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Sunday, August 4, 2013

Economic Stories of Relevance in Today's World -- August 4, 2013

America: Where Hard Working, Productive Members Of Society Pay For The Health Care Of Everyone Else -  Economic Collapse Blog - Michael Snyder - August 4th, 2013 - Everybody in America wants health care - but most Americans seem to want someone else to pay for it. In the United States today, the way that our system works is that the hard working, productive members of society pay for the health care of everyone else. At least under socialism everyone gets the same benefits. Our system of health care is a very twisted version of socialism where millions upon millions of very hard working people are forced to pay for the health care of others, but often can't afford to purchase decent health insurance for themselves. Personally, I don't have a big employer paying for my health care so I have to buy it myself, and I just got a letter from my health insurance company telling me that I have another massive rate increase coming up. Have you gotten a similar letter? Health insurance premiums are going up all over America, and this is just the beginning. In fact, the CEO of Aetna says that health insurance rates for many Americans will double when the major provisions of Obamacare kick in next year.                  It would be bad enough if hard working Americans just had to pay for their own health insurance. But no, they are also expected to pay for the health care of members of Congress, employees of the IRS and other federal agencies, state and local government employees, their adult kids (because they can't afford health insurance), the elderly, the poor, and now under Obamacare they will also be expected to subsidize the health plans of tens of millions of other Americans that are not poor enough to qualify for Medicaid.                   When you add it all up, the hard working, productive members of society are at least partially subsidizing the health care of well over half of all Americans while having to pay for their own health care at the same time.                  Needless to say, it isn't too hard to see who is getting the raw end of the deal.                   Members of Congress certainly don't want to pay for their own health care. There was panic in the halls of Congress recently when they started realizing that due to certain provisions in Obamacare they may soon be forced to pay for their own health insurance plans. There was widespread moaning and complaining about how they would be facing "thousands of dollars in additional premium payments" every year.             Things got so bad that Barack Obama got personally involved in the effort to find a solution. Thankfully, members of Congress can relax because a ruling is being issued that will allow the federal government to continue to subsidize 75 percent of the cost of their health plans...                   Lawmakers and staff can breathe easy — their health care tab is not going to soar next year.                      The Office of Personnel Management, under heavy pressure from Capitol Hill, will issue a ruling that says the government can continue to make a contribution to the health care premiums of members of Congress and their aides, according to several Hill sources.                  A White House official confirmed the deal and said the proposed regulations will be issued next week.                And the IRS, which has been put in charge of imposing the rules of Obamacare on all the rest of us, is freaking out about the fact that some members of Congress would like to force them to personally participate in Obamacare...                      The union that represents IRS employees is urging its members to write to their congressmen to help get the union out of Obamacare.                 The following are some excerpts from a letter that the union that represents IRS employees sent to members of Congress...                      “H.R. 1780 would put federal employees in a special class where they would be prohibited from receiving health insurance through their employer. It would treat federal employees differently from state and local government employees and most employees of large private sector companies who receive health insurance benefits through their employer. The primary purpose of the Affordable Care Act was to provide a marketplace for the sale and purchase of health insurance for those who do not have such coverage – not to take coverage away from employees who already receive it through their employers,” the letter reads.                       “I work hard and am proud of the services that I provide to your constituents every day. One of the main benefits I receive as a federal employee is the ability to purchase health insurance coverage through the FEHBP with an employer contribution towards those benefits. Please let me know your views on this legislation. I look forward to hearing back from you,” the letter concludes.                  This is just shameful. If the IRS is going to impose Obamacare on the rest of America, then it should be good enough for them too.                     Just check out acting IRS chief Danny Werfel begging for employees of his agency not to have to go on Obamacare...

