The Sequester and Economic Disaster

This note reflects a few quick comments on the US economy and where it is going. No formal analysis, no formal theory, just my own impression based on a few economic events.

Historically, I did anticipate the tech bubble (companies with strong buy ratings and P/E ratios of 30,000 tell me something is wrong). I also anticipated upcoming credit problems in 2007 or so (bank offers for gold credit cards to people with $350/month social security income indicate something is wrong). So with that “stellar” record, here goes:

The Sequester: I don’t see The Sequester as a disaster. I’m guessing with The Sequester in effect the economy is either going to grow faster or show little response.

Jobs: Many lamented the “poor” March jobs report of only 85000 odd new jobs. I suggest the opposite. The Sequester gloom and doom predictions said we should have seen a drop in total employment and jump in unemployment. Instead we’re seeing continued (slow) growth. And the early April unemployment numbers (when layoffs are supposed to be happening) indicate that disaster isn’t around the corner.

Interest rates, QE, etc: I think one of the problems in the economy is that interest rates aren’t doing what they are supposed to. The Fed is giving us near zero interest rates to try to increase growth. I think instead that we need higher rates.

Interest rates today provide rather perverse incentives. Savings accounts pay essentially zero. I have one savings account that did pay 0.00% for a few months. In this environment, why save? Part of the problem with the Financial Crisis was the search for high, safe returns by large investors (thus jumping on AAA rated high yield mortgage bonds). Today under the mattress gives as good a return as a safe bank account, so either spend it or put it someplace risky.

I can’t give a formal reason, but I think that near zero interest rates are a recipe for a stagnant economy. We have seen this in Japan, which has had 1% or lower central bank rates for about 20 years along with a stagnant economy. Now the United States is seeing interest rates of almost zero and a stagnant economy. If the Fed pushed rates up to a more traditional few percent, and bank savings rates got back to a few percent, I think we’d see increased growth in the economy.

Twisting Obama's words

As the political campaign heats up, we see both sides doing their best to twist the words of the opposition while apologizing for their own side.  I found a recent case in point in a recent post by Roger L. Simon in PJ Media entitled Barack Obama, Segregationist.

Calling Mr. Obama is rather a strong statement.  So what is the basis of this statement?  Mr. Simon says its a recently released 2007 speech to a black audience by Mr. Obama.  And what is the damning statement?

How else do you explain a statement like “We don’t need to build more highways out in the suburbs. We should be investing in minority-owned business, in our neighborhoods”?

What can we conclude from this statement?  First, after listening to the full speech, Mr. Simon edited the quote - it isn't even accurate.  And in the context, Mr. Obama is saying that the poor (largely minority) have trouble holding jobs because they have trouble getting to and from those jobs.  People without a car can end up spending 2 hours walking or taking busses to a job because there are too few jobs in the places the poor live.

I've been hearing politicians of both parties making statements in favor of neighborhood jobs for decades and none of them have been called segregationist.  Mr. Simon seems to think that by acknowledging that inner city neighborhoods are largely minority and thus wanting to increase the number of jobs there, plus encourage the minorities who live in those neighborhoods to start businesses, Mr. Obama is encouraging segregation.

I certainly didn't agree with all of Mr. Obama's speech, and I'm sure I'd disagree with the methods he proposed to encourage minority owned businesses, but arguing that this statement is somehow meant to encourage or sanction segregation is too much of a stretch.

The presidential debate transcripts and media bias?

Looking for a transcript of the first presidential debate, I've discovered that the transcript changes depending on the source.  So far I've found three versions, and the variations appear to support claims of media bias.  The transccript versions are:

1. An apparent full transcript.  I found these at CNN, the New York Times, and labeled as from NPR.
2. A transcript minus portions of President Obama's remarks from Fox News.
3. A transcript missing Mr. Romney's initial remarks from the Washington Post and CBS.

