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Portfolio manager Robert Arnett, who manages two of PIMCO's funds, has some alarming things to say about the environment retirees face in the future. In ten years for every working age person added to the workforce there will be 10 new retirees, the complete reverse of what it was ten years ago when there were 10 new working age persons for every new retiree. The impact of this will take the shape of many more retirees selling stocks and bonds to live on and fewer buyers for the bonds and securities, lowering the prospects for higher prices for bonds and securities. He expects the demand for goods and services to continue with higher prices. He sees stocks giving a nominal return of about 5%, bonds a nominal return of 2-4%, for a balanced portfolio yield of about 4%, during the next 10-20 years. After inflation and taxes the returns will be very thin. Expectations of 10% returns do not take into account deficits, debt, and demography in developed countries, says Arnott.

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Krugman points out that without aid to state and local governments, cash strapped cities and states will be cutting back on services and employment, undoing much of the work of the stimulus. These cutbacks by local governments is showing up in the unemployment figures from the Commerce Department. And social cohesion is being strained as the outlook for those without jobs for more than 6 months looks worse with the economy slowing down.

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Workers ended a 3 month strike at Caterpillar's Joliet, Illinois plant, essentially giving in to reduced healthcare and pension benefits and wage freezes for older workers. Under the deal workers hired before May 2005 receive no hourly pay increase, workers hired after that date get a one time 3% pay increase with future pay increases decided by Caterpillar management. Hourly pay at the plant ranges from $13 to $28. About 25% of the older workers are eligible to retire. A $7.8 million fund to supplement incomes of laid off workers will now be used for retirement bonuses. Caterpillar persuaded workers to ratify the contract by increasing the bonus for ratifying to $3100 per worker from $1000. During the strike Caterpillar continued operations by using managers and temporary workers and using 100 workers who crossed picket lines.

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The record shows that like other industrial states such as Illinois, Michigan and Ohio, Massachusetts lost many manufacturing jobs during the period 2003-2007, when Romney was Governor of Massachusetts. At the end of 2002 there were 338,000 manufacturing jobs in Massachusetts, by 2007 this had declined by 12% to 298,000, according to Andrew Sum, an economist at Northeastern University. Romney cites a drop in the unemployment rate from 5.6% to 4.7%. Prof. Sum who heads the University's Centre for Labor Market Studies, says this was people left the workforce during this period in large numbers. He says only Louisiana of all U.S. states had a bigger decline in the labor force when it was hit by Hurricane Katrina. The dot com bubble burst during the period before Romney took office. Massachusetts had already lost 158,000 jobs in 2001-2002 according to the Bureau of Labor Statistics. Romney was unable to do much to reverse the job losses that continued during his term in office.

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About 15% of black men of working age in the population, and 21% of black women, were employed in the U.S. public sector, according to the population survey. The Labor Department reports 500,000 jobs in the public sector were lost since 2007. This reverses an historical trend of resilience in jobs for the public sector during economic downturns. If population increase since 2007 is figured in there are even fewer jobs considering more jobs might have been added, with estimates as high as 1.8 million. This is bad for black people in the U.S. because many work in public sector jobs driving school buses, in the post office, in the police and in other public services, with black people being 30% more likely than whites to hold a public sector job, and twice that of Hispanics. Thic comes at a time when the black community has seen a devastating impact from the foreclosures and other economic damage that followed the 2008 financial crisis. The result is shown in a study of foreclosures for 2005-2009 at Cornell University showing mostly black and Latino neighborhoods were affected by foreclosures at three times the rates for white neighborhoods. According to Pew Research Center the median white family had net assets of $142,000 compared to $11,000 for the median black family. With median black household income at 60% of that of white households the gap keeps increasing especially with high unemployment in black neighborhoods....

