The stock market rebounded slightly on Friday, but not enough to regain losses from earlier in the week. I added some shares of Australia's largest telecom to my IRA account. As it turned out, I could have saved nearly 10% by waiting until the end of this week, but it should all work out in the end.
I don't put much stock in the new jobs stimulus program. The only beneficiaries of the last stimulus were big banks and bank executives, who promptly paid themselves large bonuses. I figure this program will prove more of the same. So much for change in Washington, although I noticed from a CNBC article that Nancy Pelosi's net worth increase during the past year by over 50%. Wonder how that happened?
Well, enough of that. After work today I'm off to the Lake of the Ozarks for some much needed R&R. Hope everyone has a great weekend!!!
Showing posts with label creating jobs. Show all posts
Showing posts with label creating jobs. Show all posts
Saturday, September 24, 2011
Thursday, September 8, 2011
ATTENTION WASHINGTON, MY SUGGESTION FOR CREATING JOBS
From an earlier post in May when I wrote about QE2:
''Since the total cost of QE2 came to $6 billion, that works out to $850,000 per job created. I figure I could retire quite comfortably on about a third of that amount. So if the government had simply offered early retirement to people like myself, they could have easily freed up 2,100,000 jobs. Now if you had 2,100,000 job openings and 2,100,000 new retirees with adequately funded retirements, not only would you create additional jobs to support the needs of the retirees, but income tax revenues would have increased since retirees would still be paying income taxes, and the government would have recouped the money spent on early retirements in the form of income taxes. Given the fact that new hires are usually hired on at a lower pay scale than seasoned employees, it would have had the added effect of keeping inflation in check by lowering payrolls and reducing overall costs for businesses. Private corporations and state governments do this all the time, offering early retirement as a way to reduce payroll costs. Why not apply the same method on a national level if you're going to spend the money anyway? Something our political leaders may need to look into.''
Corporations and state governments do early retirement buyouts, why not the Federal Government? In the case above, instead of creating just a few hundred thousand jobs, for the same tax dollars they could free up a couple of million jobs and create additional jobs to meet the needs of an additional 2 million retirees. Granted, they're not talking about spending an additional $6 Billion, but the principle is the same.
''Since the total cost of QE2 came to $6 billion, that works out to $850,000 per job created. I figure I could retire quite comfortably on about a third of that amount. So if the government had simply offered early retirement to people like myself, they could have easily freed up 2,100,000 jobs. Now if you had 2,100,000 job openings and 2,100,000 new retirees with adequately funded retirements, not only would you create additional jobs to support the needs of the retirees, but income tax revenues would have increased since retirees would still be paying income taxes, and the government would have recouped the money spent on early retirements in the form of income taxes. Given the fact that new hires are usually hired on at a lower pay scale than seasoned employees, it would have had the added effect of keeping inflation in check by lowering payrolls and reducing overall costs for businesses. Private corporations and state governments do this all the time, offering early retirement as a way to reduce payroll costs. Why not apply the same method on a national level if you're going to spend the money anyway? Something our political leaders may need to look into.''
Corporations and state governments do early retirement buyouts, why not the Federal Government? In the case above, instead of creating just a few hundred thousand jobs, for the same tax dollars they could free up a couple of million jobs and create additional jobs to meet the needs of an additional 2 million retirees. Granted, they're not talking about spending an additional $6 Billion, but the principle is the same.
Tuesday, June 14, 2011
LOOK FOR U.S. STOCKS TO RISE ON NEWS FROM ASIA
With news from China showing inflation not as bad as expected and the economy slowing, Asian and European stocks rose overnight. I look for U.S. stocks to follow suit today. Although stocks will most likely rise some today, I wouldn't expect this to point towards any kind of return of a bull market. I fully expect the markets to continue to lag throughout the summer, with small increases here and there depending on economic news from around the world.
As far as a sustainable recovery, I don't really see that happening until jobs recover. While there may be a bit of a recovery in the fall, as long as the jobs picture remains bleak, the stock market isn't likely to make any sustainable advances. Government intervention has proven ineffective at creating jobs, so it will most likely be up to the private sector. The big corporations will eventually have to see it as an advantage to create more jobs, boosting the economy, by putting some of the massive stockpiles of cash they have right now to work. If a company can no longer invest extra cash profitably, they traditionally returned the cash to shareholders in the form of dividends or share buy backs. However, as much as I like dividends, I'd rather see some of the money put to work creating jobs. More jobs mean more consumers with expendable cash, leading to increased business and profits. An increase in business profits from a growing economy is the only real way to sustain a long term recovery of the stock market and the absolute best way to reduce massive government debt by resultant increased tax revenues.
Is this likely to happen? Eventually, I think it might, but for now I think companies will continue to stockpile cash as a protection from poor liquidity in the credit markets. When money is not available in the form of loans, the companies who have a large cash reserve will fair better than those who depend on loans for day to day business expenses.
