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Employment Figures are Weak

Posted by Steve Markowitz on October 5, 2015

The US employment report posted last week by the Labor Department paints blurred picture.  While unemployment remained at 5.1%, this is but a slight of hand created by fuzzy numbers.  Here are some of the stats reported by the Wall Street Journal:

  • During September only 136,000 new jobs were created, far short of what economists predicted.
  • The Labor Department decreased the 173,200 and 245,000 jobs supposedly created to August and July down to 136,000 and 123,000 respectively.
  • During the summer of 2014, approximately 250,000 jobs per month were created.
  • Wage growth was stagnant during August, down by a penny from July.

The government reported that the unemployment rate remained steady at 5.1% for September.  This was accomplished by fuzzy accounting.  The government, in its infinite wisdom, does not count Americans that have given up on finding full-time employment as being unemployed.  The fallacy of this accounting practice is demonstrated by the workforce participation rate being at its lowest levels 40 years, falling by another 0. 2% in September to just 62.4%.

The economy requires approximately 200,000 new jobs monthly to keep up with overall workforce growth.  Given we are now seven years into President Obama’s economic policies, the weak employment numbers show failure.  The programs include the huge Stimulus spending initiated during his first year in office and continued with other interventions including Cash for Clunkers, mortgage relief, green energy programs, etc.  Instead of recognizing the failure of these interventions, Progressives including the President suggest policies that will further depress wages.  This includes promoting additional immigration that will add pressure on wages, and increasing the cost of labor through Obamacare and a higher minimum wage.

The Federal Reserve’s policies have also proven ineffective.  While the Fed has used historically low interest rates as a cure-all for the economic maladies, these policies were counterproductive.  However, the Fed is now in a conundrum.  Given the weak jobs data it is fearful that if it raises interest rates that economic growth will be further hampered.  But, interest rates will inevitably go up and that will not be a good day for the economy.

Since the economic meltdown of 2008, politicians from both parties promised economic fixes without pain.  This alchemy is not possible.  There were severe economic imbalances that needed the right themselves after the meltdown.  Governmental interventions stop these necessary events.  Sooner or later they will rebalance.  Like a boiling pot, the longer the lid is kept on the more violent the pressure release will be.

Posted in Unemployment | Tagged: , , , | Leave a Comment »

Gun Control Fails in Chicago

Posted by Steve Markowitz on October 5, 2015

Within hours after the shooting at Umpqua Community College in Oregon, the Left including President Obama started calling for stricter gun control.  The inference was clear.  Stricter gun controls would lessen gun violence.  However, history and facts tell a different story.

Chicago, Illinois has some of the Country’s strictest gun control laws.  It also has one of the nation’s highest incidence of gun violence annually.  Here are some facts and figures published by the Chicago Tribune:

  • During a 15 hour period last week 14 people were shot in the Windy City resulting in six deaths.
  • Last weekend 52 people were shot in Chicago with four dying. This is the second consecutive weekend in which more than 50 people were shot in the city.
  • Gun violence has increased by 20% in Chicago over the same period in 2014.
  • So in 2015, 2,300 people have been shot in Chicago.

Okay, so gun control does not work where it has been implemented.  Why then does President Obama and his Leftist allies push so hard for doubling down on this failed policy?  Unfortunately liberals are using a canard to cover up for the failings of Progressive policies they have promoted for decades.  These policies have ruined America’s inner cities to the detriment of the minorities forced to live in them.  By putting focus on an inanimate instrument of violence, the Left hopes cover-up the dismal failing of the progressive policies.

Chicago’s Progressive Mayor Rahm Emanuel, a former Barack Obama associate, over the weekend did the gun control two step stating: “I’m going to try to control my anger.  We have way too many guns in the city of Chicago.  There are many in Chicago with the right to be angry, but the Mayor is not one of them.  He and his fellow Progressives helped create the environment that led to the disintegration of cities across America.  Emanuel is personally insulated from the carnage protected by armed guards.  He is also able to send his children to private schools.