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This story in the NYT showing America's GE building a wind turbine three times as large as the Statue of Liberty in New York harbour, comes after a decade of bad news from GE, beginning with its role in the mortgage financial crisis when its stock dropped to new lows. Bad bets on conventional power generation in its power division are leading to the change at GE where it is now investing in renewable energy. Under CEO Immelt GE did not anticipate the surge in growth of renewable energy powered by government subsidies. Now GE is pursuing an aggressive strategy by building larger wind turbines than its competitors Vestas in Denmark and Senvion in Germany. A 12 megawatt turbine is planned by GE called Haliade-X, to be built at a cost of $400 million for demonstration in 2019, shipping units in 2021. Competitors are looking at building a 10 megawatt wind turbine. Vestas SA and Mitsubishi Heavy Industries have a 9.5 megawatt wind turbine in operation as prototype in Denmark. The bit of good news comes with the backdrop of big changes at GE as its power division falters badly. GE under Immelt badly misjudged the market for gas and coal turbines, building inventory and resorting to aggressive pricing, not anticipating the push evident in Germany and in China towards renewable energy. The shift to renewable energy reduced demand for conventional power in Germany and the U.S. In Germany. Electric companies in conventional power generation are struggling. At GE orders declined by 25% and profits by 50% in the 4th quarter over the prior year. 12,000 job cuts are planned in the power division, 18% of its workforce. Older board members at GE are expected to leave, and GE under new CEO/Chairman John Flannery plans to shed $20 billion in assets in a major restructuring and shift to renewables.   Larger wind turbines of 10 megawatts or larger are the next stage in wind energy as the Netherlands and Germany move to build wind farms free of subsidies. The economics of larger wind turbines are critical as less geographic acreage is needed with larger turbines. ...

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The U.S. Senate votes 92-2 in near unanimity to pass a bill on opioid addiction, for prevention, treatment and recovery. This comes as the U.S. faces a opioid addiction crisis in 2016. It increases funding by 47% for the efforts, with funding approval to be voted on separately.

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This is an interview with Columbia University economic historian Adam Tooze about the international trade and economic issues brought about by globalization. The rapid emergence of China in manufacturing and overcapacity in steel has led to action on steel tariffs by president Trump. Tooze is typical of opinion that sees action by Trump not as limited action to level the playing field  as proposed by Trade Representative for the U.S., Robert Lighthizer, but as reckless move on trade.  Lyrarc.com shows articles from the WSJ and NYT showing how opinion got to this point in the U.S., on Robert Lighthizer's views that the U.S. was not facing a level playing field, and  on how trade has hurt communities across the U.S. a long distance away from Silicon Valley. President Trump's views reflect a different perspective that says the U.S. has to balance the favorable situation obtained by China and the European Union through moves of its own to protect U.S. interests. Political commentary that the U.S. was starting a trade war is not supported by the facts showing China's response as muted and a willingness by China to negotiate a balanced trading relationship as its trade surplus with the U.S. continues to grow. The trade surplus is so large that the Trump moves do not tell the real story. They are likely to be overshadowed by the increasing value of the U.S. dollar leading to a continued favorable situation for Chinese exports and a larger trade surplus in 2018, regardless of Mr. Trump's action.  Trump's moves are more significant in other areas- limiting China's access to advanced technologies, with the European Union also taking the same action. This is now the new field of competition for the major world economies. ...