As far as a sustainable recovery, I don't really see that happening until jobs recover. While there may be a bit of a recovery in the fall, as long as the jobs picture remains bleak, the stock market isn't likely to make any sustainable advances. Government intervention has proven ineffective at creating jobs, so it will most likely be up to the private sector. The big corporations will eventually have to see it as an advantage to create more jobs, boosting the economy, by putting some of the massive stockpiles of cash they have right now to work. If a company can no longer invest extra cash profitably, they traditionally returned the cash to shareholders in the form of dividends or share buy backs. However, as much as I like dividends, I'd rather see some of the money put to work creating jobs. More jobs mean more consumers with expendable cash, leading to increased business and profits. An increase in business profits from a growing economy is the only real way to sustain a long term recovery of the stock market and the absolute best way to reduce massive government debt by resultant increased tax revenues.
Is this likely to happen? Eventually, I think it might, but for now I think companies will continue to stockpile cash as a protection from poor liquidity in the credit markets. When money is not available in the form of loans, the companies who have a large cash reserve will fair better than those who depend on loans for day to day business expenses.
Wednesday, May 25, 2011
QE2 BOOM OR BUST?
While so many politicians would have you believe that the increase in the number of jobs in the past year is a direct result of Quantitative Easing (QE2), making it a success, a look at the numbers paints a very different story.
According to an article I read recently, the number of jobs increased by 700,000 during QE2. Since the total cost of QE2 came to $6 billion, that works out to $850,000 per job created. I figure I could retire quite comfortably on about a third of that amount. So if the government had simply offered early retirement to people like myself, they could have easily freed up 2,100,000 jobs. Now if you had 2,100,000 job openings and 2,100,000 new retirees with adequately funded retirements, not only would you create additional jobs to support the needs of the retirees, but income tax revenues would have increased since retirees would still be paying income taxes, and the government would have recouped the money spent on early retirements in the form of income taxes. Given the fact that new hires are usually hired on at a lower pay scale than seasoned employees, it would have had the added effect of keeping inflation in check by lowering payrolls and reducing overall costs for businesses. Private corporations and state governments do this all the time, offering early retirement as a way to reduce payroll costs. Why not apply the same method on a national level if you're going to spend the money anyway? Something our political leaders may need to look into.
So, QE2 Boom or Bust? I'd have to say it's a bust. $850,000 is way too much to pay for creating a single job and if you consider the added burden of inflation, if I had been involved in passing this legislation, I don't think I'd be so quick to pat myself on the back. (For more on this subject, click the title above for a link to the article on Smart Money.com)
According to an article I read recently, the number of jobs increased by 700,000 during QE2. Since the total cost of QE2 came to $6 billion, that works out to $850,000 per job created. I figure I could retire quite comfortably on about a third of that amount. So if the government had simply offered early retirement to people like myself, they could have easily freed up 2,100,000 jobs. Now if you had 2,100,000 job openings and 2,100,000 new retirees with adequately funded retirements, not only would you create additional jobs to support the needs of the retirees, but income tax revenues would have increased since retirees would still be paying income taxes, and the government would have recouped the money spent on early retirements in the form of income taxes. Given the fact that new hires are usually hired on at a lower pay scale than seasoned employees, it would have had the added effect of keeping inflation in check by lowering payrolls and reducing overall costs for businesses. Private corporations and state governments do this all the time, offering early retirement as a way to reduce payroll costs. Why not apply the same method on a national level if you're going to spend the money anyway? Something our political leaders may need to look into.
So, QE2 Boom or Bust? I'd have to say it's a bust. $850,000 is way too much to pay for creating a single job and if you consider the added burden of inflation, if I had been involved in passing this legislation, I don't think I'd be so quick to pat myself on the back. (For more on this subject, click the title above for a link to the article on Smart Money.com)
Monday, February 28, 2011
U. S. JOBS CREATION
I recently purchased a stake in Intel (INTC) as a core holding in my taxable portfolio. Aside from their great fundamentals and their 3.38% dividend payout, I'm glad to see them leading the way towards creating jobs here in the United States. Intel recently announced they are spending billions to build new factories in the U.S.. If more U.S. based corporations would follow suit, we wouldn't have to worry about jobs creation. New factories here not only create factory jobs but boost consumer spending, leading to creation of residual jobs. Intel's U.S. factories build products for the world market, so they also help the trade imbalance by boosting exports.
Maybe it would make more sense to locate factories outside the U.S. in the short term, but I think if U.S. corporations continue to follow this path, they will eventually destroy one of their most profitable markets. Forward looking companies, ones who think long term, would realize the value of creating high paying jobs here. If we continue to lose jobs, who will buy their products in the future? That's the question CEO's and investors should be asking themselves. It's not always a good thing to outsource production, if it results in the destruction of one of your best markets.
Maybe it would make more sense to locate factories outside the U.S. in the short term, but I think if U.S. corporations continue to follow this path, they will eventually destroy one of their most profitable markets. Forward looking companies, ones who think long term, would realize the value of creating high paying jobs here. If we continue to lose jobs, who will buy their products in the future? That's the question CEO's and investors should be asking themselves. It's not always a good thing to outsource production, if it results in the destruction of one of your best markets.
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