Yes, there needs to be a discussion about violence in the United States.  The instruments of that violence need to be part of the discussion.  But so too do other key issues including the breakdown of the family, growth of the welfare state, mental illness and the violence of pop-culture in the entertainment industry.  The fact that President Obama rarely speaks of these issues brings into question the sincerity of his comments.

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Obama Equivocates on Islamic Extremism

Posted by Steve Markowitz on October 2, 2015

On September 29 President Obama participated in a Summit on Countering ISIL and Violent Extremism at the United Nations that was attended by various world leaders. Like most UN conferences little productive came of the meeting.  During the conference there was an exchange between President Obama and UK Prime Minister David Cameron as follows:

Barack Obama – “Violent extremism is not unique to any one faith, so no one should ever be profiled or targeted simply because of their faith”.

David Cameron – “Barack, you are quite right, that every religion has its extremists, but we have to be frank that the biggest problem we have today is the Islamist extremist violence that has given birth to ISIL, to Al Shabaab to Al Nusra, Al Qaeda and so many other groups”.

The exchange is informative at various levels. First, it demonstrates a more realistic understanding of contemporary world affairs by the British leader. It also once again emphasizes the Obama’s inability to comprehend the big picture and focus on solutions. Irrespective of the obvious reality that radicals can exist in any religion, it is undeniable that today’s world order and greater civilization is at risk only because of one; Radical Islam. As to why the President has an inability to either express or understand this reality is difficult to comprehend.

Posted in Radical Islam | Tagged: , , , , , | Leave a Comment »

Economic Imbalances Connected to Central Bankers’ Policies

Posted by Steve Markowitz on September 25, 2015

In 2008 the worldwide economy seemed at a precipice.  Politicians and economists demanded action that resulted in significant governmental interventions.  It is not possible in hindsight to argue with the policies given the fears at that time.  It is also impossible to determine if we would we would have gone off the economic cliff without the by central banker actions.

We have been taught there is no such thing as a free lunch.  It seems this lesson has been lost in recent decades, especially when it comes to policy and economic decisions.  The interventions made by central banks including the Federal Reserve since 2008 are historic.  Banks have purchased their countries’ debt, in essence printing money.  While so far the negative economic consequences have not been catastrophic, there will indeed be consequences.

There are two general problems typically arising from excess money supply.  The first is inflation.  Inflation has historically been across the board with increased prices for many categories of goods and services during these periods.  This type of inflation has yet to occur.

Another issue arising from an oversupply of money is bubble creation in certain asset categories. This is basically a different type of inflation and it is a growing problem.  Initially the asset bubbles occurred in commodities with prices of oil, gold, and other metals significantly increasing.  These bubbles have already burst with negative consequences affecting exporting countries.  This includes oil-producing countries such as Venezuela, Saudi Arabia and Iraq.  It is also damaged Canada and Australia who initially benefited from the overvalued commodities being purchased by China.

More recently, Chinese and other countries have significantly cut back on commodity purchases as their economies’ have slowed.  Ups and downs are a normal part of business cycles.  However, the uptick since 2008 has not been normal, but instead has been artificially created by various countries’ cheap money policies and deficit spending.

The popping of the commodity bubbles has brought consternation to equity markets that have shown increased volatility.  This is of significant concern because these equity valuations are one of the few remaining mega bubbles.  When this equity bubble pops, the consequences will be ugly. Read the rest of this entry »

Posted in Bubbles, Debt | Tagged: | 1 Comment »

Hillary: Birther Hypocrite

Posted by Steve Markowitz on September 23, 2015

At a recent town hall meeting businessman turned politician Donald Trump unartfully responded to a comment from the audience that claimed President Obama to be a Muslim.  Trump’s response highlighted some of his weaknesses that include an inability to think on his feet.

