How Labor Markets Work

There is an “immigration reform bill” on the horizon, or so it would seem. I thought I would discuss how labor markets function in the modern world so that we could see our predicament with some perspective.

The most obvious thing to know is that capital (money) will chase the cheapest labor. Now, true enough, this is for unskilled labor. If it costs fifty cents an hour to assemble in China or elsewhere in South East Asia, then companies go there to assemble. That’s pretty easy to understand.

Some people would argue that minimum wage at 7.50 or at 10 dollars an hour is too high, and that such an arrangement is killing our ability to compete or hire domestically. This is poppycock. You see, Americans are not unskilled workers. In our country we even take on help around the house at about the 10 dollar an hour range that we pay to immigrants who are willing to perform these duties at a price that we would not. Agriculture is also used to occupying about the lowest skilled labor, but even this requires some training and stamina that stuffing microcircuits onto a board probably does not. Ask Apple.

The issue for getting Americans hired is to get their education and skill set aligned with the needs of the companies producing goods and services. There are some companies that hire out their “service” departments again to areas in India and beyond, but you’ll notice that those who do so can not charge as much for real and better more immediate service as offered here domestically. If you want to charge good money for services, you need an good well trained American worker.

One idea is to intern before one leaves their educational institution. This may help. In the meantime, much of the artificial wealth that was allowed to be created by a real estate and bank’s robbery of the public, the size of which has still not been comprehended by the unsuspecting taxpayer, has left its dirty fingers in everything except your blue chip stocks in your 401k which is busy saving up cash earnings from abroad in your retirement account. Thank goodness for small favors. Investing in the rest of the world has become more “profitable” for the moment.

Unfortunately, foreign currencies are also printed in a basement just like they do here, and while they invest in infrastructure and so on, they have borrowed to do so. The Chinese are spending several dollars to create a dollar of wealth, and the rest is borrowed. They have a couple of billion people, but many are earning dirt wages. Sadly, American barons of industry see this, and they want very much to create a two tiered class system right here in America. While the few at the top are accumulating most of the wealth, educational expertise is not being supported by industry, and a huge unskilled labor force is left to battle for jobs that companies can hire elsewhere in the world for much less.

We have to ask ourselves if accepting a turning of America into the Mexico of 1950 is ok with us or not. In Mexico, a two class system is the norm. It is becoming so more and more here. How many of my readers have a principal home under water? You are making Wells Fargo very rich at your expense. The problem isn’t that you are paying too much taxes, the problem is that you and your children will never be employable at a home buying range, and you will never have access to capital unless you are from…. the already privileged class. That is exactly life in Mexico today. Returning to land owners and renters as a class distinction should scare us in this country. That shouldn’t be the rule. It should be the exception.

As we work out our “immigration reform” bill, I hope that we will remember that labor unions made the middle class of this country the envy of the world at one time, and created a dream that every man woman and child could harness a home and a picket fence with hard work. When will that become true again? A lower minimum wage and less education is a ticket to failure. Build more schools and less jails and watch the middle class grow again.

I am co-authoring a new book on tuition free education by the most prominent company in existence today in the field, founded right here in this beautiful valley. That is one possible key to the new world. It also allows for the inevitability of a combined world economy without prejudice. There are solutions. Let’s just open our eyes to mutual gain.

 

Economic Impact of Marriage Equality

Interestingly, we do not speak about heterosexual marriage but perhaps we should. People are actually asking me “What kind of weddings will gay people have?” They will be just like straight weddings. The children of these couples will be just like the kids of straight couples. Do I really have to say that straight people have children from former marriages just like gay people, and that same gender couples adopt in the same way heterosexual couples do? That is a bit insulting to even have to mention. Many heterosexual couples do not have children, and that would be true of gay couples too.

I am reading about tax ‘Parity.’ I loved that. Yes… ‘Parity.’ That is like saying women will now be taxed under the law just like men, or black people will now count as a whole person. It’s absurd to be thinking along those lines. The U.S. is lagging on marriage equality, and the lag is not the source of our pride; persistence is. As we achieve this, we will not be leaders in the world as we used to be on social issues. Still, this will be having an enormous and positive impact on our economy here in California. So, let’s look at some of the good news that is coming to our valley.

