Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
US Mortgages, Risky Bisiness "Easy Money" - 30th Oct 14
Gold, Silver and Currency Wars - 30th Oct 14
How to Recognize a Stock Market “Bear Raid” on Wall Street - 30th Oct 14
U.S. Midterm Elections: Would a Republican Win Be Bullish for the Stock Market? - 30th Oct 14
Stock Market S&P Index MAP Wave Analysis Forecast - 30th Oct 14
Gold Price Declines Once Again As Expected - 30th Oct 14
Depression and the Economy of a Country - 30th Oct 14
Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years - 30th Oct 14
Apocalypse Now Or Nirvana Next Week? - 30th Oct 14
Understanding Gold's Massive Impact on Fed Maneuvering - 30th Oct 14
Europe: Building a Banking Union - 30th Oct 14
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

President Obama's State of the Union Address Fuzzy on Maths

Politics / US Politics Feb 14, 2013 - 02:51 PM GMT

By: Money_Morning

Politics

Martin Hutchinson writes: President Obama's State of the Union Address on Tuesday night was high on rhetoric but short on math.

As with most Obama speeches, it was beautifully delivered. However, even where I agreed with the ideas, I couldn't quell a nagging suspicion that the numbers simply didn't add up, and indeed likely missed by a lot.


And let's face it, some of the ideas in the speech were just plain bad.

The Bad Ideas
At the top of the list was the proposed increase in the minimum wage to $9 an hour. It's sounds nice, but reality is a different story.

Economists pretty much universally agree that high minimum wages have the opposite effect: They increase the ranks of the unemployed.

Now admittedly, $9 an hour isn't likely to increase unemployment in costly areas like New York City or coastal California.

New York City Comptroller John Liu has already sent me an e-mail complaining that $9/hour is equivalent to only $4.97 in his overpriced city.

But it will certainly push up joblessness in St. Louis, Houston or Cleveland, where living costs are lower than the national average.

Of course, Houston can look after itself with high oil prices and a decent local economy, but you can't tell me that a $9 an hour minimum wage won't increase unemployment in Cleveland or even St. Louis, let alone in rural areas.

It's a bad idea, which fortunately won't get far in a Republican Congress. But it wasn't the only one.

His insistence that Congress must immediately address global warming, and his threat to do so by executive action if it didn't, are deeply controversial.

The reality is that global warming "investments" have already cost U.S. taxpayers billions upon billions, with very little to show for it. In fact, the extra $12 billion of wind power subsidies tucked into the "fiscal cliff" deal-- one fifth of the first year's tax increases-- is just the latest example.

What's more, when you look at the Antarctic as well as the Arctic, and at the global climate as a whole, there's evidence that global warming has at least paused since 1998, and that even by 2100 it will be limited to the 1-2 degrees Celsius change that we can easily handle without subjecting ourselves to infinitely costly command-and-control policies.

The Good Ideas
But the President's speech wasn't all bad.

President Obama made a considerable amount of sense on education. In fact, Education Secretary Arne Duncan is one of his most impressive Cabinet members.

He does want to increase access to early childhood education, the problem with which is that studies seem to show the current program does little good.

Coming from a different education system, my main beef with U.S. K-12 education is how slowly it goes in the early years.

Without any special coaching in Great Britain, I started calculus at 11. Here in the states, my son didn't get to it until he was undergoing the tribulations of college applications as a high school senior - far too late for him to have the reliable grasp of it necessary in a modern economy.

However, Obama's better education idea is to combine high school education with community colleges, so that those graduating high school have a vocational qualification that makes them useful to local employers.

If nothing else, that makes them employable if their dream job flames out. I now regret that my son, educated within 200 yards of the giant Tyson's Corner mall, didn't get a qualification in Mall Management - something a modern economy can always use!

The Fuzzy Math
The main problem I have with the speech, however, is the cost of his proposals.

Obama said specifically "Nothing I'm proposing tonight should increase our deficit by a single dime."

Then during the speech he proposed:

■15 manufacturing innovation institutes;
■An Energy Security Trust for new energy research;
■A "fix it first" program for more infrastructure spending;
■A big expansion of early childhood education;
■Incentives to companies to hire the long-term unemployed;
■Tax credits to businesses that invest in low-income couples;
■New spending on combating cyber-attacks.

That's without counting initiatives like the minimum wage and more regulation that provide a drag on the economy but don't cost the government any money directly.

Put politely, his numbers don't add up.

Eager to find something to like, The Financial Times declared that a potential U.S.-EU free trade agreement was "the centerpiece" of the speech. But that's nonsense - it was in one sentence out of over 6,000 words. But it's still a good idea.

In the end, it was a well-delivered speech, and there were some good ideas in it I hadn't heard before.

But let's face it, the government's overall current priority must be to reduce the budget deficit, and Obama's package as a whole was a hindrance, not a help to that objective.

Source :http://moneymorning.com/2013/02/12/u-s-economy-recovery-doesnt-fool-struggling-americans/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014