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About the reorganization of IBM under Sr. Vice President Robert Moffat Jr. that is underway. The idea is to make IBM more efficient by increasing the productivity of its people and reduce costs. There are over 200,000 people in the IBM services business. Operating margins increased by 2.3% to 10.3% with productivity improvements in the 1st quarter of 2006. IBM's revenues declined by 1.2% in the 1st quarter to $11.6 billion. This IBM Tech services restructuring will be watched closely by Indian IT and IBM's competitors. Moffat hopes to attack the IT tech services business with a new format to improve productivity and reduce costs, and bring IBM' strengths such as research capabilities to bear. The format is being a virtual factory with competency centres of excellence across the globe. The question is can Moffatt pull this off and convince a bureaucratic large organization to overcome inertia and do things differently. Especially as Indian IT is smaller and not yet affected by Big Company Syndrome. What Moffatt is attempting to do is to create a virtual global factory with specialized centres of compency in different global locations so that work can be transferred from one location to another- much as we see in the automobile industry- based on who does best what at what cost. Nilekani of Infosys, says American competiitors are "seeing it as a compelling threat after years of putting their head in the sand." They are responding to megatrends but not fast enough, according to Business Week. This may be attributable to the fact that Indian IT is younger, smaller, faces more competition inside India, and is more agile for these reasons compared to an IBM or an EDS. Hamm points out that IBM is shifting to a new posture as a globalized business, one that puts behind it its days as a multinational company or MNC, no more MNC geographically based independent country businesses, not an outsourcer as frequently assumed when IBM shifted some jobs overseas recently. The new IBM is an organization that builds on competency centers across the globe with concentration of skills and talent in different locations worldwide. It uses the competency centres to pull together the best people and sequence of operations to meet customer needs. ...

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Citing the drop in oil prices (with housing having to hit bottom at some point) and the stimulus package, Alan Blinder, says the recession should end by the 4th quarter of 2009. This is in sharp contrast to Ferguson's, Spence's, Roach's and Reinhart's view on the editorial pages of the NYT. The difference is whats striking. Ferguson, Roach and Reinhart say 3-4 years, Spence, is of a similiar view, if actions taken don't work the way they are expected to, and they don't put any dates down because too much is happening in the economy, with so much uncertainty. The titles of these three economist's pieces are also instructive, Beware of False Dawn by Roach, Rule of Four by Reinhart, and Spence's A Long Goodbye. Here is Blinder not only saying there won't be any surprises from now on (who knows for sure?) but also puts down an approximate time. He also ventures an exact impact of the stimulus, of 5% impact on real GDP in 2 years. With all that has gone wrong under Greenspan's leadership, one wonders about the credibility of being Vice Chairman of the Federal Reserve during Greenspan's time at the Fed. And as if to ridicule his own forecast he says without any hesitation: "But here's the rub. My forecast assumes that no other (big) shoes will drop. Sad to say, shoes have been dropping like rain." Whats the use of a forecast that has a remark like that tagged on to it, and how responsible is a statement that doesn't suggest caution, when businesses and jobs have been destroyed through overoptimistic forecasts and lack of decisive action. A case in point being General Motors, and the government and the American people are being asked to put $100 billion into General Motors. This is no time for reckless forecasts or for any but the most carefully thought through analysis. Lives and livelihood depend on it. Is this what the President means, when he talks about an era with a lack of responsibility in government and in companies, and those in leadership positions in the country, for their statements and their actions....

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Troops who served in Konar province near the Pakistan border saw some of the heaviest fighting in Afghanistan. Here they give their account of what they saw and why there is a big gap in what they saw and what military officers and President Obama are telling Americans. Fort Campbell is spread out over 100,000 acres on the Kentucky-Tennessee border. Tweny thousand troops from this base served in Afghanistan. Brigades of the 101st Airborne Division from Fort Campbell fought some of the toughest battles in the eastern part of Afghanistan even while the surge concentrated troops in the southern part near populated centers. What the troops remember is battles fought in remote valleys where troops came out of nowhere like "ghosts," in areas which were held only for a few months and abandoned with no idea what they had accomplished. This description also fits with the reality of the Taliban being both Pakistani and Afghan in the sense that the borders were defined by the British during colonial times, but the tribes of the Pashtun region are on both sides, in Pakistan and Afghanistan. To subdue the region would be to subdue the Pakistani side and the support they enjoy in large parts of Pakistan, with the large and mountainous terrain making movement difficult. Which is why these troops talk about "ghosts" turning up from nowhere and find the fighting to have lost meaning in terms of purposes it is supposed to accomplish and how this is to be done. The reality of the valleys and hills over a vast mountainous terrain of Afghanistan and Pakistan and the people and fighting there does not fit the speeches made by President Obama on Afghanistan, and say soldiers this gap is widening every day....