Why Are The Chinese Gobbling Up Real Estate And Businesses In Detroit? - End of the American Dream - Michael Snyder - July 30, 2013 - Something very strange is happening to Detroit.  Once upon a time, it was the center of American manufacturing and it had the highest per capita income in the United States.  But now the city is dying and the Chinese are moving in to pick up the pieces.  Lured by news stories that proclaim that you can buy homes in Detroit for as little as one dollar, Chinese investors are eagerly gobbling up properties.  In some cases, this is happening dozens of properties at a time.  Not only that, according to the New York Times “dozes of companies from China” are investing in businesses and establishing a presence in the Detroit area.  If this continues, will Detroit eventually become a city that is heavily dominated by China?
At this point, not too many others appear interested in saving Detroit.  Right now, there are approximately 78,000 abandoned buildings in Detroit and about one-third of the entire city is either vacant or derelict.  People have been moving out in droves and there are only about 700,000 residents left.                           For many Americans, Detroit is about the last place that they would want to live.  But to many Chinese, this sounds like a perfect buying opportunity.  According to a recent Fox News report, real estate agents in Detroit are being overwhelmed with inquiries from China…                    Downtown Detroit is home to one of the worst housing markets in the country, as prices of homes have collapsed and foreclosures have soared in the city’s depressed economy.            But some Chinese investors hungry for real estate are hoping Detroit’s losses will be their gain. After Detroit filed for bankruptcy July 18, Motor City property has been a hot topic on China’s social media platform, Weibo, according to a report.              News of the bankruptcy, coupled with a Chinese TV report in March that claimed you could buy two houses in Detroit for the same price as a pair of leather shoes, has piqued investors’ interest.
And these buyers appear to be quite serious.  One buyer reportedly bought 30 properties recently, and other buyers say that they want to purchase even more homes than that…                   And it appears to be translating into real interest; Caroline Chen, a real estate broker in Troy, Michigan, says she’s received “tons of calls” from people in mainland China.                       “I have people calling and saying, ‘I’m serious—I wanna buy 100, 200 properties,’” she tells Quartz, noting that one of her colleagues recently sold 30 properties to a Chinese buyer. “They say ‘We don’t need to see them. Just pick the good ones.’”                                Meanwhile, according to the New York Times, dozens of Chinese companies are moving into the city…                                 Dozens of companies from China are putting down roots in Detroit, part of the country’s steady push into the American auto industry.                      Chinese-owned companies are investing in American businesses and new vehicle technology, selling everything from seat belts to shock absorbers in retail stores, and hiring experienced engineers and designers in an effort to soak up the talent and expertise of domestic automakers and their suppliers.                          While starting with batteries and auto parts, the spread of Chinese business is expected to result eventually in the sale of Chinese cars in the United States.

Shocking: Black Teen Unemployment Rate 41.6%
- Breitbart - Mike Flynn - August 2, 2013 - Friday's jobs report was disappointing, but it also contained a truly heartbreaking statistic. Black teen unemployment is a shocking 41.6%. In July last year, the unemployment was considerably lower, at 36%. That almost half of black teens who want to work can't find jobs is a stain on Obama's economic policies.                        This isn't a numbers trick. This isn't a rate based on the whole black teen population in the country. This is the proportion of the black teen population that is looking for work but can't find a job. Just in March, the number was eight points lower at 33%. The white teen unemployment rate is half the black rate, although still high at 20%.           The heartbreaking thing is that these teens haven't given up hope and left the job market, something that has artificially lowered the overall unemployment rate. The unemployment rate is based on those who want a job and are trying to find one.                        In recent months, President Obama and national Democrats have increased calls to raise the minimum wage or impose "living wages" on certain companies in urban areas. Minimum wage jobs, however, are often "first jobs," providing that critical first rung on the jobs' ladder. Indeed, more than two-thirds of minimum wage employees receive a raise within the first year on the job.                    You can't get a raise, however, without first having a job. Our economic policies are abandoning a generation and threatening to create a permanent underclass. It is shameful.

House Of Raeford Farms Closing With 1,000 Layoffs - AP through WFMY Greensboro - August 1, 2013 - RAEFORD, N.C. -- The last day of work has come for about 1,000 employees of a House of Raeford Farms turkey plant in Hoke County.                The last workers start their layoff Thursday afternoon in the rural region where unemployment was 9.2 percent in June. The plant has been processing poultry since the 1950's and some employees have worked there for 20 years or more.                   The business is a casualty of dropping customer demand for frozen turkeys.                    Some employees will be transferred to a second plant in Raeford that employs 400 and processes lunch meat, ground turkey and chicken. The company says it will provide severance packages to eligible workers.                 The newly unemployed will receive state jobless benefits that were reduced this July in both amount and length of time workers can collect.

