Industrial Insight

when house prices stabilize….

December 29, 2011
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http://www.theatlantic.com/business/print/2011/12/saving-the-new-year/250554/

Saving the New Year

By Megan McArdle

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Taxes won’t keep up…

December 22, 2011
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http://www.theatlantic.com/business/archive/2011/12/the-most-important-graphs-of-2011/250240/#slide19

“As this graph shows, under average historical levels of revenue, Medicare, Medicaid, and Social Security will consume all tax revenues by 2049. We must reform these entitlement programs now to make them fiscally sustainable and to ensure that seniors are protected from poverty, without burying younger generations under insurmountable levels of debt.” — Romina Boccia, Research Coordinator, Thomas A. Roe Institute for Economic Policy Studies


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Mandatory spending is out of control…

December 22, 2011
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http://www.theatlantic.com/business/archive/2011/12/the-most-important-graphs-of-2011/250240/#slide19

“Since the adoption of President Johnson’s Great Society programs, spending on entitlement programs has grown more than five times faster than annually appropriated discretionary spending. The entitlements run on autopilot, with rare congressional oversight. This unsustainable rate of spending threatens to overwhelm the budget and smother the economy.” — Patrick Louis Knudsen, Grover M. Hermann Senior Fellow in Federal Budgetary Affairs, Thomas A. Roe Institute for Economic Policy Studies

Average Tax Lev


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Interest rates in Europe suggest more trouble.

December 22, 2011
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The Most Important Graphs of 2011

By Derek Thompson

Dec 21 2011, 2:55 PM ET
“Despite repeated European Summits over the past eighteen months that were supposed to provide definitive resolutions to the European debt crisis and despite enormous IMF-EU bailout packages, government borrowing costs for the European periphery rose to unsustainable levels. More disconcerting yet, by mid-2011, a crisis that had embroiled the smaller countries like Greece, Ireland and Portugal, started knocking on the door of Italy and Spain, which is now calling the very survival of the Euro into question” — Desmond Lachman, AEI


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poverty and energy….

December 21, 2011
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http://wattsupwiththat.com/2011/12/19/dont-tax-development-it-hurts-the-poor/#more-53343

Don’t Tax Development, It Hurts The Poor

Posted on December 19, 2011 by Willis Eschenbach

As you can see, there is a clear and quite tight linear relationship between energy use and income. This leads to an inexorable conclusion. You can’t get out of poverty without having access to affordable energy.

The game is to move to the right as much as you can (increased money) and upwards as little as you can (increased energy). So Bangladesh is not doing as well as India in that regard, since it is moving upwards more steeply. China was doing as well as India in the 70s and 80s, but has sloped upwards in the last decade of the record. Note that India is producing the majority of its energy from coal.

The US and the UK have done a curious thing. Per capita energy use for each country in 2007 was about the same as in 1979. But income went up. Both countries nearly doubled their per capita income, with basically no increase in per capita energy use. Not sure what they are doing right, but we should figure it out and clone it …


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inflation??

December 21, 2011
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http://online.barrons.com/article/SB50001424052748703911604577100333787498196.html?mod=BOL_hpp_dc

SATURDAY, DECEMBER 17, 2011

Next: “Face-Ripping” Inflation?

By JACQUELINE DOHERTY and ANDREW BARY

But the QB duo is convinced that central bankers will start printing money to pay off public debts and keep the banking system solvent. They expect a managed global devaluation of all major currencies in six months to a year. It could be orchestrated through the International Monetary Fund, or the markets might require a gold-based solution, applied by the central banks.

QB’s partners worry that the system’s base money (bank reserves at the Federal Reserve and currency in circulation) is dwarfed by the claims on it. For every dollar of base money, there are $5.00 worth of bank deposits, including checking and savings accounts and time deposits. So, if everyone demanded the return of their deposits simultaneously, the bank could pay only about 20 cents on every dollar owed, Quaintance says.


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coal remains important…

December 19, 2011
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http://www.realclearenergy.org/charticles/2011/12/19/coal_consumption_is_increasing_faster_than_any_other_resource.html

December 19, 2011

Coal Consumption Is Increasing Faster Than Any Other Resource

By Editors

The chart measures consumption of the various energy sources from 1965 to 2010 in millions of tons of oil equivalent. Coal and oil were almost even at the start of the period, with oil climbing rapidly during the late 1960s, leading up to the Arab Oil Embargo in 1973-74. This caused a slight crimp but consumption again surged over the rest of the decade (driven mainly by oil price controls in the United States) until it collapsed after the second Oil Shortage in 1979. With the economic recovery of 1983, however, it has climbed steadily ever since.


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Germany has apprenticeships….

December 19, 2011
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http://blog.american.com/2011/12/europes-next-lost-generation/

Europe’s next Lost Generation

By Daniel Hanson

December 9, 2011, 12:06 pm


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We have paid for our Social Security benefits….

December 19, 2011
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http://www.forbes.com/sites/lawrencehunter/2011/12/18/social-security-as-legal-plunder-not-so-fast/

12/18/2011 @ 9:32PM |2,372 views

Social Security As Legal Plunder? Not So Fast

Today, however, the tax most workers pay has grown so large (a combined employee/employer rate of 12.4 percent) that the real rate of return workers can expect from Social Security is far less than what they could have earned had they invested that 12.4 percent of their wages (or even half of it, for that matter) in private investments, even in the safest, low-yielding FDIC-insured bank accounts or inflation-indexed Treasury bonds.

On average, workers retiring today on Social Security can expect to receive a real (inflation-adjusted) rate of return in the neighborhood of two percent.


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How do we compare to Europe’s weak economies??

December 19, 2011
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http://www.realclearmarkets.com/articles/2011/12/19/the_eclipse_of_keynesianism_proceeds_99429.html
December 19, 2011

The Eclipse of Keynesianism Proceeds

By Robert Samuelson
In 2012, the American budget deficit is projected at 7.9 percent of GDP; Greece’s is 6.9 percent; Italy’s 2.4 percent. In 2012, U.S. government borrowing – the deficit plus renewing maturing debt – is estimated to be 27 percent of GDP; Greece’s is 24 percent; Ireland’s 19 percent. On the plus side, the U.S. debt-to-GDP ratio is smaller than Europe’s worst.


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About author

I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.

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