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Prof. Peterson of Harvard and Hanushek of the Hoover Institution, authors with Woessmann of the book "Endangering Prosperity: A Global View of the American School," offer some startling reminders about the importance of education to economic growth and incomes in countries. Simply by raising the math standards in the U.S. to the higher standards in Canada would raise GDP by three fourths of one percentage point. One advantage that the U.S. enjoys comes from its good university systems, open markets, rule of law, tax rates, and open immigration policies, which give it about two thirds of a percentage point in higher GDP growth per year. The estimates are from the authors calculations. For the period 1960-2009, a period of rapid growth in Asian countries Korea, Taiwan, Singapore and Hong Kong, higher test scores in math and reading compared to the wrold average as measured by NAEP test and PISA, have led to 2% higher GDP growth. NAEP shows only 32% of U.S. high school students proficient in math compared to 45% in Germany and 49% in Canada and 63% in Singapore. By contrast to Korea and Taiwan, Peru, Argentina, the Philippines and S. Africa have about 2% less in GDP growth because of lower scores compared to the world average....

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This Journal editorial looks into the jobs numbers for September 2012 that showed unemployment decreasing to 7.8% according to the household survey. By taking the numbers as they are in the Labor Dept. surveys and setting aside skepticism it provides useful insights into the condition of the labor market. It cites the reason for some of the skepticism about the numbers- the 873,000 jump in employment shown by the household survey which looks at 60,000 households. It is the largest increase in employment for one month in 30 years says the Journal. The household survey finds that 582,000 of the 873,000 jobs are "part-time for economic reasons" in the survey's words. The number of part-time workers for economic reasons went up from 7.7 million in March 2012 to 8.6 million in September 2012. This also returns the focus on U-6 the measure of unemployment that Fed chairman Bernanke and experts looks at. This has remained the same for Sept. at 14.7% and includes the number of people working part-time who cannot find full time work. Another useful statistic for insight into the labor market is the decline in household incomes. Studies of Census data show a $4019 decline in median household income from Jan 2009 to June 2012. And the long term unemployed represent about 40.7% of the employed in recent data, an unusually high number that worries Mr. Bernanke. By looking at the broader picture one can get a better sense of the labor market....