In answer to the question about, “What are gay weddings like,” many readers will be relieved to know that there is still an opportunity to buy gifts for each spouse (yes, spouse not partner). Registering for your wedding gifts is but one step toward the broader economy. The first few steps are actually more obvious ones. When any couple gets married they have several ceremonies. The rehearsal dinner is a traditional favorite; the civil ceremony, the religious one, the reception and all the associated expenses are on the list.

Associated expenses would include flying family into and out of the city, hotel rooms, caterers, florists, laundry for table linens, dry cleaning, meals during the stay (restaurants), tuxedo rentals, gifts, wedding rings, more flowers, party rentals, halls for banquets and rentals of sites for the various ceremonies themselves, etc. The ripple effect economically speaking is much larger than first thought; just ask any family bearing the wedding expenses.

But wait… there’s more! As a demographic, gay couples are well educated, have more disposable income and can afford to spend more on this type of event. Palm Springs and surrounding areas like Desert Hot Springs will, under proper leadership, benefit enormously from this new, modern family. While numbers from the first season will not be typical, I still estimate that with the money multiplier effect, as much as $300 million will come to our valley in this newer, broader, fairer world for years to come. Our desert cities are a far more affordable choice than SF, LA or SD.

In short, we are about to edge out Las Vegas as the marriage capital of the world , but with a beautiful and understated elegance as currently exhibited by our casinos that don’t flash nearly as brightly, on purpose. As a result of marriage equality, the industry itself will undergo a revitalization that will in turn increase the number of people wishing to celebrate here.

This has been a long time in the making. As an openly gay local resident, I am terribly proud to see this day arrive. God bless us all.

The long term view

Everything is urgent these days. This is not helping our economy on a grand nor a small scale. Right now, we have the “sequester” as our latest threat. It will probably either be forestalled with a relatively meaningless delay of some thirty days at the last minute, or solutions will be dealt with in a hind sight manner, like in the banana republics this country used to laugh about. This is truly devastating to watch as an economist and a true patriot of this country’s ability to engender innovation and success when the circumstances are right, and they are right, if everyone would simply stop complaining and get on with a solution.

It is this writer’s opinion that a challenge or a problem is simply a solution misinterpreted, and that in the name of what is best for the country and for local governments for that matter, that we need some leadership that is willing to risk a short term political goal for a long term view. Lead first, and then watch the rewards fall into place later. To some extent, that is exactly what leadership is. As I have written in various publications, and been the source of input into various media across our great valley over these past 10 years or so, it has become apparent that even I should take a dose of my own medicine.

To that extent, I have taken the initiative to meet with (on separate occasions) in the first week of March, Manuel Perez and Supervisor Benoit as we give serious consideration to the overall and long term effects of the Sentinel Plant operating on what I am told is a 30 year lease. This time horizon runs beyond the next election for these officials that were instrumental in getting this plant into our midst, and now I want to know how we as long term residents are going to look properly at the health and stability of the region in which this firm will be operating with hopefully similar goals, beyond profits I mean.

I am a financial specialist and economist, so my time will be spent with these representatives going over what commitments and plans are in place if any, or plans that should be in place if none are currently, that will allow us to all live together under the best possible set of circumstances in the best possible way.

It occurs to me that whether one is Democrat or Republican, that one’s lungs and children are basically the same, and that the future of business and tourism in the area are equally effected by the operation of the Sentinel Plant. Instead of working against each other as parties of differing interests, I am exploring what alternatives exist for the mutual interest of the community and the goals of yes, even the energy firm. Why work through a series of sure to come lawsuits when antagonistic relationships can be avoided with proper attitude and planning?

Yes, an original 53 million has been allotted in some kind of “pollution mitigation” grant, but those funds are largely allotted to a possible parkway and other down valley projects that have nothing to do with the six mile radius in which the plant operates, and today, several weeks before the official opening of the plant, that money is already gone as an allotted lump sum in year zero. What of years one through thirty? We have a long future well beyond the election cycle of these representatives.

For this reason, I am taking the initiative to dare to ask what our plans are since none have been mentioned that reflect the most certainly stable and healthy concerns of the community in which Sentinel operates and plans to operate in the long term. Let’s discover the areas of mutual interest for a growing and stable and healthy community, and I will report those results from those meetings right back here in your local economic blog where we can all count on being informed at the very least. After that, only your letters and votes can speak for us as a local and concerned society again, in the long term. Now, let’s go learn!