Greensboro's state universities brace for job cuts
- Greensboro News and Record - July 29, 2013 - University system budget cuts may mean job cuts at UNCG and N.C. A&T.                  The General Assembly passed this year’s state budget Wednesday. It includes about $80.5 million less money for universities than the state provided last year.                The system’s Board of Governors must decide how to divide the cuts among the system’s universities. The board meets next on Aug. 9.             Officials at Greensboro’s universities, and at others across the state, are preparing for bad news.                      “It looks like positions will be considered (for cuts),” said Mike Tarrant, UNCG’s director of strategic initiatives. “The question will be, how many and whether they’re filled.”                        Robert Pompey, vice chancellor for business and finance at A&T, said there’s “definitely potential” for layoffs, since the universities largest cost, by far, is salaries.                          There are a number of university system cuts in the state budget, including:

$10 million for “administrative and operational efficiencies.”
$5.8 million for “instructional efficiencies”
$65 million in “flexibility” reductions.
The system’s Board of Governors is supposed to distribute the cuts later this year, and has instructions from the legislature not to just distribute them across the board. The General Assembly laid out a number of criteria for the board to use, but some campuses will take bigger hits than others.                     “We know that everyone has to make sacrifices,” Pompey said.                 The cuts come on top of reductions in other years. Democrats made changes during the depths of the recent recession, then Republicans took over in 2010 with a promise to make government leaner and taxes lower. Part of the reason for this year’s cuts was a tax package that will lower income and corporate tax rates.                        To lower the budget impact, the legislature and governor authorized a round of tuition increases for out-of-state undergraduates, which will take effect in 2014.                     Those, too, vary by campus. UNCG will see a 6 percent increase in out-of-state tuition. A&T’s will go up 12.3 percent.                     These increases are on top of broader increases the Board of Governors approved in April.

Hiding Economic Depression With Spin - Paul Craig Roberts - August 1, 2013 - (Excerpt frpm Article) - ... The scary part of the pending economic crisis occurs when the federal budget deficit widens as the economy contracts and the Fed finds itself in a situation where it cannot print yet more dollars without causing a loss in confidence in the dollar and US Treasury bonds. What does a desperate government do in such a situation? It confiscates what remains of private pensions, piles on taxes, and drives the people and the economy deeper into the ground.                   This is the path that US economic policy is on. What is the solution?                    Capitalism could be allowed to work and the banks to fail. It is cheaper to bail out depositors than to bail out the banks.                    Corporations could be taxed on the basis of the geographical location at which value is added to their product. If corporations create the goods abroad that they market to Americans, they would have a high tax rate. If they create value domestically with US labor, they would have a low tax rate. The tax difference could be used to offset the labor cost advantage of offshored production.                  It would take time, but jobs would come back to the US. Cities, states, and the federal government would slowly see their tax bases rebuilt. Consumer incomes would again rise with productivity, and the economy could be put back together.                        As for the federal deficit, it could be significantly reduced by ending Washington’s wars. As various experts have established, these wars are extremely expensive, adding trillions of dollars to the financing needs of the US government. As other experts have shown, the wars do not benefit anyone but a narrow clique of military/security industries. Obviously, it is not democratic to destroy a people’s future for the sake of special interests.
Can these solutions be implemented or are the entrenched special interests too strong and too short-sighted?                      There is no prospect of finding out as long as the financial press and economic commentators are immune to reality. Until the real situation is understood, nothing can be done. It is difficult to sell a solution when the problem is not recognized and understood. That is why I focus on explaining the problems.

Obamacare Full Frontal: Of 953,000 Jobs Created In 2013, 77%, Or 731,000 Are Part-Time - Tyler Durden - August 2, 2013 - When the payroll report was released last month, the world finally noticed what we had been saying for nearly three years: that the US was slowly being converted to a part-time worker society. This slow conversion accelerated drastically in the last few months, and especially in June, when part time jobs exploded higher by 360K while full time jobs dropped by 240K. In July we are sad to report that America's conversation to a part-time worker society is not "tapering": according to the Household Survey, of the 266K jobs created (note this number differs from the establishment survey), only 35% of jobs, or 92K, were full time. The rest were... not.

Bill Black: The Right Should Support the Return of Glass-Steagall

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