All Articles Tagged "economics"
What difficulties are likely to be encountered during such an effort?
What are the downsides to nation formation?
The first question is just for completeness. The history of Black American efforts to establish a nation state that were highlighted in Part I of this essay constitute prima facie evidence that the concept is viable. To buttress the argument, consider the formation of East and West Pakistan and Israel in the second half of the 1940s; the independence won by the former Soviet Republics during the 1990s; and the founding of East Timor in 2002. What more do we need to confirm the rational nature of an effort to become independent?
Almost all, if not all, counselors and friends will advise an abused spouse to exit an abusive relationship. Do you consider Black Americans to be in an abusive relationship? Why is our unemployment rate generally twice that of Whites? Why is Black household net worth, on average, a very small fraction of White household net worth? Why do Black Americans comprise 40 percent of the prisoners in the U.S. when we account for less than 14 percent of the population?
We could continue highlighting adverse statistics, which cannot be explained without factoring in racism and discrimination, but we believe that you get the picture. We are in an abusive relationship from which we need to exit.
We are likely to encounter the following types of difficulties as we seek to exit this relationship:
• The most important difficulty is identification of a location to establish our nation.
• Many Black American “haves” will attempt to prevent the exit because they benefit from serving as middle men between wealthy Whites and moderate income and poor Blacks.
• White leaders of the nation’s commercial sector will seek to prevent the exit because we are very important customers. The fact of the matter is that, without Black American consumers, many U.S. firms would not be profitable.
• Other firms for which we work at suppressed wages would be forced to pay higher wages and would be less profitable if we ceased supplying our labor. These firms would also oppose the exit.
• Black Americans on the dole are likely to oppose the exit because, as Malcolm X predicted, they will say: “We got it good with massa. We don’t have to work. We can stay home and watch TV all day—especially ‘Oprah’. We get food stamps. We love us some Kentucky Fried Chicken. Where we gonna get that kina chicken if we leave Merica?”
None of these difficulties should be sufficient to thwart nation formation efforts. We can identify and acquire land for the nation (see Essay 3, “Point Zero Nation Formation” in Chosen: Black America’s Calling, 2009); those who stand to lose by the absence of our consumption will learn that commerce involves risks; and those who want to remain with massa can—or they can learn to produce even better chicken in their own restaurants in a new nation.
If we adopt a short-term perspective, we may conclude that there will be serious downsides to nation formation. A longer-term view will reveal that the short-run view is erroneous. For example:
Nation formation over an extended period will permit Black Americans to sell assets owned in the U.S.—without creating adverse shocks to markets—and to acquire new—probably higher-quality—assets in the new nation.
The loss of position and pseudo power in the American context can be exchanged for positions of real power in the new nation.
A priori, while it may appear that movement to a new nation that must be built creates great physical inconvenience, such inconveniences can be constrained to a minimum when the nation formation process is managed properly—i.e., staggered over a generation or more.
As for leaving Asian, Hispanic, Native American, and, yes, White friends behind, they can visit with a passport. Depending on the nature of the constitution, they may even be permitted to join you in the new nation.
We hope that you will agree that, what at first appears daunting can often become quite manageable given sufficient thought. In Part III, we’ll discuss the many benefits to nation formation.
Dr. B.B. Robinson is an economist and director of BlackEconomics.org, a resource for economic concepts, issues and policies affecting African-Americans.
(Forbes) — The trade deficit peaked at 6% of gross domestic product in 2006. It fell during the recent recession to about 3% of GDP. While this decline has quieted those who support protectionism, and allowed the Obama administration to declare that there are no countries manipulating currency values, protectionism is never far from the political front burner. Given all the dollar depreciation of the past several years (although not recently), along with the traditional lag time of two-plus years for changes in exchange rates to influence trade flows, the deficit may shrink further. However, the strength of the recovery is reversing this trend, rapidly restoring the purchasing power of American consumers and businesses luring in more foreign capital. As a result, the trade deficit will probably remain near current levels for the next year or so.
(New York Times) — For young adults, the prospects in the workplace, even for the college-educated, have rarely been so bleak. Apart from the 14 percent who are unemployed and seeking work, as Scott Nicholson is, 23 percent are not even seeking a job, according to data from the Bureau of Labor Statistics. The total, 37 percent, is the highest in more than three decades and a rate reminiscent of the 1930s.
Is it a post patriotic reaction to the Fourth of July or is the market so oversold investors are sifting through the ashes to find opportunities? I actually think it’s a combination of both. The market is oversold although it has come down for good reasons. There is the dilemma for investors that are more likely to head for the hills than buy on weakness. There are several facts about the market that make it attractive. For sure I think there is immense value; stocks are extremely oversold including those affected by the dollar. Investor sentiment is so low its having a self fulfilling effect but it’s also the kind of pessimism that turns out to be a buying opportunity. Of course the sentiment also leaves the market vulnerable to swift moves lower and that has chased a lot of people out and is keeping a lot of would-be investors at bay.