Immigration reform and the economy

Dear Reader, After a few weeks hiatus, I’m back!

It would seem that some reform on immigration is both necessary and going to become law. Lawfulness is always better than lawlessness, and a known quantity worth more than an unknown quantity. These two old adages have failed to be embraced in an emotional battle that needs some nice cold eyes, and plenty of fresh water.

We live in a country of immigrants. It would seem that some 12 million persons have been living here without proper documents. That is a problem. Getting identification to these individuals moves them from being unidentified into being identified, and hence from being an unknown into being a known. That is safer for them, and for everyone in their environs. Many persons believe that somehow the 12 million people here aren’t well, here yet. They are here. In your neighborhood. Everyday. From a law enforcement standpoint, any police officer will tell you that having a record on a person makes it a thousand times easier for the police to do their job of serving and protecting the community. That saves money in the broader economy.

Work permits legitimize the collecting of taxes, which also would have an enormous positive impact as currently undocumented workers would welcome paying taxes, and they are often forced to go undeclared because of their circumstances. More tax receipts for the government, especially here in California, without having to raise tax rates I should think is a blessing, and a no brainer. As wages are reported, taxes are due. Simple.

Then we hear all the claims of those who will become the “takers” and welfare recipients. Those remarks deny again the fact that these individuals are already here. When they have a medical need, they currently go to the emergency room, and cost the society at large far in excess of what that care would cost were they able to access reasonable private or public insurance. That is economics 101. Why pay more and stick your head in the sand, instead of embrace the problem and get it done with less money? Essentially, when one pays payroll taxes, one pays into the various government systems like Soc Sec, etc., and again with income taxes, and sales taxes.

The movement of goods and people and services across international borders is not the problem as far as the economy is concerned. It’s identifying them and taxing them that addresses the issues. This is another main argument for a VAT as it taxes illicit income including drug money and tourists who are not paying income taxes here. Every time we go to Europe we don’t blink an eye at the frequent 15 percent VAT (or higher!) being slapped on top of the item or service we are purchasing. Do onto others as they are already doing onto you. A further discussion of a VAT argument is really the place of another blog, as I want to stick to immigration principally here.

The building of a fence if you are simply trying to give people busywork during a recession is ok, but our maid as a child used to cross via the air conditioned lobby of the immigration office each week legally with her Mexican passport, so the idea that people swimming across a riverbed that was dammed up for electrical generation many decades ago is well, out of date. And many locals who find themselves without proper papers have been here for decades. It’s a simple reality. Their children are our future leaders, and they should learn as a family that we are a country of laws, and a country that keeps its promise of taxation WITH representation. It makes for the safest environment and the proper tax basis.

Also, the 9/11 hijackers flew at considerable height into those buildings, so how high a fence will be high enough? Persons who work in the DHS say that the real threats are the ports and our northern border anyway, so our electrifying efforts on a Berlin style wall along parts of the Southern border are little more than an international embarrassment. Identify and tax, and general fears based on the unknown will be significantly reduced. The Berlin wall has since been removed, resulting in a thriving metropolis that had been filled with “takers” just a few years ago.

Then there are some less emotional areas, where anyone with an advanced degree or degree of some immediately employable type and so on will be welcome. Such considerations are ones of degree not Degree. Also, the Dream Act provisions for persons  in the military seems reasonable to almost everyone.

Even the foes of immigration reform are going to enjoy the fruits of a better economy once new measures are in place, and that is often their political argument for not wanting those very changes.

Questions and comments can be directed to me here or at my website: www.johnpaulvaldez.com

 

 

Changes

Dear Readers -

I am happy to have heard the President’s inaugural address. I actually didn’t have any particular hopes of a second inaugural speech in particular, so one can imagine my surprise to see the President make history in his extension of gay rights to the civil rights discussion on a par with women’s rights and minority rights. This can never be removed. I am certain that California will be honoring marriages for all couples after the Supreme Court ruling on Prop 8 later this summer, and that is going to have an enormously beneficial economic impact here in the Palm Springs area. Not only is Palm Springs a gay friendly zone, but the price points remain lower than LA and San Diego, and so this will be a major competing voice in locations for same sex marriages.

