and more into those pesky things like food and fuel that the CPI masses bitterly cling to, and the teeming hordes in strip malls and the lines for $5 coffee will begin to diminish. Bad news for LULU and SBUX, but hardly an inflation deterrent in Shit That Matters while there is excess income rattling around in discretionary purchases.
But don't take my word for it- go out and see for yourself how much absolutely unnecessary spending is still going on out there. The squeeze hasn't even started yet, and there is a lot to be squozen.
The difference between Republicans and Democrats; Republicans want a bigger national debt, the Democrats want the biggest national debt they can get away with. It's Kabuki theater, lipstick on a pig, that sort of thing.
Leo's from Canada.
Thats a load of crap that Ms Nooyi is talking about health conscious foods. You should see the filth they are passing off as "snacks" in her home country India. In addition they are putting traditional home grown small businesses out of business by muscling their way in. Of course, all backed by powerful marketing budgets and top Bollywood stars that will sing the jingle for "bling"les. Wonder if they are using a similar strategy in China too and I would not be one bit surprised.
A fundamental element of every con is telling the mark what he wants to hear.
The fact that corporations now know how to tell the health conscious and the greens the right things would generally indicate one of two things:
-They have reformed their ways and become *truly* conscientious and concerned with intangibles above and beyond the basic profit motive.
-They have retooled to pick the pockets of a new demographic.
You may judge for yourself what is more probable.
Pepsi are somehow 'muscling in' to markets and putting 'traditional' 'home grown' small businesses out of business by passing off 'filth' as snacks in India?
So the locals prefer eating more expensive 'filth' than cheaper traditional snacks? Or is there an error in your analysis somewhere? ie, Pepsi are out-competing less efficient local producers, who were protected from competition for generations by India's cartel-inducing protectionist legislation, and are now facing oblivion because Pepsi know how to produce snacks that people want to eat more cheaply?
Hey - its Leo... that's the level that his mind is at.