This should be a quiet week with respect to news and volumes and that could help the market reclaim some equilibrium. On that note, the market will still need something akin to good news. Not to be confused with silver linings but actual good news. The best opportunities for that will begin next week with the next round of earnings announcements. Interestingly there is a piece on Bloomberg saying earnings estimates have actually been increasing. I’ve mentioned several times, however, good earnings aren’t always the panacea. There is the matter of $10.3 trillion in earnings not being reflected in the S&P 500 for the period of 1999 to 2009 where stocks finished lower after a decade of trading. It’s hard to imagine top line demand being the main driver of bottom line success but if there is any inkling that consumers stepped up then earnings could power stocks much higher.
In the meantime, a report out this morning from Reis showed that office vacancies hit 17.4% in the second quarter up from 17.3% and 15.9% q/q and y/y respectively. The lowest rate is in DC at 10.0% while the worst is Detroit at 26.3%. Taxpayer money bolstering a government run by czars, endless committees and more layers of bureaucracy helping the former but the latter is a warning of what happens when an economy relies too much on a single industry that fought basic runs of economics. Last year, Reis forecasted that office vacancies would hit an all-time high of 18.2% this year before topping out. There is a chance that will not happen but it should be noted the rate peaked at 17.0% during the last recession. These vacancies underscore the weakness of the economy but also the point that entrepreneurs aren’t leaping at chances to turn lemons into lemonade.
We need those entrepreneurs to step up to the plate but they can’t in such a hostile environment.
The S&P 500 is in no man’s land on a six-month chart having broken all semblances of support levels. Hopefully 1,000 will provide some support. On the upside, a close above 1,050 could trigger some buying although the big upside test comes at 1,132.
The Rogues Gallery of Mega Companies
All the evil companies of 2010 have had news this morning.
BP apparently is seeking out investments from sovereign wealth funds. This actually makes sense as the company is cheap right now and it needs the help if it’s going to survive. Remember at the beginning of the banking crisis when there was speculation China’s sovereign wealth fund was prepared to pay Bear Stearns $100.00 a share and people in America went ballistic. They wouldn’t have it, China owning such a large and important banking institution. These days xenophobia is out and survival is in so this scuttlebutt makes sense. If a Middle Eastern entity made a move, it would be interesting as many there would love to own the company they feel ripped them off back in the day. In the meantime BP has spent over $3.0 trillion on the Gulf clean up and the stock got an upgrade this morning.
Goldman Sachs (GS) got an upgrade, too. JP Morgan likes the stock down here and I have to agree the stock is extremely oversold.
Toyota Motors (TM) was able to surge to the top of the American market on efficiency and great product. Today begins its latest auto recall this morning on word they knew about problems with the Lexus two years ago.
If these rogue stocks can rally then anything is possible. (Actually BP is a high risk buy and GS a buy although I would wait on TM.)
Charles Payne is the CEO and Principal Analyst of Wall Street Strategies . This post was republished, with permission, from his company’s column, WStreet Market Commentary.
(Businessweek) — It’s often said that stock investors, eager for gains, see the glass as half full, while bond investors, careful about losses, see the glass as half empty. Now, however, their views are so different that you might wonder if they’re peering at the same glass. Many investors have withdrawn money from the stock market, especially as weak U.S. economic data have bolstered bond managers’ case for a gloomier outlook. The U.S. job report on July 2 showed the U.S. economy lost 125,000 jobs in June.
(New York Times) — Should nations embrace austerity to atone for their past sins of overspending, or will such behavior plunge the world into another Great Depression? We have little hard evidence on whether the benefit of stimulus spending covers its costs, but ignorance doesn’t make the case for inaction. A better approach is to limit any second stimulus to tax-and-transfer-related interventions that have the least potential for widespread waste.
(New York Times) — THE Great Recession hit American blacks harder than it did whites. Blacks were more likely to lose their jobs, and those who kept them were more likely have their pay or hours reduced. Black homeowners are also far more likely than whites to own homes that are no longer worth what they owe on the mortgage. And yet blacks are far more upbeat about the economy than whites. They are more likely to view economic conditions as good now, and more likely to think that improvement is on the horizon.
(Wall Street Journal) — U.S. car sales fell in June from a month earlier in a signal that the auto industry’s recovery is faltering amid increased economic jitters. But sales were up from June 2009. General Motors Co. said its June sales of cars and light trucks rose 11% from a year ago, but they fell 12% compared to May, and the company said industry sales overall were weaker than a month earlier.
(The Nation) — The twentieth-century economic adage that when America sneezes the rest of the world catches pneumonia has a tragic domestic counterpart in the relative economic condition of African-Americans. What for white Americans is a Great Recession amounts to a virtual depression for a substantial number of African-Americans. Unemployment rates stood at 15.5 percent in May, compared with the overall national rate of 9.7 percent. For black men the situation is almost as desperate as during the nadir of the Great Depression of the 1930s: more than one in six is unemployed, compared with the national average of 9.8 percent; among black teenagers, many of whom are out of school and seeking full employment, the rate stands at a shocking 38 percent.
The Great White Way isn’t quite so white these days. One area where black buying power is getting recognition is on Broadway. “Memphis,” “Fela!”, “Race” and the revival of “Fences” all focus on black characters.
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