At first, there will be a big wave of them as the law changes, but even after that, because of our temperate climate, we will be seeing these weddings and all their related happenings occurring with some frequency. Palm Springs will step up to and beyond a Las Vegas wedding site, and that is going to help the restaurants, caterers, hotels, wedding planners, florists, party rentals, and reception halls and meeting rooms. This is encouraging, and a great way to look into 2013.

I am considering several professional options including a possible candidature for office here locally, and depending on decisions at The Desert Sun, this may be my last blog for the paper. I encourage the reader to consider the paper as part of our beloved community no matter what your views, to support it wholeheartedly, and in particular, try their new online service which is being offered at a nominal cost. I believe a digital only version can be had for 10 bucks a month! Quality writers and editors can only be a part of the paper if the paper is supported with subscriptions and advertisements. This paper has been the choice for advertising for me anyway.

Everything is going digital these days. Now schools are coming into being that offer courses online for free. It is hoped that this new business model (called a MOOC) is going to add millions of new students to a more educated world. Scott Hines, the Mayor of Rancho Mirage, and some other partners have founded World Education University on this model. TheWEU.com is their website.

Before I go, I guess there are a few local events of economic importance beyond the change in weddings held here locally, and that would be this issue of the new mall downtown, the Desert Fashion Plaza. As I see it, the project is essentially funded, and the new ballot measure will not derail the project, only delay it. After waiting over a decade in fights with the Wessman partners, a few more months won’t kill this, and remember the money is already there. I don’t think the persons originating the petition have won any popularity contests, but a careful review is better than a sloppy one if we word this in the most positive sense.

I also would like to note that the hotel mentioned as a tenant in the new mall is just that, a tenant. Tenants do not own the building, and tenants come and go. Remember the PanAm bldg in NYC? It’s the Met Life bldg now. The owners of a bldg and the tenants of a bldg are two separate things. I wouldn’t put all my eggs in a basket over any one tenant regardless of who they are. Mr Wessman is hyper-aware of this. Is the public?

I also found it ironic that after the whole fight concerning the Latino bookshop, and the need to get them out against their will, that it would be a local hotel owner that would delay the DFP mall project for six more months or a year. So, there was no hurry to be throwing people out of their shops it would seem in hindsight.

I enjoy writing for this and other publications, and I look forward to being a part of the community here locally for a long time because I love this desert valley.

Questions and comments? www.johnpaulvaldez.com

 

Moving successfully into 2013.

I can’t tell you how pleased I am with the fact that my blog pointed out the ridiculousness of a “fight” over our nation’s full faith and credit, followed by this week’s announcement that no such fight will take place…… at least for a few months. Responsible writing and information always serves the public best. Our nation is strong and innovative enough to overcome any challenge, domestic or foreign. It’s just a bit shocking that many of our most serious challenges have been domestic lately.

I also take a broader look at the damage that could theoretically be imposed on world wide financial markets by portions of the Republican party in the American congress. Too often, we are seeing news people mention the damage that could come to us as the US, and that is certainly true, but a worldwide collapse of financial systems all built on three basic worldwide reserve currencies that include the US dollar would create an international disaster far more difficult to fix than to create, and much broader in its destruction, than a simple, “oops we make a mistake ruling” the following day here domestically on a true to life US default.

For all of the reasons I have stated before about the creation of a set of “risk free” financial instruments that stabilize the whole world, a US default would be internationally catastrophic and bleed well beyond our domestic borders immediately.

By adding a risk on a payment after one has promised no risk, the value of one’s credit is forever damaged, and the mere cost of carrying that debt, and the risk of carrying that formerly risk free debt become costly. That isn’t something one congressman in Texas can fix, no matter how steadfast his convictions and confusions over the difference between spending and a debt ceiling which I have said are completely separate subjects.

I am hosting an hour long Webinar sponsored by JustAnswer.com and by Pearl.com  that will feature a 40 minute discussion on how to rid yourself of Financial Flab as we face 2013, including a whole discussion on student loans among other subjects, and registration is free. There will be a 20 minute Q&A at the end. Jan. 29, 2013. Please join me for an informational, educational, fun hour at 1pm PST.