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This NYT report looks at the 20 counties within 5 battleground states in the midwestern states of Wisconsin, Michigan, eastern state of Pennsylvania, southern state of North Carolina and western state of Arizona. It shows the percentage of votes gained by the Republican and Democratic parties in the last 3 presidential elections. A look at the trend and direction of vote percentages gained by each party in each of the 20 counties in different states may be a better indication of the final result than polls alone as both parties are pushing hard in the 2020 election down to the last day. The Republicans strong in the ground game and organized effort, and Democrats in television advertising outspending the Republicans. Because of the clearly delineated positions the Democrats and Republicans stand in sharp contrast to each other both in image and substance.  Because of the Electoral College and states assigned electoral votes based on size the U.S. system is not based on the total vote count in the country. Who wins each state by vote count and gets the assigned electoral college votes assigned to that state, an builds up more than 270 Electoral College votes wins the election for president of the USA.  In Michigan there is the impact of the resurgence of the auto industry, with president Trump pulling out of TPP agreement and renegotiating NAFTA in favor of the U.S. auto industry bringing back jobs from Mexico. This puts the union vote in the auto industry- with Ford, GM and Chrysler located in Michigan- favoring these auto friendly policies from the current administration. The resilience of the auto industry sales during coronavirus is part of the economic story in Michigan. The renegotiated NAFTA treaty also helped dairy farmers of Wisconsin increase sales to Canada. In Pennsylvania the coronavirus and economic impact has hit harder than in Michigan with the decline in oil prices and effect on fracking industry. Closure of coal plants is also having a negative impact on the state. Tariffs on Chinese steel by the administration are helping the steel industry. Offsetting these economic stories is perception of how the coronavirus pandemic has been tackled by the administration. Added to this is the suburban women's vote and the shift of out of state liberal voters to suburbs in North Carolina (Wake county), and in Arizona (Maricopa county and Tucson area). States not covered here but also relevant are Minnesota which could be a battleground state in the midwest and Iowa. Racial protests in Minneapolis add another dimension with controversies about the policing in cities such as Minneapolis and recently Philadelphia. The sharp contrasts in image as well as policy, the coronavirus pandemic and the handling of the pandemic as well as the way rallies are being conducted differently by both candidates, and the economic stories, present an election like no other since the 1960's. The contrast is as sharp as between Gen. Dwight Eisenhower of the wartime allied effort and Adlai Stevenson a liberal and humanist in the 1952 election. That election saw some of the highest turnouts since the second world war, and this is now happening today. That election also determined the direction of postwar growth and dominance of American industry, the setting up of the National Highway system and important changes that were later continued under the Kennedy administration. It also marked the beginning of the Cold War following the Korean War under the Truman administration, a situation that is emerging in a different way today with the free world and the tension from relations with China. ...

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A Sept 2012 Census Bureau report shows the median income of a typical U.S. family declined or was flat in almost all states in 2011. Median household income declined in Nevada by 6%, in California by 3.8%. In Arizona and Florida incomes declined by 2.9%. For the U.S. median income declined by 1.3% to $50,502 in 2011. Poverty continues to increase, with California showing 335,760 people falling into annual income levels below $23,021 for a family of four in 2011, giving the state a 16.6% poverty rate.

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Investors put in $136 billion into startup companies in 2018, and $141 billion in 2019, as reported in this WSJ article on startups. Before this it peaked at $75 billion in 2000 and did not recover after the 2009 financial crisis till 2014 when it reached about 75 billion dollars.  Much of the increase in money that did not go into infrastructure at low interest rates below zero appears to have been wasted as the ideas for startups declined in quality in the years 2014-2019. Softbank put up a Vision Fund which has run up billions of dollars in losses including a disastrous investment in WeWork. The resistance to shifting all the money at low interest rates to infrastructure has faded with the election of president Trump supported by a Republican party that puts the American worker first for job retention and expansion, and America first in world trade. The pandemic has changed the environment for startup companies as most startup companies are not likely to survive the environment they are in. The big ones such as Uber have built up losses, and ones such as Airbnb are borrowing $2 billion at 10 percent interest in emergency funding. Experience and sound thinking for investments were left behind as capital was wasted in many projects. The time has come to return to investments that have built the basis of the twentieth and twenty first century's advances in quality of life, in infrastructure and strong public services. ...

