Daily Archives: July 19, 2013

No More Communism! North Korea Capitulates: Farming.

"The last hold-out is no longer holding out. North Korea now allows collective farms to lease land to peasants. The peasants pay 30% of the crop to the collective. We can be sure of this: output will rise. This is what Deng did in 1978. He freed up agriculture. The boom began within a year. The peasants will buy into this if they believe they will really get to keep 70%. They are suspicious. But if the collectives abide by the rules, Communism is finished. The experiment has failed. Celebrate. Light up a Cuban cigar. (No. Sorry. That’s illegal in the land of the free and the home of the NSA.) May the lights come back on in the North." Continue reading →

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“You’re Fired. Want to Work Part-Time?”

"The U.S. Chamber of Commerce summarizes what the situation is. 'Small businesses expect the requirement to negatively impact their employees. Twenty-seven percent say they will cut hours to reduce full time employees, 24 percent will reduce hiring, and 23 percent plan to replace full time employees with part-time workers to avoid triggering the mandate.' Thanks, Nancy. Thanks Barack. You have just created the new normal for low-paid workers: lower pay! This is why the government decided to delay implementation of small business rules until 2015. You see, there are Congressional elections in November of 2014." Continue reading →

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Detroit’s City Pensioners Are Wiped Out.

"This is the thing about impossible obligations. They get abandoned. This confirms economist Herbert Stein’s law: 'When things can’t go on, they have a tendency to stop.' A year ago, the experts denied that anything was wrong. Yes, there were 'problems,' but nothing that could not be fixed. 'Bankruptcy? Are you serious? Of course not. There is no possibility of that. Such talk is inflammatory. Perish the thought.' That’s what politicians always say . . . right up to the end. The pensioners will have to go back to work. They will be covered by Medicare only. They believed the politicians. They invested their working years in terms of promises made by politicians." Continue reading →

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Bernanke: I’m Clueless About Gold

"Chmn. Bernanke: When we buy securities from a private citizen, we create a deposit in their bank, and it shows up as reserves. So if you look up our balance sheet, our balance sheet balances. We have Treasury securities on the asset side. On the liability side we have either cash or reserves at banks, and on the margin that’s what has been building up as excess reserves at banks. Rep. Rothfus: You create the reserves? Chmn. Bernanke: Yes. Rep. Rothfus: Is that printing money? Chmn. Bernanke: Not literally." Continue reading →

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Detroit Suffers the Biggest Municipal Bankruptcy Ever — Are Your Muni Bonds Safe?

"The move is clearly a tragedy for Detroit residents, workers and retirees. Many will see their health-care and pension benefits slashed. But, ultimately, Detroit felt it had no choice to get out from under its crushing burden. But what about the broader implications? What does this mean for the $3.7 trillion municipal-bond market? Well, many market pundits will claim Detroit is an isolated case. Many bond-fund managers will try to downplay the significance of this. Do not fall for it. First, Detroit is far from alone. While it is certainly the largest municipality to go broke, the city is just the latest in a long line of troubled municipal borrowers to tumble into bankruptcy." Continue reading →

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101 Million Americans Received Food Aid Last Year

"Nearly one-third of Americans received government-funded food aid in 2012, according to a new report from the U.S. Department of Agriculture (USDA). There are roughly a dozen federal food assistance programs operating today. The USDA reports that 59 percent of households that participated in one of the four largest food assistance programs—food stamps, school breakfasts, school lunches, and WIC—end up receiving benefits from 'two or more programs.' This indicates significant duplication, 'providing participants total benefits in excess of 100 percent of daily nutritional needs.'" Continue reading →

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Orphans: Adding Company Value in the Biotech Space

"While orphan drugs' share of the $880-billion global pharmaceuticals market remains small—at $50 billion as of the end of 2011, or just 6% of the total—their growth curve has been steep. Thomson Reuters reports that between 2001 and 2010, orphan drugs posted a compound annual growth rate of 25.8%, outstripping the 20.1% CAGR returned by a matched non-orphan control group. With these kinds of eye-popping profits being raked in by orphan drug makers, the investment world has taken notice." Continue reading →

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Going, Going, Gone: Crisis-Plagued Madrid Sells Out City Assets

"Mayor Ana Botella would like to bring the Summer Olympics to Madrid in 2020, following the city's third attempt to capture the games. Her predecessors have already invested more than €6 billion in the effort, and she needs at least another €2.5 billion. That might explain why, in recent months, Botella has begun to sell off public buildings and properties -- even if she hasn't managed to raise very much money so far. A Chinese bank snatched up a magnificent building near the Prado Museum at a price discount of almost a third. The fire sale also included 26 works by Spain's best-known contemporary artists, which were part of the city hall's inventory." Continue reading →

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The Jobs Number Is B.S., Says Former Head Of B.L.S.

"Keith Hall believes the US economy is a lot sicker than the 7.6 percent unemployment rate would lead you to believe. And he should know. Hall was, from 2008 until last year, the guy in charge of Washington’s Bureau of Labor Statistics, the agency that compiles that rate. 'Right now [it’s] misleadingly low,' says Hall, who believes a truer reading of those now wanting a job but without one to be more than 10 percent. The fly in the ointment is the BLS employment-to-population ratio, which is currently at 58.7 percent. 'It’s lower than it was when the recession ended. I think that’s a remarkable statistic.'" Continue reading →

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Detroit Declares Bankruptcy; Citizen Layoffs Begin

After decades of mismanagement, decay, and taxpayer flight led to one of the largest municipal bankruptcies in U.S. history Friday, city officials have begun circulating notices informing citizens that their continued residence would no longer be required. "Look, there's really no need to spell out what everyone knows: Detroiters are a net drain on the Detroit economy," said city emergency manager Kevyn Orr. "The city services they consume cost far in excess of what they can afford. The sooner we complete this restructuring, which will unfortunately require a significant reduction in headcount, the sooner we will be back on track as a city." Continue reading →

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