Link for registration: https://attendee.gotowebinar.com/register/2117328789726237440

One of the subjects I will be covering is the new business model on Education where students can take classes on the internet for free as expressed by WEU, founded right here in the desert.

I can always be reached via my website as well: www.johnpaulvaldez.com

The debt ceiling is not spending – Population demographics

I have some thoughts this evening that seem awfully important to mention. The debt ceiling is the full faith and credit of the US. It is our word. It is the one thing that we have told the world financial markets is “risk free.” Everything else is questionable, but not the word of the US. What we have told the world is that no matter what, under any set of circumstances, we will meet our word, and we will pay our debts, always.

Except if you are a minority of the Republican party that has no idea what the full faith and credit of the US is in the first place. In this case, the entire world’s economy can be placed on a table top for discussion to see if we “feel like” honoring monies we have already spent. Oops. Not a good idea. That’s the same minority that didn’t vote for this past “fiscal cliff” bipartisan agreement.

Without any knowledge of the fact that government spending and budgets and revenues and balancing budgets are all separate discussions, this minority of people from largely rural areas of America mistakenly believe that our word of honor on past debts and the amount of money we may choose to spend in the future are somehow related. There is an ignorant belief that if we refuse to pay what we have promised has no risk at all, that somehow that will improve our standing in the international community. Clearly that is not the case.

That is why our word of honor in paying our debts under a risk free scenario as promised can NEVER be questioned. It is a part of defending our nation to keep our word. This will never succeed as a ploy to fool the public into believing that destabilization of world markets is somehow a responsible thing to do. Last time it was even attempted, our “risk free” rating was downgraded. You can’t add a risk rating to a risk free instrument. That would be the equivalent of saying that we are operating in a fantasy world, and that the world is a joke. The world is not laughing, and they are not a joke. Oh, and they have investors….. holding our “risk free” debt. ‘nuf said.

Secondly, the changing demographics favor us as far as the economy goes unless you are of the school of thought that slavery is desirable in America and a moral and profitable part of capitalism.

The growing Mexican and other immigrant population is the field from which our future leaders will emerge, even sooner than is generally thought. It isn’t the field from which the next group of “takers” will emerge. The entrepreneurs that we are looking for are precisely those who because of their understanding of the American spirit of an ability to access what class systems have denied them in their own countries, are actually to be found in this otherwise maligned group.

Mexicans and those of that great southern heritage are the largest growing voting block in the entire country. As Californians, surely we are ready to embrace this now.

The great western civilizations all offer a minimum level of dignity which includes access to food, education and health and fair treatment in housing so that a strong middle class can emerge if they are truly capitalist.

If one sees the lower classes as merely a working class that is to be squeezed of its value in unskilled labor to create an upper class, well, that isn’t the capitalism we are taught in school. This America works against those thoughts. I, for one, have benefited enormously from access to a fine education both inside and outside of the US, and am honored and privileged to write for this paper on a voluntary basis.

I always like to remind my readers. You can create a middle class by shrinking the lower classes with access, or you can create wealthier people at the top by increasing the size of an unskilled and impoverished lower class that is denied access to the capitalism promised in America.

Yes, our changing demographics have a lot to say about the positive future of our growing economy and our better economic future, unless you can’t embrace the intrinsic value of immigrants and diversity. A strong middle class is exactly what we have taught the world as Americans is both possible and desirable and best for all involved as it leads to a higher quality of life for the largest number of people and rewards those who have a work ethic in a free society. That is in fact our richest legacy as a nation. To watch the middle class disappear is equivalent to watching America disappear. I believe we are within grasp of moving in a positive way that will still surprise the world because of our innovative ways and undying belief in the spirit of this great nation.

I will leave the government’s role and the role of public and private joint ventures in creating wealth for another blog another day.

Find me at : www.johnpaulvaldez.com

 

 

What to look for, or push for if having a better economy is what you want

1) Write Kamala Harris and Katherine Porter about their plans to help homeowners still in their homes and likely far far underwater. ALL of the programs from the 25 billion national mortgage settlement (which is only going to give some relief to those who have ALREADY lost their homes). And the new 10 Billion mortgage settlement which is here to for undecided in its distribution, and the HOPE help line for homeowners are all disastrous failures. Insistence and political pressure can be brought to bear on these otherwise intended funds for modifications and losses BEFORE families are on the streets. This is here in California within which Riverside is the hardest hit area of all.