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Some of the statements on the IMF Blog on Inclusive Growth raises the question-Does the IMF, the International Monetary Fund, as an American institution funding developing countries, and economists, grasp what people find troubling in 2022? One of the lessons of the economic crises for families and workers in the US and other countries is that wisdom, a grasp of the soul of a country and its people through the thinking of its founders, and common sense, should drive managing of economies, with a knowledge of how economies work- not economists. Some of that is already happening. America's central bank is headed by Jerome Powell who has wide experience and has knowledge of how the economy runs, is not an economist. He was chosen by president Trump and continues to have the confidence of president Biden for this very reason. Some of the statements on the IMF economic blog are- "Why jobs are plentiful and workers are scarce" Jan 2022 "In the US and UK recent labor market the puzzle, can be partly explained by mismatch, the pandemic's effect on women and older workers leaving the work force." The Reality Wages for teachers are depressed compared to workers in the financial and economics industries, in a frighteningly disproportionate way. When it comes to logistics, hospitality, leisure and restaurants industries workers were paid poorly for what is hard work and long days. In case the IMF economists, and economists at companies, missed this it was called the Great Resignation, people simply choosing to reject the conditions that were handed down to them by the financial industry and economists who built the economic structures of recent decades. Women leaving the workforce are faced with issues of mental health coping with added responsibilities of children at home for the two years, loss of income and widespread mental health problems. The word mental health may be beyond the grasp of economists and the financial industry, yet it is the one of the biggest problems for people. Another pernicious effect noted on the pages of the WSJ is that young white men are dropping out after school because they cannot afford college in alarming numbers. Leading to the kind of discontent for workers and families that president Biden is struggling to address. On IMF Blog- "IMF Podcasts: The Year in Review" Dec. 2021 "The past year has brought us new challenges even as the old ones persist. If anything, the ongoing pandemic has taught us to think differently abut tackling the challenges and questions when it comes to thinking about big issues such as climate change, gender equality, inflation and economic measurement." The Reality Climate change lumped in with economic measurement and inflation. The floods, fires, river and reservoir water levels affecting access to basic life supporting water, drought, all over the world are of a magnitude that is missed entirely.The response to a challenge of this type requires the kind of leadership that president Biden has provided for the world with his $360 billion climate change bill as just the first step of many, and  comprehensive policies covering all aspects of the climate crisis. ON IMF bog- "How Domestic Violence is a Threat to Economic Development." "Stopping violence against women is not only a moral imperative, new evidence shows it can help the economy." The Reality Domestic violence hurts children growing up in such households. It is not so much a moral imperative as it is bad for men, women and children. So many things are wrong about it and it is made worse in conditions of low wages and poor working conditions in poor neighborhoods lacking education. These neighborhoods are also affected by lack of healthcare and the opioid crisis and mental health issues. Not investing in education and healthcare in these communities is what is simply wrong, and which the founders of America as a nation, particularly Lincoln, would find appalling.   Relationship between Capital (the Financial Industry) and Labor (Workers and Families) On the basic issue of the relationship between capital and labor, the IMF and the financial industry, economists, and the economic structure they built in recent decades, have simply got it wrong. It violates both common sense and wisdom, and violates the spirit of the founders particularly Abraham Lincoln. This is what Abraham Lincoln had to say on Upward Mobility, the ease with which each generation can do better than the one before it, as critical in the fight to save the Union. This is from the Annual Message to Congress Dec. 3, 1861, at the start of the Civil War. That upward mobility has been lost in the US with ideas that "place capital on an equal if not above labor, in the structure of government," for the last three decades in the US after the early post war period of Truman and Eisenhower, Kennedy-Johnson.  And Lincoln says this about a hired laborer being fixed in that condition for life, or of future generations of that hired laborer facing disabilities and burdens, similar to the loss of upward mobility for the people today. "Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences based on them are groundless." "Labor is prior to, and independent of capital. Capital is only the fruit of labor, and could never have existed, if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are worthy of protection as any other rights." "Again: there is not, of necessity, any such thing as the free hired laborer being fixed to that condition for life. Many independent men everywhere in these states, a few years back in their lives, were hired laborers. The prudent penniless beginner in the world, labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires another new beginner to help him. This is the just, and generous, and prosperous system, which opens the way to all- gives hope to all, and consequent energy, and progress, and improvement of condition to all." Lincoln even offers this warning- No men living are more worthy to be trusted than those who toil up from poverty- none less inclined to take, or touch, aught which they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which if surrendered, will surely be used to close the door of advancement against such as they, and to fix new disabilities and burdens upon them, till all of liberty shall be lost." US president Biden has these ideas in mind as he struggles with one piece of legislation after another to restore what once was, to open the door of advancement, to remove these disabilities and burdens that Lincoln speaks of, and in so doing restoring liberty.   ...