The other odd thing is that the Washington Post link above (to a "running transcript" of the debate) itself contains a link to the full transcript on a different Washington Post web page.

What struck me is that the conservative news outlet (Fox) omitted portions of President Obama's remarks while two more liberal sites (Washington Post and CBS) omitted portions of Mr. Romney's remarks.  These seem to be ammunition for bloggers on both sides trying to argue bias by the opposing side.

Note:  I only checked the first portion of each transcript (initial remarks by both candidates) so it's possible that the "full" transcripts I found differ in later portions of the debate.

Don't trust headlines about the Supreme Court

A news story today shows the problem with summarizing Supreme Court decisions based on the surface facts.  The headline reads:  "Court won't hear anti-gay marriage group appeal".  However, on reading the article, the court didn't decide anything about gay marriage.  Instead it rejected the appeal of a campaign finance law in Maine.  The proper headline should have read "Court won't hear appeal of Maine campaign donor disclosure law".

The case involves a Maine law requires "groups that raise or spend more than $5000 to influence elections to register and disclose donors."  The anti-gay marriage group did not want to disclose its donor list.  So this is a campaign finance decision, not a marriage decision.

This type of deceptive headline shows up several times a year.  The Supreme Court decides a case on some technicality unrelated to the primary issue, but the news media looks at it as a decision based on the primary issue rather than the technicality.

I'm sure justices are sometimes swayed by the issue behind some technicality they are deciding, but having spent over 15 years following the court's decisions, this is not normally the case.

Why the Post Office is going broke

The financial woes of the United States Post Office have been in the news lately.  Many explanations have been given for the Post Office's problems, from having to pay unfairly high amounts for future pensions to reduced mail volume due to the Internet.  Yet I see another cause.

Take a look at postal rates.  Not the amount of the postal rate, but how postage is calculated.  There used to be a simple set of rates for letters by weight, and packages by weight and service (first class or parcel post). Priority Mail was added, which was essentially a renamed first class package service.

Today, it's not so simple.  A simple letter still takes one stamp, but anything more is subject to numerous rules.  The size, thickness, and flexibility of an envelope is factored in along with the weight in an increasingly complex formula of surcharges to determine postage.  Packages are just as bad.  The only reliable way to send a package is using flat rate envelopes or boxes.  With these the rate is fixed.  But anything which won't fit into a flat rate box, especially a larger box, is subject to surcharges for the size or shape.

Last Christmas I sent a gift to my brother.  The packages wasn't heavy -- under 10 pounds, but it was larger than the Post Office's opinion of what a 10 pound package should weigh.  Given the size of the package, I was quoted $35.00 postage.  Instead I went to Fed Ex and sent it ground service for about $8.00.  Last week I sold something through Amazon.  The buyer got the package and asked for reimbursement because the post office charged him $2.10 extra postage.  Since I know I had the weight and package dimensions correct, I don't know where the extra charge came from.  I refunded the money and have to chalk it up to the cost of selling something that won't fit into a flat rate box.

I recently looked at international rates.  I wanted the cost of sending a letter outside the US.  In the past there has been a simple rate sheet which gave the cost of letters to Canada and Mexico (one rate) or the rest of the world (a slightly higher rate).  I finally found this cost after jumping through a half dozen links.  There are literally pages and pages of regulations about the nature of the letter being sent, extras that can be purchased, etc. (spelled out separately for each country of the world) with the actual rates buried almost as a footnote.

So chalk up another reason the Post Office is going broke -- more bureaucracy creating more and more new rules and regulations ensuring that it will soon be impossible to determine the postage of anything other than a 1 page letter without the help of an expert.

Random annoyances

My daughter has had two Hollister gift cards she was given as birthday presents several years ago.  Since she doesn't shop at Hollister (and there isn't a store nearby), I said I'd sell them on eBay.

I setup the listing to discover that eBay's policy is that one can only sell a single gift card per listing, and only one listing at a time.  I'm can guess at the types of abuse which may have prompted this, but it would have been much easier to sell two $10.00 gift cards as a single $20.00 item rather than having to sell them separately.