Elizabeth Warren should also be kicking in on this effort. She founded the consumer Protection Bureau, and is now closer to the President as a Senator from Mass.

2) Twice the number of Chinese expect to make long trips to vacation abroad spreading their money all about the globe with that country’s new found riches, and five times that number within a few more years. All this is happening while we here are worried about locking Mexicans out of a country they settled before the many current residents arrived here to claim their “American” roots, this and paranoiac delusions of what Arabs might do to us when they are as American as apple pie in 99 percent of the cases, we have overlooked ALLOWING visas for the new wealthy of the world (the Chinese) which is choosing Europe over the US time and again because of our failed immigration policies. China is closer to Palm Springs than Europe. At this point, our domestic terrorism by far outweighs our foreign terrorism which is being kept on the front burner by delusional minority extremists starving us from the economic growth out of fear when that additional economic growth is something we should already be enjoying, without the undeserved fear. Even Rick Perry agrees with me here. Working on a safe fair visa issuance is an issue that Mary Bono Mack said Hillary Clinton was “looking into,” now let’s write Dr Ruiz as it isn’t just Mexicans we want here legitimately.

3) Get ready to throw successful happy beautiful gay (and heterosexual weddings). We need for associations to be formed that grow business friendly associations of related businesses, halls, hotels, restaurants, party rentals, designers, floral people, dress makers, etc to make those weddings happen here before other destinations are chosen. Working together is going to make this a win for us. Greed and avarice will ruin it. Let’s make this a destination that beats Las Vegas with class in this regard, and is less expensive than a LA or other choice. That will be happening in June or sooner. Are we ready?

I have some exciting predictions and announcements to make by June for the valley and beyond as we watch the nation recover and pass this baby fight in congress over the various “cliffs.” Can’t wait.

It’s all about the solutions to the problems. Let’s create them as they are within our reach.

Comments and questions? www.johnpaulvaldez.com

 

 

A little sadness before the sunshine

I am writing this on the eve of New Years Eve, Dec 29. The last day to lock in old capital gain rates for profit taking on stocks is tomorrow Dec 30th. Now add that to the fact that the Republican side of our government has come out blocking any meaningful legislation, and the fact that the whole world was hoping we’d grow up with adults in congress by the end of today, and you have the making for a very bad day for the stock market tomorrow. I am not a betting man, and I stay away from prediction of a point estimate in favor of range estimates, but taking a blunt stab at this, I’d say a fall of 300 points wouldn’t shock me if no agreement is reached prior to the closing of the market (meaning that we “fall off the cliff”), and I hope it won’t discourage a rampage by readers as well, hence the importance of these blogs to the general public that has a tendency to only see short term movements or misinterpret market volatility.

First of all, by the end of the day tomorrow, a punt into the next year with a much smaller and less than desirable deal by our right wing extremest tied government is likely to have passed, or in the worst case scenario no package at all is passed then a similar small or even a medium or possibly a big deal will be eventually passed once the New Year rolls into place as the perceptions of raising and lowering taxes are played with by little boys with big check books. Governments don’t tax to pleasure themselves nor to spend wildly and without bounds as has been perpetrated by some, rather the revenue made and the investments wanted by a just society with a minimum level of dignity for all is the goal in this, the richest country in the world. Another goal is the maintenance of a middle class currently annihilated by those who claim that we suffer from what is passed off in a non existent “nanny state.” Such is the label of those who those who would concentrate wealth by allowing a larger pool of poor people to grow in number to support fewer wealthy ones at the top.

The opposing viewpoint, and one I actively support in everything I write, is the America that creates more wealthy people by shrinking the pool of poor people at the bottom by virtue of giving them access to health, and education and food so that those with the proper work ethic can rise to prominence in the promise of a free country inside a nation that is proud of a record of taxation with representation.