It didn’t take long for Democratic hopeful, Hillary Clinton, to attack Trump on his faux pas tweeting:

“Donald Trump not denouncing false statements about POTUS & hateful rhetoric about Muslims is disturbing, & just plain wrong.  Cut it out”.

Ms. Clinton has highly a selected view of “hateful rhetoric”.  While running against Obama in 2008 the Clinton campaign made an effort to tie Obama into the Muslim heritage of his father’s family.  This hypocrisy was brought out in the Morning Joe video below.

Hillary Clinton’s willingness to take both sides of an issue is the type of doubletalk that the American people are fed up with coming from Washington politicians.  This is not unrelated to the reasons behind the rise in outsiders Trump, Fiorina and Carson in the Republican Party, nor Bernie Sanders in the Democratic Party.  Only the political elites in Washington refuse to see the connection.


Posted in Politics | Tagged: , , , , | Leave a Comment »

NFL’s Richard Sherman Condemns Black Lives Matter

Posted by Steve Markowitz on September 16, 2015

Richard ShermanOne of the best players in the National Football League is Seattle Seahawk’s Richard Sherman.  This brash-talking, hard-hitting defensive back is feared throughout the league by opposing teams.

Sherman is a wonderful American success story.  Coming from a disadvantaged background, he went on to attend Stanford University where he was a star football player and obtained a great education.  He parlayed this into success in the NFL.

Recently, Black Lives Matter activists King Noble used an unauthorized photograph of Sherman, adding to it a violent and racist message: “When are we gon Kill These KKKracka Bro.”  Sherman was livid and his response unequivocal, posting a response included below.  It is disappointing that President Obama is not as clear in his related statements to the American people.

Sherman’s post:

I did not believe this when I heard about it.  I watched your videos.  I started a life in the gehto [sic]. I banged like a fool till I woke up.  I was not suppressed by any man or woman, white or black.

I worked myself up from Compton High School to a scholarship at Standford University and I did it myself.  I take pride in what I have accomplished both as a black man, and an athlete.  I could have stayed in LA and banged and used drugs and thought that it was all the white mans fault [sic].  But that would be a lie.  We are who we want to be, that is what is great about america [sic].  We are all born with the same chances in life..white or black…YOU choose to be a woman-abusing racist loudmouth.  I would love to debate you on national tv [sic].  And if you condone senseless black shootings of whites and police officers, you better make that a debate on Springer, so I can bitchslap your ignorant ass!

You are what is keeping and making the black race look bad. Wake up fool.  Do not glorify this half a man, he has worked for nothing.  He chose to keep himself where he is, not the white people.  It is time to take responsibility for your own actions, and not act like a stinking fool.  Kids and young black men and women look at this site, and believe that they are abused.  That is a bold-faced lie.  It is out of the mouths of cheap thugs like you that are hurting our young and taking away the chances they have to make themselves a productive part of society.  Brothers and sisters: the only slavery in america now is the one you put yourself into Rise up like Doctor King as taught us, and be a real human being [sic].  We are all in this together white and black.  Peace to all and I hope this stupid fake hate stops real soon.  We are all brothers and sisters.  Do not be fooled by the tyranny of evil men like this lift yourself up educate yourselves and work hard for a good life [sic].  No one owes you anything stand proud as a person of color , and do something meaningful with your life [sic].  I did and I am the best at what I do!  Peace out, R Sherman.”

Posted in Racism | Tagged: , , , | Leave a Comment »

Public Pension Funds Crisis Looming

Posted by Steve Markowitz on September 10, 2015

Defined benefit pension plans are a thing of the past for most private companies.  Those plans guarantee payments to retired employees based on years of service.  While a wonderful concept that was viable when American industry had little competition following World War II, these plans became untenable as worldwide competition increased.  As a result, most American businesses that offer pension plans have moved to 401(k) &plans whose funding requirements are more flexible and can be kept in line with a company’s economic realities.

In defined benefit pension plans, the real costs are hidden within complex actuarial tables that require assumptions on long-term returns.  Should the assumptions be overly optimistic, which they often are, what may look like a financially healthy company quickly become insolvent.