Fact checking the fact check -- James O'Keefe's latest and Think Progress

James O'Keefe of Acorn fame has come out with a new video showing voter fraud in North Carolina.  In the video he claims non-citizens and the dead are allowed to vote.  Of course, immediately after the release of the video the counter claims began, showing that the non-citizens were actually citizens and that in the case of the dead person the ballot was actually given out for his son (who has the same name and address).  There are not the usual rounds of partisan name calling in the blogs.

Part of the rebuttal of Mr. O'Keefe's video was a "fact check" from Think Progress, which claims that one of the "non-citizens",  Zbigniew Gorzkowski, was featured in a news article in 2008 which called him a citizen:

Customers flock through the red door of Zbigniew “Ziggy” and wife Halina Gorzkowski’s European grocery and flower shop to buy one of the 12 varieties they sell. The pierogis and 400 eastern European food items and flowers are also punching the naturalized citizen couple’s ticket for their version of the American Dream.

Think Progress said that they found the article by doing a simple Nexis search.  Note having a Nexis account, I went straight to the web site of the newspaper in question (the News and Observer).  On the News and Observer web site, the portion of the story about Mr. Gorzkowski is:

Or maybe you were thinking of taking Mom some flowers? Consider Halgo Flowers & European Grocery (4520 S. Alston Ave.; 321-2014; www.halgo-durham.com), which opened recently near RTP in Durham. Granted, the floral selection is modest compared to what you'll find in established florists. But Halina Gorzkowski, who owns the shop with her husband, Zbigniew, should be able to make up a nice arrangement with a little advance notice.

And besides, what other florist offers the chance to satisfy the foodie in you when you pick up your order? At Halgo, you'll find a broad assortment edible wares from the owners' native Poland and Eastern Europe. Explore shelves and refrigerated cases laden with more than a dozen varieties of pierogi, authentic kielbasa, Polish hams, Hungarian salami and other imported cold cuts, as well as hard-to-find Polish cheeses, imported canned goods, coffees and teas, and an assortment of sweets. Come to think of it, Mom might like a box of those chocolate cherry cordials to go with her flowers.

ad more here: http://www.newsobserver.com/2008/05/07/91316/gregorys-is-back-in-cary.html#storylink=cpy

So what should we conclude?  Perhaps Nexis's version of the article matches Think Progress?  Since Nexis says "call our sale representative if you want an account, I assume I can't afford to check that way.  My library has access to Nexis, and I couldn't find the article searching there, but I'm not sure if they had the same type of subscription as Think Progress.  So perhaps Think Progress published the honest result of their search.

On the other hand, perhaps Think Progress found the version on the News Observer site and didn't find the story convincing.  So they created their version and wrapped it around a Nexis search, knowing that most people don't have access to Nexis.

As an aside, it was about 150 comments into the over 400 to the posting when somebody finally asked about the News Observer web site article.  No response to this from Think Progress that I'm aware of.

Unfortunately, I don't know any way to determine the truth of this little "fact check" episode.  Of course, whichever version of the news article is true it doesn't answer the question of Mr. Gorzkowski's citizenship (and I'm not expressing an opinion either way).

In terms of Mr. O'Keefe's claims about non-citizens, it appears that O'Keefe got ahold of jury duty records and extracted a list of those excused for being non-citizens.  He then compared this to voting records.  Both his "non-citizens" were excused from jury duty for not being citizens, and both were registered to vote.  The first person, William Romero, claims to have become a citizen after the jury summons and before this election (and a copy of his naturalization record is online, though again it's from Think Progress.

The second was Mr. Gorzkowski, who says he was naturalized in the 1980's and has voted at least since 2004.  So most likely Mr. Gorzkowski is guilty of lying to avoid jury duty, not the right thing to do but getting out of jury duty is a longstanding tradition in this country.