When the collapse of the market took place, we were down in the 7700 range, and today we are at 12900 or so. I fully expect that once we settle our “fiscal cliff” and debt ceiling arguments which are not arguments at all but simply work that must be done, we will be well on our road to prosperity again. 13000 and above in fact. The level and duration of our fall will equal the level and depth of the fear and ignorance currently being sold to the public by a minority extremist portion of the House of Representatives. That is well established.

All these wounds are self inflicted, and they are no pleasure to watch by members of any political persuasion. They cost each of our pocket books equally and proportionately. If people dont start to understand that the debt ceiling is not a credit card limit because it represents monies ALREADY spent, and does not make any money available to spend at all.

It’s as though our nation has bought a pair of socks, and suddenly doesn’t want to pay for them at the booth even though we have been wearing them for a couple of years. The whole world downgraded us when we almost defaulted on meeting our obligations last time, because when we buy our socks we promise to pay with the full faith and credit of the US in the future. By the time the debt limit needs to be moved, the socks have holes and no one else wants them.

As for the “fiscal cliff,” we will see a need for more revenue (taxes) and less spending (investing) regardless of whether or not one is Democrat or Republican, so to be held up just because Boehner has no control over his portion of the House of Representatives will simply have to be lived with until the next election.

I am a fiscal conservative, but creating expensive wars, and giving away tax cuts we can’t afford is not consistent with those principles at all. Someone who knows how to balance books better than run a propaganda machine of fear and ignorance will eventually straighten this out. Of that I am confident.

I will be on CBS radio covering the LA area during drive time (4pm-7pm) on New Year’s Eve Day (Dec 31) if you want to hear my picks for the three most important economic stories of 2012. Tune in for a little piece of our valley if you are driving to or from LA!

Send me your questions or comments at : www.johnpaulvaldez.com

 

A little pressure goes a long way

Our lawmakers in congress are already at an all time low, but the recent tragedy in Connecticut has served to show just how petty their refusal to work together really is. Also, the whole world is watching to see if the world’s largest economy is going to offer a world of stability or not. Just wondering. On Monday the President made a third offer with 1.3 trillion in revenue, and about 1 trillion in cuts. Essentially, putting the tax “cut off” at 400K. Not 250K and not 1M as had been requested by the Republicans. Everyone below 400K would have the same tax rate they have now which is a discounted rate from the Clinton era when the budget was balanced.

Included in this deal is a debt ceiling agreement for two years over the one year previously offered by the Republicans in the negotiation. That is not some wild coincidence. Midterm elections are in two years, and an agreement to that date is likely until the next set of congressmen are in place. Their behavior now will likely show in the proportional makeup of that congress, and that fact is known.

Another ramification of the pressure that neither side appear petty in this historical moment is the very real pressure to realize that any party not showing a willingness to get their negotiated work done will damage the whole fabric of the creditworthiness of our nation not so much from a threat of the debt ceiling limit which is yet another issue beyond the budget questions, but because stability is the single most valuable addition to the business world through these unstable times. While congressmen go on vacation and children get shot, they would be well advise not to leave our economy to the whim of the global whim awaiting the US response.

Besides, the incoming congress will only be stronger on the President’s side, and any deal reached will only be stronger on the President’s side. To give the appearance of any leadership at all the Republican side would be well advised to leave their tiny footprint in an inked deal before they leave town. The good news is that if Boehner is not in control of his party as is feared, that the default position is a large boost to revenue which is automatic in the face of a refusal to actually do the work required here.

Today, the DOW went up to 13200, once again putting all the nay sayers to shame as they predict gloom and doom to our national economy under Democratic leadership. This is partially because the likelihood and probability of an agreement is seen as increasing, and a known thing adds value over an unknown thing regardless of party affiliation.

I eagerly await the arrival of the adults in the room be that prior to or after Jan 2013. Our nation is well suited to win economically either way.

Here locally, we are looking into the AQMD allocation of the 53 million in “pollution mitigation” funds that I must remind the reading public is a one time lump some payment for a 30 year lease by the Sentinel plant and its particulate matter (pollution) generating smoke stacks at the north end of PS blowing down over that particular city and DHS first and foremost. It would seem that further inquiry and examination is certainly warranted.

I thank K Kaufmann at The Desert Sun for writing so many articles on that issue of such enormous local consequence.

I can be reached via my website at www.johnpaulvaldez.com