While most of the private sector has addressed its pension responsibilities, the public sector still offers many governmental employees defined benefit pension plans.  This has created a dangerous economic model for many municipal and state governments, which is being exasperated by decreasing returns for pension plan investments.

Timothy W. Martin’s recent article in the Wall Street Journal highlights the growing problem of public-sector pension plans.  The problem is being brought to a head as long-term plan assumptions by necessity are being decreased due to the long term economic downturn and low interest rates available on fixed income investments.

Historically, annual pension return assumptions have been set at 8%.  This assumption was used to calculate the rate of growth of pension fund investments.  This rate of return has not obtainable for some years.  However, the 8% return rate assumption was maintained by pension fund managers as a way of masking problems within their funds.  As a result, states and municipalities were able to underfund their plans and push liabilities off to a future time.  That time is rapidly approaching.

Martin points out that:

  • Over 60% of state retirement systems have cut their assumptions in the past seven years with the average now being just under 7.7%. This Blog proffers the view that even this lower assumption is overly optimistic.  In fact, it has been reported that for the first half of this year the average annual return for pension funds was less than 4%.
  • Last week one of the nation’s largest public pension funds, the New York State Common Retirement Fund, cut its return rate a half a point to 7%. Similarly, the San Diego County Employees Retirement Association cut its assumption quarter point to 7.5%.  The Oregon Public Employees Retirement System and Texas Municipal Retirement System have also lowered their forecasted return rate by a quarter point.
  • America’s largest public retirement fund, The California Public Employees’ Retirement System, is considering dropping its current return assumption rate from 8%.

While lowering the return assumptions by state and local governments is ultimately a positive step, forcing governments to adequately fund their pension obligations, there is significant pain associated with this action.  Increased taxpayer dollars will be required to fund the pension plans.   This will decrease funds available to support governmental services.  For example, Martin reports that Boulder, CO has eliminated 100 positions and cut services in order to add $1.7 million to its pension fund.

States and municipalities have increased their funding of pension programs by over $120 billion in the past 10 years.  That would pay for a lot of government services!


Pension problems for state and municipal governments will grow significantly since even the new lower assumptions are overly optimistic.  In the 1960s, for example, return assumptions were less than 4%.  Should pension fund returns approach those levels, the result would be catastrophic.  As Martin points out, every 1% decrease in a fund’s returns leads to a 12% increase in the pension’s liabilities.

While the looming public pension crisis was created by state and municipal governments using unrealistically high return assumptions and offering benefits that they could not afford, the problem has been exasperated by the low interest rate policies of the Federal Reserve that further depresses fund returns.  This is one example of the significant consequences of the Fed’s interventionist policy that has distorted expenses for some, cajoled investors into higher risk investments as they seek returns, and created bubbles including overpriced equity valuations. These problems are just now beginning to percolate.  When they boil over, books will be written on the fallacy of the Federal Reserve’s low interest rate policies.

Posted in Pension Funds | Tagged: , , , , , , , | Leave a Comment »

Policies Correctness Gone Wild

Posted by Steve Markowitz on September 8, 2015

Many Americans on right of center politically are aghast at how Political Correctness has ruined intellectual discourse in the country.  What started innocuously has morphed into a form of modern fascism.  Those that do not agree with Progressive views are disparaged and marginalized.  Nowhere is the PC problem worse than on America’s college campuses that should instead be the bastion of free speech and opposing views.

The Left is pleased to accept the current direction of Political Correctness since it favors their narrative.  However, they would do well to recall that just a few decades ago Political Correctness supported the Radical Right in a way similar to that it currently favoring Radical Left.

Dr. Ben Carson, current candidate for the Republican presidential nomination, came to national prominence chastising the Left and President Obama concerning Political Correctness at a National Prayer Breakfast in 2013.  That video clip is included below.  For Millennial’s with a shorter attention span, also included is a clip of comedian Colin Quinn exposing the lunacy of PC.


Posted in Political Correctness | Tagged: , , , | Leave a Comment »

Fed’s Policies Have Created Stock Market Bubble

Posted by Steve Markowitz on September 3, 2015

The last few weeks have come with increasing turmoil in equities markets.  One day last week the Dow dipped nearly 600 points, only to recover nearly 450 the next.  The market’s gyrations are occurring after their values had been relatively flat for the past year.  This is problematic since prior to the flattening, increasing equities’ valuations masked broader weaknesses in the economy.  For example, increasing equity values offset some losses inflicted on parts of the economy due to the low interest rates that decreased returns on fixed income investments.

The signs are clear; the equity bubble is at risk.  Many blame the volatility on problems with the Chinese economy.  However, as this Blog has proffered previously, Federal Reserve and US governmental policies are the culprits. Read the rest of this entry »

Posted in Bubbles | Tagged: , , , , , , | Leave a Comment »

Obama’s Politics Feed Deteriorating Race Relations

Posted by Steve Markowitz on August 31, 2015

Barack Obama was elected president with high expectations, to a great extent based on his first election’s theme, “hope and change”.  Perhaps in no area were expectations higher than in race relations in. America elected not only its first African-American president, but also a person from a blended family with his father being African and mother Caucasian.

Instead of meeting the potential, race relations in the United States have deteriorated since Obama’s first moderation.  This can be attributed to the politics of divisive used by the radical Left and this President to gin up their political base.  It divided people by sexual orientation, income bracket, immigrant status, and yes race.

The President inappropriately interjected himself in local actions where race could be discussed since early in his first term.  First, this included making televised national comments concerning the arrest of Prof. Gates by local police for disturbing the peace, even before as Obama admitted, he knew the facts.  He then interjected himself into the Travon Martin shooting, even though it became evident that the shooting was not racially motivated.  Then, Obama and Attorney General Holder not only inferred that the shooting of Michael Brown in Ferguson was racially motivated, but that the police officer involved was guilty of a crime.  Both assertions were false as determined by Obama’s own Justice Department and a grand jury true.  The often promoted theme of “hands up, don’t shoot” was also prove to be a fabrication.  Still, there has been no admission of error by Obama.

As a result of the increasing racial divide, outward expression of violence in America is increasing.  In Ferguson, Missouri, the rioting was devastating to the local community.  In Baltimore, Maryland, rioting was even more extensive since the death of Freddie Gray with the murder rate of African-Americans in that community since skyrocketing.

A non-surprising outgrowth of this growing racial divide is the Black Lives Matter movement that infers police and much of America do not value African-American lives.  With this type of outrageous rhetoric, it is no wonder violence is increasing.  That begs the question; who is benefiting from the increasing racial divide?  Certainly not the greater African-American community.  Not the police.  And not middle America.  The ones that benefit are the bosses on the radical Left, which includes Barrack Obama, Harry Reid, and Nancy Pelosi.  Shame on those elitists that seek personal gain on the backs of the suffering of those less fortunate.

Now the racially-based violence is morphing with police being in the crosshairs.  This past weekend Sheriff Deputy Darren Goforth was murdered by an African-American merely because he was a police officer.  Harris County Sheriff Ron Hickman correctly called this an execution and blamed the shooting on the vitriolic rhetoric on race. (see video below)

Fellow Sheriff, African-American David Clarke, blames the White House for the increasing violence against police officers stating:  “I said last December that war had been declared against the American police officer, led by some high-profile people.  One of them coming out of the White House, another one coming out of the U.S. Department of Justice.  And it’s open season right now, no doubt about it.”

It is difficult to place the genie back in the bottle once a cycle of violence based on preconceived notions takes hold in society.  President Obama is one of the few people who could have a significant positive effect on this issue.  Unfortunately, he has shown little willingness to admit error or place the Country’s overall good before his own political well-being.

Posted in Racism | Tagged: , , , , , | Leave a Comment »


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